Closing More Loopholes

            According to Fred Lucas at The Daily Signal, the U.S. Department of Agriculture (USDA) published a new rule in the Federal Register today. The new regulation will take effect after the normal 60-day comment period. The reform is meant to close a loophole in the food stamp program and could remove approximately 3.1 million recipients. 

            The loophole that the USDA is seeking to close “allows states to make those receiving even minimal federal welfare benefits eligible for the Supplemental Nutrition Assistance Program” – also known as food stamps. “The loophole is known as ‘broad-based categorical eligibility’ [and] allows applicants to bypass an assets test.” This means that someone with little actual income but lots of property and huge bank accounts could receive food stamps.

            Rob Undersander, a millionaire in Minnesota, sought to expose the loophole when he “applied for and legally obtained food stamps under the existing laws.” He was not a recipient of Temporary Assistance for Needy Families, but he had little income. He was not yet old enough to receive Social Security, but he had “substantial assets in retirement through savings and investments.”

            Lucas says that the new regulation should prevent such fraud from taking place. He uses quotes to emphasis that the guilty parties in this fraud are the states, not the individuals.

Under the current system a person can be eligible for food stamps simply for receiving an informational brochure about the Temporary Assistance for Needy Families program often with no check of income or assets.

Under the new proposed rule, a person must have a cash benefit of at least $50 per month from the Temporary Assistance for Needy Families program to qualify under a state’s categorical eligibility program.

The aim is to close the loophole allowing states to expand eligibility so broadly that even people who don’t need public assistance are getting food stamps.

Under the proposed rule, taxpayers could save billions of dollars if food stamp benefits are provided on a consistent basis across states, according to the USDA.

            Americans are generous people with few objecting to helping someone in need. However, most Americans do not enjoy being used by people who are gaining government benefits by fraudulent means. The case of the millionaire referenced above shows the extent of how they system can be abused.