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This file includes material relating to the efforts attempting to reform the Food Stamps program administratively and legislatively, and court cases challenging those reforms.
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Food Stamps (5)
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16987999
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Food Stamps (5)
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This file includes material relating to the efforts attempting to reform the Food Stamps program administratively and legislatively, and court cases challenging those reforms.
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James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
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The original documents are located in Box 15, folder "Food Stamps (5)" of the James M.
Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 15 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
SUMMARY
THE NATIONAL FOOD STAMP REFORM ACT OF 1975
A Proposal for Meaningful Reform of the Nation's Food Stamp Program
June 1975
FORD LIBRARY & GERMIT
OVERVIEW
The proposals which are embodied in the National Food Stamp Reform Act of
1975 are derived from a thorough analysis of all of the elements of the food
stamp program that make it both complex and so rapidly growing. These include
the eligibility, bonus value, purchase requirement, and coupon allotment
criteria; the tests of income and resources which are applied; the numerous
loopholes that permit abuse of the program; the manner in which cash and
coupons are handled; current funding methods; and the basic purposes for which
the program was enacted in the first place.
If enacted, the proposals which are contained in the National Food Stamp
Reform Act will:
Place realistic limits so that persons with high incomes will not
qualify and thereby drain resources from a program that is to meet the
needs of the legitimately needy
Institute a food stamp formula that is based upon what the average
American family, by size and income range, spends for food, eliminating
the many complex deductions and exemptions
Close numerous loopholes that permit the voluntarily unemployed to
receive food stamps and others to manipulate the system
Tighten work requirements, so that the food stamp program does not
subsidize idleness or serve as a substitute for gainful employment
Simplify administration, by basing eligibility on gross income, by
permitting demonstration projects to test management improvements, and
by linking with welfare administration
Require recognition of multiple public benefits that go to the same
family
Direct additional funding to swifter processing of applications and to
nutritional education
Improve cash and coupon handling methods to minimize opportunities for
theft, loss, and misuse of federal coupons and funds
Enhance fraud control efforts
Increase amounts paid to the truly needy, by
- Substituting the Low Cost Diet Plan for the Economy Diet Plan,
raising coupon allotments by 29%
- Reducing food stamp costs for the aged, with a $25 monthly
income deduction
It is possible through the enactment of these long over due reforms
to:
(a) Substantially increase benefits which are paid to the persons
who genuinely need nutritional assistance, and
(b) realize, at the same time, significant savings for the taxpayer.
By closing loopholes, correcting defective elements of the eligibility
formula, tightening work requirements, and curtailing opportunities for
fraud and other criminal activities, the food stamp program can be restored
to the purposes originally intended when it was first enacted. This can
be done without detrimental effect upon the persons who are in legitimate
need -- and, as indicated, they will in fact realize increased aid as a
result of the reforms.
FOOD STAMP PROGRAM GROWTH
1965
1975
% INCREASE
PERSONS
442,359
19,142,145
44227%
(MARCH)
TOTAL
EXPENDITURES
$36,353,797
$5,200,000,000
14,203%
AVERAGE NUMBER OF AMERICANS RECEIVING FOOD STAMPS
1965 - ONE IN 439
TABLE A
1967 - ONE IN 157
1970 - ONE IN 47
1973 - - ONE IN 17
1975 . - ONE IN 13 (ESTIMATE)
REPORT TO JOINT ECONOMIC COMMITTEE ESTIMATED THAT BY 1977, AT PRESENT GROWTH RATES, ONE IN FOUR
AMERICANS COULD BE ELIGIBLE TO RECEIVE FOOD STAMPS AT LEAST ONE MONTH DURING THE YEAR.
ONE IN FOUR ALREADY POTENTIALLY ELIGIBLE IN JULY 1974.
57% OF POTENTIAL ELIGIBLES IN JULY 1974 WERE ABOVE POVERTY LINE
JANUARY 1975: ALL HOUSEHOLD SIZES EXCEPT ONE HAD MAXIMUM ELIGIBILITY LEVELS ABOVE POVERTY LINE -
AND BASED ON NET INCOME, AFTER GENEROUS DEDUCTIONS
PARTICIPANTS VS. ELIGIBLES
FOOD STAMP PROGRAM*
PERSONS
JULY 1974
JUNE 1975
PARTICIPANTS
13.9 million
21.8 million
ELIGIBLES
52.8 million
57.3 million
% OF PARTICIPANTS
26.3 %
TO ELIGIBLES
38.0 %
% OF PARTICIPANTS
one in fifteen
TO TOTAL POPULATION
one in ten
% OF ELIGIBLES
one in four
TO TOTAL POPULATION
one in four
AVERAGE MONTHLY BONUS VALUE PER HOUSEHOLD
$66
1974-75
TOTAL BONUS VALUE COST
$4.6 billion
1974-75
TOTAL BONUS VALUE COST IF ALL ELIGIBLE
$12.1 billion
GERALD
HOUSEHOLDS PARTICIPATED
R.
1974-75
FORD
LIBRARY
* BASED UPON DATA PROVIDED BY THE UNITED STATES DEPARTMENT OF AGRICULTURE
SUMMARY OF RECOMMENDATIONS
EXPANDED ELIGIBILITY TO THE NON-NEEDY: PERSONS WITH HIGH INCOMES
Base eligibility upon gross, rather than net, income
Prohibit eligibility on the part of anyone whose gross income
exceeds the official poverty indices, as established and defined
by the Office of Management and Budget
Base purchase requirements upon the percentage of income expended
for food by average household of same size and income range, with
regional variations, as established by the most recent Consumer
Expenditure Survey of Bureau of Labor Statistics, or 30%, whichever
is less
Adjust coupon allotments semi-annually by overall change in CPI,
rather than food component alone
Adjust purchase requirements in same fashion
Place limitations upon property
Evaluate property on market value, not equity
Prohibit deliberate transfer of property
Eliminate categorical eligibility of public assistance recipients
LEVEL OF BENEFITS TO THE GENUINELY NEEDY
Substitute Low Cost Diet Plan for Economy Diet Plan, raising coupon
allotments by 29%
Reduce food stamp costs for the aged, with a $25 monthly income
deduction
ELIGIBILITY LOOPHOLES
Establish minimum age as age of majority in state (to qualify as
separate household)
Require able-bodied recipients with no children under six to
register for work, engage in proven job search, and participate in
community work training programs, if established by the States, as
a condition of eligibility
Apply work registration and job search requirements to drug addicts
and alcoholics who are involved in rehabilitation programs
Prohibit eligibility when there is voluntary termination of
employment without good cause
Halt the current practice of not referring persons to employment
where union membership is required
Preclude strikers from eligibility unless otherwise qualified
Eliminate eligibility of college students as voluntarily unemployed
Direct Secretary to establish precise criteria to preclude
individuals living as one household from establishing eligibility
as separate households
Require 100% assumption by federal government of alien costs,
with referral system to INS to determine legal status
Require recognition, as income, of any other publicly funded
program which provides cash or in-kind assistance to food stamp
family for food or housing
ADMINISTRATIVE COMPLEXITIES
Transfer program from USDA to HEW
Provide demonstration project authority
Redirect outreach to provide for nutritional education and assistance
and for more immediate receipt of and processing of applications,
to relieve logjam and delays in processing; redirect funding
to these purposes
Make public assistance withholding optional at discretion of local
agency
INSUFFICIENT CASH AND COUPON ACCOUNTABILITY
Require immediate certification of deposits made by issuing agents
to local entities
Require fiscal sanctions against agents for failure to meet
depositing requirements in a timely fashion
Identify all receipts as federal funds, and prohibit any use for
individual or corporate profit
Revise coupon shipment procedures to insure local notification of
time and quantity of coupon shipments, centrally compute adjustments
to agents' orders and notify local entities of change in allotment
tables, notify local entities when agents' order is adjusted, and
assure that deliveries are made only to authorized persons
Institute federal/local monthly reconciliation of records
Require Postal Service to serve as issuing agents upon request of
state and to assume normal liability of issuing agents
CRIMINAL ACTIVITIES (FRAUD, THEFT, COUNTERFEITING, BLACK MARKETING
ACTIVITIES) AND LAX RECIPIENT IDENTIFICATION
Require photo identification card
Replace food stamp coupons with countersigned food stamp warrants
Provide 75% federal funding for the costs of investigations,
prosecutions, collection of federal funds, and related activities
Require development of çentral clearing house of information and
referral system to preclude recipients from receiving food stamps
in more than one jurisdiction
Limit continuation for 30 days when recipient moves and require
immediate reapplication and recertification
Require development of earnings clearance system to check actual
earned income against income reported by households
Require monthly income reporting
PURPOSES OF PROGRAM
Permit choice of commodities or food stamps by local jurisdictions
Require Secretary to file annual report with Congress reviewing
data collection status, quality control, and general character
of program to insure cost/beneficial use of public funds for
legitimately needy
FUNDING
Set State participation in bonus value at same rate as AFDC, with
system of "block grants" to States to offset added State costs
RALPH VINOVICH
ROBERT H. MiCHEL
ADMINISTRATIVE ASSISTANT
ABTH DISTRICT, ILLINOIS
DISTRICT OFFICE:
MINORITY WHIP
1007 FIRST NATIONAL BANK BUILDING
APPROPRIATIONS COMMITTEE
Congress of the United States
PEORIA, ILLINOIS 61602
(309) 673-6358
RANKING MEMBER
LABOR, HEALTH, EDUCATION, AND WELFARE
house of Representatives
COUNTIES:
BROWN
MASON
SUBCOMMITTES
BUREAU PEORIA
Mashington, D.C. 20515
CASS
SCHOTLER
WASHINGTON OFFICE:
KNOX
STARK
2112 RAYBURN BUILDING
TAZEWELL
(202) 223-6201
June 17, 1975
President Gerald R. Ford
The White House
File Food Stomps
1975
Washington, D.C. 20500
Dear Mr. President:
As you know, we want to make your Administration a successful
one. One key area in accomplishing this is how your Administration
will cope with the various food program problems facing the
country. Many of us have been concerned about the Food Stamp
Program growth from $36 million in 1965 to one that would spend
over $6 billion in 1975 with the further prospect that if left
unchecked it will double to $12 billion by the end of 1976, with
the potential to grow even larger in years ahead.
A number of your supporters have been working over the past
five months to develop a meaningful food stamp program that is
designed to maximize benefits to the truly poor while placing a
fiscal discipline on the growth and expansion to other recipients.
The legislation we have developed will base eligibility on
poverty indices and purchase requirements upon what the average
American family spends for food. It would increase the food stamp
benefits to those remaining in the program by 29 percent; would
reduce food stamp costs for the aged, with an across-the-board
$25 monthly income deduction prior to computation; would close ten
major loopholes in the current law; and would set State participation
at the same rate as AFDC, with a system of block grants to States
to offset added State costs.
Net savings total over $2 billion, even after funding the
29 percent increase.
We are planning to introduce our proposal next week. We
believe it is essential to begin negotiations with a bill that is
both realistic and stringent. It is our hope that this proposal
will serve as a base to work from in achieving food stamp reform,
in a joint effort with you. I have attached a copy of a summary
for you and your staff. If possible, I would like to discuss it
with you.
Sincerely,
Robert Bob H. Michel
Member of Congress
file
THE WHITE HOUSE
WASHINGTON
6/4/71
Juni -
Here's The
upat on
food stamps
Jun
FORD LIBRARY & GERALD
THE WHITE HOUSE
WASHINGTON
June 3, 1975
MEMORANDUM FOR:
JIM LYNN
FROM:
JIM CANNON
SUBJECT:
Food Stamps
In regard to our discussion about the decisions on the
food stamp program, I have checked into the process whereby
the recommendations were reviewed.
Throughout the period of preparation of the memorandum,
your staff, my office and the Department of Agriculture
participated. The evening before the decision paper went
to the President, Dick Dunham met with Secretary Butz,
Paul O'Neill and a representative from HEW. The final
paper was drawn together following this conversation and
included an option for the President which, while distinct
from any of the plans previously discussed, contained no
new elements.
However, OMB, Agriculture and HEW were asked to inform
Dick of their position i'n regard to the specific plans
listed by 2:30 p.m. the next day. The schedule called
for submission of the paper to the President that day,
May 16. Agriculture gave us their opinion. HEW responded
at 6:00 p.m. which was too late and we did not hear from
OMB. Therefore, we had no choice but to send the memo
to the President without the "notes" of HEW and OMB.
This additional option per se had not been specifically
reviewed but it addressed three basic points which were
discussed at the meeting with Paul and Secretary Butz:
1.
The Secretary's support for a simple $100
standard deduction with no categorical eligibility
and no special deduction for the aged.
-- he argued that the most important goal was
to reduce costs and the plan which he sup-
ported did that most effectively.
-2-
2.
Paul's urging that the concept of "cash out" be
included.
-- the final memo suggested that the range of
potential costs of a "cash out" were such
that it should not be part of this action
but rather should be considered in the more
comprehensive effort dealing with social
programs.
3.
The Domestic Council's belief that since our major
concern is the growing participation of those well
above the poverty level, we should not do anything
which focuses attention on the impact on the very
poor even though "equity" would argue against
continuing categorical eligibility for welfare
recipients.
--- it was felt that if categorical eligibility
for welfare recipients were continued for the
time being with the acknowledgment that this
and many of the program's other elements needed
to be addressed in a more comprehensive over-
haul of all income assistance programs, the
"inequity" was defensible.
These elements all were discussed prior to the submission
of the final decision paper. Secretary Butz has expressed
a desire to meet with the President before a program is
submitted to the Congress. I will ask for such a meeting
with the President and this should provide another opportunity
to present your views.
FORD LIBRARY & GERALD
THE WHITE HOUSE
WASHINGTON
June 3, 1975
MEMORANDUM FOR:
JIM CANNON
THRU:
DICK DUNHAM
RD
FROM:
ART QUERN
ADD
SUBJECT:
Food Stamps
Attached is a memorandum for your signature to outline
for Jim Lynn the process leading to the formulation of
the final food stamp options.
The memo refers to Secretary Butz's desire to meet with
the President to discuss the decisions and the strategy
on how to present them. The memo indicates and I strongly
urge that such a meeting should be scheduled. We can be
ready to meet on Monday or Tuesday of next week. Prior
to the meeting with the President, Dick Dunham, Paul O'Neill
and I should get together with the Secretary.
Attachment
GREATS FORD
LIBRARY
Buts
7 le
Food stamps.
would ood
got copy of theye
THE WHITE HOUSE
decise
$200 -300 willion
WASHINGTON
Didn't di as
hd with mis.
June 13, 1975
on pople
not & # / Biohor
micrown world do
80% - so economy diet.
MEMORANDUM FOR:
THE PRESIDENT
And
FROM:
JIM CANNON
1) nothing days for oplan
SUBJECT:
Food Stamps
2) a thearing
3) appeal To Suplice cart,
stay of order -
As you know we have been working to complete and submit frees place- nito
to Congress a proposed reform of the Food Stamp program
in accordance with your decisions. Two separate factors
are now present which require me to recommend a reopening
of these issues:
of
1.
Additional Problems
In our deliberations with the Department of Agriculture
prior to the May 22nd decision memorandum, one key
aspect of their plan went unrecognized. In effect
this aspect is the revival of the 30% purchase require-
ment. This requirement states that every eligible
food stamp recipient must pay 30% of his net monthly
income as the purchase price for his food stamp allot-
ment. As you will recall this proposal was soundly
rejected by Congress earlier this year.
The fact that Agriculture has included the purchase
requirement as an essential part of any standard
deduction eligibility approach was not specifically
identified. However, implementation of the standard
deduction plan will increase caseload and costs unless
it is combined with a 30% purchase requirement.
Inclusion of this requirement is the only means whereby
a standard deduction approach could produce any savings
but it has the sort of impact on individuals which led
to its rejection by Congress:
--
777,000 small families (1 and 2 persons) with
monthly gross incomes less than $400, mostly
elderly, would lose between $5 and $24 per month.
An additional 67,000 would lose more than $24
per month.
GERALD FORD LIBRARY
-2-
--
643,000 large families (3-8+) with monthly
incomes of $200-800 would lose $5-24 per month.
An additional 201,000 large families would lose
more than $24 per month.
The risks, therefore, which were not identified in the
May 22nd memorandum are:
A.
This entire reform effort will be viewed as
simply another attempt at implementing a 30%
purchase requirement.
B.
Congress will accept the standard deduction
(which by itself increases costs) and reject
the 30% purchase requirement (which is the cost
control factor) presenting you with a plan
containing only the element of your proposal
which would increase costs and caseload.
2.
Court Decision
Yesterday the U.S. Court of Appeals ruled that the
formula upon which food stamp benefits are based is
invalid. This decision could have substantial impact
on costs which are now estimated to be $6.9 billion
in FY 76. The Department of Agriculture is under
order to come up with an entirely new benefit system
within 120 days.
We are now having the decision analyzed to determine
what options are open to us.
RECOMMENDATIONS
1.
Proceed with Fourteen Points
Your decisions on the May 22nd memorandum included
approval of 14 specific items which were supported
by OMB, Agriculture and the Domestic Council as means
of improving administration, curbing abuse, and tighten-
ing accountability.
We recommend that approval of these remain unchanged
and that the Secretary of Agriculture submit these
as recommendations in a report the Senate requested
by June 30, 1975.
APPROVE
DISAPPROVE
FORD LIBRARY is GERALD
-3-
2.
Hold Recommendation on Eligibility in Abeyance
Since the plan we recommended and you approved has
proven to contain serious problems, we had been
developing some new options for your consideration.
We now recommend that any proposal for changes in
eligibility determination be held in abeyance until
we determine if the court decision affects eligibility
and what these effects might be.
In this regard, the Secretary in responding to the
Senate would make no recommendation dealing with
eligibility but would state:
A.
The most direct way of improving eligibility
determinations would be to implement an
equitable purchase requirement. Congress has
rejected this.
B.
Many of the fundamental problems of the food
stamp program reflect its function as an income
support program. These elements should not be
dealt with in the isolated case of the food
stamp program but should be included in a
comprehensive overhaul of all federal income
support programs.
C.
The Court decision throws into question the
present benefit system. While not directly
affecting eligibility it does relate to it
and therefore we are holding in abeyance any
changes in eligibility at this time.
Hold in abeyance any changes in eligibility at this
time.
APPROVE
DISAPPROVE
COMMENTS
We will proceed immediately with our analysis of the Court
decision and the options it presents us in regard to its
basic focus, the benefit system. As we proceed we will
also seek a prompt determination of how it affects our
options on eligibility.
THE WHITE HOUSE
ACTION
WASHINGTON
June 17, 1975
MEMORANDUM FOR:
THE PRESIDENT
FROM:
JIM CANNON
SUBJECT:
Food Stamps
As you know, we have been working to complete and submit
to Congress a proposed reform of the food stamp program
in accordance with your decisions. Two separate factors
are now present which require me to recommend a reopening
of this issue:
1.
Court Decision
On June 12th the U.S. Court of Appeals ruled that the
formula upon which food stamp benefits are based is
invalid. This decision could have substantial impact
on costs which are now estimated to be $6.9 billion in
FY 76. The Department of Agriculture is under order
to come up with a new benefit system within 120 days.
The decision focuses on benefits but could also have
an indirect effect on eligibility levels.
2.
Additional Problem
In our work with the Department of Agriculture prior
to sending you our May 22 decision memorandum on food
stamps, one key aspect of their proposed plans went
unrecognized. It was included by the Agriculture
Department staff and slipped through unnoticed by
Secretary Butz, OMB and me.
What we overlooked was the same 30% purchase require-
ment that was soundly rejected by Congress earlier this
year. Consequently, our description of the plan we
recommended and our understanding of its impact were
inaccurate.
GERAND LISSRAY FORD
2
Consequently, there are risks which were not identified
in the May 22 memorandum:
A. The approved reform effort could be viewed as
simply another attempt at implementing a 30%
purchase requirement.
B. Congress might accept the standard deduction
(which by itself increases costs) and reject the
30% purchase requirement (which is the cost
control factor), presenting you with a plan
containing only the element of your proposal
which would increase costs and caseload.
RECOMMENDATIONS
1.
Proceed with Fourteen Points
Your decisions on the May 22 memorandum included
approval of 14 specific items which were supported
by OMB, Agriculture and the Domestic Council as means
of improving administration, curbing abuse, and
tightening accountability. By themselves these
will not provide significant reform, but they do
offer real improvements in the program.
We recommend--and Secretary Butz and OMB (0 'Neill)
concur--that approval of these remain unchanged and
that the Secretary of Agriculture submit the 14 items
as recommendations in a report the Senate requested
by June 30, 1975.
APPROVE
DISAPPROVE
2.
Eligibility
In light of the court decision, we now recommend
that any proposal for changes in eligibility
determination be held in abeyance until we can
determine if the court decision affects eligibility
and what these effects might be.
In this regard, the Secretary, in responding on
June 30 to the Senate, would make no recommendation
dealing with eligibility but would state:
A.
Many of the fundamental problems of the food
stamp program reflect its function as an income
support program. These elements should not be
dealt with in the isolated case of the food stamp
program but should be included in a comprehensive
overhaul of all federal income support programs.
B. The Court decision throws into question the present
benefit system. While not directly affecting
eligibility, it does relate to it, and therefore
we are holding in abeyance any changes in eligibility
at this time.
C. Obviously the program is in need of a substantial
overhaul, and we stand ready to work with Congress
in this regard.
Hold in abeyance any changes in eligibility at this
time and present position in the context of points
listed above. Secretary Butz and OMB (o Neill)
concur in this recommendation.
APPROVE
DISAPPROVE
BERALD R. FORD
COMMENTS
We will proceed promptly with our analysis of the Court
decision and the options it presents in regard to its basic
focus, the benefit system. As we proceed we will also seek
a prompt determination of how it affects our options on
eligibility.
REPUBLICAN STUDY GROUP PROPOSAL
Attached in Tab A is a brief summary of the food stamp
reform package which Bob Michel and the Republican Study
Group have developed. We have just received it and have
not had an opportunity to thoughtfully review it. It
appears to have a number of elements which seem to have
promise for controlling eligibility but the administration
of these proposals might prove difficult and extremely costly.
They would most certainly be controversial.
Since our position is not. to include a specific eligibility
plan in our submission to the Senate by June 30, I recommend:
1.
That the Secretary in his submission to the Senate
refer to the Republican Study Group proposal as one
which appears, under initial review, to move toward
improved concentration of benefits on low income families.
- -4-
2.
The Secretary should indicate specifically the
Administration's intention to explore these and
other Congressional suggestions as we proceed with
the development of a basic structural reform of the food
stamp program.
3.
Through the Domestic Council we launch an intensive
effort to get the thinking of other groups, including
states, counties and cities, on the food stamp issue.
We would begin by meeting with Congressman Michel and
his staff to discuss his proposal in detail.
Preliminary discussions with Michel's staff indicate
agreement with the approach we are recommending the
Secretary take at this time.
FORD LIBRARY & 9ERALD
Sandy Vii 3160
THE WHITE HOUSE
WASHINGTON
file
June 20, 1975
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR:
JIM CANNON
FROM:
JIM CONNOR R
SUBJECT:
FOOD STAMPS
Your memorandum of June 17th on the above subject has been
reviewed by the President and the following was noted:
1.
Proceed with Fourteen Points
Approved.
2.
Eligibility
Hold in abeyance any changes in eligibility at this time
and present position in the context of points listed.
- Approved -
Your proposal for handling the Republican Study Group was also
approved.
Please follow-up with appropriate action.
CC:
Don Rumsfeld
FORD 4 LIBRARY 774899
Subj.
THE WHITE HOUSE
WASHINGTON
June 24, 1975
MEMORANDUM FOR:
THE SECRETARY OF THE TREASURY
THE SECRETARY OF AGRICULTURE
THE SECRETARY OF LABOR
FORD LIBRARY j GENALD
THE SECRETARY OF HEALTH, EDUCATION,
AND WELFARE
THE DIRECTOR, OFFICE OF MANAGEMENT
AND BUDGET
THE CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS
THE EXECUTIVE DIRECTOR, ECONOMIC POLICY BOARD
FROM:
SUBJECT:
JIM CANNON Dui
Review of Food Stamp Program
Attached is a copy of a memorandum I sent Jack Veneman
requesting that he form a task force to review the Food
Stamp program.
On June 12, the Second District Court of Appeals ruled that
major revisions in the Food Stamp program were required.
Since this decision affects the eligibility requirements for
those participating in the Food Stamp program and opens up
some broader questions and issues, the President has directed
that he be presented with alternative approaches for modifying
the Food Stamp program.
A meeting has been called for Thursday, June 26, in the
Roosevelt Room at 10:00 for the purpose of launching this
effort.
Your attendance, along with your key staff person who could
serve on the working group described in the attached memo,
would be appreciated.
Attachment
of The Donatic comicil Review Group
This is pat of The ovrace effort
on social programs.
THE WHITE HOUSE
WASHINGTON
June 24, 1975
FORD & LIBRARY GERALD
MEMORANDUM FOR:
JACK VENEMAN
FROM:
JIM CANNON
SUBJECT:
Establishment Jun of a Food Stamp Task Force
In view of the significant issues being posed by the growth
of the Food Stamp program and also the recent court decision
addressing the program's benefit structure, I am requesting
that you form a task force to review various options and
possible changes in the Food Stamp program. Among the
areas I would like you to review are:
1.
The effect of the Rodway vs. USDA decision by the
U.S. Court of Appeals, Second District.
2.
Possible ways of modifying eligibility requirements
under the current program.
3.
Other alternative ways of providing aid such as
total or partial cash-out.
4.
A review of the Food Stamp program and its relation-
ship to other income transfer programs, including
the feasibility of establishing uniform eligibility
standards.
The task force should consist of:
Secretary of the Treasury
Secretary of Agriculture
Secretary of Labor
Secretary of HEW
Director, OMB
Director, Domestic Council
Chairman, CEA
Executive Director, Economic Policy Board
These members should identify persons on their respective
staffs to serve on a working group. The efforts of this
group will be included in the overall review of domestic
social programs approved by the President on May 15, 1975.
I have asked Art Quern, Associate Director of the Domestic
Council, to coordinate this activity for the Domestic Council.
file per
MEETING AGENDA
DOMESTIC COUNCIL REVIEW OF THE FOOD STAMP PROGRAM
Am
July 2, 1975
10 Am
meety
I.
OVERVIEW
A. Recent Events
B. Formation of Review Group
FORD i LIBRARY GERALD
II.
TIMING OF REVIEW
(See Attached Chart)
III. PRELIMINARY ANALYSES
A. Discussion of Analysis Areas
B. Formation of Work Groups
IV.
OPTION DEVELOPMENT
A. Discussion of Areas of Option Development
B. Formation of Work Groups
V.
NEXT STEPS
A. Prepare Analyses
B. Meeting July 16 to Review Analyses and
Begin Option Development
FOOD STAMP REVIEW
MAKEUP OF WORK GROUPS
PHASE I:
PRELIMINARY ANALYSIS
Program Goals:
USDA
DHEW
Treasury
CEA
Literature Review:
USDA
DHEW
Treasury
Labor
EPB
Current Program:
USDA
OMB
CEA
Relationship with Other Programs:
USDA
Labor
EPB
DHEW
Summary of Current Legislative Proposals:
USDA
PHASE II:
OPTION DEVELOPMENT
Eligibility:
USDA
Labor
OMB
EPB
DHEW
07-19 & FORD LIBRARY
Form of Aid:
DHEW
Treasury
EPB
OMB
Labor
CEA
Nutritional Requirements and Cost:
USDA
DHEW
OMB
CEA
OVERVIEW
DOMESTIC COUNCIL REVIEW OF THE FOOD STAMP PROGRAM
July 2, 1975
On June 25, 1975 a meeting of the Domestic Council on the Food
Stamp program agreed to conduct a broad review of the program
and develop options for modifying the program for a Presidential
decision within 60 days.
FORD i LIBRARY GERALD
TIMING
A proposed timetable for undertaking this review and option
development process is attached. The key events of the time-
table are:
Decision options prepared for the President
by August 27.
Presidential decisions by September 24.
Proposals and political strategy prepared by
October 22.
Occuring in parallel with this review will be court action by
USDA in response to the Rodway VS. USDA decision. USDA will
keep the review briefed on this activity.
Further, unless a stay is granted to the previous court
decision, USDA will also be developing new program regulations
to meet the requirements of the decision, to be published as
- 2 -
proposed rules before October 10. It is proposed that the
Domestic Council review group be briefed on an ongoing basis
by USDA on the proposed rules.
PRELIMINARY ANALYSIS
Prior to the development of options for a Presidential decision,
a series of preliminary analyses will be required which will
provide the necessary groundwork for orderly development and
discussion of policy options. The following subjects are
proposed as areas for this preliminary analysis.
Program Goals
FORD LIBRARY & GERALD
What should be the Federal goals for this program?
Since this program was initially begun, its goals have become
somewhat clouded. The program is now regarded as a Federal
guarantee that all Americans will have sufficient resources to
purchase a nutritionally adequate diet instead of a program to
support agriculture.
The review needs to define the Federal objective of the
program so that options will be focussed upon achieving the
specific goal (s)
- 3 -
Literature Review
The review group needs a very brief summary of the significant
results of research on, and evaluations of, the Food Stamp
program. The following types of issues need to be addressed
in such a literature review:
o
how are stamps used -- do they replace or
supplement cash expenditures; are they sold
for cash; do they purchase more nutritious
foods; etc.
how do persons with similar incomes who are
not on Food Stamps use cash -- do they
purchase sufficient food; is it nutritious;
how do they allocate their overall income
among food and other necessities; etc.
how effective are other mechanisms for
increasing the consumption of nutritious
foods -- consumer education, selective
lowering of nutritious food prices, etc.
what incentives are inherent in the Food
Stamp system -- are there work disincentives,
are there sufficient incentives for the
eligible population to use Food Stamps, etc.
- 4 -
O
economic effects of the Food Stamp program --
does it inflate the price of foodstuffs; does
it help maintain the income of farmers; what
sectors are the primary beneficiaries of
any price inflation.
For the purposes of the review group, only the results of
reliable research are needed. They should be stated as one
line results and the entire summary should not be more than
4 to 5 pages.
Current Program
A summary of the current program and its trends is needed
to more clearly define problems that may need correction
or that should be avoided in proposed new programs. The
following types of issues need to be covered:
O
Federal expenditures on the current program
and projections through 1980.
O
the projected fiscal impact of the Rodway VS.
USDA decision.
O a statistical breakdown by income, family
structure, age, and sex of the current
recipient population.
- 5 -
a statistical breakdown by income, family
structure, age, and sex of the current
eligible population who does not participate
in the program.
a detailed breakdown of current administrative
costs, such as costs of engraving and printing
stamps, costs of distributing stamps, costs
of enforcement of laws and regulations related
to use of stamps, etc.
Relationships with Other Programs
A summary is needed of the relationships between the Food
Stamp program and other means-tested or income supplement
programs.
Such programs might include:
AFDC
Title XX
WIN
Unemployment Insurance
The factors for comparison with these programs might include:
eligibility criteria
work requirements and incentives
benefit levels
A Summary of Current Legislative Proposals
- 6 -
OPTION DEVELOPMENT
Following the preliminary analysis of the Food Stamp program,
which should take no more than 2 weeks, the review group
will begin outlining and evaluating potential optional modifi-
cations to the program. This phase will last approximately
4 weeks. The option development process will concentrate
upon the following 3 issue areas:
O Eligibility: defining criteria for Food Stamp
eligibility should consider the following types
of factors:
-- eligibility criteria for other programs
aimed at transferring additional resources
and aid to the poor (or proposed programs) ,
such as AFDC, Title XX, ISP, etc.;
-- scaled reduction of benefits to prevent
1010
work disincentives;
LIBRARY
-- "horizontal equity" between program
recipients and the working poor with
equivalent income;
-- reducing or standardizing income deductions;
-- gross income standard with no deductions.
- 7 -
O
Form of Aid: the various formats which nutritional
resource aid could take should be completely
explored, including:
-- restructuring the purchase - bonus system;
-- eliminating purchase requirement;
-- replacing stamps with cash;
- partial cashout.
o
Nutritional Requirements and Cost: the third area
where option development needs to take place is in
the exploration of various approaches toward
defining the nutritional needs which should be
met by a Federal program. This analysis should
lay out optional recommended diets and define their
costs. It should then explore other types of
Federal approaches to assisting Americans in
securing such nutrition. These approaches might
include:
-- provision of prepared meals;
--
-- increased consumer education and
nutritional advertising;
-- direct food distribution.
- 8 -
Work Groups
It is proposed that sub groups be formed to develop options
in these areas over the 4 week period and that the review
group meet as a whole periodically during this period to
discuss the progress of the work groups.
DOMESTIC COUNCIL REVIEW
When the options are completed, the Domestic Council review
group will review and discuss the range of alternatives and
select the most appropriate set of alternatives for Presidential
decision. Members of the review group will also indicate
for the President which options they recommend.
The work groups will prepare a decision paper for the
President based upon these Domestic Council decisions.
10/10
7/2 7/9 7/16 7/23 7/30 8/6 8/13 8/20 8/27 9/3 9/10 9/17 9/24 10/1 10/8 10/15 10/22
Preliminary
Analysis
Option
Development
Domestic Council
Review
Final Option
Development with
Recommendations
Presidential
Decisions
Briefing on
Regulation
X
X
X
X
Development and
Discussion
Regulations
X
Promulgated
Policy and
Legislative
Proposals
Developed
Legislative and
Political Strategy
Development
DOMESTIC COUNCIL FOOD STAMP REVIEW -- TIMEFRAME
7/3/75
DRAFT MESSAGE TO THE CONGRESS
In the budget that I submitted to Congress in January, I requested
$3. 8 billion to support the provisions of the Food Stamp Act for the
next fiscal year. Today, I am compelled to request that you increase
this figure by $3 billion, nearly doubling what we estimated the cost
would be just six months ago.
This increase reflects in part the economic troubles this country
has been going through. Of greater significance, however, is the
fact that this program has grown beyond all estimates because
its fundamental structure invites expansion, because of court decisions
that have been rendered and because of a variety of abuses.
While it is essential that the Congress approve this request for
additional funds, it is even more essential to examine the underlying
causes of these increased costs and what the future of this program
will be if we fail to address these issues.
When the Food Stamp Act was enacted in 1964, it stated that its
purpose was "to strengthen the agricultural economy; to help achieve
a fuller and more effective use of food abundances; to provide for
improved levels of nutrition among economically needy households
"
- 2 -
The first question, therefore, is whether these goals still apply.
Farm surpluses are no longer the problem they were in 1964 and
there is no evidence that the aim of improving the level of nutrition
has had a significant effect on the average diet. What has evolved
over the past decade is another income supplement program, fully
supported by Federal taxpayers.
A decade ago, there were 400, 000 persons participating in the
program at a cost of $36 million. Today we have 20 million
participants at a projected cost of $6. 8 billion. If every eligible
person in the country were to sign up for the Food Stamp program,
it has been estimated that between 40 to 60 million people would be
receiving stamps.
There are those that would argue that the Food Stamp program
is uncontrollable and that the escalating costs are inevitable.
FORD LIBRARY if GERALD
I refuse to accept the proposition that this, or any public program
for that matter, is uncontrollable. To accept such a proposition is an
abdication of leadership.
The Food Stamp Act was placed in the Statutes by the Congress
of the United States. The Congress of the United States has the power
and authority to amend, change or abolish this or any other program
that no longer fulfills its purpose or meets its objectives.
I ask the Congress to join me in refusing to accept the label
"uncontrollable." We must ask ourselves whether the taxpayers of
this nation can continue to accept the burden that this program has
- 3 -
imposed upon us. I submit that this was not our intention when this
Act was passed in 1964.
Was it the intention of this Congress to spread the resources
of this nation so thin that the people who are truly in need be compelled
to share the limited dollars available with persons living on incomes
of $10,000 or more?
I submit that these were not our intentions in 1964, are not our
intentions in 1975, and should not be our intentions in the future.
The costs of the program must be controlled and they must be
controlled in a manner which enables continued assistance to families
which clearly are in need.
Earlier this year, I submitted a proposal which would have
required all participants to pay the samepercentage of their income
to purchase food stamps. This plan would have continued assistance
GERALD
LIBRARY
to those in need and would have distributed benefits on an equitable
basis. However, this reform, which would have saved $650 million,
was rejected by the Congress.
Instead, there has been the inclination on the part of the Congress
to tinker with the Act and endorce separate features, when looked at
in isolation, appears to be desirable. The automatic cost-of-living
increase, the mandated outreach program, proposals to allow persons
to become eligible by simply signing a statement without immediate
verification -- all of these, well intentioned as they might be, have
been major contributors to the rapid expansion of this program.
- 4 -
To permit the continued expansion is irresponsible. To imply that
the program cannot be contained is inaccurate.
I have directed the Domestic Council to begin an immediate
identification of every available means of bringing this program under
control. I have asked them to reevaluate the goals, objectives, and
the performance of this program in such a way that costs can be
contained and every needy household will have the resources to
obtain a nutritionally balanced diet.
I am pleased to note that very recently more than 70 Members of
Congress have supported legislation which recognizes the need for
change and seek to focus available resources on assistance to low-
income Americans. Those members have also identified the need to
relate the Food Stamp program to other assistance programs directed
toward these families.
Their proposal introduces a number of positive initiatives which
should be supported by everyone who shares the dual goals of assisting
those in need and controlling costs.
The need for change is obvious, is recognized, and it must be
pursued. It can only be accomplished by those of us who have been
placed in positions of leadership, we in the Executive Branch, and
you in the Congress, working together.
- 5 -
To let problems grow to the point of a crisis, endangers our
resources and limits our ability to meet our nation's objectives.
The challenge for democracy in an increasingly complicated world
is to learn to act in time.
Full
COMMENTS BY PARTICIPANTS OF THE FOOD STAMP PROGRAM GROUP
Alan Greenspan
"My preference is for Option I with the following features:
Continue subsidy in form of Food Stamps but with the purchase
requirement.
Change income eligibility provisions by:
1) going to a 12 month accounting period; and
2) limiting deductions to taxes, medical expenses exceeding
8 percent of income, child care expenses for children
age 6 or under only in households where all adults work
25 hours or more a week and with a cap on the deduction
of $35 a week per household.
Eliminate any provisions for categorical eligibility.
Include in the asset test the equity value of all assets, including
owner occupied homes, with a deduction of $500 for personal
possessions, and $500 for tools needed for work.
Go to Federal-State matching system for funding, but retain
Federal standards and State administration."
L. William Seidman
"Option I,
including
Б
four
seems
best suited to ease the problems since it attacks both the eligibility
and deduction. At the same time, it does not remove from the
individual receiving the stamps all responsibility for making food
provisions. Selection of Option II. relieves the recipient of the
existing portion of responsibility. Options III and IV take the form
of cashouts, which as stated in your memorandum, might be
considered in the context of long-term welfare reform.
Our recommendation would be Option I with a standard deduction. "
- 2 -
Caspar W. Weinberger
"We
agree with the four major options that are presented. I
strongly endorse Option IV. At the same time, I oppose any option
which does not significantly move towards cash-out."
John Dunlop
"I would like to endorse
Option II.
Option II does move away from the voucher position toward cash.
All things considered, given our reading of the political climate
and the apparent inclination to effect economies, while at the same
time continuing a program which seems uniquely geared to the
needs of and utilized by the lowest income groups, we would
support Option II. !!
USDA
Indicated support of the concepts in Option I. The Department
indicated that they could not verify the cost and savings figures.
They also recommended that USDA be given legislative authority
to test Option II on a limited basis.
Treasury
Indicated their support for the concept of Option I by telephone
on July 31, 1975.
GOAAL FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
DATE:
July 7, 1975
TO:
JIM CANNON
FROM: JIM CAVANAUCH
SUBJ: Reagan Column
FORD is LIBRARY GERALD
FYI
X
Action
Copies have been
sent to Jack Veneman
and Art Quern.
file food strumps
Quenn
JUL 1075
THE RONALD REAGAN COLUMN
(For Release In Papers Of Friday, July 4, And Thereafter)
FORD is LIBRARY GERALD
By RONALD REAGAN
Copley News Service
Ten years ago the Food Stamp Act was passed to help
America's needy get a nutritious diet. Today, the program
is so far out of control its operations resemble a
madhatter's tea party.
Help may be on the way. A bipartisan Food Stamp
Reform Act of 1975 has been introduced in Congress which
could bring the program under control and save the
taxpayers $2 billion a year, while at the same time
increasing benefits for the truly needy an average of
29 per cent.
In 1965 there were fewer than half a million food
stamp recipients. The program cost $36 million that year.
The Ronald Reagan Column -- 2
This year, it's estimated there will be 19 million
Americans on food stamps at a cost to the taxpayer of $5.2
billion. - - an increase of more than 14,000 per cent!
That first year, one in every 439 Americans was on
food stamps; today, it's one in 13, and soaring upward.
It could be much worse; potentially one-fourth of the
entire population- 52.8 million persons is technically
eligible.
Are there really that many poor and hungry people
to feed? No, the problem lies with the liberal, loose
eligibility standards for food stamps.
The Ronald Reagan Column -- 3
Last year in California, I appointed a governor's
task force to study the Food Stamp Program, along with one
which was reviewing the effectiveness of our 1971
Aid-To-Families-With-Dependent-Childrer (AFDC) welfare
reforms (we had reduced the rolls by nearly 400,000, while
raising grants an average of 43 per cent).
The food stamp task force found that many college
students were technically eligible and drawing stamps, though
they came from wealthy families. There was no maximum
income limit to qualify for food stamps. There was no
minimum age requirement, SO that teen-age runaways living
in communes could even qualify. And, unlike the welfare
program, food stamp rules did not prohibit the rearrangement
of one's assets in order to qualify.
FORD LIBRARY & 07V
The Ronald Reagan Column -- 4
Other problems involved lax physical security and
movement of the stamps and inadequate counterfeiting
safeguards.
Most of the reforms the California task force
recommended, however, had to be accomplished at the federal
level, since the program is federally mandated.
For several months a group of U.S. senators and
congressmen has been studying these recommendations and
others and has incorporated a number of them in the new
reform bill now co-sponsored by 59 members of the House
and 17 senators.
Their objective is to reverse the explosive trend of
the program. They are alarmed that more than half the
potential recipients- 57 per cent--have incomes above the
poverty line.
FORD is LIBRARY DERALD
The Ronald Reagan Column -- 5
Their bill spells out in detail the reforms needed
to bring it under control. Basically, the bill relates
eligibility to that of AFDC and general welfare programs
providing for similar eligibility standards. This should
eliminate, for example, the voluntarily unemployed, strikers,
college students subsidized by their parents and people who
transfer assets to others in order to qualify.
Among other things, the bill would require
able-bodied recipients without children under age 6 to
register for work and seek it, or to enter community work
training programs if their state has them. This is not
required now, hence the bill's objective: no rewards for
idleness.
The Ronald Reagan Column -- 6
If the bill passes, the program will move out of
the Department of Agriculture, which got it in the first
place because the intent was to feed the needy from
agricultural surpluses. The surpluses are long gone, but
the program now accounts for more than 60 per cent of the
USDA budget. It would move to Health, Education and Welfare,
which administers the rest of the nation's welfare programs.
While bringing the food stamp mess under control,
the government will upgrade the diet formula for
recipients, raising coupon allotments by 29 per cent, and
will reduce stamp costs for the aged.
Rarely enough these days does Congress consider the
hard-pressed taxpayer. With this bill it does, while also
helping the truly needy (not to be confused with the wanty,
08
a far different and much larger group).
-30-
6/30/75
FORD i LIBRARY 070830
pg