Food Stamp Fraudsters Are Stealing Your Money

President Donald J. Trump’s Department of Justice uprooted hidden millions May 29, charging an employee at the U.S. Department of Agriculture (USDA) and five New York residents with defrauding the federal government of “$66 million in unauthorized transactions under the Supplemental Nutrition Assistance Program (‘SNAP’) — colloquially known as food stamps.”

“Yesterday was, if not the largest, one of [the] largest stings,” said Agriculture Secretary Brooke Rollins, my former boss at the Texas Public Policy Foundation, of the bust, “At [the] USDA, we are hyper-focused . . . on rooting out that waste, fraud and abuse.”

While $66 million may sound extensive, the fraud scheme lasted about five years, which averages to about $13.2 million a year. That’s only 0.2 percent of New York’s $6.5 billion in SNAP spending last year.

Last year, nearly three million New Yorkers received SNAP food welfare each month, with an average monthly subsidy of $376 per household. This is part of a nationwide SNAP program the USDA runs, totaling about $123.3 billion in fiscal year 2025.

Here’s where things get interesting: SNAP is a federally funded entitlement. Anyone who meets the threshold monthly income for a family of four — $3,380 in the 48 contiguous states, D.C., Guam, and the Virgin Islands, $4,225 in Alaska, and $3,887 in Hawaii — qualifies.

States administer the program and essentially bill the federal government for SNAP subsidies paid out. States split a modest administrative fee 50-50 with the federal government.

This arrangement means there is little incentive for a state to combat fraud because the federal government automatically covers any extra spending. Even fraudsters spend their ill-gotten gains somewhere — most likely in the state where they are operating. Who cares if there is a little fraud? Of course, the U.S. taxpayer does.

Previous academic studies have noted a disconnect in the amount of SNAP subsidies reported by states as paid out and the amount of SNAP subsidies claimed by people receiving them on U.S. Census surveys. One study found that about 35 percent of SNAP beneficiaries will not report receiving benefits out of the approximately 3.5 million households annually who receive the American Community Survey (ACS), while 50 percent of those receiving food welfare fail to report this in response to the 60,000 Current Population Surveys sent out every month.

This underreporting matters for policymakers because SNAP subsidies, as well as other federal, state, and local welfare for the poor, only show a reduction in poverty rates if the income is not reported to Census.

But maybe the academic studies are wrong and fraud is much more than we assume. Haywood Talcove, CEO of LexisNexis Risk Solutions’ Government Group, estimated that about 20 percent of SNAP’s annual budget, or $25 billion, is lost to fraud. Now, we’re talking Department Of Government Efficiency numbers.

Of course, given SNAP’s financial set up — all gain and no pain for the states — it stands to reason there might be serious fraud in the program. Of note, one of those charged in the SNAP fraud scheme, Arlasa Davis, was a veteran USDA employee “who worked within the very division of the USDA responsible for identifying SNAP fraud,” according to the Department of Justice.

One way to solve this systemic fraud problem is to shift some financial responsibility for the program to the states — and that’s just what the proposed Big Beautiful Bill, or reconciliation bill, does. Medicaid, another federally funded but state-administered program, also suffers from a systemic fraud problem for much the same reason. Democrats are having none of it, however, with breathless headlines warning that, “Historic SNAP Cuts Threaten Families, States, and the Future of Food Assistance,” and “House Reconciliation Bill Proposes Deepest SNAP Cut in History, Would Take Food Assistance Away From Millions of Low-Income Families” or end in some states entirely. The latter claim is presumably because, since the program is optional, imposing any cost sharing would end the program. The left should remember that, while states don’t have the ability to borrow and print money to infinity, they do possess an independent ability to tax, spend, and determine the best provisions for their residents’ well-being.

The reconciliation bill’s proposed federal-state SNAP cost-sharing, depending on a state’s error rate, can be as low as 12.5 percent and as high as 32.5 percent by 2028 — in the range of the estimated rate of fraud that plagues the program.

Rep. Derrick Van Orden (R-Wis.) a member of the House Committee on Agriculture, told me, “I am proud of how the One Big Beautiful Bill encourages responsible bureaucracies by rewarding states that administer SNAP benefits efficiently and gives states that do not, the ability to improve. This would never happen unless they have skin in the game.”

“As far as the radical left’s fear-mongering statements that benefits will be cut if the states must chip in, I know I can speak for my fellow Wisconsinites when I say we are willing to help our American neighbors most in need.”