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Welfare System Focus of Joint House Subcommittee Hearing

On June 25, the House Ways and Means Subcommittee on Human Resources and the House Agriculture Subcommittee on Nutrition held a joint hearing, “Past, Present, and Future of SNAP: How Our Welfare System Can Discourage Work.” This was the latest in a series of hearings on nutrition assistance programs, in general, and the Supplemental Nutrition Assistance Program (SNAP), in particular (see The Source, 6/12/15, 5/22/15, 5/22/15, and 3/20/15).

Eugene Steuerle, senior fellow, Urban Institute, said, “For households with children, those combined marginal tax rates from universally available programs like EITC [Earned Income Tax Credit], SNAP (food stamps), and government-provided or subsidized health insurance, can easily reach about 60 percent when moving toward full-time work or a second job in the household. These high marginal rates apply mainly when households move from about poverty level income to twice – or even three times poverty level income…In this range of income marriage penalties also become particularly high for a couple with two earners. For those getting housing or other assistance, the rate can easily jump to 75 percent or more.” He continued, “Add in transportation and child-care expenses, consumption taxes, health exchange rate penalties on employers—when paid indirectly by employees—and the gains from work fall even more. Sometimes there are no gains at all. Similarly, for some on unemployment or disability insurance, returning to work can also lead to few gains, as when one month of work can result in the loss of months or years of benefits. While there is widespread disagreement in the literature on the aggregate economic effect of these high tax rates and marriage penalties, there is little doubt that they act as disincentives to many households.”

Mr. Steurele concluded his testimony, saying, “[A]sking whether government benefit programs provide disincentives to work may be the wrong question. Yes, they often do. Any such effects must be contrasted with the good they may do so as to form a judgment of their merit. Here, I think the more important question for the future is how we can create a better social welfare structure that still provides a safety net but with fewer distortions and unintended or undesired consequences. We have done a moderately good job at reducing hunger and poverty, but a mediocre job at promoting mobility, as well as providing opportunity and investment, rather than just adequacy and higher levels of consumption.”

The following witnesses also testified:

  • Olivia Golden, executive director, Center for Law and Social Policy;
  • Casey Mulligan, professor, Department of Economics, University of Chicago;
  • Chanel McCorkle, Baltimore, MD, accompanied by Marsha Netus, director of operations, America Works; and
  • Erik Randolph, senior fellow, Illinois Policy Institute.
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