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Why Are Millionaires Receiving Food Stamps?

Because states are abusing a loophole that allows them to ignore food stamp applicants’ assets and bust through the federal income limits.

Let’s dive into this problem and what states can do to solve it. ↓

What is the loophole?

It’s called Broad-Based Categorical Eligibility, or BBCE. The BBCE loophole was opened by regulation during the Clinton administration, and then it was expanded during the Obama administration. It allows states to ignore income and asset limits under federal law for food stamp applicants and enroll individuals who are not eligible.

Having such lax asset checks has opened the food stamp floodgates and resulted in millions of enrollees who are not eligible—including millionaires—receiving benefits that should be reserved for the truly needy.

How does it work?

Using the BBCE loophole, states make individuals automatically eligible for food stamps if they receive any type of “benefit” funded by the state’s cash welfare program. Since welfare reform in 1996, most states have eliminated the asset limit and set a much higher income limit in cash welfare than food stamps so that benefits like work supports and childcare subsidies can go to a wider group of needy families. But states have abused the automatic eligibility for food stamps by using funds from the cash welfare program to print brochures for food stamp applicants, label the brochure a “benefit,” and enroll the “beneficiary” into food stamps, ignoring the food stamp program’s limits under federal law.

Why can’t we just get rid of it?

While the U.S. Department of Agriculture under President Trump proposed a rule to eliminate the loophole and restore asset checks, it was immediately withdrawn once President Biden entered office.

There is new legislation in the House to eliminate the loophole. It’s also a Farm Bill year, which means that the food stamp program is getting some serious attention in 2023 and BBCE is likely to be part of the discussion.

The 41 states that are abusing the loophole can also just decide for themselves to stop doing so.

States could cross-check food stamp applications against state-owned data like lottery winnings, wage reports, death records, and more to find changes in circumstances that would make an enrollee ineligible for the program. 

Bottom line

Our food stamp program needs reform. The number of food stamp recipients has more than doubled from 17.1 million in 2000 to 41.1 million in 2022, and the cost of these benefits has exploded from $17 billion to $119 billion. At least five million of those enrollees have assets that make them ineligible—likely more than that thanks to the pandemic and the president’s massive expansion of the food stamp program.

Eliminating the BBCE loophole and promoting other reforms like work requirements will go a long way in protecting the safety net for those who truly need it, ensure that able-bodied adults aren’t trapped in dependency, and preserve state budgets in the long run.

At FGA, we don’t just talk about changing policy—we make it happen.

By partnering with FGA through a gift, you can create more policy change that returns America to a country where entrepreneurship thrives, personal responsibility is rewarded, and paychecks replace welfare checks.