Video: Obama Ag Secretary says rise in food stamps is putting people to work

posted at 1:25 pm on August 16, 2011 by Ed Morrissey

Secretary of Agriculture Tom Vilsack told MSNBC’s Morning Joe that the Obama administration has a jobs program already in place — and it’s food stamps. When asked about new numbers that show one in every seven Americans now receiving food stamps from the federal government, Vilsack said that’s good news. Food stamps create jobs, Vilsack insisted, and managed to even come up with a new multiplier effect number:

So here’s the question. If food stamps create jobs, like Vilsack says here, and we’re putting record numbers of Americans on food stamps, then why aren’t we seeing record job creation? If every dollar spent on food stamps creates $1.84 in production, as Vilsack argues, and the number of food stamp recipients keeps rising, then why haven’t the GDP numbers reflected that fabulous growth?

There are two answers, the first of which is two words: opportunity costs.  The supposed multiplier effect does not take into consideration the cost of taking capital from the private sector, where it can be put to use for actual growth and job creation, for use by the government.  In this case, the opportunity costs have a heavy burden of interest, since we’re not taking money from current capital but from future capital, thanks to runaway deficits.  Not only does this make less efficient use of capital, it underscores the signals to investors that the US government will practice sharply confiscatory tax policies in the future, which stunts investment and produces … well, the stagnation we’re seeing right now.

The other answer?  The multiplier effect is completely bogus.  For one thing, much of the money gets absorbed by the government bureaucracies that manage these programs.  Second, as I alluded earlier, the evidence we see all around us shows us that we can’t get economic growth through government welfare programs.  If what Vilsack said was true, we’d be better off seizing all income and handing out food stamps.

There are good humanitarian and social reasons for safety-net programs like unemployment insurance and food stamps, but economic growth isn’t one of them.  The rise in both are indicators of failing economics.

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