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SNAP/Food Stamps = Real Stimulus

What's going on at the Federal level?

What do the experts say about how SNAP/Foods Stamps stimulate the economy?

Just one dollar of SNAP/Food Stamp benefits creates a “ripple effect” through the economy.

  • Based on U.S. Department of Agriculture analysis, it is estimated that each $5 of federal SNAP/Food Stamp benefits generates nearly twice that in economic activity. See USDA research.
  • A study by industry research firm Moody's Economy.com 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. Tracking that single dollar shows what economists call the ripple effect, Zandi said. It 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.

Across the board, economists and researchers agree that boosting SNAP/Food Stamp benefits also boosts the economy.

  • The Congressional Budget Office (CBO) has rated a temporary increase in SNAP/Food Stamp benefits highly for cost-effectiveness, short lag time, and relative certainty about the policy impact. See “Options for Responding to Short-Term Economic Weakness,” CBO (January 2008).
  • At a Senate hearing on Thursday, Peter R. Orszag, director of the Congressional Budget Office, testified that increases in SNAP/Food Stamps and unemployment benefits would have more immediate economic effects than rebates. ‘Food stamp and unemployment benefits can affect spending in two months,’ Mr. Orszag said. ‘Rebates would affect spending at the end of 2008.’” See “Bush and House in Accord for $150 Billion Stimulus,” by David M. Herszenhorn, The New York Times, 1/25/08.
  • GOP Economist Martin Feldstein “embraced” the idea of increasing SNAP/Food Stamp benefits as a way to stimulate the economy. At a Brooking Institution forum, Feldstein said he supported a flat rebate for all who pay taxes, as well as temporary increases in the SNAP/Food Stamp and supplemental income programs. See “Dems Eye Tax Rebates, Fatter Benefits,” by Andrew Taylor, AP, 1/11/08, and “Bush tax guru backs stimulus plan,” by Steve Hargreaves, CNNMoney, 1/24/08.
  • Former Treasury Secretaries Lawrence Summers and Robert Rubin agreed that additional SNAP/Food Stamp benefits would have an immediate impact on the economy. In testimony before the Joint Economic Committee, Summers said “[o]n the spending side the measures most likely to be effective are temporary increases in benefits perhaps for the long term unemployed and food stamp recipients.” In an interview with NPR, Rubin said that “immediate effects such as extending the unemployment insurance time, additional food stamps, measures of that kind that will have effect on…the demand of the economy right away.’” See “Ex-Treasury Secretary Assesses Recession Risk,” interview with Robert Rubin, NPR’s All Things Considered, 1/23/08.
  • Stuart Greenbaum , the former dean of the Olin Business School at Washington University in St. Louis, said that expanding SNAP/Food Stamps and unemployment benefits, would “provide the largest spending kick per dollar of stimulus.” See his full statement.

As more families struggle with rising food costs, an increase in SNAP/Food Stamp benefits would help quickly those that need it the most.

  • The SNAPFood Stamp EBT System has a proven record in responding quickly and effectively in times of distress. For example, in response to Hurricane Katrina, newly hard hit victims and existing clients were provided with SNAP/Food Stamp benefits on their Electronic Benefit Transfer (EBT) cards that they used at grocery stores to help meet their food needs. USDA’s response to Hurricane Katrina – including implementation of the Disaster Food Stamp Program – is described in the “What Went Right” section of the White House’s official report, “Federal Response to Hurricane Katrina: Lessons Learned” (February 23, 2006).
  • Regular SNAP/Food Stamp allotments leave families short of the necessary amount to purchase an adequate diet. SNAP/Food Stamp allotments are based on the Thrifty Food Plan (TFP) market basket, but this amount is not sufficient for recipients to meet the actual food prices charged in their neighborhoods. Boston researchers report that the actual cost of the TFP exceeded the maximum SNAP/Food Stamp allotment for a family of four in the small and large stores. Averaging across all stores, the maximum SNAP/Food Stamp allotment fell short by almost $27 per month. When the researchers investigated the cost of a modified TFP with substitutions of healthier food products, such as whole grains, the maximum SNAP/Food Stamp allotment fell short by about $148 per month. See John Cook, Vivien Morris, Nicole Neault, and Deborah Frank, “The Real Cost of a Healthy Diet in Boston, Massachusetts,” Boston Medical Center (August 2005).
  • A SNAP/Food Stamp boost would help families now turning to pantries and soup kitchens. Of SNAP/Food Stamp families who turn to the emergency feeding network for help report, over half report that their SNAP/Food Stamp allotments run out after the second week of the month and four out of five report their allotments run out after the third week. See “Hunger in America 2006,” America’s Second Harvest—The Nation’s Food Bank Network.
  • On the House Floor, Representative Jim Mc Govern (D-MA) pointed out that “[a] 10% temporary increase in food stamps would result in an increase of almost 50 cents per day per person, or $14 per month, in the food stamp benefit. That may not seem like much, but an extra 50 cents a day can make the world of difference for someone struggling to feed themselves. More importantly, a temporary increase in Food Stamp benefits would generate $1.73 in economic activity for every dollar in cost and we know that a temporary increase in food stamps can be delivered quickly and will be spent right away.”
  • SNAP/Food Stamp benefits can be quickly deposited on debit cards and used almost immediately at grocery stores, said Joan Entmacher, vice president and director of family economic security at the National Women’s Law Center. This would help both the economy and aid women in particular, she said. In 2006, nearly 70 percent of adult SNAP/Food Stamp beneficiaries were women, according to the Department of Agriculture. See “Stimulus Plan Falls Short in Female-Friendly Audit in US,” womensphere, 2/7/08.

Columnists and editorial writers agree that SNAP/Food Stamps are effective – and targeted – stimulus strategy.

  • According to the blog maintained by The New York Times Editorial Page, “ Congress’ own budget office, and many other economists and analysts, told lawmakers — and the public — that the most effective form of stimulus is increased food stamps and extended unemployment benefits for the long-term unemployed who exhaust their initial 13-weeks of benefits… The decision about what kinds of stimulus are better than others is not a close call. A study by Moody’s Economy.com shows that every extra dollar spent on food stamps would generate $1.73 in GDP within a year. A dollar of extended unemployment benefits generates $1.64; a dollar of infrastructure spending, $1.59; and a dollar of state aid, $1.36.”
  • Oregonian columnist David Sarasohn wrote that “[b]asically, the time between food stamps reaching people and the time the money gets into the economy is about as long as it takes the recipients to get to the grocery store. This makes food stamps an especially effective strategy if you're trying to stimulate an economy to ward off a recession.”
  • Nick Jimenez, editorial page editor for the Corpus Christi Caller-Times, wrote “I would think that folks out of a job would spend every nickel they get and that every person who gets extra food stamps has no choice but to use them at the grocery store. Maybe we don't really believe that there will be economic hard times ahead. It may be that the real point of the stimulus political agreement is to project the image of a concerned leadership and thus to inject confidence in the American consumer. It’s a big pep talk. I feel better already.” See “Who should get the stimulus checks?” by Nick Jimenez, Editorial Page Editor, Corpus Christi Caller-Times, 1/27/08.
  • Journalist and blogger Neil deMause believed that the debate over increasing SNAP/Food Stamps and unemployment insurance was “a useful lesson not only for Congress, but for New York City officials considering how to help Gotham’s economy.First off, those with little money on hand tend to spend it not only fast, but locally. This cuts down on what economists call “leakage.” Second, they’re likely to spend it where they live, which is -— surprise, surprise — in depressed neighborhoods, helping to revitalize them without the bulldozers and evictions that usually accompany that term. Finally, not only do programs for the poor provide more bang for the buck, but … government benefits come out of the pocket of the federal government, not city coffers. So when the food-stamp rolls rise, Washington is effectively pouring buckets of money into New York’s economy.” See blog posting, 2/4/08.

SNAP/Food Stamps in the Stimulus Package

Words of Support from Members of Congress

  • Republican Senators Collins, Snowe and Smith: “[Maine Senator Susan] Collins said a bipartisan coalition of Northeastern and Midwestern senators will push to secure as much as $800 million in heating assistance for the poor, a provision that House Democratic leaders dropped in favor of securing payments for about 35 million families who earn too little to pay income tax. Collins said she will push to restore about $12.5 billion in unemployment benefits and $5 billion in food-stamp extensions that House negotiators also eliminated, a call echoed by her fellow Maine Republican, Sen. Olympia J. Snowe, who vowed to add funds next week in the Finance Committee. Snowe will be joined by another Republican on the committee, Sen. Gordon Smith ( Ore.). See “Senators Push to Expand Stimulus,” by Jonathan Weisman and Peter Baker, The Washington Post, 1/26/08.
  • Senate Majority Leader Reid: “I expect that the [Finance] Committee and other Senators will work to improve the House package by adding funds for other initiatives that can boost the economy immediately, such as unemployment benefits, nutrition assistance, state relief and infrastructure investment.” See “Reid Statement on Economic Stimulus Deal Struck by House, President,” 1/24/08, Web site of Senate Majority Leader Harry Reid (D-NV).
  • Senate Finance Committee Chairman Baucus: “I believe, and I think many Senators agree, that we can do even more to stimulate America’s economy. Extending unemployment insurance can get money out fast to people who need it and will spend it. Increasing food stamps could do the same. Additional business incentives may more directly help hurting businesses that need quick cash to spend.” See Press Release from Senate Finance Committee Chairman Max Baucus (D-MT), 1/24/08.
  • Senate Agriculture Committee Chairman Harkin: “Now, from what I hear, the House proposal has zero in it--zero—for food stamps. Well, that has to be taken care of. And when that bill comes, if it doesn't have it in here when it comes here, I, along with others--and I see my colleague from Ohio, who I know is going to be stalwart on that too--we are going to demand that any stimulus package have food stamps. Food stamps. And why shouldn't it? That is the biggest bang for the buck right there.” See Floor Statement by Senate Agriculture Committee Chairman TomHarkin (D-IA), Congressional Record, page S272, 1/24/08.
  • Senator Schumer: “Spending additional money on unemployment benefits and food stamps will generate ‘more bang for the buck,’' said Schumer, a New Yorker who is the Senate's No. 3 Democrat. See “Schumer Says Senate Will Increase Jobless Aid in Stimulus Plan,” by Alison Fitzgerald, Bloomberg News, 1/26/08.
  • Senator Leahy: “ In a letter to the Senate’s leadership Thursday, Senator Patrick Leahy (D-Vt.) urged inclusion of a temporary expansion of Food Stamp benefits in the economic stimulus package now under development in Congress. ‘A stimulus package provides an opportunity to give a boost to the economy and at the same time deliver meaningful assistance to those that will be most impacted by a possible economic downturn,’ Leahy wrote.” See Press Release from Senator Patrick Leahy (D-VT), 1/24/08.
  • Senator Kennedy: “Helping families also means increasing benefits under the food stamp program. This program not only helps families get back on their feet – it helps stimulate the economy as well. Even President Reagan’s economic advisor, Martin Feldstein, has recommended food stamp supplements as an effective way to boost economic growth.” See statement, “Senator Ted Kennedy on Economic Stimulus,” 1/22/08.
  • Senator Casey: “'I’d be very concerned about any agreement that doesn’t include unemployment insurance, for example, as a way to stimulate the economy,’ said [Pennsylvania Senator Bob] Casey. ‘I would also like to see help on food stamps.’…‘Get it into the hands of people who will spend it quickly,’ added Casey. ‘Obviously, to spend money on food is very important, and obviously unemployment insurance will help, as well as rebates.’ See “Casey: ‘Concerns’ About Plan to Boost Economy,” KDKA Channel 2, 1/24/08. “We have to make sure, in my judgment, that if we put together a bipartisan stimulus package--and we still have to work on this in the Senate--that we invest in strategies that will work, not what we would like to do or hope to do or not what one side or the other believes is a good idea. We have to invest in strategies that work: Food stamps, not just because it helps individual Americans and their families, but we know by investing in that strategy, they will spend the money quickly. We need people to spend money very rapidly to dig us out of the hole we are in. Food stamps, unemployment benefits, and aid to the States – we have to provide investments in strategies that will work.” See Floor Statement by Senator Bob Casey (D-PA), Congressional Record, page s325, 1/25/08.
  • Senators Conrad and Dorgan: “North Dakota’s senators predict the Senate will add increases in food stamp aid and unemployment benefit extensions to the economic stimulus package announced Thursday… [North Dakota Senator Byron] Dorgan and [his colleague Senator Kent] Conrad said extending jobless pay and increasing food stamps helps the neediest and is much more rapidly distributed and spent than millions of tax refund checks.” See “N.D. senators want more in economy package,” by Janell Cole, Jamestown Sun, 1/26/08.
  • Senator Lieberman: “Today's agreement between House leaders and the White House is a step in the right direction. Under the agreement, nearly all working Americans will receive a tax rebate, and businesses will benefit from new investment incentives. Still, the package is missing the two most effective means of providing an immediate economic boost: a temporary extension of unemployment benefits and a temporary increase in food stamp benefits. I will work with my colleagues in the Senate to improve the House package by adding such measures. We must do all – not just part – of what we reasonably can to give the economy the boost it needs and those worst hit the help they need.” See Statement by Senator Joe Lieberman, 1/24/08.
  • Senator Feinstein: “Sen. Dianne Feinstein (D-Calif.) said that one of her concerns about the compromise reached between the House and the White House was that ‘rebates don’t get to the people until May or June. So the Senate should consider extending unemployment insurance and increasing food stamps to get help quickly to those who need it most.’” See “ Senators Have Own Ideas On Stimulus; Plans Calling For Food Stamps And Help For The Unemployed May Upset The House-Crafted Compromise,” by Richard Simon, Los Angeles Times, 1/26/08.
  • Senator Boxer: “And while [California Senator Barbara] Boxer lauded the House’s decision to provide rebate checks to lower income earners, she advocated including other elements to reach people impacted by the downturn and more directly boost the economy, like extending unemployment insurance and increasing funding for Food Stamps and Medicaid.” See statement, “Senator Boxer Praises Efforts to Move Stimulus Package,” 1/27/08.
  • Senator Levin: “Safety net programs, including unemployment insurance, home heating assistance and food stamps, play a critical role even in good economic times. When the economy is struggling, hard working citizens who lose their jobs and can’t afford basic necessities like food and heat require additional protections. Investing in the safety net will also channel money to people who will spend it immediately because they have no cash to spare, benefiting local economies very quickly through increased consumer spending.” See statement on “Stimulating the Economy,” by Senator Carl Levin (D-MI), 1/27/08.
  • Senator Stabenow: “‘We've heard from the Congressional Budget Office that the top two items to stimulate the economy are food stamps, where people will immediately go to the grocery store and buy food, and unemployment insurance,’ said Sen. Debbie Stabenow, D-Mich. ‘But you know, this has got to be something that we can get bipartisan support on, and frankly, something the president will support.’” See “Senators Plan To Add To House Stimulus; Boehner Wary ...,” National Journal’s Congress Daily, 1/25/08.
  • Senator Smith: Senator Gordon “said the rebate was only one of several actions needed to bolster the economy and provide services for the needy. Smith also called for a multiyear extension of the Secure Rural Schools law, which helps rural counties in Oregon and other states hurt by federal cutbacks in logging; tax and regulatory relief for small businesses; increased state aid for programs such as food stamps, low-income heating assistance and unemployment insurance; and help for first-time home buyers to refinance mortgages and avoid foreclosures.” See “Northwest lawmakers say stimulus plan just the beginning,” by Matthew Daly, AP, Seattle Post Intelligencer, 1/24/08.
  • Senator Rockefeller: “‘While I can't support more tax cuts for the wealthy, I will fight for targeted tax cuts and other relief to jump-start the economy,’ [West Virginia Senator Jay] Rockefeller said. ‘This includes tax rebates, small business tax cuts and extensions for unemployment insurance and the food stamp program.’” See “Delegation urges swift action on tax rebates,” by Jake Stump, Charleston Daily Mail, 1/23/08.
  • Senator Akaka: “U.S. Sen. Dan Akaka, D-Hawai'i, said he was concerned rebate checks are still months away while the economy needs stimulus now. ‘We could provide immediate help to those hit hardest in our community by extending unemployment benefits, providing nutrition assistance and food stamps, and offering fiscal relief to states and local communities,’ he said.” See “ Hawaii delegation backs stimulus plan but wants more,” by Dennis Camire, Honolulu Advertiser, 1/25/08.
  • House Majority Leader Hoyer: “This bipartisan economic stimulus package will provide an important shot in the arm to our struggling economy by putting money in the hands of hard-working Americans who will spend it quickly and help stimulate the economy….Democrats are particularly pleased that, under this package, 35 million working families who would not otherwise have been helped will receive tax relief this spring, and that 117 million families in all will receive a stimulus check. We are disappointed, however, that our Republican colleagues ruled out including an extension of unemployment insurance benefits and increasing food stamps in this package – provisions that would provide an immediate bang for the buck and help stimulate our economy, according to economists on both sides of the aisle. We will continue to look at these and other provisions in the days ahead.” See “Hoyer Praises Bipartisan Stimulus Package,” Press Release from Office of House Majority Leader Steny Hoyer (D-MD), 1/24/08.
  • Rep. McGovern: “A long-time advocate for anti-hunger programs, McGovern said during a congressional hearing Thursday that food stamps also boost the economy…. ‘The money goes to people who have trouble with their food and other bills,’ he said at the hearing. ‘More importantly, these people will spend this money and these funds go directly into the economy. Based on USDA research, we know that every federal Food Stamp dollar generates nearly twice that in economic activity.’ He said increased spending on food stamps is efficient and there would be little delay in getting the money into the economy.” See “Food Stamp Stimulus," by Jim Hand, Sun Chronicle, 1/19/08.
  • Rep. Blumenauer: “Rep. Earl Blumenauer, D-Ore., a member of the House Ways and Means Committee, said the proposed rebates would help struggling families pay for health care and heating bills. Blumenauer said he was disappointed the package does not include expansions for food stamps or unemployment benefits--provisions he said would have quickly and effectively spurred the economy. ‘Removing these provisions underlines the misplaced priorities of President Bush and his allies in Congress. By allowing the process to work and encouraging the public to weigh in, I would hope that we could make this package better,’ Blumenauer said.” See Northwest lawmakers say stimulus plan just the beginning,” by Mattew Daly, AP, Seattle Post Intelligencer, 1/24/08.
  • Rep. Becerra: “‘Fiscal policy that, pursuant to your statement, gets the money into the hands of those who will spend it wisely, consume it wisely, quickly....And so that could include food stamps for those who are trying to figure out a way how to buy the next meal for the family or how to make sure that you can buy the clothes your child needs to go back to school’--Rep. Xavier Becerra, D-Calif.” See “Economic Stimulus Quotes,” AP, 1/17/08.

Words of Support from State and Local Officials

  • National Conference of State Legislatures: “Food Stamps Assistance: Provide a temporary increase of Food Stamp benefits for households already eligible for and receiving such benefits.” See “States Outline Options for Congressional Economic Stimulus Package,” NCSL News, 1/22/08.
  • APHSA: “We support an increase in Food Stamp Program benefit levels, which would provide quick relief to participants in this critical nutrition support program.” See Letter from American Public Human Services Association Executive Director Jerry Friedman to Senate and House Leaders, 1/24/08.
  • Atlanta Mayor: “ Appearing with Senate Democratic leaders Wednesday in the Capitol, Mayor Shirley Franklin said Atlanta needs a federal economic stimulus package that focuses tax rebates on people at the bottom of the economic ladder’ and makes more people eligible for food stamps…. In Washington for the annual winter meeting of the U.S. Conference of Mayors, Franklin and other mayors spoke at a news conference with Senate Majority Leader Harry Reid (D-Nev.); Democratic conference Vice Chairman Sen. Charles Schumer (D-N.Y.); and Steering and Outreach Committee Chairwoman Sen. Debbie Stabenow (D-Mich.)….Specifically, the mayor said, Atlanta needs an economic stimulus package that changes qualifications for food stamps to make it easier for people to qualify. Not only does that provide food for poor people, she said, but it boosts the economy because the products purchased come from American farmers and manufacturers.” See “ Franklin endorses rebates to boost city and the poor,” by Bob Dart, Cox News Service, Atlanta Journal Constitution, 1/24/08.
  • Louisville Mayor: “While at the U.S. Conference of Mayors winter meeting last week in Washington, [Louisville Mayor Jerry] Abramson and other mayors urged Democratic senators to consider using the Community Development Block Grant program to funnel money to cities to help them address the mortgage foreclosure crisis. The mayors also talked about extending unemployment benefits and expanding food stamps.” See “Mayors seek Senate tweaks,” by James R. Carroll, Louisville Courier-Journal, 1/27/08.
  • February 28, 2008 - Local leaders bring attention to public services, such as food stamps
    San Bernardino County Sun
    “While Congress promises stimulus, community leaders in one of the city’s poorer neighborhoods announced their own plan to jolt the local economy…It was a fresh look at an old program: Food stamps.”

Words of Support from a Broad Range of Stakeholders

  • AARP: “AARP spokesman Jim Dau said the organization believes that non-taxed seniors should be part of any stimulus package – even if that means spending more on food stamps or home heating assistance.” See “Senators poised to extend stimulus,” by Richard Simon, Baltimore Sun, 1/26/08.
  • EBT Industry: “On behalf of the Electronic Benefit Transfer (EBT) Council of the Electronic Funds Transfer Association, we offer our support for the proposals to quickly stimulate the economy and help buffer the hardships so many families face by providing a temporary increase in the allotments received by food stamp households. Because of the infrastructure currently in place through EBT, this aid can be implemented expeditiously and cost effectively.” See Letter from Electronic Funds Transfer Association President & CEO H. Kurt Helwig to Senate and House Leaders, 1/24/08.
  • Bishop Murphy: “As Chairman of the Committee on Domestic Justice and Human Development of the United States Conference of Catholic Bishops, I write to express our hope that the Administration and Congress will work together quickly and cooperatively to shape and pass effective measures to help our nation and our people respond to growing economic stress…The bishops’ conference continues to support strengthening existing programs such as unemployment compensation, food stamp benefits, and the Low Income Home Energy Assistance Program (LIHEAP) as effective means to assist families and help the economy.” See Letter to Treasury Secretary Henry J. Paulson, Jr., from Most Rev. William Murphy, S.T.D., Bishop of Rockville Center, 1/23/08.
  • AFL-CIO: “This is no time for Congress to throw in the towel. In addition to extending unemployment benefits and increasing food stamps, we call on the Senate to include fiscal relief to help the states avoid the recessionary effect of budget cuts and tax increases. And we call on the Senate to include an acceleration of ready-to-go construction projects that will put Americans to work making desperately needed repairs to U.S. schools, bridges that have been declared unsafe and sewage treatment infrastructure.” See “Statement by AFL-CIO President John Sweeney on Tentative Economic Stimulus Deal,” 2/4/08.
  • Women’s Rights Advocates: “[E]nhancing food stamps and unemployment insurance benefits would inject cash quickly into the economy because it would target lower-income Americans–and by extension, many women–who would spend the money rather than save it or use it to pay down debt, steps that would not give an immediate boost to the economy. At the same time, expanded unemployment insurance and food stamps would help women stay financially afloat in a downturn that hits them hardest, advocates say.” See “Stimulus Plan Falls Short in Female-Friendly Audit in US,” womensphere, 2/7/08.
  • FRAC: “The stimulus package announced today has the advantage of tax rebates that reach many – albeit far from all – of the lowest income families. But in other essential respects it falls short of what the nation needs both as a stimulus and as a support for those among us struggling with rapidly rising costs for food, energy, and housing. In particular, we note the absence of a temporary boost in food stamp benefits and a temporary unemployment insurance extension, even though economists from a range of political perspectives agree that those are the two measures with the quickest and most cost-effective impact. Enacting a temporary raise in food stamp allotments would strengthen the package, get money out quickly to be spent in local grocery stores across the country, and generate in local communities nearly twice as much economic activity as the investment would cost. We and others who care about both the economy and low-income people in this country will be working in the days ahead to remedy those flaws in the package.” See Statement by Food Research and Action Center (FRAC) President Jim Weill, 1/24/08.

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