To help poor families maintain their purchasing power, many government programs adjust benefit amounts each year to account for inflation. When inflation is as high as we are currently experiencing, the resulting adjustments can cost the federal government billions of dollars. For example, the Supplemental Nutrition Assistance Program (SNAP, formerly called food stamps) will increase by approximately 12.4 percent starting October 1, 2023 to help offset rising food costs. This alone will add $14 billion next year to federal SNAP expenditures.

For SNAP, inflation adjustments come on top of policy changes that had already ballooned costs. Total participation and costs in constant dollars for SNAP have reached unprecedented levels, in large part because of pandemic-related policies. However, even amidst the strong 2019 economy, SNAP costs were higher than before the 2008/2009 economic downturn (Figure 1). SNAP benefit costs in constant dollars were higher in 2021 than at any point since at least 2000, even including the Great Recession when the unemployment rate peaked at 10.0 percent in 2009 and remained above 9.0 percent until late 2011.  

Recent increases in SNAP benefit costs primarily stem from policy changes. In the immediate aftermath of the pandemic, Congress passed SNAP emergency allotments, which provided the maximum SNAP amount to households regardless of other income in the household. The federal government has allowed many states to maintain their emergency allotments even though they have outlived their pandemic-related purpose, adding billions of dollars to SNAP over the past two years (Figure 2).

The rise in SNAP costs in December 2020 stemmed from Congress increasing SNAP benefits temporarily in response to the pandemic, but Congress allowed the increase to expire at the end of September 2021. However, in the following month, the USDA used a routine reexamination of the Thrifty Food Plan—the USDA’s cost estimate of a “nutritious, low-cost” diet for a family of four in SNAP—to increase permanently the maximum SNAP benefit amount by approximately 25 percent. The USDA uses the Thrifty Food Plan to determine maximum benefits, although they had never used a reexamination of the Thrifty Food Plan to increase maximum SNAP benefits before, raising questions about the integrity of the process.  

The recent inflationary adjustments to SNAP benefits will occur in addition to these policy-induced program expansions, basing this year’s increase off an already-inflated benefit level and driving even larger budgetary impacts moving forward. In current dollars, the cost-of-living adjustment means that households will get approximately 40 percent more in 2023 than just a few years ago (Figure 3). 

Policy changes after the pandemic combined with high inflation means that SNAP will likely cost the federal government more than $130 billion in current dollars for 2023. This will make SNAP the largest income-support program for low-income families in the US, more than the earned income tax credit and refundable child tax credit. Increases in SNAP benefits to account for high inflation alone in 2023 will require an additional $1.1 billion per month in federal SNAP expenditures (in current dollars) provided participation rates stay the same. And because of the associated inflationary increases to income eligibility levels, participation in SNAP will also likely increase provided that households’ incomes cannot keep pace with rising costs.

Given the increasing size of SNAP, policymakers should at the very least focus on improving the effectiveness of the program. The past several years confirm that SNAP is an effective vehicle to transfer income to families in need. However, it is less clear that continued SNAP expansions actually improve long-term outcomes for low-income families. Evidence suggests that SNAP receipt decreases employment, which can lead to longer term problems for nonworking families. Research has also linked SNAP to worse diet quality compared to income-eligible non-participants. This raises the prospect of further expansions to SNAP contributing to declining employment, obesity, and diet-related disease. Labor force participation rates among prime-age people remain slightly below pre-pandemic levels, and almost 42 percent of American adults were obese in 2017-2020; up from 30.5 percent since 2000. Policymakers should ensure that SNAP is not contributing to these problems.   

SNAP may be an important income support for low-income families, but without necessary reforms, it will likely harm participants’ long-term employment prospects and health outcomes. Given the tremendous expansion to the program in recent years, addressing these problems should sit atop the legislative agenda, as should slowing expenditure growth moving forward.

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