Friday, April 5, 2013

Melissa Boteach: House budget cuts to nutrition assistance are bad for the economy

  The House Republican budget for fiscal year 2014 proposes converting the nation’s bedrock nutrition-assistance program into a capped block grant to the states that would result in approximately $125 billion in cuts over the next 10 years. Forcing the Supplemental Nutrition Assistance Program, or SNAP, to become a block grant, in addition to the extra $10 billion in cuts to the program within the budget proposal, could result in up to 12 million to 13 million people—mainly children, seniors, and people with disabilities—losing their nutrition aid.

  These cuts, however, would not just harm households that are struggling to put food on the table. They would also hurt many businesses’ bottom lines and would cost our economy hundreds of thousands of jobs by reducing demand for certain goods and services.

  The proposed block grant would go into effect in 2019, forcing draconian cuts to the program in just the five years from 2019 to 2024. Assuming that these cuts will be spread out evenly over the five years, our analysis of a 2012 Center for American Progress study estimates that the House Republican budget nutrition block grant would cost the economy 342,950 jobs in the first year alone and hit the food industry especially hard.*

  Nutrition cuts reduce the purchasing power of low-income families, who are in turn forced to spend less on basic needs such as putting food on the table. This reduced purchasing power ripples throughout the economy: Fewer families buying less food means less demand for grocery stores and retail, which in turn require less support from trucking and warehousing and need to make fewer purchases from food manufacturers and farmers.

  While these direct, indirect, and induced job losses ripple throughout the entire economy, they have a disproportionate impact on a few sectors of the economy. According to our analysis of the 2012 CAP study, the 2019 SNAP cuts, for example, would result in approximately 11,300 jobs lost in retail including grocery stores, 21,000 jobs lost in food manufacturing and agriculture, and 8,250 jobs lost in trucking and warehousing.

  The House Republican budget proposal presents a double hit for low-income families. The cuts to the Supplemental Nutrition Assistance Program would hit the pocketbooks of the families struggling most in this economy, exacerbating hunger and poverty for households mainly composed of children, seniors, people with disabilities, and working parents. But the proposal also cuts off pathways to opportunity by causing hundreds of thousands of job losses, which would hit young workers especially hard since they constitute a disproportionate share of workers in the food industry.

  It doesn’t have to be this way. The $135 billion in proposed nutrition cuts to families struggling to put food on the table could be more than offset by eliminating the special write-offs for corporate meals and entertainment in the tax code, which total $140 billion over 10 years.

  Congress can invest in jobs and lend a hand to struggling families, but it all comes down to choices and priorities.

*These estimates are based on a 2011 analysis showing that every $1 billion in SNAP cuts equals approximately 13,718 jobs lost. Because the production functions, costs of labor, and other inputs could change over the next five years, these numbers are an approximation.

  About the author: Melissa Boteach is the Director of the Poverty to Prosperity program at the Center for American Progress.

  This article was published by the Center for American Progress.

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