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Thursday, August 26, 2010

Reducing SNAP (Food Stamp) Benefits Provided by the ARRA: P.L. 111-226 & S. 3307

Joe Richardson
Specialist in Social Policy

Jim Monke
Specialist in Agricultural Policy

Gene Falk
Specialist in Social Policy

The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) included an acrossthe- board increase in benefits provided under the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program), effective in April 2009. The ARRA effectively replaced, until after FY2018, the increase in SNAP benefits that occurs based on annual foodprice inflation indexing (under current inflation scenarios). The ARRA substantially raised maximum monthly benefits, by 13.6%. For a one-person household, the added benefit was $24 a month; for two persons, $44 a month; for three persons (the most typical household), $63 a month; for four persons, $80 a month; and for larger households, higher amounts. As a result, average household SNAP benefits (typically less than the maximum) were boosted by more than 15%. The effects of the ARRA benefit increase were expected to terminate after FY2018, when food-price inflation "caught up" with the ARRA add-on. Through FY2018, when the effect of this increase is currently projected to end, Congressional Budget Office (CBO) estimates indicate an extra benefit cost of some $57 billion linked to the 2009 ARRA provision. 

These increased SNAP benefits were recently reduced as part of P.L. 111-226 (a law providing funding for education jobs and Medicaid) and are proposed for further reduction in the Senate's amended version of its child nutrition/WIC reauthorization bill (S. 3307, as approved on August 5, 2010). 

Under congressional "pay-as-you-go" (PAYGO) rules, P.L. 111-226 and S. 3307 would tap future spending for ARRA-generated extra SNAP benefits to pay for costs incurred in these initiatives— to the tune of $11.9 billion in P.L. 111-226, and an additional $2.5 billion under the terms of S. 3307. P.L. 111-226 achieves its savings by terminating the ARRA across-the-board SNAP increase effective March 31, 2014. As a result, SNAP benefits will revert to what basic SNAP law directs (i.e., as calculated using annual food-price inflation). CBO estimates that the initial drop in monthly benefits will be between $10 and $15 a person—approximately a 10% reduction in average per person benefits. S. 3307 proposes to achieve its savings by moving up the date on which the ARRA-generated SNAP benefit increase will terminate—to October 31, 2013. 

This report outlines how the provisions in these two measures work to draw on future SNAP spending and benefits and the effect they have on ARRA-based SNAP benefits.

Date of Report: August 20, 2010
Number of Pages: 8
Order Number: R41374
Price: $19.95

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