(Bloomberg) -- The Trump administration moved to end food stamp benefits for 3.1 million people, the day after the president reached a deal with Democrats to raise federal spending by tens of billions of dollars for the next two years.
The proposed rule curtailing food assistance, announced Tuesday, drew a sharp rebuke from House Speaker Nancy Pelosi, who called it an “act of staggering callousness.”
“This proposal perfectly showcases the Republicans’ cynical special interest agenda that gives billion-dollar handouts to big corporations and the wealthy few, and then steals from children, veterans, seniors and working families to make up the difference,” Pelosi said.
Agriculture Secretary Sonny Perdue said the administration acted to restrict states’ ability to automatically enroll beneficiaries of some federally funded welfare programs because many state governments “have misused this flexibility.”
“We are changing the rules, preventing abuse of a critical safety net system, so those who need food assistance the most are the only ones who receive it,” he added.
About 9% of all households currently receiving food stamps and 13.2% of all currently participating households with at least one elderly member will lose the assistance, the Agriculture Department projected in a regulatory impact analysis.
Conservatives have long sought cuts in the federal food assistance program for the poor and disabled. House Republicans tried to impose similar restrictions on the food assistance last year when Congress renewed the program but were rebuffed in the Senate.
The proposed changes in the Supplemental Nutrition Assistance Program -- often called by its former name, food stamps -- would deliver a win for conservatives as Trump confronts harsh criticism of his spending deal from several leading congressional spokesmen for the right.
Shares of several major discount chains that sell groceries dropped following announcement of the rule. Dollar Tree initially dropped as much as 3% and closed down 1.9%, its lowest close in more than a month. Dollar General fell as much as 2.9% and closed down 0.6%. WalMart was off as much as 1.1% but pared losses to close down 0.7%.
Debbie Stabenow of Michigan, the top-ranking Democrat on the Senate Agriculture Committee, said the Agriculture Department’s action “is yet another attempt by this administration to circumvent Congress and make harmful changes to nutrition assistance that have been repeatedly rejected on a bipartisan basis.”
“This rule would take food away from families, prevent children from getting school meals, and make it harder for states to administer food assistance,” the Michigan senator added.
The Trump administration rule would rein in states’ ability to enroll recipients earning more than 130% of the federal poverty guidelines -- in most cases capping eligibility to an annual income of $32,640 for a family of four. Households are also limited in most cases to $2,250 in countable assets, such as cash or money in bank accounts.
Forty states and the District of Columbia currently use alternative eligibility criteria that allow participants in some federally funded welfare programs to automatically receive food stamps as long as their income is less than double the poverty level.
Brandon Lipps, an acting deputy undersecretary in the Agriculture Department, told reporters in a conference call previewing the regulatory changes that in some cases states enroll residents for food stamps even though they are receiving federal welfare benefits of minimal value -- including brochures.
The proposed regulations would only allow automatic enrollment of people who receive welfare benefits worth at least $50 a month on an ongoing basis for at least six months. Other than cash, the only welfare benefits that would qualify are subsidized employment, work supports such as transportation, and child care, Lipps said.
The proposed restrictions would eliminate food stamps for 3.1 million people at an average annual savings of $1.9 billion over the next five years, according to the Agriculture Department’s regulatory analysis. State governments would face greater administrative burdens, costing them an extra $231 million per year nationally. A final rule will be issued after a 60-day public comment period.
36 Million Recipients
As of April, 36 million Americans received food stamps, with an average monthly benefit of $121 per person, according to the Department of Agriculture. Enrollment has declined as the economy has improved and was down 2.5 million from a year earlier.
The federal government pays the cost of food stamp benefits. But states administer the program and determine eligibility of applicants, with the state and federal government splitting administrative costs.
Cutting back automatic enrollment would have a substantial impact, mostly hitting recipients who receive lower monthly benefits and disproportionately affecting working families with children trying to climb out of poverty, Elaine Waxman, a senior fellow at the Urban Institute said in testimony last month to a House Agriculture subcommittee.
“We particularly worry about food‐insecure households with kids and adolescents,” Waxman said. “Food-insecure children have higher rates of fair and poor health, have higher rates of hospitalization, increased risk of asthma, and delays in cognitive developments.”
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