Expansion and Permanent Funding of the Highly Effective SNAP Program Will Help Low-Income Families and Provide Immediate Economic Stimulus
What is SNAP and How Does it Work
Supplemental Nutrition Assistance Program (SNAP) provides direct, targeted financial support to improve access to nutritional food for low income individuals and families (including low-wage working families, low-income seniors and people with disabilities living on fixed incomes, and other individuals and households with low incomes). SNAP benefits are fully funded by the federal government while states administer the program in their state bear some the administrative costs. SNAP targets and pays benefits according to need: the poorest households receive the largest payments. In 2018, “the average SNAP recipient received about $127 a month (or about $4.17 a day, $1.39 per meal).”
The COVID-19 Induced Recession Increases Food Insecurity for Millions
Prior to COVID-19 the SNAP program provided benefits to purchase health meals to many low-income families – “serving 38 million people nationwide in 2019. ” As a result of the COVID-19 economic downturn, SNAP participation grew to 43 million by early summer 2020 and is expected to increase if the recessions continues. In addition, rising foods costs threaten food security for low income families. The U.S. Department of Agriculture (USDA) Food and Nutrition Service (FNS) estimated a more than 5% increase in the cost food from last year — an increase more than double the 20-year annual average increase of around 2%.
SNAP Is Highly Effective
The SNAP benefit program should expand the amount of benefits and the amount of people eligible during the time of the coronavirus pandemic because of both the direct effects of reducing food insecurity as well the fiscal stimulus benefits to the broader economy. Research has shown that other than unemployment insurance, SNAP is the most efficient and effective federal program providing direct, targeted financial assistance during economic downturns. SNAP responds quickly and effectively to support low-income families and communities during times of increased need. Enrollment expands when the economy weakens and contracts when the economy recovers and poverty declines. SNAP helps families to bridge temporary periods of unemployment or a family crisis such as when a parent loses her job or has a job that pays low wages.
SNAP Expansion Will Reduce Food Insecurity AND Provide Immediate Economic Stimulus to the US Economy
With the decrease in economic activity since the pandemic started, any stimulation the economy can get during this time is greatly needed. “Research has shown that increasing SNAP participation by 5% results in 2.2 million low-income Americans receiving $859 million in direct SNAP benefits that generate $1.5 billion in nationwide economic activity.” Another indicator the SNAP program benefits is its effect on unemployment. Research has shown “that every $1 billion of SNAP benefits creates 8,900-17,900 full-time jobs while every $1 billion in cuts to SNAP funding, 11,437 jobs would be destroyed.” Since many people have lost their jobs, using SNAP benefits as a stimulus to generate jobs can be very useful during this time. In addition, research has shown that SNAP related spending stimulates economic activity in low income areas since “SNAP beneficiaries spend more dollars on food in local stores than eligible non-participants.”
Congress Should Take Advantage of the COVID-19 Crisis to Restructure SNAP Appropriation Process to Ensure Adequate and Timely Funding of SNAP Program
SNAP is currently structured as an “entitlement program” which means benefits are guaranteed to anyone who qualifies under program rules can get benefits if they apply. This is a valuable aspect of the SNAP program. However, importantly, under the current structure the appropriations for the program are capped based on available funding each year. This legislative constraint does not allow the program to adjust as needed when economic conditions change quickly such as we are witnessing under the COVID-19 pandemic.
For example, the current amount of SNAP program funding was estimated for fiscal 2021 in the prior year, pre-COVID-19, when “unemployment was below 4 percent and food inflation had been below 1 percent a year for five years.”
However, as a result of the COVID-19 induced economic downturn, SNAP applications and participants spiked (to more than 43 million) and food costs also accelerated above base line projections (by 5 to 6 percent). Demand for SNAP benefits is expected to be above the previously projected levels for some time as the Congressional Budget Office (CBO) projects unemployment will be 9.4 percent in the first quarter of 2021 and 7.6 in the fourth quarter of that year.
Congress, as part of its stimulus package legislation, could easily address this structural problem of inadequate funding by funding SNAP like it funds most other entitlement programs by replacing language that requires a specific dollar funding amount each year that may be incorrect which language such as “such sums as may be necessary” to fund all the benefits for eligible enrollees who apply for them. This would also protect this essential basic-needs program from other unexpected funding delays such as government shutdowns during the annual budgeting process.
In sum, SNAP has been shown to be a highly effective program that responds quickly and effectively to support low-income families and communities during times of increased need and provides immediate and powerful economic stimulus effects to the broader economy.