I’ve written recently about how Social Security is now poised to become the largest single expense of the Federal government next year, spending more than DoD. I’ve also written about how Social Security is apparently being abused to provide de facto welfare for many. Well, now let’s look at another problematic Federal program. Specifically, we’ll look at the Supplemental Nutritional Assistance Program, or SNAP – formerly known as “food stamps”. Below, I’ll refer to it by the older name as that’s how it’s still more commonly known.
In theory, food stamps seem like a good idea. The idea is simple: help the truly needy feed themselves by giving them public assistance that they can only use to buy food. This lets them and use what little money they have on other essentials.
That’s the theory, anyway. In practice, things have turned out a bit differently.
The food stamp program is rife with fraud. Costs have risen hugely over the last decade plus, in both good times and bad, with no reductions in sight for at least another two years – if then. And the program very obviously supports far more than those who are truly needy.
You might want to grab a barf bag before you read any further.
Food Stamp Fraud – Business as Usual
Fraud in the food stamp program is legendary, so I won’t discuss it in great detail. Let’s just say that many vendors and individuals find . . . interesting ways to defraud Uncle Sam when it comes to food stamps.
It’s well-documented that food stamps benefits are often sold or traded – never mind the fact that doing so is against Federal law. Dirty vendors ring up phantom purchases and give back part of the sale in cash, pocketing the difference. They also ring up false sales and allow the customer to take non-qualifying items instead – like beer. Some even blatantly allow the purchase of non-qualifying items with food stamp benefits. And there’s little in the way of penalties for getting caught – in some cases, repeatedly – besides being “permanently” barred from the program. While theoretically criminal charges can be filed, they’re apparently pretty rare.
Unscrupulous vendors know how to use aliases, of course. That’s where at least some of the “repeatedly” comes from. Same guy or gal, different name, same scam. Rinse and repeat.
Why risk it? In a word: money. You can be looking at an extra $50,000 a month in income if you work it right – and most of that would be profit. Say 50% is the dirty vendor’s profit from the scam. That’s an extra $300,000 a year for an unscrupulous store owner. Yeah, they’d probably have to pay taxes on some of that – but I think they could probably manage to live on the after-tax part. Plus whatever after-tax profit the business made legitimately, of course.
Then there are the truly blatant individual frauds. Like who? Why, like Ms. Brenda Charlestain, the paralegal-turned-stripper who was pulling down $85k a year in tips, spending nearly $9,200 on “surgical enhancements”, plus a bundle on a custom bright pink paint job for her 2008 Dodge Charger (monthly car payment: $326) and paying $1,100 monthly in rent – while getting food stamps for herself and her five children because she was “homeless and out of work”.
Of course, in Ms. Charlestain’s case, the gravy train did eventually stop. She’s recently been sentenced to 18 months in the pen for fraud. No word on whether the IRS has a case pending against her for tax evasion.
Percentage wise, fraud may only be a small fraction the total cost of the program – the USDA estimates 1%, and while I think that’s probably a bit low I’d also guess the true fraud rate is no more than 2 or 3%. But when you’re talking about nearly $75+ billion annually, 1-3% is still serious money.
Uncontrolled Program Growth
The food stamp program has exploded in size since it’s first major expansion in the 1970s. In the 1970s – most of which was a pretty damn tough time economically – approximately 1 American in 50 was receiving food stamps. Today, it’s close to 1 in 7. Yes, the economy is in the bad shape today. But the economy was in the toilet in the mid- and late-1970s, too. So it’s quite reasonable to ask: what gives?
Further, the program has doubled in cost and nearly doubled in size since 2008 alone (data for this and the next several paragraphs is from this excellent source, which in turn uses data from USDA). Yes, part of that expansion is due to the economy. But as I’ll demonstrate below, the economy is only a part of the reason for that expansion. Other factors appear to have been even more important in adding literally millions to the food stamp rolls that simply shouldn’t be there.
However, the long-term trend over time is clear: since 1975, the program has been cyclic and generally out-of-phase with the economy. But it never drops to previous lows in subsequent good economic times, and it always seems to reach greater highs in subsequent “bad times”. And sometimes you even see steady growth in relatively good economic times. Very clearly, something else is driving the growth of the program along with economic need.
Few people realize just how much the food stamp program has expanded in the last 11 years, or how explosive that growth has been. And that expansion is not confined to periods of bad economic times. In 2001 – which coincides with regulatory changes expanding eligibility that I’ll discuss later – the food stamp program provided benefits to roughly 17.5 million and cost about $18 billion. By 2007 – remember, this was all during a period of relatively low unemployment and reasonably good-but-not-great economic times – it had expanded to about 26.5 million recipients and cost $33 billion By the next year, 2008, it hit 28 million recipients and cost $38 billion.
Then things really took off. In the next 4 years – e.g., by late FY 2012 – the food stamp program added nearly
20 19 million persons and nearly doubled in cost. And, as I’ve indicated previously: only part of that expansion is due to today’s bad economy.
Today, roughly 48 million in America receive food stamps (46.7 million in the US proper, plus another 1.3 million in Puerto Rico – or about 34% of Puerto Rico’s population). The cost to the Federal government for the program this year is approximately $75.7 billion ($71.8 billion in benefits distributed, plus another $3.9 billion in administrative costs; other estimates I’ve seen are slightly higher). And that’s only the Federal cost for the program. It doesn’t include the billions spend in aggregate by states administering their part of the program.
So, in 11 years the program has gone from $18 billion a year to nearly $76 billion, and from 17.5 million recipients to nearly 47 million. What happened?
Non-Economic Reasons for the Expansion
Yes, the economy played a large part in the rise in participation and cost between 2001 and today. But it’s hardly the sole reason. Qualification for food stamps has been intentionally streamlined – with predictable results. Eligibility was restored to many who’d lost eligibility in 1996. The “means test” for food stamp eligibility is a freaking joke; it has more holes than Swiss cheese. And by policy, we’ve created a few special categories that get ridiculously special treatment.
The 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) – e.g., the 1996 welfare reforms – provided states additional flexibility in managing welfare programs, and imposed many changes on previous Federal welfare programs and requirements. However, one of these changes allowed states substantially greater flexibility in determining food stamp eligibility. In particular, states were accorded great latitude in declaring working poor categorically eligible (e.g., essentially automatically eligible) for food stamps if they met certain criteria. When one is categorically eligible, complete proof that one meets normal eligibility requirements is not required.
Ostensibly intended to help the “working poor”, the actual effect has been to allow states to expand food stamp eligibility broadly – some would say, without any rational constraints. One common modification to food stamp criteria often adopted by states is termed “broad based” categorical eligibility. Regarding states using “broad based” categorical eligibility requirements, the Congressional Research Service reports:
Typically, households are made categorically eligible through receiving or being authorized to receive a minimal TANF- or MOE-funded benefit or service, such as being given a brochure or being referred to a social services “800” telephone number. (p. 6)
Currently 43 states – more than 8 of 10 – have adopted “broad” categorical eligibility requirements for food stamps. Why? Again: money. More residents getting food stamps means more Federal money spent in the state – which in turn means more taxes paid to that state.
A second factor contributing to the 2001-2007 rise in food stamp recipients during a period of relatively good economic times is the fact that eligibility for many non-citizens to receive food stamps was restored beginning in the late 1990s. The 1996 PRWORA essentially prohibited non-citizens from receiving food stamps. (Previously many if not most legal US residents were eligible for food stamps; illegal aliens were and still are not.) However, over the next several years, various acts and policy decisions reversed this ban. Now legal non-citizen residents are eligible for food stamps too – albeit in most cases after a 5-year waiting period.
This is probably only a relatively minor factor – estimates put the percentage of non-citizens receiving food stamps at around 4% of the total. One can also argue that legal immigrants, after a reasonable waiting period, should be allowed to receive nutritional assistance too. But the fact remains that 4% of 46 million is nearly 1.85 million individuals. And virtually all of those were added to the food stamps rolls since 2001.
A third factor is the fact that, frankly, the so-called “means test” associated with food stamps is exactly that – a “so called” means test. It is virtually worthless, and doesn’t come anywhere near measuring actual family income (and thus actual economic need). There are so many exclusions to what is considered “income” when it comes to eligibility for food stamps that it’s ridiculous.
As an example, let’s look at California. Here are just a few of the types of income – in kind, or in cash – that are excluded in California when determining if a household has a low enough income to qualify for food stamps.
- Income from odd jobs – excluded.
- “In-kind” income (benefits received other than cash, such as free housing, public housing, child care, WIC benefits or food) – excluded. Yeah, you read that right: if someone’s getting free housing plus all of their meals absolutely free, the value of that isn’t even considered and they can still qualify for food stamps.
- Income earned by a child in the household under the age of 18 if they’re going to school at least half-time or taking GED classes – excluded.
- Student financial aid, including Pell grants, Perkins loans, Guaranteed Student Loans, Stafford loans); and some parts of other student grants, loans, scholarships, fellowships – excluded.
- Federal government payments to help pay the household’s fuel or energy bills – excluded.
- Payments for participation in federal and state work study programs and Job Training Partnership Act (JTPA) programs – excluded.
That just a partial listing; there are many more other income exclusions. And most (if not all) of these exclusions are due to Federal policy/regulation/law, so they apply nationwide.
Additionally, for AmeriCorps and VISTA participants, it gets even better. Even though AmeriCorps and VISTA stipends are considered taxable income for Federal income tax purposes, by USDA policy they are excluded from consideration when applying for food stamps. AmeriCorps stipends can reach at least $2500 monthly – and additional in-kind benefits from AmeriCorps positions can include free housing, medical insurance, and childcare assistance. So an AmeriCorps guy/gal making $2500/month – or $30,000 a year – and receiving free housing, medical insurance, and childcare would be able to exclude the value of all of those when applying for food stamps. And no – stuff like that isn’t just a theoretical possibility:
Juan Diego Castro, 24, is a college graduate and Americorps volunteer whose immigrant parents warned him “not to be a burden on this country.” He has a monthly stipend of about $2,500 and initially thought food stamps should go to needier people, like the tenants he organizes. “My concern was if I’m taking food stamps and I have a job, is it morally correct?” he said.
But federal law eases eligibility for Americorps members, and a food bank worker urged him and fellow volunteers to apply, arguing that there was enough aid to go around and that use would demonstrate continuing need. “That meeting definitely turned us around,” Mr. Castro said.
Money for Nothin’ – Get Foodstamps While You Sit on Your Ass
But the thing about the food stamps program that pisses me off the most isn’t any of the above. Rather, it’s the fact that we’re allowing millions of able-bodied adults without dependents to sit on their ass and eat Cheetos while they play X-box or watch porno videos in mommie’s basement – while they get food stamps.
What’s that you say? That’s not allowed by law? You say it’s prohibited by those 1996 welfare reforms?
Bull. That was the case few years ago. But today? It’s not.
The 1996 PRWORA did severely restrict the ability of able-bodied adults without dependents to qualify for food stamps. Specifically, it restricted able-bodied adults without dependents from receiving food stamps for more than 3 of 36 months unless they
- work at least 20 hours a week;
- participate in an employment and training program for at least 20 hours per week; or
- participate in a ‘workfare’ program related to the food stamps program for at least 20 hours per week.
However, the 2009 Stimulus Act allowed the POTUS to suspend that requirement. He did.
The result was predictable. Between 2009 and 2010, the number of such able-bodied adults without dependents receiving food stamps more than doubled – from 1.9 million to 3.9 million, or an increase of 105% in about 19 months. For comparison, the number of others receiving food stamps increased 43% in the two full years between 2008 and 2010.
Data from 2011 and 2012 isn’t available. But I’d be surprised if we didn’t see at least a few million more added to this category in those years.
Hey – free food is free food. And you gotta have your Cheetos while you’re playing X-box.
Look, I’m not opposed to helping someone out if and when they or their family literally can’t afford enough to eat. But I’ll be damned if I want to pay for someone’s groceries when they’re already living somewhere for free, are working odd jobs for cash, and have no dependents – just so they can sit on the couch and play X-box all day without worrying about where their next meal is coming from.
And in far too many cases, that’s exactly what we’re doing today with SNAP – AKA food stamps.
Remember to tie the barf bag shut tightly before disposing of same.