Economist Magazine: Food Stamps are the "Most Effective" form of economic stimulus "increasing economic activity by $1.73 for every dollar spent"

WHEN the dismal news came on July 8th that the unemployment rate had risen fractionally to 9.2%, both Republicans and Democrats declared the data proof of the folly of the other party’s policies. How, Republicans asked, could Democrats even consider raising taxes when the economy is so weak? How, Democrats retorted, could Republicans advocate big cuts in the safety net when so many Americans are in desperate need? As the haggling over raising the legal limit on the federal government’s debt reaches a climax, the feeble state of the economy is making the budgetary trade-offs involved ever less appealing...

Take food stamps, a programme designed to ensure that poor Americans have enough to eat, which is seen by many Republicans as unsustainable and by many Democrats as untouchable. Participation has soared since the recession began (see chart). By April it had reached almost 45m, or one in seven Americans. The cost, naturally, has soared too, from $35 billion in 2008 to $65 billion last year. And the Department of Agriculture, which administers the scheme, reckons only two-thirds of those who are eligible have signed up.Advocates for the poor consider (cuts to food stamps) unconscionable.

Food stamps, they argue, are far from lavish. Only those with incomes of 130% of the poverty level or less are eligible for them. The amount each person receives depends on their income, assets and family size, but the average benefit is $133 a month and the maximum, for an individual with no income at all, is $200. Those sums are due to fall soon, when a temporary boost expires. Even the current package is meagre. Melissa Nieves, a recipient in New York, says she compares costs at five different supermarkets, assiduously collects coupons, eats mainly cheap, starchy foods, and still runs out of money a week or ten days before the end of the month.

It is also hard to argue that food-stamp recipients are undeserving. About half of them are children, and another 8% are elderly. Only 14% of food-stamp households have incomes above the poverty line; 41% have incomes of half that level or less, and 18% have no income at all. The average participating family has only $101 in savings or valuables.

www.economist.com/node/18958475