The New Spending Bill & SNAP: The Ugly, The Bad, & The Good?

Last week the Trump administration passed the spending bill. Some of the bill will be new; some keeps in place programs that already existed. And where politicians exist, they do tricks and misinformation. Sometimes what they say Is going to happen and what a bill actually does are two different things.

Let’s take a deep look at the Supplemental Nutrition Assistance Program known as SNAP. The federal government spends just over $100 billion a year on this program. It gives needy individuals about $6 a day to spend on food. Only U.S. citizens can qualify (though a very small class of legal non-citizens could get benefits too, more on that below). The majority of SNAP recipients are elderly, disabled, children, or working poor families.

The new bill calls for $186 billion in cuts over 10 years. That sounds like a lot, but let’s break down how our legislators (creatively) got to these numbers:

The first $37 billion comes from eliminating the possibility of future increases. Although the bill doesn’t cut the benefit to poor Americans, and still allows for increase indexed to inflation, it “saves” $37 billion from increases that a future administration might put into place (as happened during the COVID-19 pandemic).

Impact to grocery stores: None. These cuts are against a future event that is unlikely to happen anyway.
The second block of cuts is adding additional work requirements to qualify for SNAP. There are already work requirements for non-disabled adults up to age 54, but the new program puts in work requirements for adults 55-64, and for families whose youngest child is at least 14 years old. They are counting $68 billion in savings here over 10 years, assuming that some percentage of older Americans will drop off of SNAP.

Note that it doesn’t actually cut benefit amounts, or cut out classes of individuals, it just says they either have to work at least 20 hours a week to still qualify.

Impact to grocery stores: Both negative and positive. If large numbers of people who used to be on SNAP fall off the program, the impact could be negative to grocers. But it also provides an incentive for retirees to take part-time jobs to maintain their benefits. Senior workers are great for grocery, and they were the single largest group who left the workforce during COVID.
The new bill counts $17 billion in additional savings by closing internet and energy subsidy credits. Without getting too complicated, the Affordable Connectivity Program allowed low-income Americans to still qualify for SNAP, even if their income was slightly too high, by allowing them to show their income net of energy and internet access fees. Removing this subsidy means fewer families will qualify for SNAP since their income would no longer meet the requirements.

Note this budget change targets working families who are still low-income and can’t make ends meet, but are just above the threshold for food subsidies. There are a lot of double-income enlisted military families with children in this group.

Impact to the grocery industry: Fewer families will qualify. No silver lining here — this one will hurt the industry, especially in communities that have a large number of active-duty military.
The next block of savings will come from requiring states to cut error rates in SNAP administration. Error rates are not fraud, but true administrative sloppiness in the teams at the state level who run local SNAP programs. If the states' work become more accurate, the cuts are less severe, but Congress expects this will save $40 billion over 10 years.

Error rates are administrative failures. In some instances, families aren’t getting the benefits they actually qualify for; in others they are getting more than they should. This could be because new children come into the family or older ones age out; issues with separated or divorced families, etc.

The potential savings here are likely overestimated, but connecting rewards to administrative discipline is likely a good thing in the long run.

Note: States could choose to opt out of this. While unlikely, it could mean state-by-state variance in SNAP benefits and is worth exploring a little more in depth. (See below)

Impact to grocery stores: Likely little at the start, but over time, expect that a modest number of consumers will roll off the program and get fewer benefits, countered by increased benefits to families that should be getting more but weren’t.
Another “get your house in order” part of the changes in SNAP is asking the states to share a larger percentage of administrative costs. They expect $25 billion in savings from cuts to SNAP state workers, better terms with EBT processors, cuts to education program, and other administrative items.

Currently states pay 50% of administrative costs, and states will start paying 75% of those costs beginning in October 2026. Cutting administrative costs doesn’t actually remove families from SNAP or cut their benefits, but cutting the staff that manage it could make getting SNAP more difficult. It also could make setting up retail stores, getting reimbursements, etc. way more difficult.

Impact on grocery stores: Little at first but over time expect more administrative costs on your end to deal with fewer resources at a state level.
The bill kills $5 billion in SNAP education. SNAP-Ed is evidence-based and helps people make their SNAP dollars stretch, teaches them how to cook healthy meals, and lead physically active lifestyles. Data shows that people who go through SNAP-Ed leave SNAP more quickly, make better food choices, have fewer health issues, and in the long run save the federal government money.

Impact to grocery stores: Little, though we should think about picking up the slack. Private enterprise can play a huge role in helping low-income Americans learn how to shop efficiently, save money, and make smart food choices for their families. National retailers are already looking at how they can roll out marketing and training programs for shoppers.
Finally, the bill counts on $2 billion in cuts over 10 years for SNAP benefits that went to a very small and specific group of legal immigrants who classified for refugee status.

Impact to grocery stores: Low. Few people were on this program compared to the rest of SNAP.

Put simply, this bill provides a lot of different ways to get a big savings number. In my opinion, much of it is manufactured, but that is nothing new — politicians on both sides of the aisle have been using tactics like this to push through changes to programs forever. Big headlines now against changes that may or may not make a difference over 10 years seem to be a common way of legislating these days.

But some of these changes are real and will impact grocers and the entire industry — especially in low-income communities where 30% or more of the families are on public assistance of some kind. If you roll it all up into short-term, long-term, real cuts, and manufactured ones, it is probably at least a 5-6% cut in the short run, and less than 10 over time. That is a way more manageable number than where draft legislation first started. Kudos to our partners at NGA and FMI for helping to blunt the impact of SNAP cuts to more reasonable levels.

So, what can we be doing now?

Remember that there are provisions for states to take on more responsibility for reducing the costs of SNAP. There may be some states where the optics of SNAP cuts would look good to their heavily conservative constituents, and they could choose not to participate. You likely already know if your governor or local government is leaning this way. Now is the time to have a conversation with your local representatives, your governor, and the state administration. There is a lot of misinformation about SNAP. The best way to prevent your state from cutting SNAP is to use your clout as a local retailer or manufacturer and talk to them now about how the program really works. Your voice as a local employer and business owner matters!
The new work requirements are likely to push older Americans aged 55-64 back into the workplace, looking for 20-hour-a-week jobs; this is good news for us. Crank up your recruitment and be bold. Working 20 hours a week in our stores and keeping their SNAP benefits intact helps us, helps them, and helps our communities.
Not every community will feel these impacts. Middle-income suburbia won’t notice, but low-income communities, urban and rural, seniors and those with disabilities will feel these changes the most. Independent retailers are often the only retailers providing access to fresh food in these communities, and some of our stores have a third or more shoppers on SNAP. Which means they need help. Think about incremental deals and savings; sign seniors up for digital coupons and loyalty programs; consider introducing enhancing senior citizen special offers and shopping discounts.
Brands, we need you! Often national media and promotions go to national retailers only. We know it isn’t intentional discrimination, but the effect remains the same: middle- and high-income shoppers pay the least for groceries; low-income shoppers pay the most for food.

Your independent retailers are the perfect partner to help right this problem. Join with us, put a team together to look at how we can take the stimulus dollars you are spending and make the go farther for the neediest Americans. Do good here and you will protect your retailers, support the most vulnerable Americans and, in the long run, grow share.
Pick up where the federal government is quitting: training. If we can help our shoppers feel more confident, they will spend more. Nutrition content, articles on how to make your SNAP dollars go farther, loyalty programs, and more can do what the federal government was trying to do, and we can do it better. Step up, build education into your marketing plans, and you will attract more SNAP shoppers.

I hope this overview helps you to look at SNAP and the new budgets with more clarity. Parts are bad, some of it is meaningless, and some might have a positive impact on our industry. There is opportunity for independent grocers to use our understanding of the food supply chain and local communities to help our legislators understand how to help our neighbors.