Julie Siple at Minnesota Public Radio (MPR) this week discusses the role of asset limits in determining who is eligible for the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps.
To be eligible, according to USDA rules, program applicants generally must have net income below the poverty line. Middle-income and high-income Americans are ineligible for SNAP. This is uncontroversial.
Program applicants also generally must have financial assets below $2000 (or below $3250 if they are elderly). In recent years, states have been allowed some flexibility regarding this rule. Many states effectively have set a more generous higher limit. This is more controversial.
A provision of the farm bill in the U.S. House of Representatives proposes to reduce states' flexibility to determine what asset standard to use. Siple's report for MPR explores several sides of this issue.
Without an asset test, conservative program critics say, the program may grow too big: "No one wants to see people bear financial hardship, but we have a real
financial problem in this country, with the federal government running
trillion dollar deficits," Siple quotes CATO scholar Chris Edwards saying. "You know, we can't keep subsidizing
everyone like we have been in recent years or we'll simply go
bankrupt."
On the other hand, with the strict asset test under the House proposal, imagine the hardship for an elderly person who must spend down her savings to a very low level before becoming eligible for nutrition assistance. The radio report includes an interview with an 88-year-old Minnesota resident who lost much of her savings due to medical issues, and who worries about having to use up her remaining savings before becoming eligible for food stamps. The question at stake: is it okay for somebody in her position to still hold $80000 in assets while applying for food stamps, or should she spend down her life savings to 3250 before becoming eligible?
Savings is an important strategy to move out of poverty. The SNAP program should be structured to help lift families out of poverty, so they no longer have to depend on SNAP to make ends meet. To force families to spend down assets in order to qualify would likely make them less able to weather the next economic shock to the household. We ought not balance the federal budget on the backs of the elderly or the poor. To CATO's point, I am sure the federal government is subsidizing or providing tax breaks to people with means, Congress should look there first.
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