FRAC - Economic Stimulus Package - Food Stamp Program

Food Stamps = Real Stimulus

As the economy has weakened, getting lower-income families food stamps and other payments that they can spend quickly emerged as a key way to stimulate the economy. FRAC believes that putting more resources quickly into the hands of the people most likely to quickly turn around and spend it can both boost the economy and cushion the hardships on vulnerable people who face a constant struggle against hunger.

Wages are down. Right now, a person working at minimum wage job for 30 hours a week earns $7,725 a year. They were already struggling, even before the record increases in housing, energy, and food costs. Food stamps can put extra money in their pocket (link to chart) that rebounds through the economy. USDA studies show that every $1 of federal food stamp benefits coming into the economy generates nearly double that amount in local economic activity.
Food prices are up. Everyone is facing sticker shock at the grocery store. Food costs have risen dramatically over the past year. A year ago, food stamp challenges showed that the average $1 per person per meal food stamp benefit didn’t go far at the grocery store. Now, with higher grocery prices, that $1 buys even less. (click here to learn more about rising food costs)
Food stamps are the real stimulus. Food stamps have to be spent on food at grocery stores. It’s the fastest and easiest way for people to inject money into their local economy.

Food stamps put money in the hands of those who need it the most – at little or no cost to state and local governments. Since food stamp benefits are 100 percent federally-funded, and the federal government also shares the administrative costs, the cost to a state or local government of reaching eligible people is very small – the federal government bears almost all the cost.

How do we do this?
Any future plans to stimulate the economy must include a temporary boost in families’ food stamp payments. Low-income families need this. And it’s the best thing for the economy.

Learn more.

Reagan advisor Martin Feldstein, Clinton Treasury Secretary Robert Rubin, and Federal Reserve Chairman Ben Bernanke agree: Food stamps are the best stimulus.

In the recent federal stimulus debate, a remarkable range of economists, policymakers, and editorial writers spoke to the fact that food stamps are the best stimulus.

Read the latest news on stimulus efforts.

Towards Shared Recovery: Congress Must Do More to Reverse the Recession (April 11, 2008; Coalition on Human Needs)
Congressional Progressive Caucus letter to House Democratic Leaders (pdf) (April 8, 2008)
Progressive caucus pushes for second stimulus package (The Hill, March 4, 2008)

States have choices. They can make it easier to get food stamps to hungry families.

What do the experts say about how foods stamps stimulate the economy?

For expert opinions from January 1, 2008 to August 1, 2008, visit the realstimulus.org archive.

In the news:

Editorial, "No End in Sight," The New York Times, August 19, 2008
"Lawmakers need to start crafting the next stimulus bill — without repeating the mistakes of the last one. Composed mainly of tax rebates, as the White House wanted, the first stimulus was too broad to deliver a powerful punch. The next package has to focus on actions that are known to yield big economic benefits: bolstered food stamps, which rapidly boost consumption; and aid to states and cities so they can continue to provide essential services."

Editorial, "As Rebates Run Their Course," The New York Times, July 27, 2008
"The plan, for example, did not contain additional spending for food stamps or direct aid to states and local governments. The second one must include both."

"It is unconscionable to omit food aid from a stimulus measure, because the priority in a downturn should be to help the most vulnerable Americans. It is also poor economics, because a temporary increase in food stamps, which are spent quickly and in full, is the single most effective way to lift consumer spending. Direct aid to states and localities also reaches vulnerable populations, like Medicaid recipients, and is powerful stimulus because the extra money is passed on quickly to employees, contractors and program beneficiaries."

Jared Bernstein, senior economist for the Economic Policy Institute, said "[a]n increase in food stamp grants has been found to create the biggest bang for the buck in terms of its economic multiplier…For every extra dollar spent on the program real GDP [gross domestic product] grows by $1.73. Of the 13 tax cuts or spending increases considered, food stamps has the largest multiplier effect." ("Could Food Stamps Be The Second Economic Stimulus?" RTTNews, August 3, 2008)

Rep. Barney Frank (D-Mass.), Chairman of the House Financial Services Committee, August 1, 2008
"It is a sign of how troubled our economy is that some analysts are greeting the seventh straight month of job losses and an increase in the unemployment rate to 5.7% as relatively good news. This reaction is a discouraging confirmation of the gap that exists between many establishment figures and the reality of life for the great majority of working American men and women. The significant job loss this year in the private sector which has only slightly been offset by state and local government job increases removes any reasonable objection to a second economic stimulus package. This stimulus should include increases in the federal share of Medicaid, significantly increase funding for home energy assistance and food stamps, and other measures which will provide badly needed stimulus for our economy and help state and local governments and individuals improve the quality of their lives. The unfortunate signs that this severe economic slowdown will not be turning around on its own in the near term means it is also time for increased federal spending both directly and in aid to state and local governments for vital infrastructure projects." (statement, August 1, 2008)

Rep. Nydia Velázquez (D-N.Y.),
"Food stamp dollars go right back into the local economy, providing support for those in need and bolstering local businesses." ("Rep. Nydia Velázquez helps hungry and New York City economy with bill," NY Daily News, August 8, 2008)

Rep. Steny Hoyer (D- Md.)
"We passed an economic stimulus bill -- legislation to help lower the cost of college -- and a housing rescue bill. Now we look forward to bringing to the fore a second economic stimulus when we come back. It could mean investing in our worn down infrastructure. It could mean temporarily increasing food stamps and -- (inaudible) -- benefits. It could also mean providing assistance to states forced to cut vital services." (statement, August 3, 2008)

Mark Zandi, chief economist at Moody's Economy.com
"The downside risks are significant. Another well-timed and targeted stimulus package would be helpful," says Mark Zandi, chief economist at Moody's Economy.com. Mr. Zandi agrees on the need to try something different…. In addition, Zandi would consider a federal gasoline-tax holiday, an expansion of the food-stamp program, aid to state governments for their Medicaid bills, and maybe some infrastructure spending if a good list could be drawn up quickly. ("Economic Stimulus, Round 2," Christian Science Monitor, July 21, 2008)

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