Food stamp cuts kick in, affecting millions
Recipients, including one of every seven Americans, will lose an average $36 from a $275 monthly benefit.
This post is by Jeff Cox, finance editor of CNBC.com.
Margaret Purvis makes her living by ensuring that low-income people have enough to eat, and she sees that job as about to get a lot tougher.
That's because benefit cuts to food stamp recipients kick in Friday, a move that will siphon $5 billion off a program that helps out one in seven Americans put breakfast, lunch and dinner on the table.
"Our members are panicking," Purvis said as time wound down to the benefit decreases. "We're telling everyone to make sure that you are prepared for longer lines."
Recipients of food stamps -- officially called the Supplemental Nutrition Assistance Program -- are expected to lose an average $36 from a $275.13 monthly benefit per household. A near-record 47.6 million Americans representing 23.1 million households are on the program, the cost of which will hit $63.4 billion this year.
The cuts are a result of the expiration of a SNAP budget increase that was part of President Barack Obama's 2009 stimulus bill. Over the past few years, a bipartisan group of Democrats and Republicans have voted in favor of the cuts in exchange for higher education funding and school nutrition programs.
A group of Democrats who initially supported the cuts organized a protest earlier this week to demand that funding be reinstated.
"It was a piece of legislation that said let's change nutrition standards, let's get junk foods out of our schools, and let's make sure that our kids can have those fruits and vegetables," Connecticut Rep. Rosa DeLauro told the Huffington Post about the nutrition bill.
"There was no money for it. The price of it was $2.2 billion. That came from the food stamp program, and all of us here complained," she said. "And we were opposed to that, but we knew that it was a good first step in getting the Hunger-Free Kids Act."
There appears little appetite to reverse the cuts, however, despite the protests and worries from charity leaders such as Purvis at the New York food bank.
The repercussions go far beyond the city and are more than humanitarian.
Programs such as SNAP have what economists call a "multiplier effect" -- in other words, a dollar given to an entitlement recipient has amplified economic benefits. In this case, those consist primarily of the grocers who benefit when food stamp users shop in their stores. The estimated multiplier effect for food stamps is as high as 2 to 1.
"This isn't just a New York issue," Purvis said. "In the world of hunger relief, food stamps are supposed to be the first line of defense."
Amira Watson, a working single mother of four in Brooklyn, recently had to sign up for food stamps after her marriage ended and she lost one of the two jobs she was working after taking maternity leave.
Though she applied a few months ago, her approval won't take effect until Nov. 1 -- coincidentally or not, the day the cuts kick in.
Watson, who works nights as a medical assistant at an assisted-living facility for the disabled, worries that the SNAP benefits won't be enough to feed her kids, ages 15, 13, 4 and 3 months.
"The job is good with medical benefits, but not with the paycheck," she said. "I'm always in the hole with bills. If I pay the rent I'm sacrificing the light. If I pay the light bill I'm sacrificing the gas bill. It's always something."
Having the pantry on hand helps.
"Thank God for the food pantry and the Campaign Against Hunger," she said. "While I'm waiting for all this processing -- glitches here and glitches there -- thank God I could go there and shop for some food. I got some baby milk for my newborn, got rice, got a nice amount of stuff that will sustain us until something comes up."
People on food stamps have become easy to demonize -- many nonrecipients have stood in line behind those who pile their shopping carts high, using their allocation to buy junk food.
And while there are some abuses, the need for the program says something about the dichotomy of the stock market's soaring to new heights while income disparity widens to Great Depression-era levels.
SNAP participation has doubled over the past 10 years and risen nearly 25 percent over the past four.
"Something has changed about America since the financial crisis, and the still widespread popularity of the SNAP program is emblematic of that shift," Nick Colas, chief market strategist at ConvergEx, a New York-based brokerage and investment research firm, said in a report. "The American economic record, based on the food stamp data, is still pretty lousy."
Colas said the economic hit from the food stamp cuts will be roughly $10 billion, with the numbers probably not telling the full story.
"It may not matter to the economic data on which Wall Street hangs its fedora, but it is certainly enough to spark a political response," he said. "How this plays out, I honestly have no idea. We are in uncharted waters here, as the historical record clearly shows."
More from CNBC.com:
- Obamacare lacks key cost control: Mayo Clinic CEO
- Balance sheet shows US $16 trillion in the hole
- Yacht sales stumble despite higher stock market
You're not supposed to be able to buy all your groceries on food stamps - that's why it's called the "SUPPLEMENTAL nutrition assistance program", not the "complete nutrition assistance program". Also, the idea is to be on the program temporarily - it should provide enough food for you to figure out a way to support yourself and buy your own food. If you aren't happy with your benefit amount, stop griping and find a way to buy your own food. If food stamps are going to be a long-term entitlement, we should get rid of them altogether and spend the money setting up bread lines and soup kitchens. Maybe give out 20 pounds of rice and 20 pounds of beans per person per month. If you are truly hungry, you won't mind.
I worked as a cashier at Wal-Mart for about 15 months, over the past 2 years. During that time I saw so many people abusing the SNAP/EBT system. Some people came in with 2 or 3 (or even more) different EBT cards. There would be so many that would have $300 or $400 in groceries and use EBT cards and then open up their purses and wallets to pay for their "non-food" items and have stacks of $100 bills. Most were dressed in name brand expensive "it" clothing and wearing tons of rings and gold chains.
And the things you can purchase with SNAP is insane. I saw quite a few buying novelty candy such as a taffy that had the local college mascot on it. A bag that had maybe 50 pieces (if that many) that sold for $9.99. Red Bull, check out candy, and other "junk" food made up a lot of "small" purchases. Hardly "NUTRITION".
And then there were the ones that obviously needed the help. The older couple who started off by saying "I can't spend" more than $30 and then item by item tried to stretch that small amount out as far as possible. It broke my heart. Especially when the next BET customer was obviously one of the ones abusing the system. It's so frustrating. There really needs to be better ways of limiting WHAT people can buy first of all. Only nutritious food, for one thing. Actually keep track of these people who stay on it forever and police it better. Help the elderly more than these lazy young freeloaders, too. The elderly deserve our help and they really need it. Lazy young people out to use the system can get off their butts and actually get a job.
It's hard not being jaded and cynical when you see how the system is abused.
How about you buy a few less bags of potato chips and sodas? Substitute tea bags for soda and you'll probably save $36 alone. Cut out the chips and cookies and you'll not only save money but probably your health as well.
We shouldn't be allowing soda, chips, sweets and the like on SNAP anyhow.
Brought to you by the party of YES.
Well, it's time they learn to be smart shoppers like the rest of us who pay cash for their groceries. I skip the Oscar Meyer and get the supermarket brand. Calm it with the sodas, instead get store brand juices and drink more water at home. And they sell store brand cereals and cookies. The drop isn't THAT extreme. My paycut two years ago was bigger than that and I had to improvise.
I see many people with food stamps paying for pepsi, breyers ice cream, oscar's bacon, and Oreo cookies. Ease up with the junk food and ease up with the name brand.
Everyone has had to tighten the belt. I'm tired of hearing about this. The Country is broke and I'm tired of paying high taxes. I'm 46 years old and have not worked a total of 9 month since I was 16 years old. I worked minimum wage jobs and paid my way thru college without grant money nor student loans. The American dream is still there for those willing to work hard and get an education.
If you can't afford to feed 4 kids without help than DON'T HAVE 4 KIDS. They are your responsibility. Beans and rice are cheap....nothing says you have to have luxuries that everyone else can afford because they don't have kids or excelled more in life.
FOR A FEW WHO REALLY NEED HELP! THE REST ARE FAT LAZY DEMONCRAT VOTERS WHO
MAKE A LIFESTYLE AND BRING THEIR FAMILY IN ON THE BUSINESS OUT OF WELFARE AND
FOODSTAMPS! OBAMA AND DEMONCRATS DESTROYED THE ECONOMY ON PURPOSE!
THEY PUSHED ALL THE LEFT WING CRAP WHEN BUSH WAS IN OFFICE! THEY RAN THE
SENATE AND THE HOUSE! THEY STILL HAVEN'T VOTED ON A BUDGET CAUSE THEY WANT
ENDLESS SPENDING! THEY ALREADY GOT 600 BILLION EXTRA TAXES EVEN THOUGH OBAMA
LIED AND SAID HE WASN'T RAISING TAXES AND IT'S ALL GONE AND NOW THEY WANT MORE!
TIME TO CUT THE FRAUD WASTE AND ABUSE AND PUT PEOPLE BACK TO WORK! NOBODY
IS GETTING CUT ANYTHING THEY WERE GETTING TOO MUCH FROM OBAMA'S VOTE BUYING
STIMULUS AND THAT IS FRAUD! HE BOUGHT VOTES! BUT THEN CUT MEDICARE 700 BILLION!
AND REFUSE TO PAY MILITARY AND CUT DEFENSE SPENDING! AND THEN SENT BILLIONS
AND WEAPONS TO THE TERRORIST IN FOREIGN COUNTRIES! HE'S A SOCIALIST PIG! HOW
COME EVERY PERSON I SEE IN LINE WITH DEBT CARDS ARE EATING BETTER THAN ME???
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Some workers lose up to a quarter of their paychecks paying off old debt from credit cards, medical bills and student loans, as well as child support.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'