Despite a new Congressional Budget Office (CBO) report finding a record number of Americans receiving food stamps, the Obama administration is working overtime to enroll more people into a program increasingly rife with fraud and abuse
According to the CBO, a record 45 million Americans (one out of every seven people) are now receiving assistance from the Supplemental Nutrition Assistance Program (SNAP), a 70 percent increase in participation since 2007.
While it should be noted that the Bush administration increased participation in the food stamp program by 63 percent during its eight years, enrolling nearly 11 million people, the Obama administration has taken that number to staggering new heights, enrolling nearly the same number of people in only three years.
Since 2007 spending on SNAP has also ballooned from $30 billion to $72 billion, an increase of 135 percent. Moreover, the CBO estimates that spending on the program will continue to increase to $82 billion by 2013.
Eligibility for SNAP, which is administered by the US Department of Agriculture (USDA) but whose benefits are distributed by the states, necessitates that a person’s income must be near or at the national poverty level.
As such, the CBO reports that roughly 65 percent of the skyrocketing growth in the number of participants and program costs can be attributed to a stagnant economy; 20 percent due to higher benefit amounts passed in the American Recovery and Reinvestment Act of 2009; and 15 percent from other factors, such as higher food prices.
Begun in 1964 as a temporary food aid program for low-income adults and children, the food stamp program has nevertheless exponentially grown to become more of a permanent entitlement with half of food stamp aid actually going to individuals who have received the aid for 8.5 years or longer.
While most of SNAP’s participants faithfully abide by the program’s guidelines, it’s not surprising to find that its dramatic growth has also witnessed a correspondingly high swelling in the number of cases of fraud, corruption and abuse by crooks and hustlers.
That sentiment was recently shared by USDA Inspector General Phyllis Fong when she testified in March before the House Committee on Oversight and Government Reform.
According to Fong, the USDA since 2007 has launched 779 probes that had resulted in 1,356 indictments, 944 convictions and 792 sanctions against individuals and businesses that had cheated the program out of more than $200 million.
The most common type of fraud, according to Fong, is food-stamp trafficking where retailers encourage food-stamp recipients to use their Electronic Benefits Transfer debit card to trade their benefits for cash, alcohol or cigarettes, an illicit activity that can garner the retailer up to $50,000 a month.
That type of fraud was on display when Pat Lu, a mini mart owner in Massachusetts, was recently arrested as the ringleader of a $700,000 scheme involving at least 53 suspects engaged in trading food stamp benefits for cash.
Over a period of two years, Lu would swipe a customer’s SNAP debit card, ring up a phony sale for the value of the card, give the customer 50 cents on the dollar in cash, and pocket the rest, netting Lu $30,000 per month.
However, uncovering that type of fraud has become increasingly problematic given that the USDA has only 40 inspectors to oversee the 231,000 retailers nationwide that have been approved to participate in SNAP.
For example, the USDA has each year since 2002 removed an average of 830 retailers for food stamp trafficking, including ousting more than 1,200 stores in 2011. However, a recent investigation found that of the 4,600 retailers from 2006 through 2011 who had been permanently disqualified from accepting food stamps, 1,492 continue to participate in the program.
Of course, crooked retailers are abetted by equally crooked food stamp beneficiaries, witnessed by myriad reports of food stamp recipients selling their SNAP benefit cards on Facebook and on Craigslist.
Moreover, in her appearance before the House Committee, Phyllis Fong testified that many food-stamp recipients also use proceeds illegally netted from their food stamp benefit to buy illegal drugs, weapons and prostitutes.
Unfortunately, thousands of people who are not eligible for food stamps are still able to get them by lying or using the social security number of dead people, an activity highlighted by a USDA report that found the states of Maryland and Virginia having distributed $130 million in food stamps in 2010 to individuals who were not eligible.