The United States faces two major issues: inflation and debt. Politicians have become very effective at directing federal funds back to their districts, and lobbyists have successfully influenced government policy to favor the corporations they represent. However, this increased government spending is fueling inflation and causing the national debt to skyrocket.
Several government programs could be significantly reduced to save money and curb inflation. Lowering government spending in certain sectors reduces demand, which in turn can lead to lower prices.
President Javier Milei of Argentina has significantly reduced inflation by drastically cutting government spending. This demonstrates that, contrary to traditional economic theories, current inflation is primarily driven by excessive government spending.
In the United States, recent food price inflation has significantly impacted families. Food prices rose 3.5% in 2020, 3.9% in 2021, and a staggering 11.4% in 2022, with continued increases above 2% in 2023 and 2024. This, combined with rising housing costs, has severely strained consumers’ budgets and affordability.
At the USA-Brazil Policy Institute, we prioritize policies that benefit the majority, not just small segments of the population. We avoid micromanaging solutions and focus on broader impact.
The best program to cut spending on is SNAP (Supplemental Nutrition Assistance Program), which feeds 43 million Americans. While vital, it’s become too generous and should focus on providing essential staples. Despite online access and delivery, many recipients still choose to shop in person and struggle to reach stores, highlighting the need for accessible food options. Currently, the subsidy works by providing beneficiaries receive a monthly rechargeable debit card.
Another issue with SNAP is that recipients tend to have lower-quality diets, with a higher intake of processed foods and sugary drinks. This contributes to health problems, highlighting the need for more food restrictions and healthier food choices within the program.
Having lived in Brazil for years, I witnessed firsthand how the “Cesta Básica” (basic food basket) program served a significant portion of the population. I personally distributed over 6,000 food baskets to impoverished communities, including traditional and indigenous groups who had lost access to their cultural food sources. These baskets contained essential, non-perishable staple foods like rice, beans, cooking oil, salt, sugar, crackers, powdered milk, and UHT milk (shelf-stable milk).
The United States can learn from Brazil’s Cesta Básica program, enhancing it with technology to improve efficiency and accessibility. For example, in my children’s school, I use an app called “Ordo” to order their school lunches each week from a limited menu of healthy options. This approach ensures they receive nutritious meals while streamlining the ordering process.
Another observation from my time in Brazil is the widespread consumption of rice and beans across all socioeconomic classes. This staple provides essential calories and nutrients, demonstrating the value of incorporating affordable and culturally relevant foods into food assistance programs.
Research indicates the 2023 SNAP budget was $115 billion, with $8 billion for administrative costs and $107 billion in direct benefits. This presents an opportunity for significant cost savings and inflation reduction.
Here’s a proposed solution to modernize SNAP, improve efficiency, reduce the need for transportation, lower food inflation, and better serve families:
- Outsource SNAP Management: Contract major retailers like Kroger, Meijer, Albertsons, Walmart, and Amazon to manage the program. This leverages their existing infrastructure and expertise, potentially reducing the $8 billion in administrative costs.
- Online Ordering with Limited Options: Transition SNAP to an online-only ordering system. Offer a streamlined selection of non-perishable staple foods to ensure basic nutritional needs are met cost-effectively while minimizing waste.
- Direct Delivery: Implement a direct delivery system for SNAP orders. This saves recipients time and money on transportation, especially those with mobility limitations. It also helps reduce demand-driven inflation by streamlining the supply chain.
This approach offers several benefits:
- Cost Savings: Reduces administrative costs through efficient management and potentially lowers food costs through bulk purchasing of specific items and streamlined distribution.
- Improved Access: Ensures food reaches those with transportation or mobility challenges.
- Reduced Inflation: Helps lower demand-pull inflation by focusing on essential goods and efficient delivery.
- Improved Nutrition: Prioritizes staple foods, promoting healthier eating habits.
- Promotes Motivation: If people wants to eat more options they can work.
By leveraging existing retail infrastructure and technology, the US can modernize SNAP, improve its effectiveness, and reduce its inflationary impact on food prices.
Limit SNAP benefits to staple foods. While having a limited diet can be monotonous, it’s a necessary measure to ensure cost savings. In Brazil, the staple food is often rice and beans, sometimes eaten three times a day. Although this proposal doesn’t go to that extreme, focusing on essential staples would result in significant savings.
The food basket should be delivered weekly or every two weeks and should be based on recommended consumption levels and personal choices based on the receiver.
- Rice: $40 (50lb bag)
- Beans: $50 (various types)
- Macaroni: $120 (assuming a box per week)
- Tomato Sauce: $75 (assuming one can per week)
- Bread: $120 (assuming a loaf per week)
- Peanut Butter: $50 (several jars)
- Vegetable Oil: $20
- Salt: $5
- Sugar: $20
- Milk: $100 (depending on type and amount)
- Dried Fruits: $50
- Breakfast Cereal: $70 (depending on type and amount)
- Toilet Paper: $100
- Soap/Shampoo: $50
- Female Hygiene Products: $50
- Men’s Deodorant and Shaving Kits: $50
- Bottle of 365 multi-vitamins: $15
- Shipping Cost per year: $65
TOTAL (estimated): $1050 per year
The average monthly SNAP benefit in fiscal year 2023 was about $211.93, totaling $2,543.16 per year. By limiting SNAP to essential staples, the annual benefit could be reduced to $1,050, saving $1,493.16 per recipient. With 43 million recipients, this translates to $64.2 billion in annual savings.
This change would also reduce fraud, abuse, and food waste, as non-perishable staples are less susceptible to these issues. It would also discourage the purchase of sugary drinks and unhealthy foods.
However, this reform would negatively impact certain industries:
- Supermarkets and grocery chains: A $64.2 billion decrease in sales would significantly impact their profits. However, reduced demand could also lead to lower food prices, benefiting the other 85% of consumers.
- Sugary drink companies: Based on NIH data, 9.3% of SNAP funds (~$10 billion) are spent on sweetened beverages. Companies like Coca-Cola, with a 46.3% market share, could see a substantial sales decline.
These industries will likely oppose any changes to SNAP that threaten their profits. However, prioritizing lowering food inflation and taxpayer funds for essential food items that promote health, and well-being should be a priority.
Restricting SNAP benefits to essential staples can help “Make America Healthy Again.” It’s crucial to prioritize responsible spending and ensure that taxpayer funds support the nutritional needs of vulnerable populations, not the profits of corporations participating in this waste.
Of course due tot he multi-billion dollar corporate interests, it is highly doubtful there will be a substantial change in this program.
