Food Stamp Expansion and Fraud | Citizens Against Government Waste

Food Stamp Expansion and Fraud

The WasteWatcher

The Supplemental Nutrition Assistance Program (SNAP), commonly referred to as food stamps, has grown dramatically under President Obama’s administration. At the start of his term, in January 2009, there were approximately 32 million Americans receiving federal assistance from SNAP, costing more than $3.6 billion per month. According to the most recent data from the U.S. Department of Agriculture (USDA), there are now more than 46 million individuals receiving SNAP benefits, or roughly one in every seven Americans. The cost to taxpayers now sits at $6.2 billion per month. These figures exclude the cost of the program’s management, enforcement, and oversight. The fiscal year 2011 SNAP program cost a record total of $75.3 billion. Based on the current trend, that number will continue to rise in 2012, and could reach $80 billion.

The significant increase in SNAP’s cost is attributable to several factors. Food stamp benefit increases were included in the 2009 American Recovery and Reinvestment Act. As a result, available monthly benefits for individuals increased by 19 percent since January 2009, far above the rate of inflation. Compounding the increase in average benefits awarded is a rapid influx of new participants. The economic downturn certainly played a role in the increased demand for assistance.

However, in an effort to encourage increased access to SNAP benefits, the USDA under the current administration, has also discouraged the use of asset tests as a benchmark to determine recipient eligibility. An asset test tallies a potential recipient’s countable resources, such as bank accounts, in determining his or her need for assistance. With the relaxation or elimination of asset tests for many states, there is more room for manipulation and exploitation of the program. This has caused some to point out that even millionaires are eligible for food stamps if their monthly income is low. In fact, a Michigan man who won two million dollars through a lottery game show admitted to still using food stamps, because his lump sum payment was determined to be an asset rather than income.

Along with the expansion of SNAP benefits and access comes fraudulent behavior at the expense of the taxpayer. Food stamp fraud, defined as “trafficking” by the USDA, represents more than $750 million in waste. There are many different kinds of food stamp trafficking and abuse. Most commonly, traffickers will sell their food stamps, now given in the form of plastic debit cards, at less than face value for cash. These sales are even attempted online through Craigslist and social media outlets. The Wall Street Journal has also reported larger, more organized cases of fraud.

Recognizing the problem of SNAP abuse, the USDA in December 2011 announced new policies to attempt to curb waste, fraud, and abuse. Changes included stiffer penalties for retailers, tighter policy guidance for states seeking to effectively investigate fraud, and clarifying the definition of trafficking. While the USDA’s attention to fraud prevention is admirable, so long as benefits remain high and eligibility less stringent, there remains increased incentives to take advantage of food stamp access. The Obama administration maintains that SNAP is under-enrolled, enacting strategies to further grow the number of beneficiaries.

-- Jonathan Buono

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