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Some House Republican leaders have sought to portray SNAP as rife with fraud and abuse to help justify their proposals to cut millions of people from the program and slash $40 billion from SNAP. The facts are not on their side. A history of bipartisan congressional oversight and strong attention to SNAP program integrity from the Agriculture Department (USDA) and states have made SNAP one of the most efficient and effective programs we have.

The SNAP overpayment rate — that is, the share of benefits either issued to ineligible households or overpaid to eligible households — was just 2.77 percent last year (see graph). The large majority of overpayments reflect inadvertent mistakes by recipients, eligibility workers, data entry clerks, or computer programmers, not fraud.



In addition, when you subtract SNAP underpayments — benefits that should have gone to eligible participating households but didn’t because of errors — the net loss to the government last year was about 2 percent of benefits. By contrast, the IRS estimates that about 15 percent of income taxes go unpaid.

It’s also important to understand that fighting SNAP fraud isn’t a partisan issue. Under Congressional oversight, the USDA, in both Republican and Democratic administrations, has worked to root out fraud in SNAP. As a result, SNAP fraud is low. Nonetheless, USDA and Congress are working together to continue that progress and address new issues as they arise.

USDA has intensified these efforts in recent years. It has expanded its fraud investigations: in fiscal year 2012, for example, USDA reviewed over 15,000 retail stores to ensure that they aren’t illegally converting SNAP benefits into cash (known as “trafficking”) and conducted nearly 4,400 undercover investigations. USDA has also proposed new rules to combat fraud, increased penalties on stores for committing fraud, and given states new resources to prevent fraud.

States fight fraud as well, completing several hundred thousand fraud investigations and disqualifying 46,000 people in fiscal year 2011.

Additional common-sense measures are in the works. The Senate and the House Agriculture Committee have passed separate bills that would end SNAP benefits for lottery winners and give states new tools to identify recipients who sell their benefits for cash. Both bills also include more resources to help detect retailer fraud, such as “data mining” technology to help identify stores that could be trafficking SNAP benefits.

While SNAP fraud is very low, any amount of fraud is unacceptable, and policymakers should continue to do all they can to fight it. But they should not use highly inflated rhetoric about SNAP fraud and abuse as a cover for deep benefit cuts that would take food away from honest, needy American families, children, and seniors. http://www.offthechartsblog.org/setting-the-record-straight-on-snap-pa
rt-3-waiving-the-fraud-waste-and-abuse-flag/]

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Let's start with claims about out-of-control costs. As the chart below shows, SNAP costs did rise substantially between 2007 and 2011. The reason, however, is overwhelmingly economic. By design, SNAP provides modest benefits to eligible vulnerable people, and the number of such people rises when the economy weakens. CBO found that about two-thirds of the increase in spending on benefits between 2007 and 2011 reflects higher program participation due to the economy:

The primary reason for the increase in the number of [SNAP] participants was the deep recession from December 2007 to June 2009 and the subsequent slow recovery; there were no significant legislative expansions of eligibility for the program during that time.

Another 20 percent of the increase in costs reflects a temporary increase in SNAP benefits – which President Obama and Congress enacted as part of the 2009 Recovery Act. The remainder reflects other factors that automatically boost benefits, such as higher food prices and lower incomes among recipients due to the weaker economy.

CBO projects that an improving economy will reduce the share of the population that participates in SNAP to its 2008 level in coming years; accordingly, costs will fall as a share of the economy. That's because most SNAP beneficiaries who can work want to and do work ( http://www.offthechartsblog.org/the-facts-on-snap-part-2-snap-supports
-work/)k when jobs are available. About two-thirds of SNAP recipients aren't expected to work, mostly because they are children, elderly or disabled.
But, as the chart below shows, work rates are high among SNAP households with at least one working-age, non-disabled adult while they receive SNAP – and higher still within a year before or after they receive SNAP.



The "entitlement society" myth is often paired with similarly discredited arguments that SNAP and other federal social programs are poorly run or have high administrative costs. In fact, SNAP has a strong record of efficiency. It has one of the most rigorous quality control systems of any public benefit program. SNAP error rates (benefit overpayments and underpayments) are at an all-time low; just 3 percent of benefits went to ineligible households or exceeded the allowable benefit for eligible households.

Conservative critics of SNAP and other federal social programs like to portray them as turning the United States into an "entitlement society" by undermining the work ethic and creating a class of people dependent on government programs. That's not true of SNAP and it's not true of other federal health and income security programs. CBPP analysis finds that more than 90 percent of the benefit dollars that these programs spend go to assist people who are elderly, seriously disabled or members of working households – not to able-bodied, working-age Americans who choose not to work. http://www.usnews.com/opinion/blogs/economic-intelligence/2013/05/16/f
acts-show-food-stamp-program-has-a-strong-record-of-efficienty

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The bitter and much publicized debate leading up to the party-line vote tended to obscure what happened to the rest of the bill in the House: many of the same legislators up in arms about government spending and welfare abuse nonetheless voted for an increase in federal subsidies to wealthy farm interests.

“What’s remarkable and extraordinary about the farm bill is that, at a time of record crop prices and federal deficits, the House overwhelmingly passed a bill to increase subsidies,” Scott Faber, vice president for governmental affairs at the Environmental Working Group, told me this week.

“Only an evil genius could have dreamed this up.”

The debate over food stamps provided a smoke screen for the agriculture subsidies, he said. “Unless you read the fine print in the agricultural press, you wouldn’t have noticed.”

“It’s hard to understand how anyone in the House who calls himself a conservative could support this, but many did,” said Chris Chocola, president of the free-market-oriented Club for Growth, which opposed the bill and lobbied against it.

Mr. Chocola is a former congressman from Indiana’s Second District and commutes to Washington from his 40-acre farm near Elkhart. He said he’s spent most of his life in agriculture.

“With the federal debt and deficit we have, to be subsidizing millionaire farmers makes absolutely no sense,” he said.

Many farm commodity prices, farm incomes and farmland values are at or near record levels, notwithstanding a severe drought in some parts of the Great Plains.

Earlier this year, the Agriculture Department projected that farm income in 2013 would be $128.2 billion, the highest since 1973, fueled by “record crop production levels” and “high prices for many crops.” Moreover, surging prices of farmland — 2013 was the third year of double-digit increases, according to the Federal Reserve Bank of Kansas City — have greatly improved farm balance sheets, the department said, and raised the net worth of many farmers.

Despite flush times in the farm belt, the bill the House passed last week provides the most generous farm subsidies in history. It increased crop insurance subsidies and raised price targets for a wide variety of crops, locking in price guarantees at their recent near-record levels.

Under previous incarnations of the farm bill, such subsidies expired every five years unless Congress acted to extend them. It always did, but at least there was an opportunity for periodic changes reform. Under the new bill the subsidies are permanent.

“It’s frightening,” Mr. Chocola said. “They’re locking in historically high commodity prices at taxpayer expense. And maybe the worst is that this is now permanent.”

The Senate version of the farm bill, although it retains financing for food stamps, contains many of the same generous farm subsidies.

“Right now, the federal government favors the big guy over the little guy,” Congressman Paul Ryan, Republican of Wisconsin, who is the chairman of the House budget committee and a former Republican candidate for vice president, told me this week. “We subsidize large agribusiness and the wealthy at the expense of the family farmer and the taxpayer. It’s an egregious example of cronyism. Both parties are to blame, but I’m hopeful both sides can come together to set this right.

The new House bill does contain some purported reforms. It slashes spending for conservation and nutrition, taking aim at favored liberal causes. And, with the exception of cotton farmers — “Who always get the best deal,” Mr. Faber said — it ends so-called direct payments to farmers who don’t grow anything.

Direct payments are the $4 billion to $5 billion given each year to owners of farmland that had traditionally grown various crops, including corn, wheat, soybeans, cotton and rice. These resulted in widely criticized payments to wealthy absentee “farmers” in places like Manhattan — including over $340,000 to a Rockefeller scion, Mark F. Rockefeller, The New York Post reported earlier this year — who owned land that grew nothing. Even the farm lobby backed down on that.

Yet out of the estimated $50 billion that might have been saved on direct payments over 10 years — and perhaps far more, depending on commodity prices — was plowed back into other subsidy programs the Cato Institute’s Sallie James put it, what the proposed bills “offer with one hand, they take with the other” for programs that “are even more likely to distort markets.”

These include increased crop insurance and increased target prices for crops that guarantee farm incomes. Crop insurance subsidies already cost taxpayers $9 billion a year flow overwhelmingly to the wealthiest farmers and agribusinesses. While the wealthiest farmers collect over $1 million a year each in insurance subsidies, and 10,000 get over $100,000, the lowest 80 percent of policy holders collect on average just $5,000 each, according to the group.

Under so-called shallow loss provisions of both the House and Senate versions of the farm bill, government makes direct payments to farmers to guarantee they receive 88 percent (in the Senate version) or 85 percent (in the House version) of the “target” price of various crops

By raising target prices, the bills vastly increase the likelihood of huge payments should prices decline from their current near-record levels. The American Enterprise Institute estimated that the program could cost as much as $18 billion annually based on historical average prices for crops covered by the bill.

These payments, too, go overwhelmingly to the largest and wealthiest farmers. “The more you produce, the bigger the subsidy and the more you get,” Mr. Faber said. “This really favors big agribusiness, since they produce and sell the most crops. “

Mr. Chocola of the Club for Growth agreed. “You talk to young farmers, and they don’t want any of this,” Mr. Chocola said. “It’s not helping small farmers. We really need a generational change in thinking on farm subsidies.”

Is there any hope for reform? Congress still has to reconcile the House and Senate versions, but most of the attention is again expected to be on the food stamp program, and not the generous agriculture subsidies. Senators Tom Coburn, Republican of Oklahoma, and Dick Durbin, Democrat of Illinois, have proposed reducing crop insurance subsidies by 15 percent for farmers earning more than $750,000 a year. Capping the subsidies would save taxpayers an estimated $1 billion a year, the senators said.

In the House, Mr. Ryan got his knuckles rapped by Speaker John Boehner after he initially voted against the House bill, in part because it had no income cap for subsidy recipients. Although he supported this week’s version, he said he wouldn’t vote for a final bill that doesn’t set an income limit.

“I’m hopeful that a conference agreement will limit crop-insurance subsidies to small farmers,” he said in a statement last week.

Mr. Chocola doubts the final bill will be much better than either the Senate or House versions. Democrats are likely to look the other way to restore food stamps, and many free-market Republicans have already caved. “It’s just the way Washington has always worked and we can’t afford it anymore,” he said.

“The bigger picture is, how can developing countries compete with our massive subsidies?” he said. “You can talk about improving the plight of the poor in third world, but there’s no way they can compete with our farmers. There’s nothing free market about it, there’s no national security aspect, and we’re not going to run out of food. There’s no excuse.” http://www.columbia.edu/~eg198/u6400/Subsidies_farmers_2013.pdf

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