Why Can Food Stamps Buy Junk Food? How DOGE Could Save Billions And MAHA

 The U.S. Department of Agriculture (USDA) pays farmers not to grow food, while at the same time spending most of its budget giving “food stamps” to people who can use them to buy candy, soda, and snacks — at giant retail markups — in corner stores and elsewhere.

The food stamp program has exploded, from $56 billion in redemptions in fiscal 2019 to $124 billion in 2023. Perhaps not coincidentally, many on food stamps are more likely to be obese with related health conditions, and then be treated at taxpayer expense by Medicaid.

The current program is so inefficient that by USDA’s own estimates, it pays out $1 billion a month in food stamps to people who aren’t eligible, leading the Biden administration to call for “urgent” reforms. Twenty percent of food stamp payouts in the District of Columbia, and close to 23% in South Carolina, are erroneous. That’s a separate issue from fraud, which occurs when stores agree to trade food stamps for cash. The tens of billions of dollars spent on unhealthy food counts as neither waste nor fraud: it’s fully permitted.

Dramatically overhauling the food stamp program so that only healthy food can be bought could go beyond saving money. In a country facing an obesity crisis, it could help make America healthy again.

A 2016 study conducted by a contractor for USDA found that soda was the top item purchased with food stamps. That study likely significantly understated junk-food rates, because USDA refuses to disclose data on which products food stamps are spent on even though it can be tracked. The contractor found a workaround by getting data from a large grocery chain.

The money saved from reforming SNAP would only be the start of the benefits to taxpayers. A 2018 study from the Journal of Food Law & Policy found that “medical costs associated with obesity (which largely fall on Medicare and Medicaid) are estimated to be at least $147 billion per year.” Some people who become obese through food stamps also end up on taxpayer-funded disability programs as a result. This month, the White House proposed covering weight-loss drugs like Ozempic, which can cost $1,600 a month, for Medicaid recipients. The government would be paying both for junk food that makes people fat, and a lifetime prescription to try to take the fat off.

The food stamp program is officially called the Supplemental Nutritional Assistance Program (SNAP), and letting people use the credits on almost any edible item, no matter its nutritional value, has never been consistent with that intent. Even some Democrat-run states have recognized that, with states such as New York trying to make soda ineligible for food stamps. The federal government forbade them from even conducting pilot programs to test whether it would be beneficial. USDA, the Harvard study said, fretted that beneficiaries would be “stigmatized” if they couldn’t buy soda.

Of course, the argument that billions of taxpayer dollars should be used to make vulnerable poor people obese doesn’t come from the impoverished. It likely comes from corporate lobbyists for whom SNAP is big business. Soda manufacturers, convenience stores, and candy trade associations have all lobbied to keep junk food SNAP-eligible. They say it’s only “anecdotal” that SNAP is often spent on sweets, leaning on the fact that USDA conceals what items are purchased.

USDA fought all the way to the Supreme Court to block journalist requests to see how much taxpayer money is disbursed to each store for SNAP reimbursements. That data could make the biggest launderers of food stamps glaringly obvious because they would be showing far more revenue than similarly-sized corner stores. It would likely also show what a bonanza the SNAP program is for politically-connected corporations like Walmart.

Yet when USDA asked retailers for feedback on whether it should keep hiding data about how food stamps are spent, on the logic that it was a “trade secret,” small retailers and clerks replied that, day after day, they saw people ring up taxpayer-paid junk food, and they thought the public should know about it. One retailer said, “I have customers come in and buy candy, sodas, and energy drinks with their EBT/SNAP cards. I personally don’t believe that that should be allowed since it is not considered a necessity.” A public health dietician wrote, “I find that SNAP funds are spent on unhealthy food choices, which is compounding our nation’s health problems… I suspect the retailers are part of the problem. We need to figure this out so that all of our citizens have access to healthy food choices.”

More than a decade ago, this reporter spent weeks touring stores on the District of Columbia’s list of SNAP-eligible retailers. SNAP requires retailers to have a few healthy foods available, and while many of the stores had a few old vegetables lying around, the typical food stamp transaction was more likely to involve junk food like 20-ounce bottles of Mountain Dew and Kit-Kat bars.

Some of the stores openly engaged in criminal activity, selling individual “loosie” cigarettes, for cash. They plainly catered to criminals, selling glass “roses” used to smoke crack. One made room in its limited inventory for a selection of black ski masks—the types used in robberies—in the heat of summer.

SNAP inherently relies on the honesty of these stores to tell it how much business they did in food stamp dollars, then writes them a check. It is trivial for them to “launder” food stamps into cash, giving half the money to the customer and pocketing the other half, by ringing up ghost products. The SNAP bureaucracy seems to have been crafted precisely to make such fraud difficult to stop. The federal government puts the states in charge of doling out SNAP money, while retail anti-fraud enforcement is reserved for the feds, and there are only some 100 investigators to police a quarter-million SNAP retailers across the country.

Even so, about one in twenty stores was caught for fraud within a seven-year period. One in three stores that was supposedly banned from accepting food stamps, was still accepting them. Some seemed to have simply “sold” the store — on paper, at least — to an associate to evade consequences. A store called Tobaccosville was among SNAP-eligible stores, until it was busted for fraud. It rebranded as Tobacco City and kept accepting them. Others just ignored infractions because the sanctions were toothless. Last year, Democrats introduced a bill that would make it even easier for corporations to engage in food stamp laundering to keep operating, called the SNAP Second Chance Act.

Even if it made sense for taxpayers to pay for food at marked-up, retail prices instead of finding economies of scale by buying in bulk, SNAP is duplicative. Women and children can already buy healthy food at stores through the Women and Children (WIC) program, and school-aged children get free breakfast and lunch at school in many states.

Replacing food stamps with a program that buys nutritious commodities from farmers in bulk, allows impoverished people to select what they’d like off a menu, and mails it to them — not unlike high-end meal services such as Blue Apron — is one big-ticket idea that could be considered by the new Department of Government Efficiency (DOGE).

The time is right for Congress to dramatically reassess how America ensures that its poor are healthy. Food stamps are authorized by the “Farm Bill,” which ordinarily comes up for renewal every five years. But Congress wasn’t able to agree on a full five-year bill in 2023. After a short-term extension, the incoming Congress and administration will have an opportunity to start from scratch next year.