Stop Worrying about Food Stamp "Fraud"

Over at the Weekly Standard blog, Jeryl Bier raised an alarm on Friday about the rise of food stamp (aka SNAP) fraud. The howler in the piece is that although the headline says food stamp fraud is up 30 percent, you soon realize that the fraud rate only rose from 1.0 percent to 1.3 percent. Bier rightly deserves a ding for a ridiculously misleading use of statistics.

In response to Bier, Jonathan Cohn points out the misuse of statistics and makes the straightforward case for food stamps. That case is old but worth repeating here: food stamps stabilize households and the economy in bad economic times, pull millions out of poverty, and have very low overhead. Also, the program runs quite well!

Beyond Cohn’s takedown, I think we should point out that the kind of food stamp “fraud” Bier is complaining about is not even a problem. The USDA calls the type of fraud in question “trafficking,” and it basically amounts to individually swapping out food stamp dollars for actual dollars. Despite what you hear, it is not easy to sell food stamps anymore because they are distributed via debit cards. So what people do to convert food stamp credits into cash is take their EBT card to a store, and charge it for purchases they are not making. Then, the clerk pulls out cash equal to what was fraudulently charged, gives it to the food stamp recipient, and usually takes a cut of the cash as well. So it’s basically like selecting a cash back option when you buy things with a debit card, except it’s illegal and the clerk takes some of it.

Except for the clerk taking some of it, there is no problem with this whatsoever. The problem people presumably have with it is that they imagine that the point of food stamps is to give people food credits, not money. We don’t want to just give recipients more cash, only more food.

But check this out: giving people food stamps is basically the same thing as giving them more cash. Suppose I am spending $300/month feeding my family. Then I get on to SNAP and receive a monthly benefit equal to $100. What do I do? Well, I take $100 of my $300 monthly food budget and replace it with SNAP money. Now, that $100 I used to spend on food each month is freed up for me to spend on other things. Because money is fungible, giving me vouchers for a certain kind of spending that I am already doing is no different than just giving me cash.

All trafficking does is short circuit this process. Instead of using the fungibility of money to convert SNAP dollars into actual dollars, a trafficking person just does it directly. There are all sorts of reasons a poor person would want to do this, but more importantly, it’s not substantively different from swapping out SNAP dollars for cash in the legally permitted way detailed in the above paragraph.

To be sure, it is horrible that the clerks involved in the trafficking get a cut of the money. If you are going to give poor people money, you want them to get all of it. But if we want to cut the clerk out (and we do), we can do that by allowing people to receive real dollars instead of SNAP dollars in the first place. There is no reason to give someone SNAP dollars if they’d prefer real dollars instead. People labor under the delusion that it ensures the money goes to buying food, but that’s an economically confused understanding of how money works.

So ultimately, the problem with Bier’s post is not just that it grossly exaggerates the amount of trafficking fraud going on, but also that trafficking fraud itself is totally fine. I don’t care about it and neither should you.

Comments

I was at a community yard sale a couple weeks ago and looking through some old newspapers and magazines from the late 1950's. I did not see one article, much less a headline, about millions of people starving to death in this country. How could all these papers and magazines have missed a big story like that? After all, this was years before the 15 food giveaway programs that the government has now, including Food Stamps. What could have all the people been eating if the government wasn't handing out over eighty billion dollars worth of free food every year?
I also noticed in the pictures in those old magazines that there were no fat people. They seem to have showed up after the massive food giveaways were started. Hmmm.

Food stamps began in 1939 and the obesity epidemic began in the mid 1970s, so your vastly oversimplified causal effect doesn't even hold up. The bigger question is why you feel the need to put down a program that has helped provide food to hungry people for over seven decades and costs virtually nothing. It was originally not even started as a program to feed the hungry, but to increase demand for agricultural produce (which is why it was originally in the Department of Agriculture, not HUD).

So, "taxed" expects us to believe that because he saw a bunch of magazines from the 50's that didn't mention anyone starving to death, that means it wasn't happening?

How convenient for a wingnut who wants to claim that SNAP doesn't help people because he'd rather make poor kids and old folks (who make up more than half of all recipients) go hungry than go after the real driver of our long term debt--health care costs.

As for poverty and hunger in America in the 50's, a time of post war boom, it's likely that the magazines you saw at the yard sale didn't give a damn about, say, rural blacks, or poor people in inner cities.

http://en.wikipedia.org/wiki/Hunger_in_the_United_States

"he'd rather make poor kids and old folks (who make up more than half of all recipients) go hungry than go after the real driver of our long term debt--health care costs."

Yeah I missed the part where he said that. You do realize, right, that it is possible to be against hunger (seriously, is anyone --outside of the Koch brothers of course -- FOR hunger???) but think that food stamps are not the right way to go about it.

To point out something that is almost always over-looked: While black Americans have been disproportionately poor, the majority of the poor have always been white. The majority of rural poor have always been white -- you know, folks who "work hard and play by all the rules," and therefore cannot be poor within the flawless economic system we have in the US (so we pretend they don't exist). It is not convenient, for a list of reasons, to note this reality. For most of our history, we maintained the myth that poverty was only a black issue, and that it existed because black people are unable/unwilling to engage in competitive work. White poverty has been swept under the carpet because we don't want to admit that poverty might be caused by a grossly flawed, hyper-capitalist economic system. The more you sort through the race issue, the more you understand that those in power couldn't care less about the color of the people they can exploit. And, in fact, Martin Luther King pointed this out when explaining why it's in the best interests of the poor, regardless of color, to unite and push back against those who work so consistently to keep them in poverty.

Because money is fungible...

It sure is. About a week ago I was at the grocery store and the guy in front of me was wearing a big watch, sunglasses inside, baseball hat (probably around 50 years old) and managed to only grunt responses to the cashier. Anyway, he pays for his food with his food stamp debit card, then pulls out a $20 to pay for his beer (he also bought potato chips, but I can't recall if that was paid for with the cash or food stamps). This isn't the first time I have seen this happen either, with people needing the rest of us to pay for their food but somehow having money for beer (and ridiculous clothing). Lefties, please tell me again what a great program this is.

One, beer is about as cheap as Coke. Two, I'm glad you and yours are not in charge of policy. You'd have every food stamp applicant submit to blood work to prove they were actually starving.

If you don't like that plan how about this one: in our rich nation there is no need for anyone to starve. So we canhave food stamp stores, where people can get beans, rice, potatoes, milk, etc. No need to temp “hungry” folks with sodas and chips and stuff they really do not need. Great idea, right?

I'm equally glad you are not in charge of public policy. Because you can't tell the difference between someone who is starving, and someone who has expendable cash to buy beer.

I'm equally glad you are not in charge of public policy. Because you can't tell the difference between someone who is starving, and someone who has expendable cash to buy beer.

I'm equally glad you are not in charge of public policy. Because you obviously think that people who are "poor" have to dress in rags. What on earth is the connection to wearing a baseball hat have to do with being in the SNAP program?

Mr. Bruenig is laboring under the false assumption that the fraud resides in the stamp/money swap. Wrong. The fraud is in the application for benefits that the applicant does not need, hence is able to swap for money instead of getting food, and taking American taxpayers' money away from people who really are hungry. This is the sort of falsity we've come to expect from the right; I suggest Mr. Bruenig switch parties.

I don't know anyone who wants to see people suffer, go hungry, naked, or homeless. But to insinuate that we should stop worrying about fraud in any sense, especially when it comes to the use of tax dollars, borders on lunacy.

Fraud is a very real problem within the government bureaucracy known as the welfare program and it must be addressed. Welfare must return to a supplemental assistance program meant to bridge the gap for those losing employment or suffering other confirmable setback.

But don't take the reality of this fraud from me, take it from someone who works within the government welfare program. I'm not advocating the removal of public assistance, just a return to legitimacy and integrity.

http://longversion.wordpress.com/2013/08/14/confessions-of-a-welfare-worker/

The SNAP programs clients are deserving 98.7 percent of the time. That is an efficiency considered excellent and any effort to further ferret out fraud would be silly.
If you are really concerned about the misuse of taxpayer money on a large scale may I suggest you look at tax breaks that are given to big corporations to encourage hiring and improve the nation's economy. Instead of those outcomes, corporations outsource hiring to other, cheaper countries and offshore companies. Then, the profits made from these "fraudulent " transactions are kept in offshore accounts so they won't be taxed, if they are cagey, by any government and they can keep it all.
I have and have had family both on welfare and foodstamps. They would like nothing better than to have a job that earned them a living wage and made government assistance unnecessary. The way to get people off the rolls is to have an economy that provides a decent living.

Here's an idea: instead of giving people food stamps, let's just give them MONEY! The assumption is that poor folks will just spend what money they they get irresponsibly. Will they? Give them money. Dismantle this humiliating, paternalistic system. And that might actually be cheaper.

There are massive food stamp fraud bust here in Arizona. The food stamp program has made more drug dealers rich then any other entity in modern history. The states are swamped with these crimes and the feds do nothing about it.

online slot machine games

Even recycling allures criminals. Thousands and thousands of dollars are lost per year to recycling fraud, such as where criminals unlawfully cash in recyclable containers like aluminum cans in states that pay individuals for it, such as California, Maine and Michigan. How many times have you needed additional information on where to find a payday loan guaranteed acceptance and turned to a web site search on emergency payday cash loans?" Your search is over, all of the info you need is at http://www.MatchFinancial.com.

You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)

Connect
, after login or registration your account will be connected.