The federal government shutdown, now in its 40th day, has sparked chaos surrounding a food assistance program for 42 million low-income families. The conflict stems from conflicting rulings by federal district courts and the Supreme Court over the November Supplemental Nutrition Assistance Program (SNAP) payments, with Democratic governors in their states attempting to distribute the funds normally clashing with the federal government’s refusal to transfer funds to those states.
The conflict began with the Department of Agriculture’s announcement last month that the shutdown had depleted its budget and prevented the November SNAP payments from being distributed. This prompted lawsuits from 25 Democratic-controlled states and civic groups. The district court ruled in their favor. It ordered them to use the USDA’s emergency fund, which currently has $4.65 billion, as well as additional funds raised from customs revenues, to fully implement SNAP as scheduled.
The federal government appealed, arguing that only about 65% of the estimated $9 billion needed for November could be implemented. When the appeals court failed to reach a decision, the federal government took the case to the Supreme Court, which on the 7th suspended the full payment order.
The conflicting decisions between the district court and the Supreme Court created considerable confusion. Some of the 25 states followed the district court’s order to fully fund November’s SNAP accounts (aka “food stamps”). These states used the funds to make purchases at grocery stores and other locations with electronic payment systems (EBT), and after the USDA reviewed each state’s SNAP file, the Treasury Department deposited the funds into the state’s account. However, the federal government refused to deposit (repay) the subsidy to the state government, calling it an “unauthorized payment.” In the case of Wisconsin, a month’s worth of subsidy has already been charged to 700,000 EBT users, amounting to $100 million, the Associated Press and local media reported on the 9th
.The Department of Agriculture notified SNAP officials in each state the day before that “all actions taken to issue the entire SNAP benefit for November must be immediately canceled.”
In other words, in the flow of “Treasury → State → Beneficiary → Retailer,” the state government charged the beneficiary’s EBT, and some beneficiaries had already purchased groceries and other items at retailers, but the Treasury said it could not pay the state government.
These 25 states have already expressed concern that a federal refusal to reimburse SNAP recipients for payments made last week would result in “catastrophic operational disruption.”
This could lead to retailers refusing to accept SNAP cards, or states facing massive lawsuits. The ability to recover already-purchased SNAP benefits is also in question. Even as the chaos caused by the prolonged shutdown intensifies, Congress remains at a loss, with Republicans insisting on immediately passing a temporary budget bill to restart the government and Democrats insisting they cannot comply unless the “Obamacare subsidy” is extended for a year.