Trick or Treat

Dear Mr. Kettle

Now that Halloween’s Eve has passed, it’s time to open our goody bags and take inventory of all that we’ve received. Regrettably, for nearly 48 million American, those treats may not be so sweet. What’s more, the real trick is on us all.

November 1^st , ushered in new Federal austerity measures meant to get the American people off their collectively lazy butts. That’s right, the Supplemental Nutrition Assistance Program (SNAP), administered through the United States Department of Agriculture was directed to cut its $90 billion dollar program by some $5.5B, affecting all SNAP recipients. As this is not a transcript of Carl Sagan’s Cosmos, to put those numbers into a more manageable perspective, they translate into a reduction of $36 per month for a family of four. That’s $420 a year. A modest amount until you realize that it constitutes nearly two weeks take-home pay for someone working for minimum wage.

However, this is not a rant about SNAP, but rather the other trick that does not dangle from the news feeds as prominently as toilet paper from one’s tree. That insidious bit of devilry that lay beneath our bag of treats won’t be found in mainstream media, lest they who bear witness be strangled in the shadows before they can even scream. The other welfare programs managed by the United States Depart of Agriculture are the Farm Income Stabilization subsidies paid to the owners of farms, ostensibly to ensure the stability of our food crops. At just over $20B in annual taxpayer dollars, it may lay lack the same largesse of SNAP, but is still
well within the same order magnitude of tax funded excess. However, before jumping up to defend or detract this body of legislation, it must be pointed out that these direct subsidies were enacted by Congress and signed into law years before the events of 1929 and were, therefore, not the product of social engineering that came in the wake of the Great Depression - with one notable exception being the Energy Policy Act of 2005. Still, these subsidies have persisted for a century, heralding back to a time when the face of farming and agriculture was markedly different from what it is today. In fact, these subsidies touch an even smaller number of people than they did a century ago. What is more, at an annual cap $40,000 per farm owner, the welfare impact is significantly different than that of SNAP, by two full orders of magnitude.

There are some arguments put forth that farm subsidies are a necessary evil to ensure the stability of the country’s food supply and overall social stability. However, the same argument has been put forth in arguing for SNAP. In both cases, opponents of both programs point to the lack of economic analysis to support such claims, which brings me to the nagging question. Why is this particular welfare program within the Department of Agriculture left untouched? Applying even the modest 5.5% reduction implemented with SNAP would have netted the American Taxpayers more than $1B dollars in annual savings. If reductions were applied by relative order of magnitude, then the bulk of the $20B dollar annual expenditure would likely have been wiped completely from the books. However, focusing solely on matching cuts, it should be pointed out that the Energy Policy Act of 2005 increased these direct farm subsidies for farmers of corn by roughly $6B dollars annual as a means of encouraging alternative bio-fuel productions. Are welfare programs necessary for the energy sector to thrive in a true free-market society? Is ethanol production the path to energy independence? If so, then why does it require a welfare program for viability? After all, to quote Benjamin Franklin, “A penny saved is a penny earned.”

Sincerely,

Mr. Pot