July 5, 2005

What Is A Fair Share of the Cuts for the Food Stamp Program to Bear?

By Dorothy Rosenbaum

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Some agricultural commodity groups have suggested that the House and Senate Agriculture Committees meet their $3 billion reconciliation instruction by cutting each program area that the Committees control in proportion to that area’s share of overall Agriculture Committee spending.  These groups have circulated documents showing that under this approach, the Food Stamp Program would be reduced by $1.7 billion over five years and bear 57 percent of the cuts in the House, and $2 billion over five years (bearing 67 percent of the cuts) in the Senate.  The purpose of this proposal is clear — to shift the majority of the cuts from farm-related programs to food stamps.[1]

This self-serving proposal assumes that the task at hand for the Agriculture Committees is a simple matter of arithmetic that does not entail any setting of priorities.  But priorities are inevitably involved.  And it should be noted that the proposal these commodity groups are pushing departs sharply from the priorities in the President’s budget.  Moreover, the proposal is sharply inconsistent with the position these groups took in 2002, when the Farm Bill was being considered and the Congressional budget made money available for increases in Agriculture Committee programs.  These groups did not suggest in 2002 that the increases be distributed proportionately, but rather that the lion’s share go to farm programs.

Figure 1


The Congressional budget resolution subsequently shrank the overall cuts in Agriculture Committee programs from the $9 billion that the President proposed to $3 billion.  The proposed cuts in Agriculture Committee programs were thus reduced by two-thirds.  Yet the commodity groups are now proposing to triple the food stamp cut the President proposed.  Under their proposal, cuts in areas outside of the nutrition programs would be 85 to 90 percent smaller than the President proposed, while the food stamp cut would be about three times larger than the President proposed.

The commodity groups’ argument that the cuts should be proportionate to each program area’s share of overall Agriculture Committee spending is, as noted, inconsistent with the positions these groups have taken in the past.  In 1996, when the Food Stamp Program was cut by almost $28 billion over six years, according to Congressional Budget Office estimates, the commodity groups did not argue that farm programs should take a proportional share of the overall cuts. 

Nor did the commodity groups argue in 2002 that spending increases under the 2002 Farm Bill should be distributed proportionally.  In 2002, the Food Stamp Program received 9 percent of the increase in federal resources the Congressional budget made available for Agriculture Committee programs that year.  Farm programs received more than 70 percent of the increases.  (The remainder went primarily to conservation programs.)


A Sounder Approach

Instead of an approach that would have the cuts be “proportional” to spending, the Agriculture Committees should follow the President’s priorities and look to the Food Stamp Program to contribute 7 percent of the $3 billion reconciliation instruction.  This would amount to $200 million over five years.

As noted, President Bush proposed $9 billion over five years in cuts in programs under the Agriculture Committees’ jurisdiction, of which 6.7 percent (or $600 million) would come from the Food Stamp Program.  If, consistent with the President’s priorities, the cuts to the Food Stamp Program constituted 6.7 percent of the $3 billion in savings that the Agriculture Committees must produce, the farm and other non-nutrition programs under the Committees’ jurisdiction still would be cut by only one-third as much as the President proposed ($2.8 billion rather than $8.4 billion).

It may be noted that in developing its estimate that the President’s proposals would save $9 billion, the Congressional Budget Office (whose numbers are the ones that matter for the budget reconciliation process) did not include any savings for the President’s proposal on “payment limitations” for agricultural subsidies.  CBO explained that this proposal was not described in sufficient detail in the President’s budget for CBO to develop a precise cost estimate of it.  The Office of Management and Budget estimates that this proposal would save $845 million over five years.  If the “payment limitation” proposal were included in the calculations, the food stamp reductions would likely account for 6 percent of the total savings that the President requested in Agriculture Committee programs rather than 7 percent.


Most Food Stamp Cuts from 1996 Remain in Effect; Commodity Cuts Reversed 

Also of note is the fact that the Food Stamp Program has been cut much more sharply than farm programs over the past decade.  In 1996, the Food Stamp Program was cut by almost $28 billion over six years as part of the 1996 welfare law, according to CBO, with the cuts reaching 20 percent by the sixth year.  A significant portion of these cuts came from across-the-board benefit reductions that affected nearly all recipient households, including families with children, the working poor, the elderly, and people with disabilities.  Eligibility also was severely curtailed for legal immigrants and unemployed childless adults.

Since 1996, Congress has enacted several pieces of legislation that have moderated some of the most severe food stamp cuts, but about two-thirds of the cuts enacted in 1996 remain in effect.

By contrast, the 1996 Farm Bill, known as the Freedom to Farm Act, was estimated to decrease federal spending by $2 billion over seven years.  CBO estimated that the policy changes would increase spending by almost $5 billion in the first two years and decrease spending by almost $7 billion over 1998 through 2002.  Those savings never materialized, however, because the Congress subsequently approved more than $20 billion in additional spending in “emergency” legislation in order to address perceived problems in the 1996 Farm Bill and to reverse cuts in farm programs included in that bill, in most cases before the cuts ever took effect.


When Adding Funds, the Agriculture Committees Have Not Used a Proportional Approach

In 1998, Congress enacted the Agricultural Research, Extension, and Education Reform Act (AREERA), which reauthorized and expanded agricultural research programs, made changes to crop insurance programs, contained cuts to the Food Stamp Program, and used a portion of the savings from those cuts to restore eligibility to some legal immigrants who lost eligibility in 1996.  According to CBO, on net, food stamp spending was reduced by $2.4 billion over 10 years, while other programs were expanded.  (The food stamp cuts contributed more than three-quarters of the overall savings in the bill, while the food stamp restorations accounted for only one-third of the spending that these savings financed.)

In addition, as just noted, in the years between the 1996 and 2002 Farm Bills, Congress passed $20 billion in “emergency” farm legislation to address perceived problems in the 1996 Farm Bill.  This process reached its culmination with the passage of the 2002 farm bill, itself.  The Food Stamp Program received nine percent of the increases in that bill, while agricultural programs received 71 percent, a share that far exceeded their share of total spending under the Agriculture Committees’ jurisdiction.


Farm Programs Have Not “Saved” the Government Money Since 2002

Some who lobby for agricultural subsidy programs have argued that these programs should not be cut because they have saved the federal government money since 2002.  This assertion is not correct.

Outlays for farm programs in recent years may have been lower than CBO projected at the time the 2002 Farm Bill was enacted, but such variances occur all of the time in entitlement programs and do not represent budgetary savings.  


Food Stamps are Working Efficiently and Are Not Growing Out of Control

After unemployment insurance, the Food Stamp Program is the federal benefit program most responsive to swings in the economy.  Food stamp participation and costs have grown since 2000, primarily because of the economic slowdown that turned into a recession in 2001.  This growth, however, followed six years of continuous declines in food stamp participation and costs. 

The net result is that over the past ten years as a whole, federal food stamp costs have grown no faster than the inflation rate.


Food Stamp Error Rate at All-time Low

Finally, the Food Stamp Program is both effective and efficient.  Program integrity has improved dramatically in recent years.  Food stamp error rates are at an all-time low.



By mid-September the House and Senate Agriculture Committees are expected to comply with the Congressional Budget resolution and recommend policies that cut programs in their jurisdiction by $3 billion over five years.  The President recommended reductions in Agriculture Committee programs that are three times this size ($9 billion over five years).  He proposed that 7 percent or these savings ($600 million) come from the Food Stamp Program.

The Food Stamp Program is operating effectively and efficiently and has achieved the lowest error rates on record.  Congress enacted deep cuts in the program in 1996, the majority of which are still in effect.  Comparable cuts were not made in agriculture programs.  In addition, since 1996, when Congress has made funding available for increases in Agriculture Committee programs, food stamps has received only a small share of those funds.  In crafting legislation to comply with the $3 billion reconciliation instruction, the Agriculture Committees should follow the President’s priorities and look to the Food Stamp Program to contribute 7 percent of the total.

End Notes:

[1] For this paper we assume that any cuts to nutrition programs would come from the Food Stamp Program.  The Child Nutrition programs, including the School Lunch and Breakfast programs, are the only other major mandatory nutrition program under the jurisdiction of the Agriculture Committee in the Senate.   In the House these programs are under the jurisdiction of the Education and the Workforce Committee.  A major reauthorization of Child Nutrition programs was completed just one year ago, and it is not likely that Child Nutrition programs will be reopened as part of this year’s reconciliation process.

[2] This calculation compares the change in food stamp spending over the 2000 to 2005 period as a share of the Gross Domestic Product (GDP) to the change in the surplus/deficits as a share of GDP over the same period.  See CBPP: “Cuts to Low-income Programs May Far Exceed the Contribution of These Programs to Deficit’s Return,” available at, https://www.cbpp.org/2-4-05bud.pdf.

[3] See U.S. General Accounting Office, Farm Program Payments: USDA Should Correct Weaknesses in Regulations and Oversight to Better Ensure Recipients Do Not Circumvent Payment Limitations, GAO-04-861T, June, 16, 2004.

[4] See U.S. Department of Agriculture, Food and Nutrition Service, Impact of Food Stamp Payment Errors on Household Purchasing Power, March 2005.