House plan to cut food aid discourages families from saving and building financial security

A total of 41 states have chosen to eliminate assets tests (36 states) or raise the asset limit (five states), recognizing that their residents are better served if SNAP eligibility is not withheld from low-income households who are doing their best to save for emergencies, escape poverty and eventually move off public benefits programs.

But now House Republicans, led by Representatives Paul Ryan (R-Wis.) and Frank Lucas (R-Okla.), want to eliminate the “categorical eligibility” option and require states to use an assets test to determine SNAP eligibility. Under the House bill, if a household subsisting on a poverty-level income ($19,530 for a family of three) has more than $2,000 in savings they will fail the asset test and be denied help.  That assistance will also no longer be available if they own a vehicle worth about $5,000.  Without such a vehicle many would be unable to get to jobs that help them support their families.

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Those in favor of imposing asset limits typically argue that SNAP is not going to the needy households it was meant to serve; that people who have even a small amount of savings should deplete those first before tapping government resources; and that the number of SNAP recipients is not decreasing as quickly as expected during the economic recovery.

None of these arguments stands up to the facts.

In 2011, only 2 percent of all SNAP households had gross monthly incomes above the poverty line. Most of those were low-income single mothers whose disposable income was actually below the poverty level when childcare expenses were factored in.  The Congressional Budget Office (CBO) estimates that 1.8 million people would lose food assistance if categorical eligibility is eliminated.  Most of these would be low-income seniors and working families with children.  These families typically live paycheck to paycheck. Denying them the ability to save for emergencies, such as fixing a car, or unexpected expenses, such as buying a uniform for a new job, only makes them more dependent on government resources, not less.

Proponents of asset limits point to examples such as the widely-reported case of a Michigan lottery winner who continued to receive SNAP benefits.  But extremely rare examples of this kind, which are completely avoidable through policy tweaks, should not be used to derail a system that has worked well for states and their residents.  To guard against similar abuses, the House bill would prohibit lottery or gambling winners from qualifying for food assistance.

SNAP is also one of the least wasteful of all government programs. Just 3 percent of SNAP benefits are the result of overpayments to either ineligible households or to eligible households whose benefits were too high. Reinstating asset limits would actually create inefficiencies and waste government resources since the rules for SNAP eligibility would be far more complicated, forcing states to modify their computer systems and application procedures. 

Finally, those who argue that SNAP caseloads aren’t shrinking enough as the economy improves are not taking into account the uneven nature of a recovery that has many left low- and moderate-income households behind. The CBO found that simplifying the SNAP application process through categorical eligibility accounted for just 2 percent in additional costs and that the economic downturn was by far the biggest reason for food assistance expansion.

Ironically, this effort is driven by Republicans who traditionally favor state’s rights. Now they are fighting to strip states of the ability to determine which households deserve food assistance and are instead returning that power to the federal government. This makes no sense for states and it makes no sense for the low-income families who need the extra boost SNAP provides as they strive to improve their circumstances and save of a better future.

Brooks is director of state and local policy for the Corporation for Enterprise Development (CFED); Greer is director of government affairs for CFED.