Food Stamps - The Black Hole You Enter and Never Exit

Bruce Bialosky

10/8/2012 12:01:00 AM - Bruce Bialosky

Have you heard the rumor that the number of food stamp recipients has increased during President Obama’s term from 28.2 million to 46.6 million? Have you heard that in only three years, the annual cost of the program, which was already astronomical at $35 billion, has soared to $76 billion? It certainly has been the talk of the town (if not the campaign), but does anyone really know how we got to this state of affairs? That is what I set out to discover.

Even the most basic details about the program seem surreal. Why in the world is this welfare program administered through the Agriculture Department? We have been arguing about agriculture subsidies since the beginning of time, yet a program that really has nothing to do with farming or ranching now swallows up most of the budget. Just the idea that the Department of Agriculture (USDA) is running a $75 billion welfare program gives you a perspective of how screwed up this situation has become.

I contacted the House Agriculture Committee spokesperson, Tamara Hinton, to get some answers. What is the amount of attrition for the program, I asked. Given that the program has grown by 18.4 million participants in the past three years, is there anyone who has stopped receiving benefits? She stated that the USDA claims that the average duration of benefits is 9 months. I pointed out that if that were true, then about 160 million people have been on the program in the last three years.

It turns out that Katherine Bradley of the Heritage Foundation describes a much more plausible scenario. She claims that people participating in the program – now known as the Supplemental Nutrition Assistance Program (SNAP) – stay on it for an average of eight full years. When I challenged Ms. Hinton on the accuracy of the Heritage study, she informed me that the program is administered through the states, who only report the net change in the number of recipients, and not how many people have entered or left the program.

So nobody knows how many people – if any - are leaving the program. President Obama’s campaign incessantly reminds us that he has created 4.5 million new jobs in his term – a truly dubious claim that is credible only if you don’t count the 4.3 million jobs lost in the first 13 months of his term. But let’s pretend that he’s correct and that there are indeed 4.5 million new jobs. Then how come there are 18.4 million new people receiving SNAP benefits, and why has the yearly cost risen by an additional $37 billion? If people are finding jobs, then participation should be going down, and so it is only rational to come to the conclusion that this program has become a black hole where people keep signing up, but no one is signing off.

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.

What makes the situation even worse is that there are active attempts by left-wing bureaucrats to stimulate participation in the program. The information sheet from the USDA is headed Food Stamps Make America Stronger. Further down, there’s a section entitled The Food Stamp Program is an investment in our future. And for those Americans who are a little light on their reading skills, USDA radio ads encourage listeners to sign up for the SNAP program so that “you will eat healthier.”

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?