Government Does Not Like Small-Time Thieves

Trey Smith

Food stamp recipients are ripping off the government for millions of dollars by illegally selling their benefit cards for cash — sometimes even in the open, on eBay or Craigslist — and then asking the government for replacement cards.

The Agriculture Department wants to curb the practice by giving states more power to investigate people who repeatedly claim to lose their benefit cards.

It is proposing new rules Thursday that would allow states to demand formal explanations from people who seek replacement cards more than three times a year. Those who don't comply can be denied further cards.
~ from Food Stamp Fraud Raising Concerns in Gov't Offices by Sam Hananel ~

On the surface, this doesn't sound like a bad solution for a growing and vexing problem. If a large number of people are trying to defraud the government, then the government should go after them. But dig a little deeper and it raises some salient questions.

First off, is this type of Food Stamp fraud prevalent? Further down in this report we're told that

Most fraud occurs when unscrupulous retailers allow customers to turn in their benefits cards for lesser amounts of cash.

Now the word most is a nebulous term, but it does indicate more than 50 percent. So, this type of fraud is the lesser of the two, yet this is the one government seems most concerned with.

Secondly, how much money are we talking about?

Food stamp fraud costs taxpayers about $750 million a year, or 1 percent of the $75 billion program...

Now fraud is fraud, regardless of the amount of money in play. However, in terms of other kinds of fraud routinely perpetrated against the government, $750 million is miniscule. Compare it to, for example, the suspected amount of Medicare fraud in the US in 2010. The latter is estimated to be to the tune of $528 billion. Food Stamp fraud represents approximately 0.14 percent of this amount (and remember that most of said fraud is committed by businesses, not individuals)!

Third and most importantly, does the government go after those suspected of committing fraud in an evenhanded manner? Hell no! Various reports over the past few years found that huge corporations like Bechtel, Halliburton and Blackwater (to name a scant few) defrauded the government out of hundreds of billions of dollars in terms of contracts for various projects in Iraq. What was their punishment? More contracts!

This is what troubles me about reports of this nature. Folks who average about $132 per month in Food Stamp benefits -- that comes out to a whopping $1,584 per year -- receive intense government scrutiny because a few of them may be defrauding the system, while corporate repeat offenders receive almost no scrutiny, even when it is well documented that they are defrauding taxpayers of billions of dollars per year!