The federal food stamp program—now called SNAP—is attracting a lot of media coverage. One reason for this is that the program’s costs have exploded—spending more than quadrupled during the Bush-Obama years to $82 billion in 2013 (see here and here p. 16). The Clinton, Bush, and Obama administrations all took steps to loosen the purse strings on food stamp eligibility, and those changes have led to the ballooning costs of recent years during the stagnant economy.
Aside from the rising costs, two other aspects of SNAP have garnered interest. One is food stamp fraud. The other is the program’s “Twinkie problem”: taxpayers are paying for billions of dollars of junk food, which seems like a huge waste of money to most people.
These two issues have come together in a high-profile effort by a group of media organizations that is demanding greater transparency in SNAP operations. The organizations—led by the Association of Health Care Journalists (AHCJ)—have sent a letter to Agriculture Secretary Tom Vilsack (whose agency oversees SNAP) asking for full disclosure about where food stamps are being spent and what they are being spent on. The Daily Caller reports on the issue here.
Let’s look at the fraud issue. The government claims that the food stamp trafficking rate is just 1 percent and the general overpayment rate is just 4 percent. I suspect that the real rates are much higher, for three reasons: First, the overall costs of SNAP and the number of beneficiaries have skyrocketed. Second, SNAP is ideally suited for abuse: the USDA has few investigators to police the roughly 200,000 SNAP retailers, any of whom could be scamming the system. Third, overpayment rates on other federal subsidy programs are often around 10 percent. Medicare and Medicaid overpayments are in that range, for example, and overpayments have long been around 20 percent in the EITC program.
Chris Edwards is the director of tax policy studies at the Cato Institute, and editor of www.DownsizingGovernment.org. Before joining Cato, Edwards was a senior economist on the congressional Joint Economic Committee, a manager with PricewaterhouseCoopers, and an economist with the Tax Foundation.
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