Trump Targets Food Stamps With Proposed Fee On Retailers

Trump’s proposal to overhaul the U.S. food stamp program, or the Supplemental Nutrition Assistance Program (SNAP) as it’s currently known, has brought with it a widely overlooked fee that could end up costing food retailers billions.  Per MSN:

That provision is a new fee that the White House wants to charge retailers that accept food stamps, which is now known as the Supplemental Nutrition Assistance Program.

The Office of Management and Budget said the fee would be assessed when stores sign up and would require renewal after five years. The budget office said the amount would depend on the size and type of retailer, but the president’s budget estimates that the fee would generate $2.4 billion in revenue over the next decade.

An OMB official described the fee as “modest” and “reasonable,” emphasizing that some large retailers redeem a billion dollars or more in food stamp benefits each year.

“Although a small number of stores may choose to leave the program rather than pay the fee, we do not expect that this will affect access to authorized stores,” the official said.

Of course, the fee is likely intended to cut down on the wildly unmanageable 260,000 different retailers that opt into the program each year.  That said, the biggest financial impact will accrue to traditional grocery stores, dollar stores and supercenters (aka Walmart) which collectively account for well over 80% of the $66BN in annual SNAP benefits.

The overhaul also proposes reducing overall expenditures on SNAP, a program which Budget Director Mick Mulvaney described as “a formula for waste and growth rates and costs that are simply unsustainable.”

Beyond the new fee, the Trump administration is proposing $191 billion in cuts over the next decade to the food stamp program. The U.S. budget office said the reductions would come from tightening the work requirement to qualify for the benefits, but said the details would be left up to individual states. The administration also expects states to make up some of the lost funding.

The existing system “is a formula for waste and growth rates and costs that are simply unsustainable,” Budget Director Mick Mulvaney said during testimony on Capitol Hill last month. “The total spending should not go down. Or if it does, it goes down because of efficiencies and not because of reductions.”

Per the chart below, U.S. taxpayers currently distribute roughly $70 billion per year worth of food stamps to over 50 million people.

Meanwhile, if the Trump administration really wants to cut down on SNAP expenditures they should take a look at the state of Alabama which, as we pointed out yesterday, experienced an 85% decline in benefit payments when they decided to once again require able-bodied food stamp recipients, without dependents, to be employed and/or engaged in a job-training program in order to participate in the program for more than 3 months over a 3-year period.

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Here is our note from yesterday:

13 Alabama counties experienced some ‘shocking’ results, or maybe not depending on your natural level of cycism, when they decided to once again require able-bodied food stamp recipients, without dependents, to be employed and/or engaged in a job-training program in order to participate in the program for more than 3 months over a 3-year period.

As background, Alabama, like many states, lifted their work/training requirements associated with food stamp benefits after the great recession.  That said, starting Jan. 1, 2017 the last of Alabama’s 13 counties reinstated those requirements and they promptly experienced an 85% decline in taxpayer-funded food subsidies.  Per AL.com:

Thirteen previously exempted Alabama counties saw an 85 percent drop in food stamp participation after work requirements were put in place on Jan. 1, according to the Alabama Department of Human Resources.

During the economic downturn of 2011-2013, several states – including Alabama – waived the SNAP work requirements in response to high unemployment. It was reinstituted for 54 counties on Jan. 1, 2016 and for the remaining 13 on Jan. 1, 2017. As of April 2017, the highest jobless rate among the 13 previously excluded counties was in Wilcox County, which reported a state-high unemployment rate of 11.7 percent, down more than 11 percentage points from the county’s jobless rate for the same month of 2011.

As of Jan. 1, 2017, there were 13,663 able-bodied adults without dependents receiving food stamps statewide. That number dropped to 7,483 by May 1, 2017. Among the 13 counties, there were 5,538 adults ages 18-50 without dependents receiving food stamps as of Jan. 1, 2017. That number dropped to 831 – a decline of about 85 percent – by May 1, 2017.

Statewide, the number of able-bodied adults receiving food stamps in Alabama fell by almost 35,000 since Jan. 1, 2016.  Meanwhile, with each recipient receiving about $126 a month in benefits, that equates to over $50 million in annual savings for taxpayers based on just the state of Alabama alone. 

But sure, there is no fraud in the entitlement programs.

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For those who missed it, below is a look back at a prior post which detailed exactly how Americans are spending the nearly $7 billion they receive through the SNAP program each year.

A new study just released by the USDA, offers a very detailed look at exactly how participants in the “Supplemental Nutrition Assistance Program” (SNAP, aka Food Stamps) spend their taxpayer-funded subsidies.  Unfortunately for taxpayers, the amount of money spent on soft drinks and other unnecessary junk foods/drinks is fairly staggering.  But, we suppose it’s a nice taxpayer funded subsidy for the soda industry…so score one for Warren Buffett and the Coca Cola lobbyists.

Per the study, nearly $360mm, or 5.4% of the $6.6BN of food expenditures made by SNAP recipients, is spent on soft drinks alone.  In fact, soft drinks represent the single largest “commodity” purchased by SNAP participants with $100mm more spent on sodas than milk and $150mm more than beef.

Soft drinks were the top commodity bought by food stamp recipients shopping at outlets run by a single U.S. grocery retailer.

That is according to a new study released by the Food and Nutrition Service, the federal agency responsible for running the Supplemental Nutrition Assistance Program (SNAP), commonly known as the food stamp program.

By contrast, milk was the top commodity bought from the same retailer by customers not on food stamps.

In calendar year 2011, according to the study, food stamp recipients spent approximately $357,700,000 buying soft drinks from an enterprise the study reveals only as “a leading U.S. grocery retailer.”

That was more than they spent on any other “food” commodity—including milk ($253,700,000), ground beef ($201,000,000), “bag snacks” ($199,300,000) or “candy-packaged” ($96,200,000), which also ranked among the top purchases.

Even worse, when we added up all of the commodities that would typically be considered “junk food” (i.e. soft drinks, candy, cakes, energy drinks, etc.), we found that roughly $950mm, or just over 14% of the aggregate $6.6BN of food expenditures made by SNAP recipients, is spent on unnecessary, unhealthy products.

It’s a good thing democrats re-branded Food Stamps as the “Supplemental Nutrition Assistance Program”….otherwise we would have confused it for a blatant waste of taxpayer money on sodas and energy drinks.