The glacial US economic recovery seems to be slowly reducing the number of Americans getting Supplemental Nutritional Assistance Program benefits, or food stamps — an $80-billion annual program. According to the USDA (via the WSJ): (a) 46.8 million Americans received SNAP benefits in December, the lowest number since June 2012; (b) 22.8 million households received SNAP benefits in December, the lowest number since August 2012; and (c) $5.8 billion in SNAP benefits were paid out in December, the lowest number since November 2010.
Continuing economic improvement means that decline should continue, according to the CBO, which sees participation falling to 34 million by 2023 at an annual cost of roughly $56 billion, adjusted for inflation.
Even under that scenario, there would still be double the number of Americans getting benefits versus back in 2000 when annual spending was $18 billion. Why has spending soared over the past decade or so? From the CBO:
– About 65 percent of growth came from an increase in the number of people receiving benefits. That increase was driven primarily by the weak economy.
– About 20 percent of growth can be attributed to temporarily higher benefit amounts. That increase was legislated in the American Recovery and Reinvestment Act of 2009.
– The final 15 percent of growth stems from other factors, such as higher food prices and lower income among beneficiaries, both of which boosted benefits.
But as researchers David Armor and Sonia Sousa have pointed out, the story since the Great Recession is not just one of more poor people causing greater spending and participation. “Most of the increases in food-stamp participation in the past several years have instead resulted from an increase in benefits going to people above the poverty line,” they wrote in the Fall 2012 issue of National Affairs.
More people are eligible, and more of those eligible are participating. As Armor and Sousa highlight, some 8 million recipients (as of their writing) had incomes at 200% of the poverty level or higher. Lowering that threshold to 130% of the poverty level would save about $35 billion a year, according to Armor and Sousa. Certainly that would be one possible reform, especially considering some possible modest anti-employment effects from the program. A 2013 paper by Cato’s Michael Tanner mentions a number of possible changes including stronger work requirements and subjecting all SNAP applicants to traditional asset and income tests rather than using broad, categorical eligibility. An alternate reform is to shift the entire budget into the Earned Income Tax Credit, as part of an expansion of that program. The CBO chart below looks at the cost and participation impact of a number of possible changes, which all seem rather modest versus the effect of better economic growth: