Food Stamp Fraud Costing Taxpayers Billions

Rachel Sheffield
December 9, 2011 at 3:15 pm

The Washington Examiner recently reported that the two states bordering the nation’s capital are two of the five worst states for food stamp fraud.

The above table shows the inverse relationship between the number of food stamp recipients and the percentage of cases investigated for fraud in Virginia, Maryland, and the District of Columbia. While the number of food stamp recipients has significantly increased (now up to a total of 45 million Americans) the percentage of cases investigated for fraud has not increased or even remained constant. The result is that fraudsters are duping taxpayers of millions, even billions, of dollars.

According to fiscal year 2010 data collected by the U.S. Department of Agriculture, Maryland and Virginia distributed about $130 million in food stamps to individuals who were not eligible. For every $100 in benefits, those two states doled out $6.11 and $5.04, respectively, to those not eligible. The national average for that time was $3.05.

Inefficiency in the food stamp program spending is costing taxpayers billions. Of the $64.7 billion spent on the program last year (a record high that is only slated to increase), an overall $2.5 billion was spent on improper food stamp payments.

Another recent audit by the Department of Agriculture on the state of Kansas showed three major sources of inefficiency in the distribution of food stamp funds. While many recipients had invalid Social Security numbers and were double-dipping between federal and state programs, many of the recipients also happened to be dead. This has become a pervasive problem in the realm of government benefits. (The Social Security Administration also sends millions of dollars to recipients who are dead.)

Beyond protecting against fraud, the federal government should ensure that food stamps—not to mention the roughly 70 other federally funded welfare programs—are helping individuals become self-reliant rather than dependent on government. Half of food stamp recipients have received the benefit for 8.5 years or more.

Fortunately, some lawmakers are taking action. Representative Jim Jordan (R–OH) and Senator Jim DeMint (R–SC) are proposing legislation that, among other things, would attach work requirements to food stamps. The legislation would also roll back total welfare spending—which now stands at nearly $1 trillion per year—to pre-recession levels once the unemployment rate recedes to 6.5 percent.

Additionally, in a recent letter to the Joint Select Committee on Deficit Reduction (the “super committee”), Senator Jeff Sessions (R–AL) pointed to the food stamp program as an area with great potential for reform:

Like welfare reform in the 1990’s, smart reforms to the food stamp program will improve outcomes and help more Americans achieve financial independence. Unmonitored welfare programs, over time, can hurt the very people we are seeking to help.

As Ronald Reagan noted in 1968, “We should measure welfare’s success by how many people leave welfare, not by how many are added.” He also stated in 1970 that “welfare’s purpose should be to eliminate, as far as possible, the need for its own existence.” Unfortunately, the federal welfare system fails to accomplish this purpose. Welfare reforms that promote work are key to achieving the goal of helping those in need become once again self-reliant and independent.