Shutdown could leave millions without food stamps and hit small businesses

Jan. 5, 2019 / 11:39 PM GMT

By Phil McCausland

Millions of Americans could face going without the benefit that allows them to purchase food if the government shutdown continues into February.

The Supplemental Nutrition Assistance Program, known as SNAP or food stamps, costs an average of around $4.8 billion per month, according to the U.S. Department of Agriculture. But because of the government shutdown, the program has only $3 billion in emergency reserves for February.

More than 19 million households in the United States receive food stamps, accounting for nearly 39 million people. Each household receives on average $245.28 per month.

But because of the shutdown, USDA has no money to pay for the program in the ensuing months. The agency also had to furlough approximately 95 percent of Food and Nutrition Services, the office that oversees the SNAP program.

The White House and the USDA did not respond to requests for comment about their plans to address the shortfall, but experts say there is cause for concern for the millions potentially impacted.

If the $1.8 billion shortfall for February benefits were spread evenly across the 19 million households that receive SNAP benefits, each would see a cut of about $90 per month for their overall grocery budget, according to Dottie Rosenbaum, a senior fellow at the Center for Budget and Policy Priorities (CBPP).

If the political standoff that began Dec. 22 continued into March, these households would receive no money to buy food.

“Even if the President and Congress resolve the shutdown by February, depending on the decisions the Administration makes in the coming one to two weeks, households could experience a substantial delay in receiving their full SNAP allotment for February because of the operational challenges that states and EBT contractors face,” Rosenbaum said in an email.

Robert Powell is another American who might have a reason to worry, although he doesn’t use the benefits himself. Powell owns a grocery store called the Town & Country Market in Atoka, Oklahoma — a small town of about 3,000 people where the store has been a fixture since 1967.

A fair amount of his customers use food stamps, Powell said, later adding that these lost benefits could have a negative impact on his customers — as well as his business.

“There’s going to be rioting in the streets when they cut the stamps off,” Powell said. “Get your timber ready.”

Businesses are a secondary victim if the shutdown causes the program to run out of cash. The money spent by SNAP beneficiaries is typically split between small business owners, like Powell, and major retailers, like Walmart.

Tens of billions of dollars could be on the line for hundreds of thousands of businesses across the U.S.

In fiscal year 2017, SNAP participants redeemed $63 billion in SNAP benefits for food purchases at about 260,000 retailers — 80 percent of which were considered small businesses — according to an April 2018 CBPP report.

The lost benefits would spread out to affect all retailers. It would also impact supermarkets and big-box stores, where more than 80 percent of that $63 billion is spent, the report found.

Gary Philbin, enterprise president of Dollar Tree, noted in an earnings conference call last year that the company’s stock prices had been impacted by the more than 500,000 people removed from SNAP in 2016.

Considering the millions of people who would lose their consumer power without the benefits they depend on to buy food, the shutdown could have a major impact on retailers — especially those that serve low-income populations — if the government does not find a way to make up for the $1.8 billion loss in February.

“That’s a $1.8 billion loss across the whole country [in February],” Stacy Dean, the vice president for Food Assistance Policy at CBPP, explained. “But it will have a disproportionate impact on groceries and small businesses that serve poor communities where shoppers are more reliant on SNAP benefits.”

And those communities often include some of the most vulnerable individuals as well, such as veterans.

CBPP concluded in a separate report from November 2018 that the SNAP program is used in nearly 1.4 million households where veterans live. Thousands of veterans would be affected in every state of the country if these benefits were cut.

In an interview with NBC News, Rep. Karen Bass, D-Calif., called the shutdown a “distraction” from issues that Congress should be focused on, and she noted that the ongoing divide between President Trump and Democrats could impact those who depend on food stamps.

“If the shutdown continues, then you will literally have millions of people that will not be able to afford food,” Bass said. “And I think this is just absolutely unconscionable.”

“I think it’s another example [of] him,” the congresswoman added, referring to the president. “Either he literally doesn’t understand [the consequences of the shutdown] or doesn’t care.”