Food Stamp Primer for the Middle Class

Image source: NY Times 

Food stamps are mysterious. They are kind of like cobras. I have never seen one up close nor do I want to. Are they actually stamps? Like mail stamps? No idea.  But just because cobras are not a part of my daily life does not mean that they should be ignored. Food Stamps were utilized by over 45 million Americans in 2016 totaling $75 billion (less than 2% of the federal budget). That is not insignificant. So let’s check our privilege and become informed voters by (briefly) diving into the world of Food Stamps.

First, the term “Food Stamps” is passé.  The government renamed it the Supplemental Nutrition Assistance Program or SNAP in 2008, though states are free to call it whatever they want (a small victory for states’ rights). EBT is another term that occasionally appears in grocery store windows and that I surmised was loosely associated with food stamps. EBT, or Electronic Benefits Transfer, is essentially synonymous with SNAP. An EBT card has funds transferred to it at the beginning of every month which can then be used for SNAP purchases. So the “stamps” are not literal stamps. Nor were they ever really what I would consider stamps, but rather funny-colored tiny bills (see above).

A person with an EBT card loaded with SNAP $$$ can purchase just about anything at a grocery store with a nutrition label. It is probably easier to list what you cannot purchase with food stamps than what you can:

• Fun stuff (wine, beer, liquor, cigarettes, misc. tobacco)
• Nonfood items (soap, paper products, hammers, pet food, Arby’s)
• Hot foods or foods consumable in the store (i.e. Taco Bell)
• Medicine (this is what Medicaid is for)

Grocery stores have a lot of choices. Choosing which foods will keep you alive while also being as cheap as possible is a challenge. Luckily the US Department of Agriculture is here to help.  With the help of some sophisticated economists and the revised Food Pyramid (which I admittedly still do not understand) they have devised a definitive thrifty food plan (TFP). The government literally has a detailed plan for how SNAP dollars should be spent. Please check it out. Discover what Uncle Sam says you should be eating instead of mac-n-cheese and pizza rolls (hint: you have to eat a lot of beans). Two complaints with the TFP: 1) This report is pretty complex. Is the information getting out to people on SNAP? 2) Though the TFP is updated fairly regularly (especially the pricing data), it is based on some ACNielsen Homescan Panel data from 2001. As this was before the bacon craze it is doubtful that this data accurately reflects actual consumption patterns.

Applicants have to meet certain income tests to be eligible for SNAP.  They must have a net monthly income below the federal poverty level. Additionally some states have asset requirements that limit the amount of savings or property a recipient can own. Citizens can be considered categorically eligible if they meet the requirements for other federal programs. Several deductions factor into the calculations for benefits, including excessive housing costs.  If an applicant spends more than 50% of their income on rent, anything above 50% can be deducted from their income for SNAP calculations. Certain aged and disabled populations also have lower restrictions on benefits from SNAP.

Applying for SNAP is not easy and the application varies between states. Iowa for example has a 19 page form that looks way more complicated than a 1040 tax form. I did not even want to read it much less attempt to fill it out. The rigor in the application process is meant to curtail fraud but it also places a burden on the family receiving the benefits and increases the administrative costs for the case workers who have to review the forms.  

Benefits are calculated assuming a household spends 30% of its budget on food. So the difference between 30% of the net income and the maximum allowed federal benefits based on family size is the amount received.  For a family of 4 the maximum benefits are $649 which is about $6 less than the projected cost of the TFP for a family with two kids aged 6-8 and 9-11. The deficit is more pronounced for a family of two adults. This emphasizes the “supplemental” part in SNAP’s name. Even purchasing scant rations based on the TFP does not guarantee an adequate diet. Exacerbating this problem is state-to-state variability in food prices.  While the federal maximum benefits are fixed in the contiguous 48 states, food prices in Connecticut can be over 30% higher than the national average or 11% lower in Texas. 
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SNAP does have some economic upside. SNAP spending by the government has a multiplier effect. For every $1 spent on SNAP the US GDP increases by $1.79. SNAP also decreases hospitalization costs and improves school attendance for children. 

SNAP has its benefits and drawbacks but for over 10% of Americans it is a necessity. If you want to learn more about SNAP or to try and live the SNAP life at home check out the “Food Stamped” documentary website for details. To find more specific statistics for SNAP in your state check out the interactive map at the Center on Budget and Policy Priorities. To find out more information about cobras click here.