As Cuts to Food Stamps Take Effect, More Trims to Benefits Are Expected

Cuts to the Supplemental Nutrition Assistance Program, popularly referred to as food stamps, reflect the lapse of a temporary increase created by the administration’s stimulus program in 2009. They are slated to go into effect separately from continuing negotiations over renewal of the federal farm support program, which looks likely to further cut funds for food stamps, which this fiscal year are expected to come to about $76.4 billion.

The Republican-controlled House version of the farm bill proposes cutting $39 billion from the program over the next decade; the Democratic-controlled Senate would cut $4 billion over the same period.

The food stamp cuts scheduled to go into effect on Nov. 1 will reduce spending by $5 billion in the 2014 fiscal year, and another $6 billion over the 2015 and 2016 fiscal years. They are expected to shave 0.2 percentage point from annualized consumption growth in the fourth quarter of 2013 and trim an estimated 0.1 percentage point off the annual growth rate of the nation’s gross domestic product, according to estimates by Michael Feroli, the chief United States economist at JPMorgan Chase. Those drags may seem small, but right now projections for gains in fourth-quarter gross domestic product hover around an annual rate of just 2 percent.

“This could potentially affect consumption of food as well as nonfood items, as individuals may maintain the same food intake but reduce spending on other items,” Mr. Feroli said.

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