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Dollar stores such as Dollar Tree (DLTR) - Get Dollar Tree Inc. Report and Dollar General (DG) - Get Dollar General Corporation Report could get the shaft, should Trump's food stamp cuts get passed.

President Trump is proposing $193 billion worth of cuts to the food stamps program, known as the "supplemental nutrition assistance program", over the next decade in the budget he will deliver to lawmakers on Tuesday. That represents nearly 25% of the budget for the program, which supports 22.3 million low-income households, or about 45 million people. If the most recent cuts to food stamps were any indication, less money in the hands of low-income households could weigh on the dollar stores that often dominate where this population group lives.

Food stamp enrollment began to plunge last year, as several states ended benefits earlier than they were required under initiatives put in place by the Obama administration. 

With less money in their pockets, dollar store customers shifted their focus on buying low-margin food as opposed to purchases of less importance (which are often higher margin). To try and entice low-income shoppers, Dollar Tree started to offer more products priced at $1. As for Dollar General, it flat out lowered prices in key parts of the store to drum up business. Even then, Dollar General saw sales challenges persist. 

"The cuts in SNAP benefits [food stamps] have affected 56% of our store base -- so we have started to lower prices as our consumers need us right now," Dollar General CEO Todd Vasos told analysts on a conference call late last year. Vasos added that Dollar General stores in states with the food stamp cuts saw their same-store sales in the third quarter lag the company average by 100 basis points.

Dollar General's Chief Financial Officer John Garratt said on that same call, "Clearly our consumers' budgets are being pinched, the SNAP reductions have taken a toll on their spending."

Wildcard: people moving off of food stamps find work, and then splurge once month at Walmart (WMT) - Get Walmart Inc. Report while maintaining their spending levels at the dollar stores. 

This article originally appeared at 07:55 ET on Real Money, our premium site for active traders. Click here to get great columns like this from Jim Cramer and other writers even earlier in the trading day.

Read This Or Lose Out

The latest on the bombing in Manchester: TheStreet has a fine team of veteran journalists positioned in the U.K. that have been all over the news on the bombing in Manchester. Here is the latest on this heinous, appalling crime.  

President Trump says what most are thinking: Love him or hate him, President Trump has had a few good days touring the Middle East. He has signed lucrative deals and has avoided major gaffes in protocol with heads of state. Stock prices have bounced back since last week's vicious selloff, as a result. One could argue Trump scored a few more points on Tuesday by calling the U.K. bomber -- and others like him -- "evil loser" terrorists.  

Tara Palmeri, White House Correspondent at Politico, is a great follow on Twitter for all things Trump and politics.

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