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Food stamps helped lift the US economy out of the Great Recession

Especially in rural America.

A woman sits at a dinner table with her three children.
Lisa Zilligen serves lunch to her three children at their Chicago home in November 2009. Zilligen, a single mother and full-time student at Loyola University, relied on food stamps to feed her family.
M. Spencer Green/Associated Press

If President Donald Trump’s wishes could magically come true, the federal government would cut billions of dollars from anti-poverty programs for low-income families and the elderly.

His budget proposal for 2020 includes a massive $220 billion cut to the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. He would slash $845 billion from Medicare and $25 billion from Social Security.

Luckily, there’s little chance those wishes will come true in a divided Congress. His GOP allies on Capitol Hill have long shared his disdain for the safety net, pushing the tired narrative that welfare makes people lazy and is a drain on the US economy. That view is so entrenched that the Trump administration has used it as an excuse to make it harder for people to qualify for help.

Yet new research from the US government discredits that narrative.

Economists at the US Department of Agriculture found that government spending on food stamps has been pretty effective in stimulating the economy since the start of the Great Recession. And more specifically, it has been most effective in helping rural America, the kinds of places where voters overwhelmingly supported Trump in the 2016 election.

Researchers found that every $22,000 in tax dollars spent on food stamps between 2001 to 2014 created about one job. Grocery subsidies, which families usually spend right away, immediately pumped money into rural supermarkets and small businesses (and their employees) at a time when jobs were scarce.

One job for every $22,000 tax dollars may not seem like a lot, but it is when you consider that the federal government spends about $70 billion a year on food subsidies for low-income families.

And here’s another surprising conclusion from the report: Spending on SNAP benefits helped the US economy more than most types of government spending (like infrastructure or defense spending).

“The fact that SNAP provides direct payments to low-income households rather than grants to States or private contractors may result in larger employment impacts than many other types of government spending, particularly during a major recession,” USDA economists wrote in the report, which they published last week.

This report marks the first time government researchers have closely analyzed the economic impact of food stamps at the local level. While there’s some evidence that food subsidies had a negative impact on city jobs before 2007, that changed when the economy sank into a deep recession, as food stamps helped sustain jobs at farms, supermarkets, and trucking companies. That has only continued during the recovery.

The safety net has kept millions out of poverty

The new report confirms what progressive policy groups and Democrats have long argued: Large government anti-poverty programs are far more likely to boost the US economy than burden it.

During Trump’s first year in office, income from these safety net programs directly kept 44.9 million people out of poverty. That’s 200,000 more people compared to 2016. So far, Trump and congressional Republicans have been unable to gut spending on the safety net programs they have long despised, facing resistance from Democrats whose votes they needed to pass a budget deal each year.

Of all the social safety net programs, Social Security had the biggest impact last year, keeping 27 million people above the federal poverty level, which in 2017 was $12,060 for an individual. Refundable tax credits, such as the earned income tax credit, helped another 8.3 million people. In 2017, nearly 45 million low-income Americans depended on the federal food subsidies for groceries, lifting 3 million of them out of poverty.

Yet the White House has tried to make the case that these social programs are doing more harm than good.

“While absolute material hardship has declined, less success has been achieved in strengthening self-sufficiency. Employment rates of non-disabled working-age adults have been stunted, and their dependency on welfare programs has grown. It is important to ensure that welfare programs do a better job of promoting work, especially in today’s hot economy,” the White House Council of Economic advisers wrote in a statement last year.

That GOP narrative keeps getting harder to defend as new research discredits the claim.

Republicans have overblown the negative economic impact of welfare

The idea that welfare is keeping people from working is a deeply entrenched belief within the GOP. There is some truth to it, but research shows that the incentive to avoid working is actually quite small, and many of the federal government’s biggest social programs already have work rules. These requirements were implemented as part of the 1996 welfare reform legislation signed by then-President Bill Clinton.

For example, SNAP requires beneficiaries who are not disabled and have no children to work 80 hours a month or show they’re meeting other similar requirements in order to qualify for the program.

And for other programs that don’t require beneficiaries to work, such as Medicaid, most of the recipients work anyway. Two out of three Medicaid recipients have jobs, and the rest are mostly people who are ill, disabled, retired, or taking care of a family member.

Vox’s Alvin Chang and Tara Golshan reviewed the research on the impact of forcing welfare recipients to work in exchange for benefits, which is something several states have tried.

They found that the rules did increase employment among participants, but only by very little because most beneficiaries were already working. And they noted that the requirements didn’t do much to lift people from poverty:

Work requirements barely caused poverty rates to budge, partially because even people who found work weren’t earning enough to lift themselves out of poverty. In addition, at half the experiment sites, work requirements caused more people to be in deep poverty.

The fact that work requirements don’t seem all that effective in helping keep Americans out of poverty hasn’t discouraged Republicans from pushing for more work rules, or from trying to slash millions of dollars in spending on the social programs that seem most effective in preventing economic hardship.

If anything, the latest USDA research suggests that those efforts could actually hurt Trump’s “booming” economy.