Economic Effects of Refocusing National Food-Assistance Efforts

I n an era of budgetary and deficit pressures, food-assistance programs are headed for change as part of an overall effort to scale back on Government-funded welfare programs. Most agree that the U.S. welfare system needs reform to reduce costs, improve the effectiveness of the programs, reduce dependency, and provide incentives for recipients. Proposals from the Executive and Legislative branches, as well as the States, offer modifications to current programs, including those providing food assistance. There is much discussion on how to make the programs more efficient while continuing to assist the needy. The major proposals would reduce funding and eligibility for some Federal programs and transfer control of others to the States under a block grant with a fixed spending limit. Impacts of changes in the Nation's food and nutrition assistance programs will extend beyond the programs' 45 million recipients to the rest of the food sector and the larger economy. With reductions in food assistance, national food spending would decrease, as would the demand for agricultural commodities (particularly meats), commodity prices, and farm income. Nonfood sectors would also be affected. The extent of these changes depends on the size of the program cuts, the form of the new programs, and whether the savings are used to reduce the Federal budget deficit or to cut taxes.