Newt Gingrich, Food Stamps, and Flat Earth Economics

Apparently, if Newt Gingrich is to be believed (and why would anyone do that?), he doesn't understand how food stamps stimulate the economy:

Well, you know, I carry around a bumper sticker that says 2 plus 2 equals 4. So I'd be very curious how a dollar given to somebody becomes a $1.79. And I think if we could get that to work with the U.S. Treasuries, so if people gave the Treasury $1,000, it became $1,790, we could pay off the federal debt and never worry about spending or anything. I mean, I -- you know, somehow, I don't understand how liberal math turns $1 into $1.79.

As I've mentioned before, only idiots don't realize how money has velocity--that is, that $1,000 can ultimately yield more than $1,000 of services. So let's turn it over to that bastion of Dirty Fucking Hippies, The Wall Street Journal:

Money from the program -- officially known as the Supplemental Nutrition Assistance Program -- percolates quickly through the economy. The U.S. Department of Agriculture calculates that for every $5 of food-stamp spending, there is $9.20 of total economic activity, as grocers and farmers pay their employees and suppliers, who in turn shop and pay their bills.

While other stimulus money has been slow to circulate, the food-stamp boost is almost immediate, with 80% of the benefits being redeemed within two weeks of receipt and 97% within a month, the USDA says.

And it's not just USDA claiming this, Mark Zandi, who was Republican presidential candidate John McCain's campaign adviser, has made similar claims.

Of course, this assumes that Gingrich is stupid--and I don't think he is. He certainly possesses a well-develop feral cunning. I think he's just lying (again). He knows this is a stupid argument, but he also knows demonizing food stamp recipients is a good way to mobilize his base (because food stamps are such a cushy living).

Admittedly, he said this on Fox 'News', whose business model is to misinform its viewers, but the sooner this man is no longer taken seriously in any way, shape, or form, the better off we will be.

And really, does anyone really believe that he carries around a bumper sticker that says "2 + 2 =4"? He must have very full pockets (and here I was, thinking he was happy to see me!), what between the bumper sticker, the copy of the Constitution, and the Federalist Papers. Or something.

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Some years ago when I was projecting fishing benefits for a proposed reservoir over the next 20 years, I understood from economists that the standard was $7 of activity for each dollar spent. Reservoir was never built so it didn't matter.

By Jim Thomerson (not verified) on 13 Oct 2010 #permalink

I don't really understand how someone like Gingrich can honestly not understand this. I mean, what does he think? Someone spends 5 dollars at the grocery store and the store owner uses the money as toilet paper?

Newt can't understand how food stamp dollars work yet that never stopped him from supporting the military changing $12 hammers into $2,000 hammers.

See if those food stamp folks would start killing people...

Waitaminute, wasn't $1 (in tax savings from tax cuts) supposed to amount to $1.79 (in actual economic improvement when it trickles down to the rest of us poor slobs) according to Reaganomics?

By Joe Shelby (not verified) on 13 Oct 2010 #permalink

In Gingrich's defense, in medieval times, the local nobleman probably did not spend those gold coins from taxes directly, but kept it in a sack in his castle until he needed it to wage war on some rival feudal lord. So the idea of the dynamic effects of money does not form a part of Newt's intellectual heritage.

By Birger Johansson (not verified) on 13 Oct 2010 #permalink

Actually, in medieval times, the taxes received by a local nobleman were mostly
a.) Labor (typically 40 days of labor or military service per family per year)
b.) Food

By A Silberman (not verified) on 14 Oct 2010 #permalink