Research & Commentary: SNAP Asset Testing

Published November 13, 2015

The Supplemental Nutrition Assistance Program (SNAP), commonly known as the Food Stamp system, has become one of the fastest-growing welfare programs. SNAP is the fourth-largest means-tested program for low-income families and individuals. It is administered by the U.S. Department of Agriculture, and the benefits are distributed by individual states. 

Nationally, SNAP expenditures have doubled in the past five years, from $33 billion in 2006 to $78 billion in 2011. The number of people receiving SNAP benefits increased from 26 million to 45 million during the same period. When the food stamp program was first implemented nationally in the 1970s, just one in 50 Americans participated. Today, according to the Congressional Budget Office, one in seven Americans receives SNAP benefits, at a total cost of more than $6 billion per month. 

Welfare reform should focus on encouraging able-bodied recipients who are enrolled in these programs to become more self-sufficient and less dependent on government aid. Asset tests are one tool states can use to ensure all food stamp dollars are used only by those families truly in need. Currently, 14 states require an asset test to receive food stamps. 

The current income and asset test for SNAP requires recipients to have a gross income below 130 percent of the poverty level, a net income below 100 percent of poverty, and less than $2,000 in assets. However, many SNAP recipients are accepted under looser standards through “categorical eligibility.” In states using categorical eligibility for SNAP, recipients are determined not by the income and asset limitations established for SNAP, but by participation in other cash welfare assistance programs, which can have more relaxed eligibility standards. 

According to the Foundation for Government Accountability, if every state matched its asset testing for food stamp eligibility to the federal baseline, 749,000 fewer Americans would be trapped in food stamp dependence. Nationally, taxpayers would save more than $1.1 billion per year

Maine is the most recent state to consider reestablishing an asset test for those receiving food stamps. Any person applying or reapplying for SNAP benefits would now be required to disclose certain assets. The assets examined would not include home equity or a primary vehicle, but would include bank account balances and recreational vehicles, such as snowmobiles, boats, motorcycles, jet skis, ATVs, as well as other valuable assets. Under the new rule, households without children would become ineligible for SNAP benefits if such assets exceed $5,000 in value. 

Critics of asset tests argue they discourage saving, but asset tests are an important tool that’s used to ensure individuals spend their own resources before turning to taxpayers for support and to prevent abuse by those who do not truly need the help. Establishing an asset test with a reasonable threshold allows room for savings while making sure those who truly need SNAP benefits receive them. 

The following articles examine the Supplemental Nutrition Assistance Program, developments of the program since the end of the 2008 recession, and how states are now managing their programs.

Welfare Reform Report Card: A State-by-State Analysis of Anti-Poverty Performance and Welfare Reform Policies
In 2015, The Heartland Institute published an updated version of its Welfare Reform Report Card. This report card compiles extensive data on five “inputs” and five “outputs” of state welfare and anti-poverty programs and assigns a final grade to each state on the strength of the welfare policies it has adopted. 

Reforming the Food Stamps Program
Writing for The Heritage Foundation, Robert Rector and Katherine Bradley outline several areas where SNAP can be improved. The authors’ reforms would help return the program to its intended role of encouraging work and self-sufficiency. “Congress and the Administration should transform food stamps into a program that encourages work and self-sufficiency, close eligibility loopholes, and, after the recession ends, reduce food stamp spending to pre-recession levels,” they write.  

Food Stamp Fiasco
This Wall Street Journal article comments on the growing problems related to SNAP and notes legislators have failed to implement reforms to improve it. “When the food stamp program began in the 1970s, it was designed to help about 1 of 50 Americans who were in severe financial distress. But thanks to eligibility changes first by President George W. Bush as part of the 2002 farm bill and then by President Obama in the 2008 stimulus, food stamps are becoming the latest middle-class entitlement,” the article notes.  

Issue: Food Stamp Reform
The Carleson Center for Public Policy recommends block-granting food stamps, an idea first proposed by President Ronald Reagan. The document states, “President-elect Reagan, as part of the transition process from the Carter administration, approved the following recommendation regarding the federal Food Stamp program for the poor: ‘That a comprehensive nutritional block grant program be proposed to replace the 13 individual categorical USDA programs. That the program be administered by the states under broad federal guidelines with limited planning and reporting requirements.'” 

Food-Stamp Folly
Writing in National Review, Nash Keune of the Franklin Center documents the rapid expansion of the food stamp program. Keune argues current reform proposals do not go far enough to combat the growing costs. Keune writes, “In short, SNAP is a supposedly countercyclical program that saw its enrollment increase by 25 percent as unemployment dropped. Per-capita spending on the program doubled between 2007 and 2010. The House’s small funding cut and reforms such as Senator Sessions’s (there are about 200 other amendments to the Farm Bill on the table) are just small steps toward reining in a fundamentally flawed program.”  

The Great Bush-Obama Food Stamp Expansion
Veronique de Rugy of the Mercatus Center discusses the rapid expansion of the food stamp program under the George W. Bush and Obama administrations. De Rugy criticizes those expansions and the bonuses states receive for boosting SNAP enrollment.  

Obama vs. Reagan: Food Stamp Failure
This Americans for Tax Reform article examines the history of the food stamp program and criticizes recent changes under the Obama administration, comparing them unfavorably with the Reagan administration’s efforts to downsize the program. 

Reforming Food Stamps to Promote Work and Reduce Poverty and Dependence
Robert Rector of The Heritage Foundation argues for applying work requirement standards similar to TANF to the food stamps program: “The replacement of AFDC with the Temporary Assistance to Needy Families program (TANF) has led to record declines in dependence and poverty. Since the creation of TANF, we have learned that welfare programs with work requirements will reduce poverty more effectively than similar programs without work requirements. It is time to apply the lessons from AFDC reform to Food Stamps.”  

The Supplemental Nutrition Assistance Program: Categorical Eligibility
Gene Falk and Randy Alison Aussenberg of the Congressional Research Service discuss categorical eligibility and some of the problems it causes. They describe the three different types of categorical eligibility: traditional categorical eligibility conveyed through receipt of need-based cash assistance and the newer “narrow” and “broad-based” categorical eligibilities conveyed via TANF “noncash” benefits. They also provide information on current state practices regarding categorical eligibility and discuss proposals to restrict TANF-based categorical eligibility. 

More States Enforce Food Stamp Work Requirements
With the U.S. economy emerging from the 2008 recession, food stamp work requirements that were suspended during the downturn will be reinstated in many states, says Jake Grovum in Stateline. 

Top 10 Reasons Food Stamps Need to be Reformed
FreedomWorks’ Andrew Montgomery identifies serious flaws in current food stamp programs: “In recent years, food stamps have grown into a major financial obligation. Enrollment in SNAP has increased dramatically, rising from 26 million in 2007 (one in twelve Americans) to nearly 47 million in 2012 (one in seven Americans). Costs have increased dramatically as well, rising from $35 billion in 2007 to $80 billion in 2012, making it the second most expensive means-tested federal welfare program, behind only Medicaid.” 

Food Stamps Don’t Stimulate Economic Growth
Rachel Sheffield and T. Elliot Gaiser of The Heritage Foundation refute the commonly cited claim food stamps stimulate economic growth. “A growing welfare system is not only bad news for the economy, but bad news for Americans in need. Instead of continuing on this same failed course, Congress should work to ensure that welfare programs like food stamps promote self-sufficiency through work,” they write. 


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