Wednesday, August 17, 2011

Speaking of Food Stamps...

The Secretary of Agriculture Tom Vilsack has run to a microphone with his own facts, namely that for every dollar invested in the SNAP Program (food stamps) $1.84 is generated in additional economic activity. In fact, according to Vilsack, the program is directly stimulative and creates jobs.

Now, I'm not even going to spend a minute trying to unravel the methodology of the study that produced the $1.84 gained per $1.00 spent in food stamps claim. Who knows, he might be right.

What is unfortunately omitted by Vilsack is the fact that the $1.00, before it is ever spent, has to be extracted from the larger economy. The dollar, if it had not been taken from the private sector, would have had every bit as much impact on the economy even without its metamorphosis into a vehicle of benevolence. Let's be generous to Mr. Vilsack and grant him his $1.84 figure.

But that is only a small part of the morass. In actuality, the $1.00 that was ultimately bequeathed to the food stamp recipient began as closer to $3.00 in the pocket of a privileged taxpayer. What began in the private sector as three crisp one dollar bills, became atrophied by the salaries and benefits paid to bureaucrats and further, were exposed to other extravagant overheads rarely enjoyed by any entity outside of the federal government.

So, yeah.

Once Mr. Vilsack begins tracking the $1.00 that is spent in his program he might very well arrive at the $1.84 in economic activity. The problem is that he begins tracking that dollar way too late because the extraction and bequeathing of what became one dollar actually subtracted in the neighborhood of $5.52 from the economy. ($1.84 X 3) Then, once the shriveled three dollars in the form of one dollar were spent, the $1.84 figure so glowingly referred to by the secretary comes to life.

A more valid claim from Mr. Vilsack would be that every $1 spent on food stamps only costs the economy $3.68. ($5.52 minus $1.84)

Which, all things considered, is not a bad deal coming from Washington.

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