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Food stamp failures: Feds offering $5 million to stop billions of dollars of fraud

Throwing good money after bad, USDA is spending millions of taxpayer dollars to theoretically prevent additional billions from being fraudulently spent.

Golden Horseshoe
Golden Horseshoe
(Just the News)
Updated: June 6, 2020 - 10:35pm

The Facts Inside Our Reporter’s Notebook

The Golden Horseshoe is a weekly designation from Just the News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s.

This week, our award goes to the U.S. Agriculture Department for creating a new $5 million grant program to curb the billions of dollars of fraudulent spending that exist within the Supplemental Nutrition Assistance Program (SNAP). 

SNAP, which prior to the Obama administration was known as the food stamp program, is currently the largest program in the domestic hunger safety net. Via a system of Electronic Benefit Transfer (EBT) cards, it provides an estimated 40 million low-income Americans with the means to supplement their household food budgets.

The Obama administration made significant efforts to expand the program. Between the years 2007-2013, SNAP spending went from about $30 billion per year, to about $80 billion, with the government going so far as to incentivize states with millions of dollars in cash bonuses to swiftly register their residents into the program. Current spending shows the program costing $60 billion per year. 

As the program ballooned to a record size during the Obama years, so did the levels of fraud. Throughout the duration of the Obama administration, authorities busted several of the largest-ever food stamp fraud operations. Last year, USDA released figures documenting about $1.1 billion in fraudulent food stamp spending a year.

As a result of this, in late May, the Food and Nutrition Service (FNS) -- a branch of the USDA -- announced a grant that will work in partnership with state agencies to monitor the administration of SNAP benefits, in an effort to curb fraudulent abuse of the system. The FNS is largely responsible for rooting out corrupt and fraudulent spending within SNAP. 

Notably, the division was granted increased authority in 2008 to legally pursue store owners and operators who were engaging in food stamp "trafficking," which is when a store exchanges food stamp benefits for cash, as opposed to approved groceries. According to a 2018 investigation by the Government Accountability Office, the FNS has almost entirely failed to use their specifically sanctioned legal authority to stop or prevent the abuse of SNAP in this way. 

Last summer, on the other hand, the FNS did eliminate a SNAP loophole that allowed states to issue benefits to residents without actually checking whether the recipients qualify for the government benefit. This effort is projected to save taxpayers somewhere in the ballpark of $2.5 billion per year.

Now, the FNS is supposedly taking further steps toward cleaning up its act. Of course, those steps involve the further expenditure of millions in taxpayer dollars, despite the fact that the agency's inaction over a number of years has already cost Americans several billion dollars. Hopefully, their plans, which for the moment remain largely secret, lead to enforcement action that is more effective than their previous efforts.

Otherwise, the Ag Department is simply throwing good money after bad.