The U.S. Court of Appeals for the 8th Circuit on Tuesday rejected the privacy provision that keeps the retailer’s payment from the Supplemental Nutrition Assistance Program secret. Responding to a denial of a Freedom of Information Act request from the Sioux Falls Argus Leader, the suit sought a reversal on the grounds that SNAP reimbursements are not proprietary information of the individual businesses, but relevant and disclosable information concerning government spending.
The issue of payment disclosure is essential in the sense that it underlies the current debate going on with SNAP, the successor program to food stamps. Increasingly, conservatives have used as a talking point – defending their attack on the social safety net program – the notion that SNAP trafficking is on the rise.
SNAP trafficking, or the practice of retailers or traffickers offering SNAP recipients cash for their benefits at a discounted rate, has been a major issue of concern recently. In August, the Department of Agriculture published a report indicating that the amount of trafficked SNAP dollars rose from 2006-2008 to 2009-2011 by $528 million. In practical terms, this is only an increase of 0.3 percentage point from 1.0 percent of the total benefits disbursed to 1.3 percent.
The federal government argued that disclosing this information will actually encourage SNAP trafficking.
“The reason that USDA is concerned with disclosing this information is … this redemption information is reviewed by the agency to look for fraud,” said Assistant U.S. Attorney Stephanie Bengford. “If all the information as to individual retailers who participate in this program were available by store type, and the amount of redemptions that they’re bringing in on a yearly basis that would allow individuals who are participating in fraud to use that information to look for outliers—as far as trying to make a determination where the agency might be setting its threshold as to where there might be a concern that someone could be participating in fraud.”
However, coupled with a 28-percent increase over the same observation periods for the number of authorized SNAP retailers found engaged in trafficking – from 8.2 percent to 10.5 percent – offered the impression of a wasteful program.
The myth of “the welfare queen”
On Monday, House and Senate negotiators agreed on a compromise five-year farm bill. This bill will cut approximately $8 billion from the SNAP program over 10 years – twice what Senate Democrats sought, but a fifth of what House Republicans wanted. While the compromise will avoid some of the more draconian elements of the House’s proposal, including drug-testing of benefits recipients and mandatory work requirements – the bill will cut approximately $90 per month to 850,000 households in 17 states, affecting nearly two million people.
This cut entails a practice pertaining to certain states attributing heating and cooling utility costs to applying households’ expenditures automatically, regardless if the household actually pays the expenditure. This created a situation in which an applicant’s net income for benefit determinations were actually lower than reported, leading to an overpayment.
Among the other key provisions in the nutritional title of the farm bill are assurances that lottery winners and college students from affluent homes are ineligible for SNAP benefits, strengthened enforcement and punishment against SNAP trafficking, testing of new strategies to encourage employment among SNAP recipients and attempts toward reducing the number of “food deserts” in the U.S. by requiring SNAP retailers to carry more perishable foods, for example.
While this compromise has been accepted as a win by the Democrats, in reality, the concessions reflect a “playing-out” of the suspicions and concerns the Republicans have read into the program. For example, William Jay Riley, chief judge of the 8th circuit’s Court of Appeal and a George W. Bush appointee, argued in his opinion for the Argus Leader’s FOIA request that SNAP can benefit from a closer examination.
“Formerly known as the Food Stamp Program, the Supplemental Nutrition Assistance Program is one of America’s largest and fastest-growing welfare arrangements,” Riley wrote in the opening paragraphs of the decision. “Amid increasing public scrutiny of this burgeoning program, a Sioux Falls, South Dakota, newspaper called the Argus Leader wondered how much money individual retailers received from taxpayers each year through the program. Invoking the federal law meant to bring disclosure sunlight to the government bureaucracy … (‘Sunlight is said to be the best of disinfectants.’)”
The realities of desperation
However, the realities of SNAP defy such easy allegations. According to an analysis by the Center on Budget and Policy Priorities, enrollment into SNAP has paralleled the rate of Americans at 130 percent of the national poverty limit since 1985. While participation in SNAP has increased since 2000, so has the percentage of Americans who are impoverished or near poverty.
More than four years after the Great Recession ended, the share of workers who are employed has remained stagnant at 58.6 percent – a rate that has stayed roughly the same for the last several years. Despite the fact that the unemployment rate has fallen to 7.3 percent, what this really reflects is the fact that a growing number of Americans have given up on finding work or have accepted part-time work as their primary source of income.
Among those without a college education, African-Americans, Native Americans and Latinos, the unemployment rates are in the double figures. This has created a scenario in which enrollment in SNAP has doubled to 47.3 million since 2006. This has also created a black market among the desperate.
“I know what I was doing was against the law, but I didn’t think I was doing anything wrong,” said Elbert Eugene Shinholster, 77, who – according to the New York Times ran a SNAP trafficking operation.
In Wilkinson County, Ga., the poverty level is greater than the national average. Shinholster, a meat market owner, thought he was helping out by swiping his customers’ Electronic Benefits cards and giving them groceries and cash, at a 30-cent-to-the-dollar premium.
Eventually, his customers just came for the cash. Despite this, Shinholster, a former leader of the National Association for the Advancement of Colored People, thought he was helping families to pay the bills in a time of need.
While Medicare and Medicaid both have fraud rates more than double that of SNAP, the image of the “welfare queen” has created a perception of rampant fraud. In the last year, the Department of Agriculture has brought 667 indictments on SNAP fraud, 10 percent more than last year. One of those indictments was Shinholster, who was accused of $4.6 million in trafficked funds. Shinholster is facing four years’ imprisonment.
“The thing is, when you live in a county where 18 percent of the people live below the poverty line, they are going to do what they have to do,” said Kim Watkins, Shinholster’s daughter.