To its considerable credit, in its latest assessment of the Turkish economy, the International Monetary Fund (IMF) could not have been more explicit in its calls for a fundamental redirection of Turkish economic policy to address the country’s major economic vulnerabilities. President Erdogan would do well to heed those warnings if Turkey is to avoid yet another exchange rate crisis when global financial markets become less benign than they are today.

The IMF is warning Turkish economic policymakers not to be lulled into a false sense of security by the current relative calm in the Turkish exchange rate market. Rather, the IMF is suggesting that this calm might be the result of favorable global liquidity conditions. It is also urging Turkey to take advantage of this calm to strengthen its defenses against a renewed attack on its currency.

The IMF’s main concern is that Turkey’s aggressive interest rate reduction policy and its expansive budget policies could once again draw attention to the country’s economic vulnerabilities in a more challenging global liquidity environment. These vulnerabilities include a very low international reserve level, a very large private foreign exchange debt, and very large external financing needs.

Sadly, all of the indications are that President Erdogan will not heed the IMF’s warnings as he sprints for short-term economic growth at the cost of future economic stability. Not only has he fired his central bank governor and has made his son-in-law Turkey’s finance minister. He has been adamant in his highly unorthodox view that far from helping to contain inflation, high interest rates are the cause of inflation. He also has not seemed to grasp the idea that fiscal policy discipline is needed if the country’s external accounts are to be placed on a sustainable sounder footing.

All of this matters importantly for the global economic picture. Unlike Argentina, which recently defaulted on around US$100 billion in external debt, the Turkish corporate sector has around US$300 billion in external debt. Worse yet, the bulk of that debt is denominated in US dollars. This heightens the chances that in the event of another exchange crisis, Turkey could have trouble in servicing its external debt. Such a wave of corporate debt defaults would be the last thing that an already troubled world economy now needs.

Turkey should heed the International Monetary Fund’s warnings
John Konicki

Do economists still have a place in policy debates? Did Milton Friedman’s proposals create modern inequality? And should our politicians scrap economic narratives in order to create a more equitable world? Here to consider these questions is Binyamin Appelbaum, the author of the newly released The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society.

Binyamin Appelbaum is a member of The New York Times editorial board, and previously served for nine years as a Washington correspondent for The Times, where he covered the Federal Reserve and other aspects of economic policy. He is a recipient of both the Polk Award and the Loeb Award, and was a finalist for the Pulitzer Prize in public service. Below is an abbreviated transcript of our conversation. You can download the episode here, and don’t forget to subscribe to my podcast on iTunes or Stitcher. Tell your friends, leave a review.

Pethokoukis: What is the period of time that you would describe as “The Economists’ Hour,” and how was it different than what came before?

Appelbaum: This period is a revolution that begins in the late 1960s where economists become increasingly prominent in policymaking, specifically in advocating for an approach of stepping back and removing the hand of government from the economy in favor of markets.

The general rise of economists doesn’t begin that much earlier. It’s only during the Great Depression that economists even begin to measure the size of the American economy, and it’s only in the wake of World War 2 that the government begins to take seriously the idea that it can manage economic growth.

So you start to see economists in government, but not until the late 60s do they achieve this really central, primary position in the policymaking process. That happens to coincide with a particular type of economic philosophy which held that government should unhand the economy.

So there seem to be a lot of things that happen in that “hour” that you don’t think were good for us. But didn’t this era of economics also lift around a billion people out of extreme poverty across Asia?

Absolutely, and I don’t want to minimize that in any way. A turn toward more market-based policies was enormously successful in reducing abject poverty and lifting people’s standard of living. That is indeed part of the story.

However, I don’t think that there had to be a tradeoff between the increased prosperity of the developing world and the stagnation that we’ve seen in the developed world. For many people in the latter, the economy has stopped getting better, and problems like inequality have skyrocketed.

The economic problems that seemed so all-encompassing in the 70s were ended after those policies were implemented, though. Do you think that we have reason to revisit that legacy?

Yes. There’s a story in the book about Juanita Kreps, the Commerce Secretary in the Carter administration and an economics professor at Duke University. She resigns from the Carter administration because she’s so frustrated by the failure of their economic policies, and she resigns from Duke because she doesn’t know what to teach her students anymore.

That’s where we were — the conventional Keynesian approach to economic policy appeared to have failed. The economy was in trouble and there was a need for something new, so alternatives offered by figures such as Milton Friedman had an appeal.

There’s a portion of this change that’s just an unmitigated victory; lower taxes and less inflation was good. And then it kept going, and by the 1990s you had Alan Greenspan testifying  that 1 percent inflation is better than 2 percent inflation, while privately telling his colleagues that he has no idea if that’s true.

That’s a revolution that’s gone too far and coming at the expense of a higher unemployment rate.

U.S. President Donald Trump welcomes economist Arthur Laffer with Vice President Mike Pence as he participates in the presentation of the Presidential Medal of Freedom to Laffer in the Oval Office of the White House in Washington, U.S., June 19, 2019. REUTERS/Jonathan Ernst – RC17241BFEF0

How did airline deregulation serve as an example of this?

In the mid-century, everything about the airlines was regulated — from where you flew to how much you paid. Alfred Kahn was put in charge of deconstructing that system, and for the rest of his life he felt great about being on crowded airplanes because he thought it was the symbol of his victory; airplanes were half-full under regulation and now they’re 80-90 percent full. Prices are also much lower — the average American flies eight times more often today.

The downside is that the government believed carriers would compete on even footing, and so they didn’t worry about consolidation. We eventually ended up with only four airlines, and they all magically charge the same price for any available flight. So the failure to enforce antitrust means has that the market has broken down, and for the first time in history it’s cheaper to fly in Europe than in the United States. That’s an example of how that evolution just keeps going past the point where it’s good for us.

Is the solution to throw out the technocrats, like many politicians in the US and Europe have done, because they’ve shown that they can get things very wrong?

No, because some of our alternatives are terrible. Right now, we have this “turtle politics of nationalism” where you get into your shell and hope everything goes away. That’s not a great response. The point of this is not that we don’t need economists. Rather, we need better economists, and we need other people to be directing the efforts of economists.

William McChesney Martin, who was the chairman of the Federal Reserve in the 1960s, told a visitor that the Fed kept its economists in the basement, because they ask really good questions but they don’t know their own limitations. That’s not a bad summary of economists. Someone needs to make sure that they’re working for the public good.

5 questions for Binyamin Appelbaum on how economists have shaped our world
James Pethokoukis

Prime Minister Boris Johnson acted unlawfully in suspending parliament, says the UK’s high court.

While the PM may have broken the rules, he did so to push through a no-deal Brexit on October 31. This, while painful, would at least have started to resolve the crisis engulfing British politics. Now there will almost certainly be further delays over Brexit, because a majority of British MPs do not want to leave the EU and they have the upper hand once again. But they cannot say they are defending democracy and then overturn a lawful vote to leave the EU — regardless of the sense of that idea.

The EU will also continue to push for delays. I always shook my head when Italy or Greece repeatedly broke borrowing, deficit, or monetary rules and were forgiven by the EU. Maintaining the system, even at the cost of any and all internal rules, was always preferable to sanctioning a member state. The UK is no exception.

As I see it, there is likely no deal that will satisfy Parliament, the EU, and the British people. The only possible way is to sacrifice Northern Ireland to become a de facto part of Ireland, and the Northern Irish Protestants and especially the ulster paramilitaries (that still exist under the surface) will not allow that to happen without a fight — and I do mean an actual fight, with bombs and guns.

I therefore suspect that Britain may well join the ranks of nations that will stay in a state of weird EU-rule-bending limbo for years, even decades.

Brexit delay is almost inevitable now, and perhaps indefinite
Nick Pompella

Brazilian President Jair Bolsonaro has gone about shifting, defanging, and interfering with the nation’s architecture for fighting crime and corruption in recent months. With these moves, Bolsonaro risks losing the core of his general appeal, or what little still remains of it amidst falling poll numbers — his tough-on-crime, anticorruption brand. Worse, these moves play into his opponent’s more sinister interpretation that Bolsonaro is putting his finger on the scales of justice in an anticorruption case of great interest to him.

One of Bolsonaro’s sons, Senator Flávio Bolsonaro, is ensnared in a serious money laundering investigation that threatens his father’s reputation — and perhaps his entire presidency. In this context, President Bolsonaro’s decision to reshape the machinery for fighting crime and corruption has given his opponents the ability to call into question his neutrality and commitment to the rule of law.

Brazil’s president Jair Bolsonaro arrives ahead of the 74th session of the United Nations General Assembly at U.N. headquarters in New York City, New York, U.S., September 24, 2019. REUTERS/Yana Paskova

Bolsonaro’s government has overhauled the Council for Financial Activities Control (COAF), an agency that is critical to both the fight against transnational organized crime and political corruption in Brazil. Under the reorganization plan, COAF moved from the Ministry of Finance to the Central Bank and its previous director was fired. Moving the COAF under the auspices of the Central Bank could make it more difficult for the investigatory agency to coordinate with law enforcement agencies and potentially more open to political influence. The more cynical interpretation is that this is relegating the COAF for being the first institution to flag suspicious financial transfers from Flávio Bolsonaro’s bank accounts last year — the starting point for the ongoing investigation.

Second, Bolsonaro is under fire for his selection of Augusto Aras as Brazil’s next Attorney General. The position is normally insulated from political influence in the country’s Public Ministry, and for nearly 20 years, Brazilian presidents have followed a carefully crafted process involving a list of candidates vetted and approved by the National Association of Prosecutors for ensuring its independence. When Bolsonaro announced his selection, he likened his relationship with Aras to that of matrimony and stated that what he valued most was loyalty. “I need someone who I can trust. If it doesn’t work out, we divorce,” Bolsonaro said. The more nefarious interpretation holds that the “alignment” between Bolsonaro and his nominee for Attorney General raises questions about Aras’s ability to complete a rigorous and independent investigation of Flávio Bolsonaro’s alleged crimes.

Third, Bolsonaro also ordered an unusual change in the leadership of the Rio de Janeiro Federal Police. While he claims this change was a question of “productivity,” the less charitable interpretation is that this is a precautionary measure, since the Federal Police of Rio de Janeiro have jurisdiction over Flávio’s case because he was a state official during the period of the alleged crimes.

Unfortunately, under the guise of a Law Against Abuse of Authority (Lei de Abuso de Autoridade), elected officials in Brazil’s Congress have also reversed some of the gains made in fighting corruption and increased legal protections for themselves. While Bolsonaro bowed to the intense pressure to veto some of the more extreme elements of the bill — time limits on sensitive investigations and a prohibition on the use of handcuffs in arrests, to name a few of the most absurd — Congress may reinstate them by overriding his veto.

It is unclear, at this point, what kind of lasting impact these moves will have on the trajectory of rule of law and anticorruption efforts in Brazil. Polling numbers reveal that, although he is at the lowest point in his brief presidency, Bolsonaro retains the support of those who despise the leftist Workers Party (PT) and continue to believe he is an anticorruption crusader. Meanwhile, rather than develop their own agenda, Bolsonaro’s opponents in the PT remain mostly enthralled with the idea of reversing the corruption conviction of former president Luiz Inácio ‘Lula’ da Silva, especially in light of the potential disclosure of confidential information by the judge in the case. Even within this context, Bolsonaro’s moves are inadvisable and risk giving his opponents fodder to attack his political brand; in a country like Brazil, they have also given rise to all-too-familiar charges of corruption and collusion to protect his son.

Brazil’s Bolsonaro Continues to be His Own Worst Enemy
Ryan Berg

1. Chart of the Day (above) shows the 4.5X (and 350%) increase in New Mexico’s crude oil production over the last 8 years, from 200,000 barrels per day (bpd) in 2011 (and about the same level as for the previous 30 years) to nearly 900,000 bpd in recent months this year. For that increase, we can credit the revolutionary technologies of hydraulic fracturing and horizontal drilling, and the state’s proximity to the Permian Basin in West Texas, one of the most prolific oil fields in the world. Current production in the Permian Basin is more than 4 million bpd and about 25% of that production is across the Texas border in New Mexico.

2. Free College Tuition in New Mexico. As the New York Times reported yesterday in an article titled “New Mexico Announces Plan for Free College for State Residents: Tuition to all state colleges would be free for students regardless of family income,” “New Mexico plans to use climbing revenues from oil production to pay for much of the costs.” In other words “fracking = increased oil production = increased state tax revenues = free college tuition.”

3. Venn Diagram of the Day I (above) based on Item #1 and Item #2 above. Will progressive students in New Mexico refuse to attend tuition-free state colleges to demonstrate their opposition to fossil fuels?

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4. Venn Diagram of the Day II (above) inspired by yesterday’s protests in Washington, DC where “climate rebels” disrupted rush hour traffic, caused gridlock and shut down intersections across the District.

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5. Venn Diagram of the Day (III) above on the “neutrality” of public schools when it comes to political protests and allowing student to skip school to demonstrate for political causes.

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6. Huge Gender Disparity Again for the Math SAT. The College Board released data today on the 2019 SAT test that revealed the following outcome: For the highest SAT math test score range (700-800) there were 157 male high school students (127,392) for every 100 female students (80,974) that follows a 50+ year history of males significantly out-performing females on the Math SAT both for average scores (537 vs. 519 this year) but especially for scores on the high-end. But many feminist scholars remained unfazed and unconvinced by the evidence, e.g., “There just aren’t gender differences anymore in math performance,” says UW–Madison psychology professor Janet Hyde.

7. Inconvenient Climate Statement. A group of 500 esteemed scientists and professionals in climate science have officially notified the United Nations that there is no climate crisis and that spending trillions on a non-problem is “cruel and imprudent.”

8. Climate Quiz. Have you got your climate facts straight? Test your knowledge of climate facts and trends with this 12-question quiz.

9. Quotation of the Day, on The Tragedy of Greta Thunberg is from David Harsanyi writing for The Federalist:

We’ve finally convinced a generation of Americans to be Malthusians. It’s the fault of ideologues who obsess over every weather event as if it were Armageddon, ignoring the massive moral upside of carbon-fueled modernity. It’s the fault of the politicians, too cowardly to tell voters that their utopian visions of a world run on solar panels and windmills is fairy tale. It’s the fault of media that constantly ignores overwhelming evidence that, on balance, climate change isn’t undermining human flourishing. By nearly every quantifiable measure, in fact, we are better off because of fossil fuels — though there is no way to measure the human spirit, I’m afraid.

The emission cuts that environmentalists insist are needed to save the earth would mean economic devastation and the end of hundreds of years of economic growth. This is a tradeoff progressives pretend doesn’t exist. And Thunberg’s dream for the future means technocratic regimes will have to displace capitalistic societies. We can see this future in the radical environmentalist plans of Rep. Alexandria Ocasio-Cortez’s New Green Deal, one supported by leading Democratic Party candidates. It’s authoritarianism. There is no other way to describe a regulatory regime that dictates exactly what Americans can consume, sell, drive, eat, and work on. One imagines that most Americans, through their actions, will continue to reject these regressive ideas. One reason they should is so that Greta Thunberg’s generation won’t have to suffer needlessly.

10. Markets in Everything — Free Market Medicine. Walmart is bringing its “everyday low prices” to the private-sector health care market—with an emphasis on “prices.” And not just low prices, but fully transparent prices, see the price list here.

Tuesday afternoon links, mostly energy and climate edition
Mark Perry

Some people can quit smoking without aids, but most require nicotine patches or less harmful alternatives to cigarettes, such as non-combustible tobacco products and vaping products.

The choice depends on to whom the smoker listens and the smoker’s preferences. Patches are promoted by pharma companies and health advocates, and they’re inherently risk free when used as directed. Few health advocates promote alternative cigarette products, tending to focus on the negative when it comes to new products, especially those promoted by large tobacco corporations. But these products serve an interesting purpose when it comes to cessation.

Some smokers just want the nicotine fix (most via patch) and to disassociate themselves from smoking entirely. Others want a product that closely resembles the taste and ritual involved with smoking. Heat-not-burn e-cigarettes do this job best (note: these are not even sold in the US yet), although tobacco flavored vaping may be a choice for some. Others like vaping alternatives that involve holding a cigarette-like delivery system but taste nothing like a cigarette, and in this sense bubble gum or mango flavors may be their favorite choice.

While it is possible, even likely, that such fruit flavors may encourage young people to try these products, should we deny those trying to stop smoking from all of the choices possible? Finding a lower-risk alternative to smoking should remain the priority, since as much as any addiction — nicotine included — can be worrying, smoking is the main threat.

Smoking cessation products are diverse, so allow them all on the market
Nick Pompella

The following is the latest in a series of blog posts accompanying newly released Bradley Lectures Podcast episodes. The subject of this post is “Stork realities,” an episode examining Jonathan V. Last’s 2013 Bradley Lecture, “What to expect when no one’s expecting: America’s demographic crisis.”

The end is near — we just don’t know when, or why.

The version of the story told by, say, a candidate for the Democratic presidential nomination, might be that Earth cannot sustain even its current population, and we are ushering in the collapse of our own ecosystem by continuing to procreate. To stave off our environmental eschaton, we should “aid those organizations around the world that allow women to have abortions or even get involved in birth control,” in the words of Sen. Bernie Sanders (I-VT), “especially in poor countries around the world.” Making access to contraception easier as a means of curbing population growth is often a central component of environmentalist thinking.

Meanwhile, the notion that the United States (among other countries) should adopt a one-child policy akin to the one recently repealed in China has gained some advocates in academic circles. If indeed we only have 12 years to prevent a climate catastrophe, perhaps such a draconian response is warranted.

Whether by birth control or by law, the goal is the same. Fewer humans — the most prolific consumers of natural resources this world has ever known — would mean less environmental degradation and our last chance to save our world and the species that inhabit it.

On the other side of the argument, prophesying doom for a country (and world) losing interest in sex and fertility, is author Jonathan V. Last, whose book “What to Expect When No One’s Expecting” was the topic of his Bradley Lecture in 2013. Last is no less pessimistic than those fearing imminent climate catastrophe, though his timeline is longer and his predicted catastrophes are less arresting in nature.

Last paints a bleak picture of what could happen if we do not reverse low and decreasing birthrates. Social Security and other pension programs that rely on a continually expanding workforce would shrivel up and disappear, quite unjustly depriving the elderly of the money they put in as workers. Moreover, Last worries that our future is “worse than Idiocracy,” the 2006 cult film about a dystopian future dominated by the least Solomonic among us. “It’s anti-Darwinian,” because once the upper and upper-middle classes stop having children, the whole society follows. A world of low fertility is a world of less imagination, creativity, and human flourishing.

This last point caught the attention of demographer and AEI Fellow Lyman Stone, who joined the podcast to discuss Last’s lecture and Stone’s own work on the subject. Only an abundance of children, Stone argues, can adequately fight climate change. We need new technologies to reduce dependence on fossil fuels, reverse environmental degradation, and avert that very climate catastrophe that so worries Sen. Sanders. Human capital — the indomitable spirit of our youth — is not simply good. It is necessary. It is the only answer to looming crises.

The debate between the neo-Malthusians and the natalists raises fundamental and persistent questions about human beings’ role on Earth. Are we good, or are we liabilities to Mother Nature? Does this world exist for humanity to conquer and subdue, or are we just another species in an arbitrary and indifferent ecosystem?

It is possible that the natural world would be better off without Homo sapiens. To hear Last and Stone tell it, however, human beings in all our creative capacities can build a sustainable world of meaning that would be impossible without us. Our confidence in the next generation is first made manifest in the decision to beget it — we may be fulfilling our own prophecies of doom if we do not.

Tal Fortgang is a senior research associate at AEI’s Social, Cultural, and Constitutional Studies department and the host of the Bradley Lectures Podcast.

Natalism, fatalism, and everything in between
Tal Fortgang

Trade talks between the US and China are slated to restart in early October, and staff-level discussions began in Washington last week. At the heart of US negotiating priorities is a series of structural reforms in the deeply embedded Chinese technology mercantilist protection system. According to well-confirmed reports, Beijing initially agreed to a number of US demands, only to reverse course in May and back away from previous commitments.

China has also claimed that it is pursuing internal reform to level the competitive technology playing field. What follows is the first part of a review and analysis of how matters stand in China regarding three issues that constitute top priorities for the US and other Chinese trading partners. This blog will focus on intellectual property (IP) protection, while part two will look at forced technology transfer/investment policy and state-directed subsidies to priority high-tech domestic sectors.  In each case, the results are a mixed bag of some advances, inconclusive changes, and even backsliding.

There are two separate issues regarding China’s treatment of IP: economic espionage and outright theft; and the treatment of IP by Chinese laws, regulations, and courts. As pointed out in previous blogs, the history of Chinese economic espionage is one of promises — and broken promises. In 2015, after estimates of IP theft of more than $300 billion, President Xi Jinping gave his word to President Barack Obama that that in the future, the Chinese government would not “knowingly” allow the results of espionage to be passed on to Chinese high-tech firms to gain a competitive advantage.

After an initial decline in such activity, US cybersecurity firms have recently reported a major uptick in economic espionage attacks, with the Chinese Ministry of State Security again employing outside “entrepreneurs” to augment and disguise government activity. Beijing denies the recent charges, blustering that US claims are a “political tool” to thwart China’s economic development.

Foreign technology companies have complained for decades that China’s IP laws and regulations — and court system — were stacked against them. In recent years, partly as a result of outside pressure and the country’s climb up the technology ladder, Beijing has moved to reform both law and administration. In 2014, Beijing established for the first time a small group of specialized IP courts in Shanghai, Guangzhou, and Beijing, and there are plans to establish some 19 such specialized IP courts. More significantly, on January 1, 2019 a new specialized appeals court assumed jurisdiction over appeals from around the country regarding technology-related IP disputes.

The administrative court changes have been supplemented by important reforms — at least on paper — to basic trademark, trade secret, and licensing laws and regulations. This has resulted in some positive movement against local protectionism, and a bias against foreign firms. The aim is to strengthen the position of IP holders, and to institute meaningful damages and penalties.

It is too early to tell how much these administrative reforms will affect foreign firms — all of the courts are still working through complicated patent and copyright challenges, as well as adequate and fair remedies and penalties. And the reaction from foreign corporations has been mixed. A survey by the European Union Chamber of Commerce found that companies agreed that “visible progress” had been made on IP, but still 51 percent felt that enforcement was still woefully lacking.

As US-China trade talks restart, a checklist of Chinese structural ‘reforms’ to date (Part I)
Nick Pompella

The Great Financial Crisis soured China on American-style capitalism. And it seems to have done the same thing to America. U.S. policymakers are now embracing a sort of “capitalism with Chinese characteristics,” as The Financial Times puts it. They fear Beijing’s super-genius central planners will steal our economic lunch unless Washington adopts its own sweeping industrial policy. America must become more like China — at least a little bit — if it is to become great again.

Long-time Washington wonks have heard this story before. Back in the 1980s, Japan was the rising Asian power that had devised a superior economic recipe. And then America went on to dominate the global internet economy.

Now China is the nation that’s figured out how to do industrial policy right. But has it really? According to a new report jointly released by the World Bank, China’s Development Research Center of the State Council, and China’s Ministry of Finance, China’s “productivity growth has been slowing since the global financial crisis and has remained relatively low, despite signs of modest recovery in recent years.” Their solution: The Chinese government must become “less market interventionist and more market supportive.”

Similarly, America’s eager planners should be careful in their tinkering and worry considerably about unintended consequences. Should Washington spend a lot more on basic science research (while staying open to immigration and trade)? There’s a strong case to be made that it should. But should it also, say, try to spread the research wealth by creating mini-tech hubs around the country? Maybe not. First, government has a poor record at intentionally doing so. While military spending and the space program boosted Silicon Valley, there was no grand plan to create a Science City, as is recounted in The Code: Silicon Valley and the Remaking of America by Margaret O’Mara.

Second, be cautious in shifting innovation away from existing American tech hubs. In “The Effect of High-Tech Clusters on the Productivity of Top Inventors,” economist Enrico Moretti finds as follows:

“Clustering of the high-tech sector may exacerbate inequality in earnings and income across communities. At the same time it appears to be important for overall production of innovation in the US. Policies designed to spread innovation across communities, such as place-based subsidies that favor areas with little high-tech presence, need to take into account both benefits and costs.”

Don’t forget capitalism with American characteristics has been pretty successful so far.

How about capitalism with American characteristics?
James Pethokoukis

Federal law authorizing the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) includes specific eligibility standards — generally requiring low income and limited savings — to ensure benefits reach households truly in need. But as Angela Rachidi explained in a previous post, current law also permits states to confer “broad-based categorical eligibility” for SNAP benefits to individuals receiving support from the Temporary Assistance for Needy Families (TANF) program, a key cash welfare program designed to assist low-income families with children.

While linking eligibility for welfare and food stamps made sense when the two programs had similar eligibility standards, the 1996 welfare reform law fundamentally changed cash welfare in ways that have increasingly undermined that linkage. Today, not only can states provide many services other than welfare checks using TANF funds, but many people who receive help from TANF never have their income or assets checked to determine eligibility for those services. Receiving a flyer or referral to a 1-800 number financed by TANF funds — a “service” provided without regard to individual income or assets — has become enough to “confer” eligibility for SNAP.

This loophole has made a growing number of individuals eligible for SNAP who otherwise wouldn’t qualify based on federal eligibility criteria. As a congressional hearing demonstrated, even millionaires and lottery winners have been able to access food stamp benefits this way. And since SNAP benefits are 100 percent financed by federal funds, many state agencies have been only too happy to use this backdoor way of extending benefits to individuals with incomes and assets well in excess of what is prescribed in federal law.

In July, the US Department of Agriculture (USDA) proposed a rule to close such loopholes that allow, by their estimate, up to 3.1 million people to qualify for SNAP benefits when federal eligibility standards say they shouldn’t.

We have submitted comments to the USDA on their proposal, generally agreeing with the thrust of the changes but also highlighting areas where it could be further refined. We agree that states should no longer be able to confer eligibility based on receipt of “token” TANF services, such as brochures or referrals to other assistance. We urge the USDA to also ensure that TANF recipients conferred access to SNAP actually receive “ongoing” support from TANF, and that such programs receive a majority of their funding from TANF. We also propose aligning the income eligibility criteria of such TANF programs with SNAP once again, preventing future loopholes from developing.

SNAP provided more than $60 billion of assistance to nearly 40 million Americans last year — well above levels in the mid-2000s when the economy was similarly strong. This program is a vital lifeline for needy families, but a notable share of food assistance goes to households that do not satisfy SNAP’s own eligibility standards. That undermines confidence in the targeting of this important program, and can and should be fixed. We applaud the USDA’s efforts to close unjustified categorical eligibility loopholes and hope they consider our recommendations for further improvements.

Proposed revision of SNAP eligibility rule is a step in the right direction
John Konicki