Welfare Reforms Protect Poor, Taxpayers

Regardless of where you stand on taxpayer-funded entitlements, few Americans argue against the maintenance of temporary safety nets or modifications aimed at ending welfare fraud, waste and abuse.

In hopes of protecting both interests, the Pennsylvania Department of Public Welfare recently re-implemented an asset test to food stamps.  An asset test, after first determining income eligibility, looks at the total wealth of an individual, including savings and possessions like a home or car before granting taxpayer assistance. Until 2008, Pennsylvania was using such a test.

For those interested in reform, asset tests represent an important first step toward preserving limited taxpayer resources for the truly needy.  The measure is necessary because welfare eligibility and spending – including for food stamps – has exploded, threatening to crowd out everything else in the state budget.

Despite indisputable evidence that welfare fraud and waste is alive and well, many politicians in Harrisburg and Washington have downplayed it, while actually expanding welfare benefits to the detriment of the truly poor.  In Pennsylvania, food stamp expenditures have climbed from $750 million in 2002 to $2.5 billion this fiscal year – an increase of more than 300 percent.  Not surprisingly, abuse has climbed, too.

Last year, 178 grocery and convenience stores in Pennsylvania were banned from the food stamp program – now formally called the Supplemental Nutritional Assistance Program (SNAP) – for trading cash (not food) for food stamps.  Last month alone, eight individuals were found guilty of welfare fraud within the food stamp program and sentenced to return nearly $50,000 in stolen benefits.  Sadly, this is a mere trickle for a hemorrhaging system with few legislative surgeons willing to stop the bleeding.

Enter the asset test, a tried and true tourniquet made from common sense.  Pennsylvania’s proposed reestablishment of this reform would limit SNAP benefits to non-disabled adults under 60 with assets up to $2,000 and senior citizens with assets up to $3,250. The Pa. test actually excludes ones home, car, a second car under $4,650 and retirement savings.

By applying this simple test, DPW has stated the change will remove benefits for only 2 percent of current, undeserving SNAP beneficiaries. This would save Pennsylvania taxpayers approximately $50 million in stopping benefits to those who should use their own assets before taking taxpayer money.

Moreover, 11 states already maintain the federal minimum asset test of $2,000 for adults under 65 (with various exceptions for non-liquid assets) and four states have an asset test of $5,000. Without any such protection, billionaires like Bill Gates could actually be eligible for food stamps if their income was low enough for a year.  

Sound farfetched?  Consider the case of Leroy Fick.  Mr. Fick won a $2 million lottery jackpot but still legally collected food stamps. This fall, Michigan decided to enact a $5,000 asset test to protect food stamps for the truly needy, thus keeping exploiters like Fick from taking advantage of the system.

Like Michigan, Pennsylvania is once again facing a budget deficit with families stretched so thin they cannot afford misuse of one dollar.  Since 2002, total public welfare spending, including all state and federal funds, increased by 52 percent.  Shortly after the 2001 recession, expenditures for the state’s SNAP program totaled $750 million. By 2006, costs had risen to $1.2 billion.

Advocates of more government spending dismiss fears of growth, saying benefit programs should increase in times of economic distress and that enrollment will decline as the economy recovers. History tells a much different story though, as the number of Pennsylvanians receiving food stamps is at an all-time high, soaring 46 percent since December 2007.

If lawmakers are squeamish about stopping the outright theft of those willing to steal from the poor in order to get rich, fiscal realities are certain to force their hand.  Even though many act otherwise, taxpayer dollars are a limited resource.  If government chooses to do nothing, at its current pace, welfare spending will crowd out dollars for education, transportation, and every other priority in the state budget.

Under significant budget restraints, the state must do everything in its power to protect benefits for those most in need. DPW’s intention to restore the SNAP asset test is a small step towards the greater goal of helping Pennsylvanians up while not handing out tax dollars to those who don’t need it.

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Elizabeth Stelle is a policy analyst and Jay Ostrich director of public affairs with the Commonwealth Foundation (www.commonwealthfoundation.org), Pennsylvania’s free-market think tank.