Sunday, February 18, 2018

Food or Fraud?

The Trump Administration signaled again last week that it is willing to once again challenge the status quo by proposing a change to the food stamp program whereby a portion of the federal food stamp program would be replaced with actual boxes of food delivered to recipients' front doors.

The "Harvest Box" would contain domestically grown food and include "shelf-stable" items such as juice, pasta, canned meat and beans. It is estimated that this would save $129 billion over a decade, driven in part by government purchasing power at the wholesale level.

Predictably, opponents have already lined up on both sides of the aisle as well as some of the large supermarket chains which derive a reported 7.5% of sales from food stamps.

WalMart reportedly captures an astounding one in five food stamp purchases. Let's put that in context. If WalMart spun off a separate entity for its food stamp sales alone, those revenues would rank it about 200th on the Fortune 500 list of the largest U.S. corporations.

I have written about issues surrounding the food stamp program a number of times in these pages over the years. Here, here and here are examples.

Of course, today it is no longer officially called the food stamp program, it is called the Supplemental Nutrition Assistance Program ("SNAP') and they don't use stamps anymore, recipients get an EBT Card (Electronic Benefit Transfer).

When the food stamp program began in 1965 there were 500,000 people initially receiving food stamps. So far in 2018, an average of 43.7 million people are receiving food stamps according to the latest numbers from the U.S. Department of Agriculture. That is down from a high of 47 million people in 2013 but it is still an astronomical number when the unemployment rate is 4.1%

This chart provides some perspective on how the numbers on food stamps has increased between 1975 and 2016. This chart and those that follow are provided by Matt Trivisonno.


This works out to more than one in eight individuals in the United States.


You get some additional perspective on the size of the program when you see that there are more individuals on food stamps in the United States than the entire population of countries like Argentina, Poland, Canada, Venezuela and North Korea. I doubt anyone in Venezuela or North Korea would be complaining about receiving a "harvest box" of food.


What are some of the arguments for the Trump proposal besides the projected cost savings? A big one is that it has been argued that a large portion of food stamps are spent on poor nutritional choices.

For example, The New York Times cited a U.S.Department of Agriculture report last year that found that household receiving food stamps spent 9.3% of their food stamps on “sweetened beverages,” a category that includes soft drinks, juices, and energy drinks, among others. Soft drinks were actually #1 on the list of all food purchases by SNAP recipients. Another 11% of purchases were made for candy, desserts and salty snacks according to the USDA report.

Of course, there is the bigger question of whether all those 6-packs of soft drinks are consumed by the food stamp beneficiaries? This is where the question of fraud comes in. In Kentucky's Appalachia region they even have a name for it..."The Pop Train" where food stamps are turned into cash.

WKYT in Lexington, Kentucky reported on "The Pop Train" in 2014.

"It happens everyday. We see it often," said Jackson Police Chief Ken Spicer.
WKYT's Miranda Combs investigated after receiving numerous calls telling WKYT to be at the Jackson Walmart or Save-A-Lot at the first of the month when SNAP benefits -- or food stamps -- are given out. The callers and Jackson's police chief told WKYT there would be people pushing and unloading carts and carts full of pop.
Chief Spicer told WKYT people will buy the pop with food stamps, then turn around and sell it for cash. He says typically the sale is made to small convenience stores outside the Breathitt County line. 

There are also some unscrupulous retailers paying 50 cents on the dollar for food stamps directly. They then launder the EBT amounts through their stores.

Where does the cash go that the food stamp recipients receive? It is not hard to conclude that a good deal of the money is going to buy drugs, including opioids.

Trump's "harvest box" proposal would provide better nutritional choices to the food stamp population while also making it much more difficult to trade in EBT currency.

Monica Showalter in American Thinker has an excellent article on fraud in the food stamp business and why the Trump proposal makes so much sense. She cites a Worcester, Massachusetts story from a couple of years ago involving a convenience store owner.

WORCESTER – A federal judge Monday sentenced a local woman to a year in jail and ordered her to forfeit $3.5 million and pay restitution in what lawyers said was the largest food stamp fraud case in Massachusetts history.
Vida Ofori Causey, 46, owner of J&W Aseda Plaza at 753 Main St., pleaded guilty in December to charges of conspiracy to commit Supplemental Nutrition Assistance Program benefits fraud, SNAP fraud, and money laundering in a $3.6 million cash-for-benefits scheme.
The scheme involved buying food stamps for 50 cents on the dollar while charging the government the full value of the benefit.  In a four-year period, Mrs. Causey rang through more than $3.6 million worth of benefits from a three-aisle convenience store in Main South.

Showalter's observation on all of this as it relates to the Trump proposal.

The Worcester Telegram story is pretty emblematic of the widespread level of fraud out there in the federal food stamp program and, as the left howled, probably why the Trump administration moved to change half the benefit from food stamps to food boxes.  Food boxes are quite a bit harder to offload to store owners for cash at the local convenience store.

Perhaps it would not be so bad if food stamp fraud was not taken more seriously. Did you notice the jail time given to the woman who laundered $3.6 million in food stamps?

One year.

That is pretty typical sentence according to the article. Most convicted of food stamp fraud get 1-3 years.

By comparison, bank robbers get 10 to 25 in the slammer for an average take (as of 2012) of $9,521.
And while about half to three quarters of bank robbers are caught, the risk of getting caught at food stamp fraud is low, too, according to the Chicago Tribune.  Food stamp fraud costs a billion dollars a year and undoubtedly contributes to the opioid epidemic in run down areas, where cashed out food stamps go to the purchase of illegal drugs.
With the risk-to-reward ratio quite high for robbing banks and quite low for food stamp fraud, you can see why so much of this is going on.

If the penalty is so minimal for those that rip off the system for millions of dollars you can see that there is absolutely no reason for a food stamp recipient to worry about abusing the system.

If you doubt how rampant the fraud and abuse is with EBT cards you should take a look at this music entitled "It's Free, Swipe Yo EBT".

This is the "clean' version.

If you have the stomach for it, this is a link to the original perverted, profane version that shows truly how far over the line we are with food stamps.

Food stamps should be about food, not fraud.

Bring on the "Harvest Boxes". It can't come soon enough.

No comments:

Post a Comment