Off the Charts Blog | Center on Budget and Policy Priorities

Even as the House prepares this week to cut SNAP (formerly food stamps) by $21 billion and push 2 million low-income people off the program, new research shows that SNAP is the most effective program pushing against the steep rise in extreme poverty.

The number of households with children living on $2 or less per person per day — one definition of poverty the World Bank uses for developing nations — more than doubled between 1996 and 2011, to 1.6 million, according to research by the University of Michigan’s H. Luke Shaefer and Harvard University’s Kathryn Edin.

While these findings are troubling, the authors also show that SNAP kept more households with children out of extreme poverty than any other government program.

Counting SNAP benefits as income cuts the number of households with children in extreme poverty in 2011 by 48 percent, from 1.6 million to 857,000 (see graph).

SNAP also cut, by roughly half, the rise in extreme poverty among households with children between 1996 and 2011, the study found.

The study provides strong evidence that one of the main drivers of rising extreme poverty was the decline in cash assistance since the 1996 welfare reform.  Aid to Families with Dependent Children (AFDC) cut extreme poverty significantly in 1996, the study found, but Temporary Assistance to Needy Families (TANF) — which replaced AFDC after 1996 and reaches many fewer needy families — had a much smaller impact in 2011.

For many of the poorest Americans, SNAP has become the only form of income assistance they receive.

One reason SNAP is so effective in fighting extreme poverty is that it focuses its benefits on many of the poorest households.  Roughly 91 percent of monthly SNAP benefits go to households below the poverty line, and 55 percent go to households below half of the poverty line (about $9,800 for a family of three).  One in five SNAP households lives on cash income of less than $2 per person a day.

The farm bill before the House would move SNAP in the wrong direction by cutting or eliminating food assistance to large numbers of low-income families.

As our new report explains, some senators are proposing amendments to the immigration bill that would make its long and difficult path to citizenship far more difficult — in some cases undermining the fundamental goal of enabling undocumented workers to legalize their status.

One such proposal, from Senators Orrin Hatch (R-UT) and Marco Rubio (R-FL), would require immigrants seeking legal status to prove they have paid all of their taxes since they entered the country before adjusting to a legal status.

On the Senate floor Wednesday, Senator Hatch claimed that the IRS is well-positioned to determine such individuals’ tax liability, even when workers lack earnings and tax records:

The IRS is well experienced at estimating the tax liabilities for people who, for whatever reason, lack the records that normally support a tax return. . . .  Using bank records, credit card statements, housing records, and other evidence of an individual’s lifestyle, the IRS is able to construct returns and estimate tax liabilities for nonfilers who are U.S. citizens and resident aliens.  The same process can be used for immigrants looking to certify they no longer owe any Federal taxes.  That is not a tough thing to do…

But the IRS does not routinely try to use such records to guesstimate people’s incomes.  These are extreme methods, which it resorts to in only a very small number of cases each year.

Senator Hatch is essentially arguing that it would be workable — and a good use of taxpayer money — to require the IRS to conduct extensive field audits of very large numbers of undocumented immigrants seeking legal status.

The audits would be very complicated in many cases; many of these workers’ past employers will be difficult to locate, will not have records for cash transactions made years ago, and (for obvious reasons) may be reluctant to cooperate.  Moreover, many of these immigrants likely will not have bank records or credit cards, will have moved many times, and will have been working in the United States for many years or even decades, so reconstructing their records for this entire period could prove extremely difficult.

The IRS’s experience in estimating a family’s income based on its “lifestyle” is largely restricted to a very small number of generally high-income people and small businesses where there is a large disconnect between their reported income and the person’s lifestyle or the business’s spending and the IRS has reason to believe large-scale tax evasion may have occurred.  The IRS has never used this method for large numbers of low-income workers.

Given that an estimated 11 million people are eligible to legalize under the bill, the increased workload for the IRS would be tremendous.  Of the 187 million individual and business tax returns filed in 2011, the IRS examined just 1.7 million — fewer than 1 percent.  Moreover, over 70 percent of these audits were conducted by mail (where information is requested and provided by mail) and were not the complex, intensive audits that Senator Hatch envisions.

Based on the total cost of current IRS enforcement efforts and the number of returns examined each year, each field examination would clearly cost thousands of dollars.  This means that the cost of conducting vast numbers of complicated audits, as Senator Hatch evidently envisions, would run into the billions.

Senator Hatch has not proposed any new funding for the IRS to conduct such audits or indicated that large numbers of new IRS staff would be hired.  If the IRS tried to implement his proposal, it would have to divert a very large portion of its total enforcement resources, probably for a number of years, from enforcement activities that yield a much higher return for the Treasury to auditing millions of legalizing workers, most of whom have modest incomes.

In 2012, the IRS conducted 31,700 field audits of corporations, leading to a total of $20 billion in recommended additional tax assessments — an average of more than $600,000 per review.  When both individual and business field audits are considered, the average tax assessment is close to $60,000.  Diverting IRS resources away from these high-return audits to try to reconstruct earnings records from modest-earning immigrants almost surely would result in a net loss of revenues to the Treasury, not the gain that Senator Hatch suggests.

More realistically, the IRS would never be able to conduct the required audits, so the process of legalizing undocumented workers would grind to a halt for many — leaving the basic goal of the legislation in tatters.  Undocumented workers would remain undocumented and the Treasury would collect less in taxes going forward than if these workers were allowed to come out of the shadows.

As we’ve noted previously, the 2014 agriculture appropriations bill moving through the House underfunds WIC, the highly regarded nutrition program for low-income pregnant women, infants, and young children, and as a result could deny WIC benefits and services to eligible women and children at nutritional risk.  With the bill moving to the full House Appropriations Committee on Thursday, it’s important to understand what’s at stake.

The House bill relies on two unsound budget choices to try to avoid turning away about 140,000 eligible women and children, according to our updated estimate that’s based on new data.

• More than 98 percent of WIC funds are devoted to the core supplemental foods, nutrition education, and health care referrals for which the highly regarded program is known.  In recent years, about $100 million has been dedicated to two special purposes — an evidence-based breastfeeding peer counseling program and technology upgrades to convert the program from using paper vouchers to electronic benefit cards, which improves management and reduces costs in the long run.

  The House bill would use these funds for benefits if there is a shortfall, which the bill’s funding level is very likely to create — effectively terminating the part of the program that provides breastfeeding counseling to pregnant women and new mothers.  This would mark the first time since the breastfeeding program’s creation in 2004 — in response to medical evidence on the health benefits of breastfeeding — that policymakers have denied funding to this part of the program.

• Moreover, even with the breastfeeding funds and technology funds, the funding likely would not be adequate to serve all eligible applicants.  The bill also relies on WIC’s Contingency Fund to cover the remaining shortfall — a risky move.  The Contingency Fund is designed to cover unanticipated costs that arise after the appropriation is enacted — e.g., spikes in dairy prices, in fruit juice prices after a winter freeze, or in egg prices after an avian flu outbreak (all of which have occurred in WIC’s history), or a slowing economy that makes more people eligible for the program.  If policymakers tap the Contingency Fund to meet funding needs that we know about before the fiscal year starts, the fund may not be there for unanticipated costs during the year.

The full Appropriations Committee has an opportunity to amend the bill to adequately fund WIC.  If the Committee raises WIC funding, the breastfeeding program could stay in place, the program could continue to be modernized, the Contingency Fund could be reserved for truly unanticipated costs — and policymakers could continue their longstanding bipartisan commitment to providing WIC with enough funding to serve all eligible low-income pregnant women, infants, and young children who apply.

The Urban Institute has published a new commentary collection on the first year of Work Support Strategies (WSS), a five-year, multi-state project that is designing, testing, and implementing more effective, streamlined, and integrated approaches to delivering key supports for low-income working families.  In my contribution, I outline lessons that we’ve learned from past performance and look ahead to the initiative’s future as states implement health reform:

Most guidance from the federal government on the [Affordable Care Act, or] ACA so far has been focused on changes to health programs.  While this information is crucial, it neglects the overwhelming majority of states administering Medicaid and human services jointly. WSS states play a crucial leadership role in discovering how to blend new Medicaid eligibility rules and customer service standards with delivery of other human services programs.  They’re using lessons of the past and assessing how they can achieve new efficiencies to test creative solutions to provide all the necessary benefits to their most vulnerable people.  They will be innovators on the path to creating modern, efficient systems that serve the poorest families comprehensively while delivering first-class customer service at a low cost to the taxpayer.

Click here to read the whole commentary collection on WSS, including my piece and 11 others.

The 2014 agriculture appropriations bill that a House subcommittee will consider today would underfund WIC, the highly regarded nutrition program for low-income pregnant women, infants, and young children.  The bill could result in the denial of WIC benefits and services to thousands of eligible women and children at nutritional risk.  And it would effectively end the part of the program that provides breastfeeding counseling to pregnant women and new mothers.

The bill bars the use of WIC funds for the Breastfeeding Peer Counselor Program if that means there wouldn’t be sufficient funds to serve all eligible low-income women, infants, and children who apply.  This prohibition would force WIC to cancel the breastfeeding program for most or all of the fiscal year, since the bill’s WIC funding level ($6.655 billion) very likely would be insufficient — and even if it turned out to be sufficient (due to lower-than-expected participation and food costs), the Agriculture Department wouldn’t know that until late in the fiscal year and would have to withhold the breastfeeding funds until then.

If enacted, this would mark the first time since the breastfeeding program’s creation in 2004 — in response to medical evidence on the health benefits of breastfeeding — that policymakers have denied funding to this part of the program.

Evaluations have found that breastfeeding counseling improves breastfeeding rates and duration.  Without this dedicated funding, many states would likely lay off their WIC breastfeeding counselors.

The bill also would help compensate for its underfunding of WIC benefits by withdrawing funding for state investments to strengthen WIC management by converting WIC from paper vouchers to electronic benefit cards.

Even with the withdrawal of funding for breastfeeding counseling and strengthening WIC management, the bill’s underfunding of WIC might force the program to turn away some eligible women and children at nutritional risk.  We estimate that if funds were not diverted from these activities to help pay for WIC benefits, the program would have to turn away nearly 200,000 eligible women and children next year.  Even if the funds were diverted, we estimate that about 40,000 eligible applicants would be turned away unless the program’s Contingency Fund were drawn down.

To be sure, the Contingency Fund might cover the funding shortfall that the bill would create, but counting on that would be risky.  The Contingency Fund is designed to cover unanticipated costs that arise after the appropriation is enacted — such as spikes in dairy prices, in fruit juice prices following a winter freeze, or in egg prices following an avian flu outbreak (all of which have occurred in WIC’s history), or a slowing of the economy that makes more people eligible for the program.

If policymakers rely on the Contingency Fund to meet funding needs that can be anticipated even before the fiscal year starts, the fund may not be there when it’s needed.

Moreover, the Contingency Fund won’t help the Breastfeeding Peer Counselor Program.  Under the bill, WIC must divert the breastfeeding funds to cover any shortfall in paying for WIC benefits before it can tap the Contingency Fund.  This is why breastfeeding counselors, often low-income mothers themselves, would likely be laid off under the House bill.

House appropriators should honor the longstanding bipartisan practice of providing WIC enough funding to serve all eligible low-income pregnant women, infants, and young children who apply — without undermining breastfeeding support or depleting the Contingency Fund unless unforeseen circumstances arise.