One myth about the surge in federal government spending over the last four years is that it was an automatic response to the recession. But the “tests” that beneficiaries of various government safety-net programs are required to pass before they can participate have gotten easier since 2007.
The government safety net is intended to help people in need. Because a lot of people don’t need the government’s help, a variety of tests have been designed to distinguish the needy from everybody else. These include employment tests, asset tests, income tests, earnings tests, retirement tests and age tests.
Two of the largest government programs are Social Security and Medicare. They administer essentially one test, for age. Once a person reaches age 65 (sometimes earlier), he or she can receive benefits from these programs regardless of income, assets or employment status.
In the past, and still today in most of Europe, Social Security required beneficiaries not only to be elderly but to be retired – the retirement test.
These days unemployment insurance is another major government expenditure, and its beneficiaries have to pass an employment test. That is, they have to be without a job and actively looking for one in order to receive benefits (a few states have small programs for employed but underemployed workers). Once a person passes the employment test, his or her assets or financial income are irrelevant for determining eligibility or benefits.
Beginning in the 1990s, cash family assistance or “welfare” programs began to have their own employment tests, but with the opposite determination: employment was required for participation. The 2009 American Reinvestment and Recovery Act permitted states to relax some of these requirements.
Family assistance programs traditionally had asset and income tests: a family could qualify only if both its income and assets were low enough. Medicaid – a government-financed health-insurance program for the poor – also has asset and income tests. The Patient Protection and Affordable Care Act of 2010 relaxed some income tests effective 2014, although even then a family with too much income will not qualify for Medicaid.
Traditionally the food stamp program (now called the Supplemental Nutrition Assistance Program, or SNAP, and participants now receive debit cards from the Department of Agriculture, rather than “stamps”) overlapped closely with family assistance programs, with some of the same asset and income tests. The 2002 farm bill provided an opportunity to avoid some of the SNAP tests, and states have recently taken that opportunity.
The bill allowed states to confer automatic SNAP eligibility on all households receiving a specified social service informational brochure, hard as that may be to believe. Households that participate in SNAP under this “broad-based categorical eligibility” rule still have benefits determined by the same formula (of household size and net income) as the other SNAP beneficiaries.
A practical result of broad-based categorical eligibility is that households can receive benefits based solely on their net income – it typically must be less than 130 percent of federal poverty guidelines (about $20,000 a year for a family of four) – and not based on the value of their assets or their employment status.
Even SNAP households not taking part through broad-based categorical eligibility saw the asset test relaxed by the 2008 farm bill, as the values of vehicles, retirement accounts and education savings accounts began to be excluded from the test.
So, simply put, in most states having assets is no longer a barrier to receiving food stamps. That’s the main reason that participation in the program increased 37 percent more than the number of families with income near or below the poverty line.
I agree that safety net programs would have grown from the recession alone, but, for better or for worse, they have grown many times beyond that thanks to numerous changes in program rules.