On November 1, tens of millions of Americans learned that the assistance they received from the federal government to purchase groceries was reduced. Maximum monthly benefits for a family of four fell from $668 to $632, and for a single person the maximum benefit fell from $200 to $189.
Who is going to be effected by these cuts?
This change is likely to affect nearly 48 million individuals, including 22 million children. According to the U.S. Department of Agriculture (USDA), since 2007, the number of individuals benefiting from the nation’s Supplemental Nutrition Assistance Program, or SNAP (which most of us know as food stamps) has grown from 26 million to 48 million people, in large part because of the significant loss of jobs and income that resulted from the Great Recession that began in 2008.
What impact will these cuts have on cities?
The impact on cities is likely to be significant. First, individuals and families will have to spend more of their limited resources to purchase food, leaving them with less money to pay for other necessities. Second, these same households will be forced to reduce their food spending, which is likely to impact their health and well-being. Third, your city or town and the various community-based organizations dedicated to assisting lower income households with food are likely to face an increased demand for basic food items like milk, bread, and cheese. And fourth, this cut is likely to have an impact on the nation’s overall economy.
If the impact is likely to be so significant, why did these cuts occur?
The $5 billion cut that took effect November 1 for fiscal year 2014 (which began October 1) will be followed by another $6 billion cut in fiscal year 2015 and yet another $6 billion cut in fiscal year 2016. This reduction in food stamp assistance occurred because Congress failed to extend a temporary increase in food stamp spending that was part of the Obama Administration’s 2009 economic stimulus bill.
Are more cuts coming?
The future does not bode well for the nation’s food assistance program, despite its benefits. If left to the Republican-controlled House, Nutrition Assistance programs would be cut by an additional $39 billion over ten years. If left to the Democratic-controlled Senate, $4 billion in additional cuts would be made over the same ten-year period.
Do these cuts make sense?
These cuts make no sense; they’re happening even though most economists agree that the more spending power low- income people have, the greater the benefit for the economy. Unlike those Americans with substantial incomes, who are more likely to save their extra income, the nation’s poorest individuals will spend their extra money to ensure that their basic needs are met, and in doing so, will return more money to the economy.
For example, the USDA estimates that for every $5 spent with food stamps, $9 in economic activity is generated, and these expenditures benefit grocers, food producers, and farmers. And the New York Times reports that JP Morgan Chase estimates that the cuts could shave 0.2 percentage points from economic growth in final three months of 2013, and 0.1 from the nation’s gross domestic product. And while “those drags may seem small . . . projections for gains in fourth-quarter gross domestic product hover around an annual rate of just 2 percent.”
Are more cuts in safety net programs coming?
Unfortunately, the answer appears to be yes. Unless Congress acts, emergency unemployment benefits will end, and millions of individuals will have their benefits cut. The end of that program is likely to cut economic growth by 0.4 percent in the first quarter alone, according to JP Morgan Chase.
About the author: Neil Bomberg is NLC’s Program Director for Human Development. Through Federal Advocacy, he lobbies on behalf of cities around education, workforce development, health care, welfare, and pensions. Follow Neil on Twitter at @neilbomberg.