Trump’s Effort to Cut SNAP by Fiat Would Kill 178,000 Jobs Over the Next Decade

President Donald Trump’s latest budget blueprint is out, and it again calls for eviscerating nearly every program that helps families afford the basics, including cutting the Supplemental Nutrition Assistance Program (SNAP)—the United States’ largest food assistance program, which helps nearly 39 million people get enough to eat—by a staggering $220 billion, literally shrinking the program by one-third. While presidential budgets are often considered dead on arrival, since they do not themselves become law, one particular proposed cut to SNAP poses an immediate and dangerous threat, given that Trump is trying to sidestep Congress to enact it by fiat.

Last December, Congress rejected President Trump’s attempts to use the 2018 Farm Bill to make deep cuts to SNAP. Immediately after this rejection, President Trump announced that he would cut SNAP unilaterally through administrative action. Following through on that announcement, the Trump administration last month released a proposed rule that would dramatically scale back eligibility for SNAP by curtailing states’ flexibility to help jobless or underemployed workers in hard-hit regions. By the administration’s own estimate, the rule would take food assistance away from some 755,000 Americans.

As new analysis from the Center for American Progress shows, if enacted, Trump’s proposed rule wouldn’t just hurt workers struggling to afford enough to eat—it would also hurt the American economy as a whole.

SNAP generates more than $1 in economic activity for every $1 spent

Because SNAP primarily serves lower-income Americans whose budgets are stretched thin—including families with children, individuals with disabilities, low-paid workers, and workers between jobs—benefits are generally spent quickly: 80 percent of monthly benefits are spent within the first two weeks of the month. This money is pumped into the local economy, helping businesses expand and supporting jobs at local retailers and farms.

In fact, as a result of this so-called fiscal multiplier effect, every additional $1 in SNAP benefits generates more than $1 in economic activity. Princeton economist Alan Blinder and Moody’s Analytics Chief Economist Mark Zandi estimated that in early 2015, SNAP had a fiscal multiplier of 1.22. This meant that every additional $1 policymakers allocated to SNAP created $1.22 in gross domestic product (GDP)—giving it the greatest “bang for the buck” of the 22 spending and tax policy tools that Blinder and Zandi examined.

According to the Trump administration’s estimates, the proposed rule would shrink SNAP by $15 billion over the next 10 years by taking away benefits. This move would not only take food away from workers struggling to find a job or get enough hours at work, but applying Blinder and Zandi’s 2015 estimate, it would also shrink U.S. GDP by about $18.3 billion. President Trump could partly offset some of this negative impact—although likely not all of it, given SNAP’s large multiplier—by redirecting that $15 billion to another use that has a similarly strong multiplier effect, such as enhancing child benefits for low-income families or boosting unemployment benefits for job seekers. But as the administration’s Robin-Hood-in-reverse budgets have shown, the opposite is likely to occur. Indeed, Trump’s $2 trillion tax law gave more in tax breaks to the top 1 percent alone than the entire SNAP program costs in a year. Such handouts to the rich tend to weaken economic growth because the rich save a large share of every additional dollar they receive, rather than spending it in the local economy.

Every $1 billion in SNAP benefits supports 12,748 jobs

In addition to boosting economic growth, SNAP enables hundreds of thousands of American workers to find or keep jobs by sustaining demand for groceries in businesses across the nation. Updating the results of previous CAP analysis, the authors estimate that every $1 billion spent by SNAP recipients supports 12,748 jobs.* In 2018, that means that more than 782,600 workers were employed because of the SNAP program. If Trump’s proposed rule goes into effect next year, cutting $1.5 billion per year from SNAP, it would result in nearly 18,900 jobs lost in 2020 alone, and more than 178,000 job-years lost over the next decade. Applying this analysis to the larger proposed cuts to SNAP in Trump’s latest budget proposal—totaling $17.1 billion in 2020 and $220 billion over the next 10 years—would result in 221,815 jobs lost in 2020 alone, and more than 2.8 million job-years lost over the next decade. A job-year is one year of one full-time job.


In a recession, Trump’s SNAP cuts could mean a loss of $2.6 billion per year in economic activity

When a recession arrives—and the United States is overdue for one, by historical standards—SNAP’s economic footprint becomes even more powerful. In a downturn, SNAP does double duty, not only as serving as a lifeline for millions of Americans but also acting as an automatic economic stabilizer. By automatically expanding as job losses mount—without requiring direct action from Congress, the president, or state policymakers—SNAP helps dampen the depths of recession and fortify the macroeconomy. Near the depths of the Great Recession, as the unemployment rate approached 9 percent, each additional $1 in SNAP benefits boosted GDP by $1.74—more than any other typical countercyclical policy lever. That being the case, the roughly $1.5 billion that Trump is seeking to cut each year over the next decade would compound into a loss of $2.6 billion each year in economic activity. To make matters worse, Trump’s proposed rule is specifically designed to hit areas that need this stimulus most, by taking resources and flexibility away from communities that face persistently weak labor markets and insufficient job opportunities.

Rather than proposing to kick struggling workers while they’re down, if Trump truly cared about helping American workers, he would use his office to push for adequate job opportunities and livable wages. Trump could save far more money on SNAP while helping, rather than hurting, working families simply by making good on his campaign promise to raise the federal minimum wage: By raising the minimum wage to $12 per hour—not even the $15 congressional Democrats have proposed—Trump could save roughly $53 billion in SNAP costs over the next 10 years, a reduction nearly four times as much as that from his proposed rule, while also ensuring that wages are high enough to put food on the table.

Conclusion

Fortunately, Americans have the opportunity to speak out against President Trump’s cruel, imprudent rule by submitting comments by April 2. Rather than weakening one of the nation’s most powerful economic stabilizers when the next recession could be just around the corner, Trump should heed American voters’ strong support for the program by expanding and strengthening SNAP’s modest but critical benefits.

Rachel West is the director of research for the Poverty to Prosperity Program at the Center for American Progress. Rebecca Vallas is the vice president for the Poverty to Prosperity Program at the Center.

* These estimates are based on a previous analysis for CAP showing that every $1 billion in SNAP cuts results in approximately 13,718 jobs lost. Based on personal communication in April 2018 with Heidi Garrett-Peltier, a co-author of that study, this updated analysis adjusts that number based on historical and forecast growth in labor productivity. These data come from Bureau of Labor Statistics, “Labor Productivity and Cost Measures for Business and Nonfarm Business Sectors,” available at https://www.bls.gov/lpc/ (last accessed February 2019). Future productivity growth is forecast using the average of the most recent available 10 years of historical growth rates, 2007–2017.

By Rachel West and Rebecca Vallas Posted on