Economics, U.S. Economy

Has the shutdown really slashed the safety net?

Government shutdown and the safety net

Needy families are hurting. Food pantries’ shelves are bare. Cash assistance for the lowest-income Americans has run dry. Because Congress can’t end the partial government shutdown, our country’s poor are suffering mightily.

Or are they? That’s certainly the narrative around which left-wing pundits, journalists, and policy wonks have coalesced, but does their rhetoric match reality? As the shutdown rolls into week two, a closer look gives the lie to these panicked cries. Our budget crisis does ring alarm bells about America’s entitlements—but not the alarm bells that liberals have rushed to ring.

First, the biggest and best-known entitlements are largely unaffected because they’re funded independently of normal appropriations. Like an individual or family who has set some bills to “autopay,” Congress doesn’t have to take any action to keep these programs running.

These include:

The bureaucracies that oversee these programs are diminished, but their core benefits are flowing freely. If we stopped our analysis here, the safety net’s vulnerability would look roughly like the above chart.

But even this overstates the shutdown’s immediate harm.

For example, food stamps are fine, even though they aren’t funded automatically (in technical terms, SNAP is an “appropriated entitlement”). That’s because language in the 2009 stimulus law that temporarily boosted SNAP benefits also guarantees funding. That immunizes food stamps from the shutdown until the stimulus sunsets November 1. Even then, the USDA could tap into billions in contingency funds. Unless the shutdown lasts into the winter, SNAP and school lunches look to be okay.

So does Medicaid, albeit with one important exception. It’s largely state governments that administer Medicaid and front its costs; the feds merely reimburse states quarterly. Since Q1 2014 doesn’t end until December 31, then, Medicaid/SCHIP recipients will be cared for and state comptrollers can proceed as normal. (Critically, Washington D.C.’s Medicaid program could face big trouble much sooner, due to a legal glitch with its non-state status.)

Here’s an updated chart that reflects the safety of these important programs:

 

So what programs are impacted? Alarmists seize on TANF, a straightforward transfer of cash aid to the poor. TANF’s federal funding has indeed been frozen, but even welfare advocates note that there’s plenty of play in the joints: States are free to move money around and will almost certainly be reimbursed for any costs they shoulder.

Supplemental food aid for women, infants, and children (WIC) has also drawn hyperbolic handwringing. But the USDA reports that federal contingency funds alone will see WIC through the end of October, at which time states could step up.

Pro-poor conservatives can agree with progressives that the shutdown showcases our screwy priorities. Should massively expensive, cradle-to-grave goodies for the middle class really be afforded automatic and inviolable funding while small-bore poverty relief programs are shoved onto the chopping block?

But exaggerating how recent events will affect real Americans does this crucial debate a disservice. Unless the shutdown lasts far longer than anyone anticipates, the safety net is basically safe.

One thought on “Has the shutdown really slashed the safety net?

  1. It didn’t make the news, but after granting a small increase in food stamps in Oct. they are taking away more than twice that much in Nov. These are the kinds of games they play with people’s lives. How can they budget when they don’t know how much they’re going to be getting (this increase and decrease had nothing to do with their income – it had to do with that idiotic stimulus bill from a few years ago)

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