Reduced Foodstamps Payouts Could Hurt The Economy

Food stamp recipients will see a cut in their benefits starting Friday. For the hungry and unemployed, more cuts may be coming. That's a challenge for the affected families, but it could also be a drain on the broader economy.

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ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel. Starting today, the 47 million Americans who rely on food stamps will have to get by with a little less. The federal government temporarily boosted its food stamp allowance four years ago during the worst of the recession. Well, now that increase is expiring, even though for many families, the job market remains a challenge.

And as NPR's Scott Horsley reports, government safety net programs could be cut further in the months to come.

SCOTT HORSLEY, BYLINE: The cut in food stamps taking effect today is not all that big, around five percent, but then the benefits weren't all that big to begin with. Jeremy Farmer who runs a food pantry in Douglas County, Kansas says from now on, those who rely on food stamps or SNAP benefits as they're now known, will have to feed themselves on about $4 per person per day.

JEREMY FARMER: You're not just talking about the difference between buying hamburger and steak, you're talking about whether or not somebody has a meal today or they don't.

HORSLEY: Farmer already sees a jump in traffic at his food pantry in the last 10 days of each month once people have exhausted their food stamps. With today's cutbacks, he expects that rush to begin sooner. The recession-era increase in food stamp benefits was always designed to be temporary, but Bob Greenstein, who heads the left-leaning Center on Budget and Policy Priorities, says when policymakers set the expiration date four years ago, they thought the economy would be stronger by now.

BOB GREENSTEIN: In a weak economy, among the worst things you can do is reduce the purchasing power of those consumers who are on the bottom rungs of the economic scale and don't save, they need to spend everything they get. So if you cut the resources, they spend less and as a result, businesses sell less.

HORSLEY: Grocers who cater to food stamps recipients are already bracing for the cutback.

THOMAS CALLAHAN: Well, our sales will just be down and we won't be able to make as much money or clear as much profit. So I don't know. It's just not good. It won't be a good thing.

HORSLEY: Thomas Callahan runs a grocery store in rural Kentucky, the state with one of the highest concentration of food stamp recipients.

CALLAHAN: The closest town is Booneville, 11 miles from here to Booneville and we're about the only little grocery store left out here.

HORSLEY: Kentucky's unemployment rate of 8.4 percent is well above the national average and Callahan says with few jobs available in Owsley County, many of his customers depend on their SNAP benefits to help put food on the table.

CALLAHAN: When those stamps come in, it helps them finish on up the month with their groceries. Milk, bread, lunchmeats, ice cream, things like that, they always check the prices. We have to compete, you know, with the bigger stores, Sav-a-lots and Wal-Marts.

HORSLEY: Some of those big grocery stores have warned the drop in food stamps could hurt their bottom lines. And Greenstein says this could be just the beginning.

GREENSTEIN: I think the greatest concern for many low-income families and people concerned about the program is not the drop today in benefits, but the fact that Congress is potentially looking at pretty severe cuts on top of these.

HORSLEY: Lawmakers are considering steps to reduce the number of people who qualify for food stamps. The number of qualifying jumped dramatically during the recession and it's remained high, though many forecasters expect the rolls to shrink automatically as the job market improves. The Democratic-controlled Senate has called for fairly modest cuts in food stamps of about $4 billion over the next decade, while the Republican House wants to cut 10 times that much.

Marlin Stutzman is a Republican congressman from Indiana.

REPRESENTATIVE MARLIN STUTZMAN: This bill reforms food stamps by making sure able-bodied adults are working, seeking work or getting job training.

HORSLEY: Another big cut could come at year's end when extended unemployment benefits are set to expire. Judy Conti of the National Employment Law Project says that would mean an immediate loss of income for nearly 1.5 million people.

JUDY CONTI: So right after we're done with the holidays, as people enter the new year in very cold parts of this country, they could abruptly lose all income that they have.

HORSLEY: Economists warn that would drain even more money from the economy, making the recovery that much harder. Scott Horsley, NPR News, Washington.

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