Trump Cutting Food Stamps Could Ironically Cost Retailers Billions
Walmart and Target could be among those hit hardest.
Photo by Flickr user Mike Mozart
Food stamps have long been a crucial subsidy for low-income recipients. If Trump's proposed budget cuts to the Supplemental Nutrition Assistance Program (SNAP, or more commonly known as food stamps) go through, some folks will be hit hard.
The proposal has the Food Stamp program cut by $191 billion between 2018 and 2028. Right now, the Congressional Budget Office says the average recipient gets about $252 per month. After these cuts, that average would fall 31 percent to $173 per month. That's a monthly grocery bill for about a quarter of a person who's not very hungry.
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Just like a @POTUS tweet, there is an irony that seems lost on the supporters of these cuts. According to a report from AlixPartners, the cuts could create an estimated $70.7 billion loss for retail.
Supermarkets and superstores stand to lose $57.5 billion over ten years. That means stores like Walmart will get hit the hardest. Target could see the second-largest kick in the grocery bag with an estimated $4.8 billion to $5.3 billion sales drag.
So, while public subsidies lay their weary heads on the chopping block, there seems to be a lack of forethought in how it could affect the darlings of the current administration: The mega-corporate world. In an extraordinary case of foot-shooting, tax cuts that are largely to help the rich might actually take food off their plates. Now, will everyone go hungry?
K-Mart, with an already struggling balance sheet and with multiple store closings, looks to be another hard hit in this race to defund. The proposed cuts could mean a sales loss of $1.9 billion to $2.2 billion for the once go-to for all things, well, all things.
Diana Sheehan, Kantar Retail grocery analyst and director of retail insights, told CNBC, "If you look at food spending as a whole, it's not discretionary, it's necessary. So, you reallocate budget dollars to spend on food if you have to."
Yeah, eating is not really optional. But It seems the intent to help large companies who would in turn create more jobs for lower and middle-class people could force those very mega-corps to trim the fat.