This occurs because the states, who administer SNAP, have every reason to maximize the number of people enrolled in their program. In simple terms, it brings more money into the state at no cost. There used to be a relatively stringent enrollment procedure to obtain SNAP benefits, but this was superseded by a provision in the 1996 Welfare Reform Act called “categorical eligibility.” The idea was to cut down on administrative costs by eliminating duplicate financial tests in order to receive benefits from related programs. The problem is that the Clinton Administration left Bush another ticking time bomb (like the redo of the banking law and the infusion of $1 trillion in the home mortgage market with lower standards) when he changed the regulations in 2000 to make it easier for people to get SNAP without providing financial info. Today, it seems that to qualify for the programs, all you need to provide is a note from your mother.
Ms. Hinton told me about one consequence of this policy that is almost criminal. Apparently, if you qualify for benefits under the Low Home Energy Assistance Act of 1981 (LIHEAP), you automatically become eligible for SNAP. Because payments made to LIHEAP recipients can be of any amount – no matter how small – states have figured out that they can attract billions of dollars in federal SNAP funding at a cost of thousands of dollars in LIHEAP stipends. Sure enough, there are 16 states and the District of Columbia who pay people less than $5 under LIHEAP just to qualify them for SNAP. You could say no one is watching the store; but, in fact, someone is watching – and stealing the Federal government blind.
It gets even more stunning. You would think that the federal government would encourage the states to cleanse its rolls. You know those three favorite words of politicians – waste, fraud and abuse. Instead the Obama Administration has set up a bounty program. They have a $50 million bonus program to motivate states to get more people on SNAP. The funds the winners get are not restricted to be used on the state’s SNAP, but can be used for any purpose deemed appropriate by state officials. Otherwise, get more residents signed up on SNAP and get money to fix up facilities at the state park or redo offices of the members of the state legislature
As part of the new Agriculture bill, the House has approved a partial restructuring of the SNAP program. The problem is that the Obama Administration, along with the Democratic Senate, wants to make it even easier for people to get SNAP benefits under the categorical eligibility exemption. While the House and Senate bills will have to be reconciled during the lame duck session, the bigger picture is that the entire program desperately needs a wholesale restructuring.
It may sound quaint, but, when I was growing up, Americans thought that you used food stamps only if you were really, really poor. We wouldn’t even shop at stores that took them as payments. Now you can just swipe a card indistinguishable from any other debit card and – voila! – you’re just like any other shopper. Upscale stores accept SNAP payments without even blinking. With almost 45 million people receiving food stamps, a retailer would have to be crazy to pass up the income stream.
It’s no wonder that there’s such a deep divide in this election as to the future of this country and whether the current administration is heading us in the right direction. Yes, folks, we have a big decision in front of us. Do you want to become a food stamp nation?
In Honor of His 103rd Birthday, Here Are The 20 Best Quotes From The Late, Great Milton Friedman | John Hawkins