Food Stamp Benefits Falling Further Behind Rising Food Prices
End Notes
[1] Effective October 1, 2008, the 2007 farm bill renamed the Food Stamp Program the Supplemental Nutrition Assistance Program (SNAP). The program rules are substantially the same (with improvements from the farm bill), but the name is new. This paper uses the term “food stamps,” since the new name is not yet widely known.
[2] The Personal Responsibility and Work Opportunity Act of 1996 (P.L. 104-193) cut food stamp benefits from 103 percent to 100 percent of the Thrifty Food Plan.
[3] In calculating households’ benefit levels, Food Stamp Program rules assume that households will pay 30 percent of their net income toward food purchases.
[4] In September 2008, the maximum food stamp benefit for a family of four was $542 a month, while the monthly cost of the Thrifty Food Plan stood at $605.80. For USDA estimates of the monthly cost of the Thrifty Food Plan, see: http://www.cnpp.usda.gov/USDAFoodCost-Home.htm. Food stamp benefits are based on the cost of the Thrifty Food Plan for a family of four with children 6-9 and 9-11 years old. USDA makes adjustments for household size and for higher food prices in Alaska, Hawaii, Guam, and the Virgin Islands. For maximum benefit amounts, see http://www.fns.usda.gov/snap/government/cola.htm. For information on the Thrifty Food Plan itself, see U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, “Thrifty Food Plan, 2006,” April 2007, http://www.cnpp.usda.gov/Publications/FoodPlans/MiscPubs/TFP2006Report.pdf.
[5] See USDA, Economic Research Service, Analysis and Forecasts of the CPI for Food, projections as of September 19, 2008, http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/consumerpriceindex.htm
[6] This paper assumes that households can afford a sufficient diet with the amount of the Thrifty Food Plan and that no more than 30 percent of a household’s net income can be available to purchase food. Some may argue that that the Thrifty Food Plan is more than sufficient and provides a cushion to absorb the increased cost of food, or that low-income families can easily pay more than 30 percent of their available income for food, but evidence points to the contrary. Studies have found that the Thrifty Food Plan may not be sufficient for families to purchase an adequate diet, especially in urban areas where food prices are higher. See Julie Thayer et al., “Coming Up Short: High Food Costs Outstrip Food Stamp Benefits,” Children’s Sentinel Nutrition Assessment Program, September 2008, http://www.c-snap.org/upload/resource/RCOHD_Report_Final.pdf. In addition, the 30 percent household contribution rate was set more than 30 years ago. Since then the rate of increase in the cost of other items, such as housing, transportation, and health care, has outpaced the growth in food prices, calling into question whether most households can set aside 30 percent of their net income to purchase food.
[7] See, for example, Adam Drewnowski and SE Specter, “Poverty and Obesity: the Role of Energy Density and Energy Costs,” American Journal of Clinical Nutrition, Vol. 79, No. 1, pp. 6-16, January 2004.
[8] Many have recommended using a higher, more realistic, food plan as a means to ensure that food stamp benefits are adequate to purchase a healthy diet.
[9] The stimulus proposals the House and Senate Democratic leadership unveiled in September followed this approach. The Senate plan called for a 10 percent increase in benefits for FY09, which would boost benefits by about $5 billion over the next year, while the House plan would boost benefits by 5% in FY09 for a cost of about $2.6 billion. For more information on these stimulus packages, see Sharon Parrott, et. al., “Key Components of House and Senate Economic Recovery Packages Would Boost the Economy and Provide Needed Relief to Struggling Families,” Center on Budget and Policy Priorities, September 26, 2008, https://www.cbpp.org/9-26-08bud.htm.
[10] Mark Zandi, Chief Economist for Moody’s Economy.com, finds stimulus effects of food stamps would be in a similar range, generating $1.73 in increased economic activity for each $1.00 in cost, and says that a temporary increase in food stamp benefits is the most effective stimulus measure on the table. Similarly, Martin Feldstein, a leading Republican economist who was chair of President Reagan’s Council of Economic Advisers, endorsed a temporary food stamp increase earlier this year because it targets low-income people.