SNAP/Food Stamps Provide Real Stimulus

As the economy has weakened, getting lower-income families food stamps and other payments that they can spend quickly emerged as a key way to stimulate the economy. FRAC believes that putting more resources quickly into the hands of the people most likely to turn around and spend it can both boost the economy and cushion the hardships on vulnerable people who face a constant struggle against hunger.

Just one dollar of SNAP/Food Stamp benefits creates a “ripple effect” through the economy. A study by industry research firm Moody’s looked at the potential impact of each stimulus dollar. According to economist Mark Zandi, “some provide a lot of bang for the buck to the economy. Others … don’t.” Zandi said that the study shows the fastest way to infuse money into the economy is through expanding the SNAP/Food Stamp program. “If someone who is literally living paycheck to paycheck gets an extra dollar, it’s very likely that they will spend that dollar immediately on whatever they need – groceries, to pay the telephone bill, to pay the electric bill,” he said. That single dollar helps to pay the salaries of the grocery clerks, pays the truckers who haul the food and produce cross-country, and finally goes to the farmer who grows the crops.

Plus, USDA research shows that each $5 of federal SNAP/Food Stamp benefits generates nearly twice that in economic activity.

In 2009, FRAC led the charge to include a SNAP/Food Stamp boost in the American Recovery and Reinvestment Act of 2009 (ARRA). The Act:

  • Provided $19.9 billion for increased SNAP/Food Stamp spending. Most of that goes to boosting benefits, which translates to an initial 13.6 percent increase in the value of the Thrifty Food Plan. (The increase phases out over time.) This began with the April 2009 allotments.
  • Suspended time limits on eligibility for jobless adults without dependents through FY 2010 unless a state chooses to offer workfare slots.
  • Provided $295 million for SNAP/Food Stamp administrative costs, almost all of it to states. Of that, $4.5 million goes to USDA for oversight (FY 09 payments to flow to states no later than 60 days after enactment). The formula is based on states’ shares of SNAP/Food Stamp households in last 12 months (75 percent) and of SNAP/Food Stamp increases in last 12 months (25 percent).