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April 14, 2015

How the Food Stamp Program Is Like the U.S. Export-Import Bank

 

George Mason University economist Donald Boudreaux refers to the U.S. Export-Import Bank as “that great geyser of cronyism.”  And he’s right. The purpose of the Ex-Im is to lend taxpayers’ dollars to other countries so they can buy certain American products. Get it?  We fund them to buy our products.
 
So how is that like food stamps?  Well, Congress puts funding for the food stamp program in the agricultural bill—that quinquennial process whereby Congress funnels billions of taxpayer dollars to mega-farming and ag-industry businesses in the name of helping the “family farm.”  So taxpayers give money to low-income people so they can buy products from farms, which taxpayers are subsidizing.
 
The Heritage Foundation’s Daren Bakst rightly points out that doing so helps preserve funding for both farm subsidies and food stamps. “Legislators who want to pass agricultural programs might vote for the farm bill despite serious concerns with food stamp legislation and vice versa,” writes Bakst.
 
But it’s more than that. By putting the $74 billion (2014) food stamp program—which was down from $80 billion in 2013—in the farm bill creates an Ex-Im-like transfer. Taxpayers give money to individuals to buy farm (i.e., food) products, even as taxpayers subsidize farms.
 
Putting them in the same bill creates an incentive to bid up both portions—farm subsidies and food stamps—as an indirect form of cross-subsidization.
 
If a fiscally prudent member of Congress wants to reduce spending on the food stamp program, he or she is accused of not just starving the poor but hurting farmers. And if a congressman wants to reduce the cronyism involved in farm subsidies, he’s accused of not just hurting farmers, but driving up food prices and making it more expensive for the poor to buy it.
 
Removing the food stamp program from the farm bill and putting it somewhere else—Heritage suggests in the Department of Health and Human Services because it’s a welfare program—won’t necessarily make it easier to reduce food stamp spending, but at least it will help eliminate some of the rationalization that is the hallmark of the Ex-Im Bank—i.e., that we have to give the customers money so they can buy the producers’ products.


 

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