and we want to see if they work or not, before we pass new provisions that perhaps will not be necessary if we give the program a little bit of stability. We want to see whether or not all of those steps Conqress has taken to tighten it up and make it a more efficient program, whether they will have that effect. And for that reason, as well as the reasons that we have already enumerated and illustrated so well, for all of these reasons, we want to urge the committee not to make massive cuts in this program, not to hurt Delton Ponder and his family, not to hurt that family in Oklahoma, not to hurt that elderly woman in Arlington and the other people you heard about this morning; not to take food away from them, not to go back one more time for the fourth year in 5 years and say that we are going to throw this program into a massive upheaval once again. We think this is a program that works. We have seen the evidence it works. We know the people for whom it makes a palpable and critical difference in their lives. And now we would like to see whether or not we can all agree to let the program work as it was intended to work, and see if it can go on doing its job. The CHAIRMAN. Thank you very much. You are an eloquent lady. We appreciate your patience in waiting here this long. Our final witness-and I think he ought to get some sort of reward for patience and understanding, Mr. Bill Shaker, executive vice president, National Tax Limitation Committee. The committee, I might say here, has received a statement from the commissioner of agriculture from the State of Texas, the Honorable Reagan V. Brown. Commissioner Brown comments on several general aspects of farm and food policy that directly concern our work at this time. Without objection, Commissioner Brown's statement will be made a part of the permanent record.1 Thank you, sir, for your patience. It has been a long morning. You may proceed, sir. Any formal statement that you have will be printed in the record. If you would like to summarize it, fine. STATEMENT OF WILLIAM H. SHAKER, EXECUTIVE VICE Mr. SHAKER. I will kind of skip through then the formal statement that I have written.2 I am William H. Shaker, executive vice president of the 500,000member National Tax Limitation Committee. We wish to thank the Senate Agriculture Committee for inviting us to appear before the committee today. The original 1981 budget projected the cost of the food stamp program at $10.3 billion. And there is a 20-percent increase projected for fiscal year 1982, as you can see from the chart before you. The administration is proposing cuts of $2.304 billion. We support this level of cut because we support the entire administration package of spending cuts. We believe it essential that the integrity of the entire package be maintained, because that is the way to 1 See p. 339 for the statement of Commissioner Brown. 2 See p. 343 for the prepared statement of Mr. Shaker. restore economic stability and reduce the need for an ever-increasing level of transfer payments in this society. A recent poll of our members, by 57 percent, demands as their high priority that the food stamp program either be eliminated or significantly reduced in costs. For starters, it is imperative that the waste and fraud programs inherent be eliminated immediately. These feelings should not be misinterpreted. Our members are not mean spirited. But all problems in society need not be necessarily solved by the institution of the Federal Government. The Federal Government has, to a large extent, preempted the charitable functions of our society. The Federal Government, because of its large and impersonal size, is not the most effective institution to provide this function in all cases. By the same token, the administration is correct in that a safety net should be provided by the Federal Government until such time that other institutions in society develop to fill the gap. Some wealth transfer programs run by the Federal Government are simply duplicative. A large number of NTLC members are also union membersblue-collar workers, who carry lunch buckets to work. One of their biggest complaints involves the hot school lunch program that they pay for with their tax dollars. These blue-collar workers simply don't understand why kids can't carry their lunch to school in lunch pails or brown bags like they do. Far less controversial than eliminating either the food stamp or lunch programs would be to eliminate the overlap that presently exists between the two. The Congressional Budget Office has estimated that 43 percent of the households in the food stamp program also participate in the school lunch program. The Congressional Budget Office concluded that we are subsidizing four meals a day for 6.8 million children. In any case, eliminating the duplication would save $600 million annually. Nine months ago, our committee commissioned a study, with an eye toward developing a methodology for identifying excessive Government spending. We released this study in book form, "Meeting America's Economic Crisis: A 'Road Map' to Emergency Federal Spending Reductions," on February 15. The study drew from the expertise of some 50 people from government, academia, business, as well as private institutions that monitor government activity. Writing in the foreword to "Meeting America's Economic Crisis," David Stockman said: The authors of the NTLC study have some realistic advice for those whose programs will be cut as well as for those who must do the cutting. The special interests can ignore the present economic situation and the voters' mandate of last November. They can continue as part of our problem-lobbying for things as they have been.* Our study developed a neutral set of criteria by which to judge programs. We tried to apply these criteria, without prejudices, across the whole budget. The more of these criteria a program or group of programs violated, the greater the need for a careful review of that program. With the help of a matrix based upon these criteria, we identified 83 specific expenditure control opportunities in all areas of the budget. We felt that use of such across-the-board criteria represented a practicable and fair methodology of budget control. For the same reason, we feel that the suggested cuts must remain in a package. The criteria used in our study are: (1) Tendency toward fraud and abuse; (2) tendency toward error, inefficiency, and waste; (3) duplication and/or lack of coordination with other programs; (4) failure to satisfy cost-benefit tests; (5) unjustified expansion in benefit eligibility; (6) absence of a uniform national benefit; (7) impractical or unattainable goals; and (8) program better performed by State, local, or private agencies. I want to talk a little about food stamp eligibility. Several parts of the food stamp program fail to satisfy some or all of the first five criteria. The first and most dramatic aspect of the food stamp program is its size. In March of last year, 21.7 million Americans participated in the program, which is up from 15.3 million in October of 1979. According to the Congressional Budget Office, the food stamp program has grown from 1,350 percent between 1970 and 1980. Almost 1 in every 10 Americans receives food stamps. This figure does not include those who technically could qualify for food stamps but for some reason have not collected them. Part of the reason for the sharp increase is that net rather than gross income determines eligibility. The law excludes so many items from gross income that the administration has suggested applying an upward limit for eligibility of 130 percent of the poverty line. Our study proposes that Congress could further tighten eligibility here, without hurting the truly needy, by placing the limit at the poverty level plus a flat 15-percent allowance for work-related activities. We have some comments regarding the food stamp purchase requirement, which I won't bother to read. I would just comment in passing that the caseload has increased tremendously since that requirement has been eliminated. One serious problem which unfortunately besets the food stamp and many other Government programs is fraud. In 1977, a GAO audit found $500 million lost each year through food stamp errors, misrepresentation, and fraud. In some poor areas, food stamps have become alternative to currency. Just upon reflection, one wonders, since we do have a form of currency, why have we replaced that with another form of currency? I think the same sort of comment would apply to the discussion about providing energy stamps. Dollars seem to work very good as a medium of exchange. The total estimated savings from all these recommendations equal $2.238 billion. The original calculations were for fiscal year 1981, although that total plus inflation, where applicable, should apply to the fiscal year 1982 budget as well. The committee will probably have noticed that there are considerable similarities between the administration's suggested cuts and ours, although we suggest some cuts they do not and vice versa. We certainly do not oppose any of their recommendations, pro rating the first month's benefits seems especially reasonable, although we do urge the committee to consider some cuts in addition 79-755 0 - 81 - 6 to those the administration suggested, especially in the area of tighter income limits for eligibility. I want to talk a little bit about the poverty line. Few will argue that society must help the truly needy-but it is important that this committee as well as the administration give some thought as to who the truly needy are. The poor, according to the U.S. Government's definition of poverty, you will always have with you. We continue to hear that we still have as large a percentage of people in poverty today as we had at some specific time in the past. This is clearly true because poverty continues to be defined as the low end of the bell distribution curve. In 1941, the poverty level for a family of four was $836, $5,595 in 1980 dollars. Yet, the Department of Labor statistics defines the poverty line in 1980 as $8,410. Furthermore, the U.S. Department of Labor statistics defines the minimal low standard of living for 1980 as $13,918. Those in the minimal low standard of living in 1980 would have been in relatively good shape economically in 1941. The choices this committee and others throughout the Congress will face over the next few weeks will test our character and our wisdom. That we are undergoing a period of some economic difficulty few doubt. But the solution for those difficulties has been the occasion of much debate. The President has proposed a package of spending cuts. They seem to NTCL to follow the principle of fairness and to cut according to specific criteria. The American people believe these cuts represent a good faith effort to address our problems. Congress can unify our country over a serious attempt to cure our economic ills and contain our everexpanding Government. But for this to happen, each congressional committee must avoid overprotecting the programs within its purview. We are confident that you will speak out against any proposal the consequences of which you deem to be disastrous. But if a given cut exposes you to the pressures and passions and politics, now is the time for character and wisdom. The need for character is obvious. While wisdom is required to understand that we must take the risk to escape our economic troubles, that successful opposition will not only lead to an increase in the scale of Government but also eliminate our chances for unification in opposing those troubles. And finally that some of those who are tired of rowing will naturally gripe if we quit helping them row. But we must remember through all this the alternative of a decaying economic situation, unable to save even our drowning citizens. We need responsible cuts now to enable us to meet our responsibilities in the future. The answer exists. We have heard a lot of testimony on the increasing number of people that need food stamps, that need the transfer payments. Of course, this is true, because our economy is in the doldroms. And we have disaster just over the horizon. That is why it is so important that the economic stability of the country be addressed. And we think that the answer is a productive and revitalized economy, not just the mere continuation of trying to address the symptoms. Thank you. The CHAIRMAN. Thank you for a very fine statement. You undoubtedly will receive some written questions from Senators who because of conflicts with other committees are not here today. So we do thank you for your testimony, and especially for your patience. If there is no further business to come before the committee, we stand adjourned. [Whereupon, at 1:40 p.m., the committee recessed, to reconvene at 9 a.m., Thursday, April 2, 1981, in room 324, Russell Senate Office Building.] |