Nationwide, enrollment in the food stamp program surged in March to about 33.2 million people, up by nearly one million since January and by more than five million from March 2008. In a recent research report, Pali Capital Inc. estimated that food-stamp spending will increase between $10 billion and $12 billion this year from $34.6 billion in 2008.
As CBS News reported , most people and businesses are getting immediate help from the increased stimulus spending on food stamps, unlike the other stimulus payouts.
For Bobbi Foster of Martinsburg, W.V., the once simple task of grocery shopping has suddenly become a burden. In December, her husband Danny lost his trucking job. "Everyone I know has been laid off work. When I see people going to work I'm surprised - they have a job!" Foster said.The U.S. Department of Agriculture (UDSA) calculates that for every $5 of food-stamp spending, there is $9.20 of total economic activity, as grocers and farmers pay their employees and suppliers, who in turn shop and pay their bills. This was confirmed in findings by other economists and stimulus studies, which found that the fastest way to infuse money into the economy was through expanding the food-stamp program. The cost/benefit equation often quoted in relation to the impact of food stamp type programs is that for every dollar spent $1.73 is generated throughout the economy.
A month later, Danny was diagnosed with a benign brain tumor. The Fosters signed up for food stamps. As a West Virginia family of four, they would receive $329 a month - not nearly enough to cover their monthly food expenses. But that changed under the economic stimulus package where every American on food stamps would get 13 percent more money on their state-issued debit cards.
And while it will certainly help the Fosters, its really aimed at their grocer, who stands to make an extra $25,000 a week, enabling him to hire up to five more part-time workers.
"Everyone goes to the grocery store," said Martin's Supermarket manager Mike Sword. "I can't think of a better way, frankly, to stimulate the economy."
"[For us,] it means surviving. Really, surviving for the month," Foster said. "When you are living week to week day by day you know it [the stimulus increase] would make things a lot easier."
If someone who is literally living paycheck to paycheck gets an extra dollar, it's very likely that they will spend that dollar immediately on whatever they need - groceries, to pay the telephone bill, to pay the electric bill. While other stimulus money has been slow to circulate, the food-stamp boost is almost immediate, with 80% of the benefits being redeemed within two weeks of receipt and 97% within a month, the USDA says. The stimulus or benefit ratio from food stamps was higher than the benefit from infrastructure spending per dollar, and way higher than tax cuts. Permanent tax cuts had a lower than one benefit to cost ratio, showing that these would have been wasted stimulus spending.
It is hard to argue with the logic behind the stimulus impact of higher food stamps, but the counter argument could be that while the food stamp stimulus spending has a more immediate impact, it is only short term. Stimulus spending on infrastructure and educational spending, economists argue has a much longer term impact and ongoing benefits like higher employment and increased government revenue through taxes.
Still, the Obama economic stimulus package was meant to have had much more of an impact than currently felt, so the case for focusing future stimulus packages on more direct programs like food stamp increases may be getting stronger. Who would have thought that stimulating welfare type programs for the poor could be the best boost for the economy. Make the poorer richer, and the nation will thrive. Sounds simple right?
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