Last Thursday, the House rejected a farm bill that would have cut food stamp spending by more than $20 billion over the next 10 years, ending benefits for nearly 2 million people. This is the second year in a row that Congress has debated a farm bill that combines cutbacks in farm subsidy programs with cuts in the Supplemental Nutrition Assistance Program (SNAP). Some lawmakers propose spending cuts to stem recent growth in SNAP spending. But is SNAP spending out of control?
Before cutting benefits for 2 million people, here are five things to consider about the program.
1. The SNAP program is designed to automatically expand in times of recession. Growth in spending has made food stamps an easy target. But the program was designed to expand with greater need. And it has succeeded at what it was supposed to do. Participation rose 81 percent since the recession began in 2007, reaching more than 47 million people this spring. As unemployment went up and incomes fell, more people became eligible for the program and began signing up for benefits. That the program has grown means it has been successful as a safety net for people who have lost their jobs or who don’t earn enough to adequately feed their families.
As a rule of thumb, analysts who study the program expect to see 1 to 3 million more people join the program with each 1 percentage-point rise in unemployment. It’s this flexibility that makes SNAP so crucial in downturns. It makes up for safety net programs with fixed funding, like cash welfare, that have been less successful (or not successful) in fighting poverty when the economy sours.
2. Higher SNAP spending provides a fiscal stimulus to the economy. Not just needy families, but all Americans benefit from countercyclical programs, such as SNAP and unemployment benefits. By pumping needed dollars into the economy when it is weak, SNAP helped our economy recover from the recession of 2007-09, assisting us in avoiding another Great Depression. Almost all (97 percent) of SNAP benefits are spent within a month, providing an immediate economic stimulus. One economic analysis suggests that every $5 in new SNAP benefits generates as much as $9 of economic activity. Recognizing this, Congress chose to temporarily expand the size of SNAP benefits under the 2009 stimulus package (the American Recovery and Reinvestment Act, or ARRA), to add further stimulus beyond caseload-generated growth.
3. SNAP spending is projected to decline over the next several years. As unemployment improves and the need for food stamps shrinks, participation—and costs—are expected to fall. As in past recessions, the decline in SNAP participation is expected to lag behind the recovery in the economy, but the Congressional Budget Office projects participation to fall from 47 million in 2012 to 35 million by 2023. More immediately, federal spending on SNAP is expected to go down in November 2013, with the expiration of the temporary boost in benefit size under ARRA.
4. SNAP reduces food insecurity, particularly among vulnerable populations. My Urban Institute colleagues Caroline Ratcliffe and Signe-Mary McKernan found that SNAP reduces the likelihood of being food insecure—that is, of having trouble meeting basic food needs—by 30 percent. It is an important safety net, with particularly high program participation among families with children. Traditionally, half of all recipients are children, and another quarter are adults in families with children. In addition, 20 percent of the caseload are disabled recipients. Elderly participation is lower, but still important, at 8 percent of the caseload.
5. SNAP benefits are a key work support. Increasingly, SNAP benefits have been viewed as a key work support for low-income working families and many states have changed policies to streamline access. In fact, while most SNAP growth is due to the economy and ARRA, changes in state administrative practices have contributed to program growth in recent years. Efforts to ease administrative burden were directly targeted in the House farm bill, which would have eliminated “broad-based categorical eligibility,” a practice that has been widely adopted to reduce paperwork. Under this policy, people who receive benefits from certain other low-income assistance programs—such as Temporary Assistance for Needy Families—become automatically eligible for SNAP, though the amount of their benefits is still governed by SNAP rules.
While its impact on caseload size was limited (the 1.8 million people affected by eliminating this practice represent less than 5 percent of the caseload), this administrative simplification is a step toward a more effective and streamlined public benefits system. Further strategies for modernizing and simplifying the delivery of nutrition benefits and other work supports are currently being tested in a multi-state demonstration directed by the Urban Institute. More efficient delivery of SNAP and other work supports provides families with “a hand up, not a handout,” according to one governor’s perspective on early lessons from the Work Support Strategies initiative.
In sum, SNAP is an important work support for working families. It is effective in reducing food insecurity among vulnerable populations. And its expansion in times of economic downturn is not a flaw in program design, but a key element of its success in supporting families and stimulating the economy during hard times.