The MacNeil/Lehrer Report; Food Stamps

ROBERT MacNEIL: This is a booklet of food stamps. More than seventeen million Americans are currently using these coupons to buy groceries. But controversial changes have been proposed which will alter who gets them and how.

Good evening. One of the drawbacks of living in the richest country in the world is that it costs so much even to be poor. By government standards thirty-four million Americans have incomes low enough to qualify them for federal help in feeding themselves --that is, food stamps -- although only half that number participate. Last year eight percent of the national grocery bill was paid with food stamps, costing the government 5.6 billion dollars. The stamps have always been controversial, disturbing to the political consciousness of both liberals and conservatives, repeatedly under fire for abuses and cheating. Now the Carter administration has jumped into this political thicket eager for reform. Their plan would drop one and a half million people now using the stamps and add some two million others. Tonight: is this a good reform, or should the system be scrapped altogether? Jim?

JIM LEH RER:Robin, first it`s necessary to understand the present system if the Carter proposals are to make any sense. The system revolves around two major steps: determining eligibility for the stamps and then how they are paid. Eligibility works a lot like figuring out one`s income tax. Gross income is the starting point, then deductions are allowed for utilities, rent, medical expenses, taxes and so on. The result is the net income. It must fall below certain ceilings, depending on the size of the family. The absolute income ceiling is $6,840. Now to the stamps. If that net income figure is low enough -- the very poor, in other words -- then the stamps are given to the recipients free, and it slides up from there, with the recipient paying a certain proportion of the cost to get the stamps. For instance, the income level might determine that a family has to pay fifty dollars for $160 worth of stamps, and so on. One final point: the food stamps can only be redeemed for legitimate food; no cigarettes, no booze, no fancy imported foods.

Now let`s see how the administration wants to change this system. One of the architects of the Carter plan is Bob Greenstein, Special Assistant to the Secretary of Agriculture. Until a month ago, when he joined the Carter administration, Mr. Greenstein worked for the Community Nutrition Institute, a public interest organization. Mr. Greenstein, first you want to change the eligibility procedures. How would you change them?

BOB GREENSTEIN: We change them in a couple of ways, Jim. First, the income limits -- you mentioned that that absolute ceiling was about $6800 a year - - we would lower that. We would use the official federal poverty line as that net income ceiling. That`s about $1,000 lower than that $6800. Secondly, you mentioned all these complex itemized deductions that you figure out like income tax; they`re complicated, they cause a lot of red tape, they cause administrative expense, they hassle the recipients, and they cause a lot of errors and mistakes.

LEHRER: A lot of the fraud is involved in those, too, is it not?

GREENSTEIN: It could be. Now, what we do is we replace all of those itemized deductions with two simple, easily administered standard deductions, a flat $80-deduction for all households per month, and a second deduction as a work incentive -- twenty percent of income for those families who work -- and that`s to cover their taxes, and their work- related expenses, other mandatory deductions from salary. We-would take those two deductions, and then if your income was below that poverty line you would be eligible. We also change how much you`re eligible for by having a thirty percent benefit reduction rate. That means for each additional dollar of income you have you lose thirty cents in benefits. And the way that all fits together...

LEHRER: I`m not sure I understand that.

GREENSTEIN: Let`s say that you had $100 in income. As your income went from $100 to $110 your food stamp benefit would drop by three dollars as your income went up by ten. That`s to make sure that the poorer you are the more you get, the less poor you are the less you get. But if you dropped it one dollar for each additional dollar in income it would be a work disincentive. You know, you earn a dollar and you lose a dollar in food stamps.

LEHRER: Okay. Now, the other major change has to do with the purchasing of the stamps themselves.

GREENSTEIN: Absolutely.

LEHRER: All right. Now, what do you propose there?

GREENSTEIN: That`s really the key to the whole plan -- that`s the cornerstone. We would eliminate the purchase requirement. Instead of paying $100 for $166 in stamps, ,for example, a household would simply get that $66 in food stamps. When you talked about fraud, I think our biggest area of fraud has been these 15,000 firms -- check cashing firms, banks, post offices, stores, churches, all kinds of private agents -- that collect that cash for food stamps all across the country. There is no other federal program in which so many people pay so much cash to so many private agents and the cash is federal cash. Some of those agents have absconded with the money; and at the same time that that is complicated and a lot of paperwork, some of the really poorest recipients in the United States who need food stamps aren`t getting them because they can`t come up with those lump sums of cash once or twice a month to buy the stamps. If you eliminate the purchase requirement you simplify administration, you get rid of all vendor fraud, you cut administrative costs, and most important of all you bring into the food stamp program for the first time some of the poorest people who really need it and are getting nothing now.

LEHRER: Mr. Greenstein, thank you. The Carter food stamp program as - outlined in a general way by Mr. Greenstein is due for a spirited debate in the Congress, and one of those destined to be in the middle of that debate is Senator Robert Dole, Republican of Kansas and the 1976 GOP candidate for Vice President. Senator Dole is a member of the Senate Agriculture Committee and has a long-time interest in the food stamp program. Senator, what do you think of what I`m now going to call the Carter-Greenstein plan?

Sen. ROBERT DOLE: I think we ought to put in Bob Bergland, the Secretary of Agriculture, who`s done a great deal of work. Strangely enough, maybe, to some viewers, I find myself in somewhat of agreement with the Carter program and have been; in fact, have sort of pioneered a similar approach with Senator McGovern for the past several years. There are some basic differences. We would have a standard deduction of $100; we would have the same earned income deduction which would be a work incentive, but in addition to that we have a deduction of up to $85 monthly for child care. We think this is a work incentive to get a mother to work and to help her with her food stamp program. I can say to some of my conservative friends who may be viewing this program before they flip that they ought to take a hard look at it, because this is a conservative approach. I don`t know of any American who doesn`t want to help the poor. And the thrust of this program in eliminating the purchase requirement is to bring some of those, as Bob Greenstein has said, who haven`t the money to put up once or twice a month for the purchase of stamps, into the program. That`s what the program is all about; it`s a nutrition program and we believe it will work, with good administration. And I wish this administration luck in administering the program. It`s a very difficult program. It will, if we eliminate the purchase requirement, I think save fifty to 100 million dollars just in the administration because we eliminate all those transactions that cost a dollar or a dollar and a half each; we do eliminate vendor fraud -- there are no more vendors of stamps -- and I think it will be a better program all the way around.

LEHRER: The purchase part of it is the one that`s causing the real problems.

DOLE: That`s the big stickler, and that`s the one that Senator Talmadge flatly opposes.

LEHRER: And he`s chairman of the Senate Agriculture Committee.

DOLE: He does occupy a fairly important spot, when you think of it. But I think Senator Talmadge is sincere in his opposition; he just has a belief that if you`re going to receive a benefit you ought to make a payment. Well, I can cite you a lot of programs where payments are made, some to very rich farmers who never make a payment -under the disaster programs if you have a crop loss you get a payment. You don`t pay anything under the school lunch program. We could name all kinds of programs, but it seems to me that if we`re really concerned about a nutrition program for the poor we`ve got to make them eligible, we`ve got to bring them into the program.

LEH RER: Mr. Greenstein makes it sound like it`s the answer to all the problems in the food stamp thing; would you go that far? Do you think this is just a step toward the kind of reform that you and Senator McGovern have been fighting for all these years, or is it ...

DOLE: We know there are problems; we want to eliminate those who shouldn`t be in the program. Again, it is like figuring your income tax. It`s frightening, a little bit, when you stop and think that you`re talking about someone`s diet, whether or not they have enough to eat. We would lop about a million people off the program. How much, Bob, would you estimate?

GREENSTEIN: Close to a million and a half.

DOLE: About a million and a half, and maybe we could even do more, but we`re also reducing benefits of millions of those who are now in the program and increasing benefits for some. That`s one fault with the Carter program, is a reduction of benefits. We have a bigger standard deduction and therefore reduce the benefits as far as participants are concerned -- a fewer number.

LEHRER: You go a hundred, they go eighty, right?

DOLE: They go eighty, and plus we have the child care deduction which we believe is not very costly -- it`s thirty million dollars annually in a program that`s five to six billion dollars, and it`s an expensive program. But I want to come back to one point: before the critics jump on the program, we`ve got to remember that we`ve had food stamp programs since 1939. When we didn`t have food stamp programs we had commodity programs; we gave the poor what was left over on the farm, and at one time eight to nine million people participated in this, so we shouldn`t just look at that one figure of seventeen million and say, well, it`s too big, we can`t take care of it.

LEHRER: All right. Now we`re going to let the critics jump on the program. (Laughing.)

DOLE: I want them to. They have a sound view, but it`s a little misdirected.

(General laughter.)

LEH RER: All right. With that introduction, Robin, it`s all yours. (Laughing.)

MacNEIL: The elimination of itemized deductions in favor of a standard deduction is drawing fire from some quarters. They point out that living costs vary around the country. For example, the Bur eau of Labor Statistics estimates each year what it takes for a low, intermediate or high-budget family of four to live comfortably in various sections of the nation. Low- income families need $8,971 in Dayton, Ohio; $8697 in Nashville; $8,902 in Orlando; $8,412 in Austin, Texas; and $8588 in Baton Rouge, Louisiana. The same family needs $10,005 in Boston; $10,266 in New York; $10,209 in Seattle; and $10,009 in Los Angeles. These discrepancies disturb some critics of the Carter plan. Ronald Pollack is director of the Food Research Action Center, the legal arm of the anti-hunger movement, so called. It was in part responsible for preventing both Gerald Ford and Richard Nixon from cutting back the food stamp program in recent years. Mr. Pollack, just to start with, how will those regional disparities in living costs affect the working out of the Carter plan?

RONALD POLLACK: The major effect is going to be that people, particularly in the Northeast, are going to suffer very vast reductions in assistance. Under the Carter plan 49.2 percent of the people currently in the program are either going to be eliminated or find their benefits substantially reduced. By contrast, only fourteen percent of the people currently in the program are going to receive increases in assistance. So that particularly in areas that have high shelter costs -- high costs for fuel, high costs for rent -- there`s going to be a very substantial reduction in assistance.

MacNEIL: It`s not so much the differences in cost in food around the country as difference in cost in these other things that you mentioned: housing, rent, power, electricity.

POLLACK: You will note when you look at the effect of the Carter plan that the places that are hurt the most are the places that are in the northernmost parts of the country. These are the places that have high fuel costs, these are the people who are laying out a tremendous amount for shelter; and by converting from an itemized deduction system to a standard deduction system which unfortunately, I think, is terribly inadequate, unlike Senator Dole`s bill, which I think is basically a very good bill, I think that a lot of people are going to be hurt.

MacNEIL: I see. Just to underline this point, it`s because the incomes of people in areas like the Northeast or Seattle or Los Angeles appear to be high -- they can still be on the poverty level be cause the living costs are higher there than they are in some other places in the country, and therefore reducing those by the standard deduction will still not qualify them for the new income level.

POLLACK: Even people who have low incomes -- let`s say people who are below the poverty line -- they currently receive a very high itemized deduction. That itemized deduction is high because they are per mitted to reduce their effective calculated income by the excess shelter expenses that they have. And so that even for poor people below the poverty line, they receive greater benefits under the current system because the itemized deduction system is far more generous than the standard deduction system would be under the Carter administration.

MacNEIL: Now, your organization has been in favor of ending payment for the stamps for a long time, so I assume you`re in favor of of that.

POLLACK: I agree with Mr. Greenstein. That has got to be the cornerstone of any reform of the food stamp program, and I think that has got to be the highest priority.

MacNEIL: What other faults do you find in the Carter proposal, other than this regional disparity?

POLLACK: I`m deeply concerned that what the Carter administration wound up doing is it innovated something which of course Senator Dole really pioneered a few years ago, but it did something very brave by proposing to eliminate the purchase requirement. I think that`s to be commended. Unfortunately, what the administration has wound up doing is it`s subsidizing the cost of that important innovation on the backs of current recipients. The elimination of the purchase requirement has a price tag of approximately $450 million. The administration has decided that despite that very important proposal it wants to make sure that not a penny extra is spent on the program than current services. So in order to subsidize the elimination of the purchase requirement, which all of us agree should be the highest priority, it has subsidized it on the backs of the current recipients and as a result there is going to be a vast cutback in aid to people currently in the program. Seven million people who are currently in the program will either have their benefits totally terminated or reduced.

MacNEIL: Seven million people, you say.

POLLACK: Seven million people. 1.5 million people will have their benefits terminated; an additional 5.5 million people will have their benefits reduced. In essence, what the administration is doing is it`s robbing Peter to pay Paul, and I don`t think that`s very good. And let me just further explain that. The current program essentially is calculated to provide people their basic subsistence needs. Now, I would argue that it doesn`t quite do that, but I think most people in the program feel that it provides your basic subsistence or something just below that.

MacNEIL: You`re not going to starve if you`re on that program, in other words.

POLLACK: That`s correct. Now, if the program does at this point provide bare subsistence and in order to subsidize the elimination of the purchase requirement a large number of people are going to have their benefits reduced, it says, in effect, people currently in the program are going to be consigned to hunger -- will not get decent assistance; and I think that should be changed. The administration, by the way, has found $300 million new money that`s available for the program. They had estimated that $5.7 billion would be spent on the program next fiscal year; they now estimate that $5.4 billion is going to be spent in the program in the next fiscal year. I think that $300 million should be used to restore some of the cuts that the administration proposes in order to implement elimination of the purchase requirement.

MacNEIL: Okay. We`d like to get into the costs in a moment, but first of all let`s get another view. For a conservative critique of the Carter program let`s turn to Clifford White, a legislative assistant at the American Conservative Union and a former staff member of former Senator James Buckley. Mr. White, what do you feel about the Carter proposal?

CLIFFORD WHITE: I think President Carter has put forth a proposal which is nothing more than really a surreptitious attempt to circumvent the true purpose of the food stamp program, and that is to be sure that every needy American is able to receive an adequate diet. And any movement toward cashing out that program is an attempt to destroy the program and make it into nothing more than another cash welfare program. The costs are going to increase and the aid to the truly needy will not increase. I don`t think that President Carter has addressed himself to the overall and more important problems in the program. He hasn`t addressed himself to the fact that there`s no asset limitations in the current program. One can own a home of about any value and still be eligible for the program; one can own antiques and still be eligible; you can drive a Cadillac and still be eligible. The President says that he`s going to standardize the deductions. After that`s done, still one who earns 175 percent of the poverty level income would still be eligible. Now, Mr. Greenstein has told us tonight that a lot of needy people aren`t able to put up the front money to buy their food stamps; for example, they`d have to pay $100 to get $166 worth of stamps. This isn`t really true, because there`s a variable purchase requirement in the program so that you don`t have to buy all your stamps at once -- you can do it at different times. Strikers will continue to be eligible under the Carter proposal, students will continue to be eligible. Sixty-five percent of the recipients of food stamps in Madison, Wisconsin, are students. I think that`s collegiate oppression of the working class.

MacNEIL: Can I ask you on one of the specifics, Just to go back on that; why, Mr. White, would you like the purchase requirement retained? What does it achieve?

WHITE: The purchase requirement is a bit more of an insurance that the food stamp program will maintain its integrity, which is to insure that this program will be used to insure that the needy do have an adequate diet. Now, if you were to eliminate the purchase requirement it is actually a move toward cashing out the program.

MacNEIL: The people can spend the money on what they like, rather than on food, you mean?

WHITE: Correct.

MacNEIL: Senator Talmadge, the chairman of Senator Dole`s committee, says that the Carter plan is the first step towards destroying the program and he`s going to put forward his own bill which would keep the present system for another year and then just convert the whole thing to cash grants thereafter. Are you in favor of that solution?

WHITE: Well, I would hope that it wouldn`t come to that. No, I would not be in favor of that. Actually, I think that what President Carter has done is tried to put a bandaid on a cancer -- and also, I would say, Senator Talmadge -- and we have to look at the problem of setting an asset limitation, we have to look at the fraud situation; about ten percent of food stamp payments go to those who are ineligible. I think that there ought to be more requirements on the sorts of food one can buy.Currently you can buy ice cubes, cooking wine, any kind of junk food with food stamps, and that`s just not fair to the working people who have to subsidize this program.

MacNEIL: Thank you. Jim?

LEHRER: Senator Dole, I think it`s only fitting and proper that you respond to the conservative complaints here. First of all the asset limitation question.

DOLE: Well, I`m not certain what the administration provides, but the Secretary of Agriculture can set an assets limit, and we`ve encouraged that. We grappled with that last year until we finally gave up on it and went back to the Secretary and gave him the authority to set a limit. We don`t want people with a lot of assets qualifying. We`ve heard all the horror stories about some airline pilot qualifying for food stamps, so we want an assets limitation.

LEHRER: Is it in this, Mr. Greenstein?

GREENSTEIN: There`s an assets limit in the current regulations, and in our bill we would give the Secretary authority and Secretary Bergland has indicated he wants to tighten upon that.

DOLE: He can tighten up on the present law.

GREENSTEIN: I think Mr. White has misrepresented the current assets limit. There`s a $1500 assets limit per household. If you have more than that in the bank or stocks or bonds, you`re out. Now, we find in our surveys that fifty percent of the households have virtually nothing in the bank, and over ninety percent have less than $500.

LEHRER: Cars and houses are not considered.

GREENSTEIN: Let`s take the houses. Less than ten percent of the people own their own homes. Of those who do, a large portion of them are elderly. Do we want to knock out somebody who`s an elderly person who bought a home for $20,000 thirty years ago when they were working and just because land values are up their home is worth a little more now?

LEHRER: Do you want to do that, Mr. White?

WHITE: I think that the situation is that the regulations which the Department of Agriculture has set have been extremely lenient. Now, in the SSI program, the Supplementary Security Income program which affects the elderly, there`s a limitation that the value of the home cannot be, I think it`s $30,000.

GREENSTEIN: That`s incorrect, Mr. White. The Congress passed a law last October first -- Senator Dole will remember this -- and the Congress, on an amendment by Representative William Ketchum, a conservative Republican from Southern California, removed any limit on homes in the SSI program because they found that it was (a) unfair to the elderly, and (b) it cost more to administer that amendment than it saved in getting out the few people with expensive homes.

LEHRER: Senator, to the general point that Mr. White made that this was a movement toward a cash welfare system and this was not the way to go, how do you respond to that, sir?

DOLE: I don`t agree with that, and I have great respect for Mr. White and the view he represents as well as Senator Talmadge -- he says we ought to just cash this out or extend the program for another two years and then we`ll have welfare reform, we`ll add this in the form of cash; and I don`t believe that`s a direction we should go. I find myself more in agreement with the Carter program, of course, than I do the program that Mr. White advocates or others with that view. I just think we`ve got to come back to one basic question; do we want to help poor people? Do we want to help people who need food? And we can argue all day about assets tests, but as Bob Greenstein has said, we`re talking about people who don`t have any assets. And we can find some horror stories, and we`re going to be told again about somebody who owns a big farm and qualifies for food stamps, but we`ve got to face the basic question: do we want to help the poor? And I think most of us do, and I think Mr. White does, Senator Talmadge does -- certainly the administration does -- and so how do we do it? We`ve had an imperfect system so far. We want to tighten it up, we want to make it harder for those who shouldn`t be in the program to be in the program. But it`s going to cost money.And I agree with Mr. Pollack, I think we ought to take a look at some of the regional areas. In fact, in our proposal...

LEHRER: What about that regional question?

DOLE: We have a provision. Our bill would authorize the Secretary in a case of emergency to add another $50 deduction. If you had a severe winter, a severe hardship of some kind, he can increase it by $50. We think that might be a good point; it wouldn`t cost a great deal of money.

LEHRER: Mr. Greenstein, that was the most serious criticism that Mr. Pollack had of this plan, that it discriminates against people who live in the North or where the cost of living generally is higher.

GREENSTEIN: We wrestled with this problem. I think it`s probably the most difficult, serious problem in coming up with a food stamp plan. There are a couple of other aspects to this that we need to look at. Welfare payments in- the Northeast are considerably higher than they are in the South. If you look at the Deep South, in Mississippi the payment is still at a maximum -- $60 or $70 a month for a family of four, a mother with three children. If we look at people with earned income, the average food stamp household with earned income in the Northeast has over $500 a month in income, but in other parts of the country it tends to be $300 or $350 a month. Part of what we`re doing is trying to get more income to those poorer people in the other regions. And I agree it is tough on the Northeast, and we don`t have a closed mind on this; we`re not unwilling to look at various modifications that the Congress will develop -- we would look at that. But there`s one point that has to be made. The question is whether we`re talking about modifying it regionally so that when the Northeast gets more, other areas get a little less, or whether we`re talking about what I think Mr. Pollack wants, which is adding more onto the Northeast and keeping the same for everybody else.

LEHRER: Is that correct, is that what you really want, Mr. Pollack?

POLLACK: I think there are two problems, and I think both problems need to be rectified. First, we have a very substantial flow in the administration`s bill away from the Northeast to the Southeast, and I think it does it in an inequitable fashion and it`s going to hurt people very substantially in the Northeast.

MacNEIL: We have a few seconds. Could you make your second point quickly?

POLLACK: The second is that current recipients throughout the program are basically getting bare subsistence, and I think it`s unfair, it`s inequitable, I think it`s wrong to try to subsidize elimination of the purchase requirement, which is basic, on the backs of the current recipients, thereby consigning them to hunger.

MacNEIL: Thank you very much. Sorry we have to leave it there. Thank you all, gentlemen, very much, in Washington. Good night, Jim. Thank you, Mr. Pollack. Jim Lehrer and I will be back on Monday evening. I`m Robert MacNeil. Good night.