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Tonight I was on the phone with my sister (who lives in Michigan), and we happened to discuss the recent noticeable proliferation of EBT (food stamp) purchasers shopping in our respective upscale supermarkets.

I suggested that, perhaps, the expansion of use of the EBT program might be related to certain "public service" television ads I have seen of late - cheerfully encouraging people to apply for benefits offered by the Dept. of Agriculture to "improve American nutrition."

I have no idea how much of such Federal program spending represents borrowed funds, but one might suspect the amount is more than negligible (even if it is dwarfed by military and Medicare spending).

My sister mentioned to me that an upper-middle-class co-worker of hers, who is working to help pay for her daughter's $35,000 per year college tuition, recently disclosed that her daughter came home from campus recently announcing that she was planning to apply for her very own EBT card, since "everyone else is doing it." The mother, who prides herself on her ability to provide for her family, was appalled and instructed her daughter not to apply, as it would be morally wrong - and it would embarrass the entire family.

Although I am supportive of student aid, including Pell Grants, student loans (which I personally believe should be dischargeable in bankruptcy under certain conditions) and work-study programs, I am not sure that it is entirely in the best interest of the taxpayer to be encouraging non-working (or even working) students to become dependent upon the government for their daily bread.

It seems to me that the "solution" to feeding hungry middle-class students (whose parents are paying the equivalent cost of a new BMW every year for college tuition) just might be for the student to instead matriculate at a less expensive university or community college, and "investing" the money saved in food so the poor child doesn't starve to death while they intensely study for their chemistry exam.

I did a quick check online to see whether the US government is indeed encouraging students to apply for EBT cards while they are enrolled - and lo & behold, it appears that my sister's Michigan friend appears to have been telling the truth.

Here's an excerpt of an online description of such programs published about 6 months ago:

Portland State University devotes a page on its Web site to explaining the ease with which students can receive benefits, along with instructions on how to apply. The school says food stamps are not charity but rather a benefit all honest taxpaying citizens can afford. The U.S. Department of Agriculture renamed food stamps the Supplemental Nutrition and Assistance Program (SNAP) in 2008, instituted electronic debit cards instead of coupons, and began an aggressive push to expand eligibility. This is from the school’s site:

Here are some additional SNAP facts:
• Over half of all U.S. citizens will use SNAP at least once during their lifetime.
• SNAP is not a charity. As a taxpayer, you are paying into this program and, when needed, you can reap the benefits.
• There are enough SNAP dollars for everyone that needs them. As a matter of fact, about 20 percent of Oregonians who are eligible for SNAP do not apply.
• Students receiving SNAP can defer their student loans while they are receiving benefits.
• Applying for SNAP is easy. In most cases, you will not have to apply more than once a year.

Traditionally food stamps are for the working poor and single parents, but colleges are trying to make it as easy as possible for students to obtain federal assistance, no matter their socio-economic background.

This "revelation" leads me to four questions that have relevance to our current ballooning debt and its obvious macroeconomic implications:

1. Is it wise to encourage young, impressionable college students to "work the system" to obtain government benefits that are basically replacing the support that students and their parents have in the past earned and provided for themselves?

2. Is it wise to intentionally advertise and expand "entitlement" programs from poor to middle-class and even upper-middle class scions at a time when the government is already spending at least twice the amount of its annual tax revenues?

3. Is it wise for the Federal Reserve and other buyers of US Treasuries to continue to fund (at nearly 0% interest) the sort of government borrowing it takes to fund entitlement programs the government is intentionally expanding despite lack of the funds to pay for them?

4. Is this going to end well?

I think I already know the answer to question 4. The answer is "no."


-Cross-post from METaR:
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