June 25, 1979
Page 16328
Mr. MUSKIE. Mr. President, I oppose the amendments offered by Senators HELMS and HAYAKAWA to reduce the budget authority provided in the supplemental appropriations bill for food stamps.
It is true that the amount provided in this bill — $989 million — exceeds the amount which CBO estimates will be needed in fiscal year 1979 — $660 million — by $329 million. At first glance, it would appear that a reduction in the budget authority provided would be fully justified.
I have a great deal of faith in the accuracy of CBO's estimates. In opposing these amendments, however, I am adopting a healthy bit of skepticism suggested by the CBO itself.
Mr. President, I ask that a letter dated June 25, 1979, from Alice Rivlin to Senator TALMADGE be inserted in the RECORD following my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered. (See exhibit 1.)
Mr. MUSKIE. This letter confirms CBO's estimate of the total supplemental needs of the program as $660 million. However, CBO points to the uncertainty in this estimate which exists "because of the continued implementation of the new food stamp law coupled with increasing
uncertainty in the future status of the general economy."
Dr. Rivlin goes on to point out that the additional costs could range under alternative scenarios from $600 million to $1 billion.
The Appropriations Committee has been cautious, Mr. President. They have provided adequate funds to allow full food stamp benefits even under the most adverse of scenarios.
Given CBO's uncertainty over the direction of this program and rising food costs, to provide less would be to threaten thousands of poor people with loss of benefits essential to their health and welfare.
EXHlBIT 1
CONGRESSIONAL BUDGET OFFICE,
Washington, D.C.
Hon. HERMAN E. TALMADGE
Chairman, Committee on Agriculture, Nutrition, and Forestry,
U.S. Senate, Washington, D.C.
DEAR .MR. CHAIRMAN: This letter is in response to your staff's request asking our office to prepare a range estimate for the fiscal year 1979 food stamp supplemental, assuming the current law's authorization ceiling were eliminated.
In our official cost estimate of S. 1309 on June 22, we indicated that a supplemental of $663 million — $280 million over the authorization ceiling — would be required this year. We did indicate, however, that uncertainty existed in this point estimate because of the continual implementation of the new food stamp law coupled with increasing uncertainty in the future status of the general economy.
Under alternative scenarios, the needed supplemental could range between $600 million and $1.0 billion; $220 million to $320 million over the current law's authorization ceiling. This range estimate will have a very high probability of including the final actual figure.
The high end estimate is based on an assumption of continual increase in food stamp participation throughout the remainder of the fiscal year — increasing from 19.1 million persons in March to an average of 20.0 million persons in the final quarter. The high end estimate is also based on an assumption that cost savings of the new law (approximately $105 million this fiscal year) have already been achieved in the months January through April. The high end estimate further includes the assumption that any seasonal decline in participation, which normally occurs in the summer months, would be offset by increases in unemployment and continual increases in participation associated with the elimination of the program's previous purchase requirement.
Two of the assumptions underlying the low end estimate are similar to those for the point estimate provided Representative Mathis last week. A decline in participation because of normal seasonal factors and a reduction in participation associated with the new law's eligibility and benefit provisions are assumed.
The low end estimate also assumes unemployment would remain at its current level of 5.8 percent for the remainder of the fiscal year. Recent estimates indicate that a one percentage point increase (decrease) in the national unemployment rate could increase (decrease) food stamp costs by about $500 million on an annual basis. The high end estimate and point estimate provided Representative Mathis are based on the assumption that unemployment would increase to 6.3 percent in the final quarter.
The range and point estimate do not attempt to control for changes in program error rates that might be occurring with the new program.
I hope this information will be of assistance to you. If you have any further questions, please let us know.
With best wishes.
Sincerely,
ALICE M. RIVLIN, Director.