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SNAP: An Analysis of Current Practices and Proposed Changes

August 22, 2018
The Supplemental Nutrition Assistance Program (SNAP), commonly referred to as food stamps, is an integral part of the United States’ nutritional social safety net. In February, the Trump Administration proposed an overhaul and cut in funding to SNAP. The proposal moves away from the traditional system of electronic monetary credits and instead proposes to provide households with a physical basket of foods. This article will explore the history and evolution of SNAP and evaluate the President’s proposed changes to the program.

The first food stamp pilot programs began in 1939 and 25 years later President Lyndon B. Johnson created a permanent system through the Food Stamp Act of 1964. For most of its history, the food stamp program used physical coupons to represent denominations of currency, which families could then exchange for food at stores. However, in 1988, a shift was made to an Electronic-Benefit Transfer (EBT) payment system and further implemented across the country in 2002. With EBT, recipients received a card similar to a debit card preloaded with food-stamps, which could then be used to buy food at grocery stores. In 2008, the program was renamed the Supplemental Nutrition Assistance Program (SNAP) in efforts to avert the stigma behind the term “food stamps”.

In the long term, SNAP spending has been consistently increasing. However, more recent studies shows that SNAP spending has been decreasing in the past few years, peaking in the 2013 fiscal year at about $80 billion and steadily decreasing to $68 billion in the 2017 fiscal year.[1]

Additionally, the figure below suggests that SNAP costs, as a share of GDP, is falling and is projected to continue to fall; thereby suggesting that SNAP spending is becoming less of a fiscal burden on the federal government.

Image: SNAP Actual and Forecasted Costs, 1995 - 2025 Source: Center on Budget and Policy PrioritiesImage: SNAP Actual and Forecasted Costs, 1995 - 2025 Source: Center on Budget and Policy Priorities

Despite the controversy attached to SNAP, the program still maintains a degree of success. President George W. Bush sanctioned a USDA study on SNAP which showed that the program generates roughly $1.84 in gross domestic product (GDP) for every $1 spent in the program. While President Trump suggests that the US spends too much on SNAP, it should be noted that, as it currently stands, the US is actually given an economic boost by the program.[2] SNAP also works to lift families above the poverty line. Research shows that 10 percent of SNAP households are uplifted over the poverty line when SNAP benefits are added to gross income. Furthermore, when considering the poorest households, the effect is even greater – 12 percent of these households were found to move 50 percent above the poverty line.[3]

General opposition to SNAP also points to manipulation of the system by people who desire the ability to live off welfare. According to a 2016 USDA study, almost one-third of SNAP households had jobs, and only 5 percent of households receive cash welfare.[4] Additionally, reports have found that SNAP payment errors are trending downward, with a record low of approximately 3 percent of all SNAP benefits being overpaid.[5]

However, SNAP has its drawbacks as well. As it stands now, SNAP indicates little success in alleviating the issue of food insecurity. Food insecurity is defined as a lack of consistent access to affordable yet nutritious food. Between 2015 and 2016, food insecurity went mostly unchanged. Other findings showed that food insecurity was significantly higher than the national average (38.3%) for single-parent, Black, and Hispanic households.[6]

The basis behind President Trump’s newly suggested reform to SNAP centers around cutting the budget for the program in order to divert the spending to other sectors. The President’s budget plans to cut spending to SNAP by almost 10%, or about $213 billion, over the next 10 years. This proposal would take at least 4 million people off the program. A large component of this plan is to give certain goods to families and individuals under the program while allowing them to use the rest of the money at their own discretion.[7]

Image: SNAP Cuts in the President's 2019 Budget Source: USDAImage: SNAP Cuts in the President's 2019 Budget Source: USDA

Dubbed “America’s Harvest Box” and introduced as part of a budget proposal, it would affect households receiving more than $90 per month in benefits, which translates to 81 percent of all SNAP households, by giving roughly half of their benefits to them in the form of government-bought, nonperishable food items.[8] These products include goods such as peanut butter, canned goods, shelf-stable milk, etc. The USDA estimates that it could supply these goods at half the cost of retail, which would cut the cost of SNAP and still feed the participants. The average SNAP household currently receives $249 in monthly benefits, which implies that the new average benefits that one receives would be roughly $125.50.[9]

Budget director Mick Mulvaney compared the program to Blue Apron – a meal kit delivery service that ships ingredients like fresh fish and produce to a consumer’s doorstop to make their own meal. Assuming that this is the case, Blue Apron reports that as much as a third of the price per box factors into shipping and general logistics. Blue Apron is about $10 per meal kit while SNAP intends to offer $1.37 per meal. The USDA reported that the government could cut spending in half by supplying goods at half the cost of retail, but no budget has been put out for the cost of transportation. Factors such as dietary restrictions and severe weather conditions have also been left out of the report, leaving the actual final cost ambiguous.[10]

This cut in SNAP benefits fits with President Trump’s broader goals in his new budget plan. The President proposed large cuts, such as $3.5 billion from the Agriculture Department (from which SNAP is funded), $6.8 billion from the Department of Housing and Urban Development, and $16.2 billion from the State Department and USAID, in order to redirect these funds departments and programed more aligned with his political goals. Most notably, the President’s budget provides $80.1 billion in additional funding to the Department of Defense and $5.5 billion in additional funding for the Department of Homeland Security, for among other things, building a wall across the US-Mexico border.

President Trump’s SNAP proposals would take the program from its historical place as a free-market based, beneficiary-choice program to a government rationing program. Though further research must be done on the effects of the Trump Administration’s SNAP proposal, it seems that the rationale behind the spending cuts are not supported by the data. The data suggests that SNAP spending is increasingly placing less stress on total government spending, and its ability to lift people out of poverty and provide a basic nutritional safety net is unmatched.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References:

  [1]https://fns-prod.azureedge.net/sites/default/files/pd/SNAPsummary-07.pdf

  [2]https://www.theatlantic.com/health/archive/2012/07/the-economic-case-for-food-stamps/260015/

  [3]https://fns-prod.azureedge.net/sites/default/files/ops/Characteristics2016-Summary.pdf

 [4]Ibid.

 [5]https://www.cbpp.org/research/snap-is-effective-and-efficient

 [6]https://fns-prod.azureedge.net/sites/default/files/pd/SNAPsummary-07.pdf

 [7]https://www.washingtonpost.com/news/wonk/wp/2018/02/12/trump-wants-to-slash-food-stamps-and-replace-them-with-a-blue-apron-type-program/?utm_term=.1df4aea1f48d

 [8]Ibid.

 [9]https://fns-prod.azureedge.net/sites/default/files/pd/SNAPsummary-07.pdf

 [10]https://www.washingtonpost.com/news/wonk/wp/2018/02/12/trump-wants-to-slash-food-stamps-and-replace-them-with-a-blue-apron-type-program/?utm_term=.1df4aea1f48d

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