The White House recently released its Fiscal Year 2018 budget that would boost spending for the military and border security while cutting social safety net programs, including the Supplemental Nutrition Assistance Program (SNAP). The President’s budget request officially kicks off the formal process and lays out many of the Administration’s priorities. While it serves as an important guiding document, Congress almost always creates their own budget resolutions in the House and Senate Budget Committees
The $4.1 trillion budget, titled “A New Foundation for American Greatness,” largely upholds President Trump’s promise to increase spending on defense, military, and border security. It also calls for drastic cuts to SNAP program, proposing a 25 percent – or $192 billion – funding decrease by shifting costs to states, restricting eligibility requirements, and reducing benefits for current recipients. The President’s budget for SNAP would:
- Require states to pay for 10% – 25% of SNAP benefit costs (resulting in $116 billion over ten years);
- Terminate minimum monthly benefits for households of one or two people; and
- Cap additional benefits based on household size at families of six.
In addition, the budget calls for retail SNAP applicants to pay a fee when they apply to receive or renew a SNAP license. The exact structure and fees are unclear, but the proposal includes language calling for fees to be “scaled upon existing retailer size and category definitions, ranging from $250 for the smallest firms, such as corner markets, to as much as $20,000 for the largest retailers, such as super-centers and large supermarket chains. Retailers would pay the fee each time they are authorized or reauthorized.”
The following is a direct excerpt from the budget that discusses many of the proposed changes to the program:
“The Budget proposes a series of reforms to SNAP that close eligibility loopholes, target benefits to the neediest households, and require able-bodied adults to work. Combined, these reforms will reduce SNAP expenditures while maintaining the basic assistance low-income families need to weather hard times. The Budget also proposes SNAP reforms that will re-balance the State-Federal partnership in providing benefits by establishing a State match for benefit costs. The Budget assumes a gradual phase-in of the match, beginning with a national average of 10 percent in 2020 and increasing to an average of 25 percent by 2023. To help States manage their costs, in addition to the currently available operational choices States make that can impact participation rates and benefit calculations, new flexibilities to allow States to establish locally appropriate benefit levels will be considered.”
On the tax side, the budget surprisingly assumes the continuation of the estate and gift tax in its current form. This past April, the White House urged Congress to repeal the estate and gift tax in any tax reform package. Many are now unsure what the White House’s position is on this issue.
The budget created a firestorm on Capitol Hill, with many Members of Congress suggesting the cuts went too far. The Economist also blasted the budget for using rosy economic assumptions, which assumes 3 percent GDP growth for seven of the next 10 years.
It’s important to emphasize that the chances of Congress passing this budget are little-to-none. Congress will soon begin working on its own budget, which we expect to look vastly different from the Administration’s budget. As Speaker Paul Ryan recently noted, Congress will now “have a great debate about the details and how to achieve those goals.”