Vegacura: Food and the economy

It's encouraging that policy makers are beginning to think beyond how many more trillions they can give to the financial industry, and instead focus on how assistance to people really hurting can help the economy. Starting with food stamps.

Fueled by rising unemployment and food prices, the number of Americans on food stamps is poised to exceed 30 million for the first time this month, surpassing the historic high set in 2005 after Hurricane Katrina.

The figures will put the spotlight on hunger when Congress begins deliberations on a new economic stimulus package, said legislators and anti-hunger advocates, predicting that any stimulus bill will include a boost in food stamp benefits. Advocates are also optimistic that President-elect Barack Obama, who made campaign promises to end childhood hunger and whose mother once briefly received food stamps, will make the issue a priority next year.

"We soon will have the most food stamps recipients in the history of our country," said Jim Weill, president of the Food Research and Action Center, a D.C.-based anti-hunger policy organization. "If the economic forecasts come true, we're likely to see the most hunger that we've seen since the 1981 recession and maybe since the 1960s, when these programs were established."
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Analysts attribute the jump primarily to rising unemployment, which hit 6.5 percent in October and is predicted to increase to 8 percent by the end of 2009, but rising food costs are also a factor. Although prices have fallen from the levels of this past spring, they remain high. In October, the consumer price index for food and beverages had jumped 6.1 percent over last year. Staples such as eggs and bread rose even faster.

For low-income families, who spend a higher percentage of their monthly budget on food, that rise has been particularly painful. Food stamp benefits are adjusted for inflation only once a year, and as of September, the maximum benefit fell $64 a month short of the cost of the thriftiest, USDA-established diet for a family of four. The annual adjustment in October of 8.5 percent largely brought the benefit in line with food costs again, but the Center on Budget and Policy Priorities, a nonpartisan policy group, estimates that if current inflation persists, by December benefits will again fail to match the cost of the thrifty food plan.

"At a time when we have more people turning to the food stamp program, it is less and less able to meet their basic food needs," said Stacy Dean, the research center's director of food assistance policy.
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To tackle the problem, supportive lawmakers are pressing to include a temporary bump in food stamp benefits in the next stimulus package. Similar proposals failed to pass twice this year, but there appears to be broad support now for an increase of 10 to 20 percent, advocates and lawmakers said.

Economists say an increase in food stamp benefits would help the economy overall by concentrating relief on those most likely to spend the money quickly, pumping dollars into an economy desperate for demand. According to Mark Zandi, chief economist of the rating agency Moody's Economy.com, every $1 spent on food stamp benefits generates $1.73 of economic activity, more than extending unemployment benefits or offering state fiscal relief.

"Congress has been focusing on the impact on the financial markets," said Dean at the Center on Budget and Policy Priorities. "We want them to focus on the supermarkets and help 30 million people."