Exactly How Serious Is a $1.6M Food-Stamp Scandal?
Between October 2006 and March 2009, a Wethersfield, Connecticut, woman named Lillian Adames unlawfully swapped her food stamps for cash. Today, Adames will be sentenced in a U.S. District Court for her role in a $1.6-million food stamp fraud scheme, which she accomplished in collaboration with her husband, who's now in jail.
With such a hefty monetary amount and a Pulp Fiction-esque husband-wife criminal team attached to it, this is the kind of food stamp story that gets plenty of media attention. It's also the kind of story that outrages tax-paying Americans who feel they've been fleeced for supporting the poor. But there's a second group that suffers too: the poor themselves.
Right now millions of Americans rely on food stamps. Last week Bloomberg Business Week reported 49.7 million Americans—or 16.1 percent—are in poverty. In June NBC News published news that Americans on food stamps had hit a record high, with 46.37 million people relying on the federal food program known as Supplemental Nutrition Assistance Plan, or SNAP. That's 15 percent of Americans, or one in six people.
None of these numbers are to say that tax payers shouldn't be outraged by the Adames' tricks—they should. What Adames and her husband did was illegal and immoral. But they were also an exception to the rule.
As pre-election spats climbed to a fever pitch this election season, food stamps became a go-to target. Critics of the food stamp program argued that the program was ripe for cuts and pointed to the $750 million in fraud that the program faces each year. To an outsider, that number sounds huge, but it's only one percent of the total food stamp budget.
And fraud reduction efforts have been improving. Back in 2004, the government took a huge step forward in cutting down fraud by switching from paper coupons—which could be traded for cash by food stamp scammers—to plastic cards that keep track of people's food stamp money electronically. (Not only did the cards, which resemble debit cards, cut debt, but they also reduced food stamp stigma by making the process of paying with food stamps much more inconspicuous.)
In Februrary of this year, Kevin Concannon, U.S. Department of Agriculture (USDA) undersecretary for food, nutrition, and consumer services, told Reuters that other innovative solutions will also help trim fradulent food stamp use. The USDA is working with social media firms and the data mining company SRA International Inc. to sniff out abuse, and has launched a website where whistleblowers can report fradulent activity. The Ag Department is also working at the state level, collaborating with state agencies to investigate food stamp recipients who may be misusing or abusing their benefits, and will seek tougher penalties for stores that are engaged in trafficking.
None of those efforts are taking a major toll on taxpayers either. The Center on Budget and Policy Priorities (CBPP) reports that only a quarter of a percent of federal SNAP spending went to federal administrative costs in 2010. Add in state administrative costs and that number rises to four percent. Another one percent goes to nutrition education and employment and training services for SNAP recipients. So, in total, about 94.6 percnet of federal spending still went "directly for food that the program's low-income beneficiaries purchased."
Cases like Adames make taxpayers and politicians eager to lash out and call for stricter eligibility rules as a stop-gap to what seems to be a massively abused program. But while stricter eligibility standards—like requiring a super-low limit on the amount of assets a food stamp recipient can have and still qualify for aid—may weed out a few bad rats like Adames, they hurt many more people who would use food stamps responsibly.
Food stamps were created to help people get through tough times, and that's how the majority of food stamp recipients use them. When we punish the poor for the abuse of a few, we end up with an imbalanced solution to a very specific problem.
If that's not enough to convince you that—in spite of the Adameses of the world—food stamps are still a good thing when used correctly, consider this: The USDA says that food stamps stimulate the economy because "every dollar of emergency money spend on food stamps during a recession sparks $1.82 in local economic activity," which amounts to increased productivity and employment. And that's something we can all agree is a good thing.