Food Stamps' $80 Billion Mystery
Imagine a government program that has exploded in size, is the subject of bitter partisan haggling and spends almost $80 billion a year in secret.
No, not the National Security Agency, the Central Intelligence Agency or the Department of Homeland Security, which all spend less (as far as anyone call tell). The program in question is food stamps, formally known as the Supplemental Nutrition Assistance Program, which now are used by one in six Americans.
But after the U.S. Department of Agriculture lost a court case in January, in which it opposed telling the public which businesses get all that money, the government is reconsidering: This month it said it would think about revealing how much money individual retailers receive. The department is accepting public comments on the proposal. If the past is any indication, big-box retailers, supermarkets and convenience stores will oppose it.
Let's hope the department ignores them, if only to make good on the principle that taxpayers deserve to know how their money is spent. Nor is there sound legal precedent for withholding food-stamp spending data. Other social programs, such as Medicare and Medicaid, provide a bounty of data on how much specific vendors receive in government payments and are releasing more all the time.
What might the food-stamp information tell us? At a minimum, we would get confirmation that they make up a large part of the sales of some of the country's biggest retailers, such as Wal-Mart Stores Inc. Wal-Mart, the nation's largest grocer, has already acknowledged the importance of food stamps in its latest annual report. It warned that if the program ever experienced large spending cuts -- as House Republicans unsuccessfully demanded during much of the past two years -- its results could be hurt. Wal-Mart had about $279 billion in U.S. sales last year, about half from groceries.
We might also get some insight into where and how fraud occurs in the food-stamp program. That was one rationale in the court ruling, which noted that "Congress has clearly indicated its intent to involve the public in counteracting fraud perpetrated by retailers participating in the program." Although fraud is estimated by the Government Accountability Office at about 1 percent, that's as much as $800 million a year.
If the data were public, watchdogs and the news media could ferret out retailers that do an inordinate amount of food-stamp business, perhaps because they permit misuse of the benefits. This was one of the reasons that the USDA ended up in court in the first place: A newspaper in Sioux Falls, South Dakota, the Argus Leader, filed a Freedom of Information Act request as part of an investigation into claims that beneficiaries received cash from retailers instead of food.
A number of food activists think the Agriculture Department should go further and disclose what products are purchased. The department shouldn't hesitate to do so. Food stamps can be used to buy almost anything, with the exception of tobacco and alcohol and a short list of nonfood goods such as pet food, soap, household supplies and some prepared foods. That leaves the entire universe of junk food, which is responsible in large measure for the U.S. obesity epidemic. Obtaining product information might help public-health officials persuade lawmakers to adopt reasonable prohibitions on food-stamp use; a parallel nutrition program known as Women, Infants and Children already bars almost all heavily processed foods.
Any complaints by the USDA that imposing limits would be too complicated have to be viewed skeptically. Food stamps are stamps in name only: Beneficiaries make purchases with a card much like that used at an automated teller machine. The cards could be programmed to help the USDA glean valuable data on what recipients are buying. With that, the government could develop a "do-not-sell" list that retailers could incorporate into the product codes that are scanned at the point of sale.
This might even pay dividends: Along with ensuring that beneficiaries have healthier diets, it might steal some of the rhetorical heat from those who think too many people on food stamps are living high on the taxpayer's dime.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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