Supplemental Nutrition Assistance Program Reforms

The Supplemental Nutrition Assistance Program, known as food stamps until 2008, has its roots in President Franklin D. Roosevelt’s New Deal as a part of the Agriculture Adjustment Act of 1933. This act was an effort to reduce the supply-side surplus of agricultural products, which resulted from the demand for increased exports during World War I. The federal government stepped in to restore the purchasing power of agricultural commodities to the levels seen prior to the war, primarily through the taxation of intermediary processers.

In 1939, the “Food Stamps Plan” was passed and began to resemble the current-day SNAP program. The Food Stamps Plan allowed those with low incomes to purchase food stamps with the benefit of a 50% tax-funded match in additional stamps for restricted use on foods designated to be in a surplus. The special stamps for surplus foods were eliminated in 1961.1

Fast forward to 2016 and SNAP has more than 44 million beneficiaries receiving a monthly payment of $125.50 per individual.2 About two-thirds of SNAP recipients are vulnerable individuals such as children, the elderly, and the disabled.  Of those served, 42% earn incomes below 50% of the poverty line, and 40% earn incomes between 51-100% of the poverty line.3 In general, to qualify for SNAP, the individual can’t make over 130% of the federal poverty line in gross monthly income and no more than 100% of the federal poverty line in net monthly income.4  67% of the SNAP recipients are in the aforementioned category of vulnerable individuals and are not expected to work. Of the remaining 33%, about 14% were employed, and 19% were unemployed.3

In a 2015 report by the United States Census Bureau, SNAP was shown to have kept 4.6 million Americans out of poverty, lowering the overall poverty rate by 1.4%.5 The virtues of injecting SNAP monies into the economy have been touted by many Keynesian economists for the theoretical multiplier benefit of consumption spending on the economy. It has been estimated that every $1 spent in the SNAP program generates $1.79 in economic activity.6 Though this point is debated, framing a safety-net program such as SNAP in terms of its downstream effects on the general economy is removed from the intent of the program, which is to provide aid to individuals in need of sustenance. The SNAP program continues to garner much public support as shown by a recent study, which found that 80% of individuals agreed that SNAP benefits should be raised by 19-43% depending on the scenario.7

The current presidential budget proposal for fiscal year (FY) 2018 entitled A New Foundation For American Greatness suggests cutting the SNAP program by 29% over the next ten years. The proposed budget seems to lament that the typical ebb and flow of this public safety-net program has been replaced in recent years by continual spending increases. SNAP participation usually decreases when the economy is strong and increases when the economy is weak. SNAP reached a historic high during the recession, but even with the improved employment numbers since then, “SNAP participation remains persistently high.” Furthermore, the proposed budget states that the reforms to SNAP will “close eligibility loopholes, target benefits to the neediest households, and encourage work.” Loopholes and safeguards against fraud are important steps to take, especially with the knowledge that the amount of SNAP benefits paid in error totaled $2.2 billion in 2009.8 Prominent forms of SNAP fraud include benefits that are exchanged for cash, embellishment on applications to receive more benefits, and disqualified retailers who continued to accept SNAP.9

The budget proposal also suggests a major structural change to the financing of SNAP. Previously, SNAP was fully funded through the federal government with the states covering the administrative costs, but the new budget proposes a state-federal partnership that will phase in and shift 25% of SNAP costs to the states by 2023.10 The presumable intent of this change in financing is to incentivize states to control costs and put more resources into helping recipients seek employment.

In a Miami Herald op-ed, Mick Mulvaney, director of the U.S. Office of Management and Budget has defended the proposed budget cuts to the SNAP program as a means of making the government more efficient, decreasing the deficit, and allowing individuals to keep more money in their pockets through decreased taxation.11

In the budget proposal, the SNAP program takes the largest cut relative to other public programs. The widespread public support and historical bipartisan support of SNAP makes it hard to foresee the budget passing as proposed without a revision to this particular suggested cut to SNAP. Though the presidential budget is just a recommendation, there are senators on both sides of the aisle who have expressed the sentiment that the budget in its current form is “dead on arrival.”12 House and Senate Appropriations Committees will be considering the FY 2018 spending bills in July after the Independence Day recess so we will soon find out the depth of cuts to the SNAP program.

References

  1. The History of SNAP. SNAP to Health. https://www.snaptohealth.org/snap/the-history-of-snap/. Accessed June 26, 2017.
  2. Supplemental Nutrition Assistance Program (SNAP) Participation and Costs, 1969-2016.; 2017. https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap. Accessed June 24, 2017.
  3. Chart Book: SNAP Helps Struggling Families Put Food on the Table. Washington, DC; 2017. http://www.cbpp.org/research/food-assistance/chart-book-snap-helps-struggling-families-put-food-on-the-table#part4. Accessed June 25, 2017.
  4. Supplemental Nutrition Assistance Program – Fact Sheet on Resources, Income, and Benefits. https://www.fns.usda.gov/snap/fact-sheet-resources-income-and-benefits. Published 2017. Accessed June 25, 2017.
  5. Renwick T, Fox L. The Supplemental Poverty Measure: 2015. Washington, DC; 2016. https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-258.pdf. Accessed June 24, 2017.
  6. Hanson K. The Food Assistance National Input-Output Multiplier (FANIOM) Model and Stimulus Effects of SNAP.; 2010. https://www.ers.usda.gov/publications/pub-details/?pubid=44749. Accessed June 25, 2017.
  7. Kull S, Ramsay C, Lewis E, Williams A. Americans on SNAP Benefits.; 2017. http://vop.org/wp-content/uploads/2017/04/SNAP_Report.pdf. Accessed June 24, 2017.
  8. Brown K. Supplemental Nutrition Assistance Program: Payment Errors and Trafficking Have Declined, but Challenges Remain.; 2010. http://www.gao.gov/products/GAO-10-956T. Accessed June 24, 2017.
  9. What is SNAP Fraud? https://www.fns.usda.gov/fraud/what-snap-fraud. Published 2017. Accessed June 25, 2017.
  10. A New Foundation For American Greatness – Fiscal Year 2018. Washington, DC; 2017. https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/budget.pdf. Accessed June 24, 2017.
  11. Mulvaney M. Mulvaney: The federal budget released today puts taxpayers first. Miami Herald. http://www.miamiherald.com/opinion/op-ed/article152074727.html. Published May 22, 2017. Accessed June 24, 2017.
  12. Gambino L. Republicans voice opposition to Trump’s budget: “Dead on arrival.” The Guardian. https://www.theguardian.com/us-news/2017/may/23/republicans-opposition-trump-budget-medicaid-spending. Published May 23, 2017. Accessed June 25, 2017.
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