Food Stamps Program

Photograph

By: Tim Boyle

Date: June 24, 2004

Source: Photo by Tim Boyle/Getty Images.

About the Photographer: Tim Boyle is a photographer with Getty Images, a Seattle-based creator and distributor of a wide variety of image collections.

INTRODUCTION

The Federal Food Stamp Program is considered by many as one of the most significant, government-assisted food-relief programs in the United States. Under this program, impoverished individuals can obtain free food stamps from the government that can then be used to buy food at authorized stores. Those who have low-paying jobs, are unemployed, work part-time, receive public assistance, or are elderly, disabled, or homeless may be eligible for food stamps. The federal government pays for the amount of the benefit received, while states pay the costs of determining eligibility and distributing the stamps.

The amount of food-stamp benefits that an eligible household can receive depends mainly on the number of people in the household and its monthly income (after deduction of certain expenses). The Food Stamp Program, administered by the U.S. Department of Agriculture, was first implemented in the late 1930s. As many as twenty million people, located in nearly half the counties in the United States, were covered by the first Food Stamp Program (1939–1943).

Although the first program was deemed successful, the second Food Stamp Program was not implemented until eighteen years later, in 1961. After a number of proposals, President John F. Kennedy (1917–1963) initiated the Food Stamp Pilot Program on February 2, 1961. Before the program ended in 1964, it had assisted 380,000 participants from twenty-two states. Soon after, President Lyndon B. Johnson (1908–1973) proposed to make this program permanent. Subsequently, with the aim of providing improved levels of nutrition to low-income households, the U.S. Congress passed the Food Stamp Act on August 31, 1964.

During the early 1970s, participation in the Food Stamp Program (FSP) increased rapidly, increasing from half a million participants in 1965 to fifteen million in 1974. With the increases in participation came an increase in the cost of administering the program. Lawmakers proposed changes to the program to reduce costs and to improve the administration and the accountability of the program.

While rising costs led to several curbs in the Food Stamp Program in the early 1980s, a number of factors combined to further increase expenditures during that decade. The United States faced a severe hunger problem between 1985 and 1990. As a result, additional provisions were incorporated into the Food Stamp Program, including the abolition of sales tax for items purchased with food stamps, an increased resource limit, and eligibility for the homeless. According to the U.S. Department of Agriculture (USDA), the increase in benefits cost the government 2.8 billion dollars.

Up until the early 2000s, the Food Stamp Program issued paper stamps. Transactions with such stamps, however, were extremely cumbersome and time-consuming, and the accounting procedures were also quite complex. Consequently, beginning in the mid–1980s, the USDA began a series of demonstrations to test the technical feasibility, cost, and acceptability of a new method of issuing and redeeming benefits. This method, known as Electronic Benefit Transfer (EBT), aims to simplify food-stamp processes by automating them. The Personal Responsibility and Work Opportunities Reconciliation Act of 1996 (PRWORA) mandated that all states convert paper food stamps to EBT cards by 2002. Similar to a bank debit card, the EBT card tracks the total value of food benefits that can be used. Food purchases from authorized stores can be made by simply swiping the card at the checkout counter.

PRIMARY SOURCE

ELECTRONIC FOOD STAMP "DEBIT" CARDS REPLACE PAPER COUPONS

See primary source image.

SIGNIFICANCE

In the decades since the Food Stamp Program was made permanent in 1964, the number of participants has generally increased, especially after the program was implemented in most states. Participation figures generally fluctuate based on the health of the national economy. For instance, participation increased significantly in the early 1990s, when the United States experienced a mild recession, while the period of economic growth from 1994 to 1999 was marked by a decline in participation.

One of the key aims of the Food Stamp Program is to promote nutritional value and healthy eating habits in low-income households. According to the USDA's Office of Analysis, Nutrition, and Evaluation, more than one hundred research studies evaluating the program's impact on diet quality have been conducted. Although many of these studies conclude that the Food Stamp Program leads participants to increase their expenditure on food, there is no conclusive evidence suggesting that the program has improved diet quality. Nevertheless, it is widely accepted that the program is successful.

Throughout the history of the Food Stamp Program, various concerns have included rising costs to the USDA, weak accountability, complex and time-consuming procedures, and cases of fraud. Accountability and cost issues were resolved to an extent through legislative changes, and the EBT cards have simplified procedures and reduced fraud, making them cost-effective for the USDA.

Paper coupons could easily be misused or sold to other people. The EBT system creates an electronic log for each food stamp transaction, making it easier to identify and document instances of food stamp "trafficking." In the past, food stamps were sometimes sold as a form of currency, with proceeds used to buy narcotics and other illegal substances. EBT card holders are less likely to trade their card with others, as the card has access to the entire month's benefits. In addition, a Personal Identification Number (PIN) is required to use the card. Surveys conducted by the USDA indicate that most participants prefer the EBT card to paper stamps. Reportedly, these cards enhance security and convenience for users. They also simplify accounting procedures and reduce labor costs for retailers.

The Implementation of EBT and expanded eligibility standards since the early 2000s resulted in increased participation in the Food Stamp Program. Thirty-seven million individuals were eligible for benefits in 2003. Of these, 56 percent (approximately twenty-one million) participated in the program—higher participation compared to previous years.

Since the EBT system was implemented in all states in 2004, there have been further technological advancements. A pilot phase of "Tier II EBT", also known as Electronic Services Delivery (ESD), has been initiated. The Tier II system includes automating the distribution of a variety of non-economic, public health, and education-related benefits. These benefits include Temporary Assistance to Needy Families (TANF), child-care assistance, child support payments, and integration of the Women, Infants, and Children (WIC) program. WIC provides food relief to pregnant women and infants.

FURTHER RESOURCES

Books

Ohls, James C. and Harold Beebout. The Food Stamp Program: Design Tradeoffs, Policy, and Impacts. Lanham, Md.: University Press of America, 1993.

Web sites

Federal Reserve Bank of Philadelphia. "Assessing the Impact of Electronic Benefits Transfer." September 21, 2004 <http://www.philadelphiafed.org/pcc/conferences/agen da1204.pdf> (accessed May 18, 2006).

Food & Nutrition Service, USDA. "Design Options for Assessing the Food Security and Diet Quality Impacts of FNS Program Participation." December 2005 <http://www.fns.usda.gov/oane/MENU/Published/FSP/FILES/Other/DietQualitySummary.pdf> (accessed May 18, 2006).

Food & Nutrition Service, USDA. "Explaining Changes in Food Stamp Program Participation Rates." September 2004 <http://www.fns.usda.gov/oane/MENU/Published/FSP/FILES/Participation/TrendsSum99-02.pdf> (accessed May 18, 2006).

Food & Nutrition Service, USDA. "Food Stamp Program Participation Rates: 2003 Summary." July 2005 <http://www.fns.usda.gov/oane/MENU/Published/FSP/FILE S/Participation/FSPPart2003-Summary.pdf> (accessed May 18, 2006).

Food Research and Action Center. "Federal Food Programs." September 7, 2001 <http://www.frac.org/html/federal_food_programs/programs/fsp_faq.html> (accessed May 18, 2006).

United States General Accounting Office. "Food Stamp Program." January 2002 <http://www.gao.gov/new.items/d02332.pdf> (accessed May 18, 2006).