    [House Hearing, 115 Congress]
    [From the U.S. Government Publishing Office]

                SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM FRAUD

    =======================================================================

                                 JOINT HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                           INTERGOVERNMENTAL AFFAIRS

                                    AND THE

                          SUBCOMMITTEE ON HEALTHCARE,
                       BENEFITS, AND ADMINISTRATIVE RULES

                                     OF THE

                             COMMITTEE ON OVERSIGHT
                             AND GOVERNMENT REFORM
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 26, 2018

                                   __________

                               Serial No. 115-103

                                   __________

    Printed for the use of the Committee on Oversight and Government Reform

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov
                           http://oversight.house.gov
                                       ______

                         U.S. GOVERNMENT PUBLISHING OFFICE

    32-575 PDF                WASHINGTON : 2018

                  Committee on Oversight and Government Reform

                      Trey Gowdy, South Carolina, Chairman
    John J. Duncan, Jr., Tennessee       Elijah E. Cummings, Maryland,
    Darrell E. Issa, California              Ranking Minority Member
    Jim Jordan, Ohio                     Carolyn B. Maloney, New York
    Mark Sanford, South Carolina         Eleanor Holmes Norton, District of
    Justin Amash, Michigan                   Columbia
    Paul A. Gosar, Arizona               Wm. Lacy Clay, Missouri
    Scott DesJarlais, Tennessee          Stephen F. Lynch, Massachusetts
    Virginia Foxx, North Carolina        Jim Cooper, Tennessee
    Thomas Massie, Kentucky              Gerald E. Connolly, Virginia
    Mark Meadows, North Carolina         Robin L. Kelly, Illinois
    Ron DeSantis, Florida                Brenda L. Lawrence, Michigan
    Dennis A. Ross, Florida              Bonnie Watson Coleman, New Jersey
    Mark Walker, North Carolina          Raja Krishnamoorthi, Illinois
    Rod Blum, Iowa                       Jamie Raskin, Maryland
    Jody B. Hice, Georgia                Jimmy Gomez, Maryland
    Steve Russell, Oklahoma              Peter Welch, Vermont
    Glenn Grothman, Wisconsin            Matt Cartwright, Pennsylvania
    Will Hurd, Texas                     Mark DeSaulnier, California
    Gary J. Palmer, Alabama              Stacey E. Plaskett, Virgin Islands
    James Comer, Kentucky                John P. Sarbanes, Maryland
    Paul Mitchell, Michigan
    Greg Gianforte, Montana
    Michael Cloud, Texas

                         Sheria Clarke, Staff Director
                        William McKenna, General Counsel
                            Betsy Ferguson, Counsel
                             Kiley Bidelman, Clerk
                     David Rapallo, Minority Staff Director
                   Subcommittee on Intergovernmental Affairs

                         Gary Palmer, Alabama, Chairman
    Glenn Grothman, Wisconsin, Vice      Jamie Raskin, Maryland, Ranking
        Chair                                Minority Member
    John J. Duncan, Jr., Tennessee       Mark DeSaulnier, California
    Virginia Foxx, North Carolina        Matt Cartwright, Pennsylvania
    Thomas Massie, Kentucky              Wm. Lacy Clay, Missouri
    Mark Walker, North Carolina          (Vacancy)
    Mark Sanford, South Carolina
                                     ------

         Subcommittee on Healthcare, Benefits, and Administrative Rules

                           Jim Jordan, Ohio, Chairman
    Mark Walker, North Carolina, Vice    Raja Krishnamoorthi, Illinois,
        Chair                                Ranking Minority Member
    Darrell E. Issa, California          Jim Cooper, Tennessee
    Mark Sanford, South Carolina         Eleanor Holmes Norton, District of
    Scott DesJarlais, Tennessee              Columbia
    Mark Meadows, North Carolina         Robin L. Kelly, Illinois
    Glenn Grothman, Wisconsin            Bonnie Watson Coleman, New Jersey
    Paul Mitchell, Michigan              Stacey E. Plaskett, Virgin Islands

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on September 26, 2018...............................     1

                                   WITNESSES

    Ms. Ann Coffey, Assistant Inspector General for Investigations,
      USDA Inspector General
        Oral Statement...............................................     5
        Written Statement............................................     9
    Mr. Thomas Roth, Director, Fraud Investigation and Recovery Unit,
      Maine Department of Health and Human Services
        Oral Statement...............................................    16
        Written Statement............................................    18
    Mr. Tarren Bragdon, President and CEO, Foundation for Government
      Accountability
        Oral Statement...............................................    21
        Written Statement............................................    23
    Dr. Craig Gundersen, Soybean Industry Endowed Professor in
      Agricultural Strategy, University of Illinois
        Oral Statement...............................................    37
        Written Statement............................................    39

                SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM FRAUD

                                  ----------

                         Wednesday, September 26, 2018

                       House of Representatives
      Subcommittee on Intergovernmental Affairs, joint
    with the Subcommittee on Healthcare, Benefits, and
                                  Administrative Rules,
                  Committee on Oversight and Government Reform,
                                                       Washington, D.C.
        The subcommittee met, pursuant to call, at 10:19 a.m., in
    Room 2154, Rayburn House Office Building, Hon. Gary Palmer
    [chairman of the subcommittee] presiding.
        Present: Representatives Duncan, Issa, Jordan, DesJarlais,
    Massie, Meadows, Walker, Grothman, Mitchell, Norton, Watson
    Coleman, Krishnamoorthi, Raskin, Cartwright, DeSaulnier.
        Mr. Palmer. The Subcommittee on Intergovernmental Affairs
    and the Subcommittee on Healthcare, Benefits, and
    Administrative Rules will come to order. Without objection, the
    chair is authorized to declare a recess at any time. I will now
    recognize myself for my opening statement.
        The Supplemental Nutrition Assistance Program, known as
    SNAP, offers assistance to millions of Americans who cannot
    afford nutritional food for themselves and their families. The
    Food Nutrition Service, known as FNS, administers the program
    in partnership with state agencies, but nearly all funding
    comes from the federal government.
        In 2017, SNAP provided almost $70 billion in benefits to
    over 42 million Americans in need, more than half of whom were
    children and elderly. Efficient and effective program
    administration is critical for a program that size, for an
    expenditure that size, and a program that is that important.
        To this end, the subcommittees are holding this hearing to
    examine fraud in SNAP, which can take a variety of forms. Fraud
    can consist of SNAP recipients providing misinformation about
    eligibility requirements, such as income, and the number of
    household members.
        For example, in Wisconsin, a woman was charged with hiding
    income from a live-in boyfriend to fraudulently collect more
    than $25,000 in benefits. Fraud can also consist of SNAP
    retailers lying about meeting authorization requirements.
        For example, the USDA Inspector General found about 3,400
    retailers applied for SNAP authorization using the Social
    Security Numbers of deceased people, allowing them to
    fraudulently redeem about $2.6 million in benefits.
        SNAP recipients and retailers can also commit fraud by
    trafficking SNAP benefits, a crime that involves exchanging
    SNAP benefits for anything other than eligible food, usually
    cash. For example, in my home state of Alabama, a grocer
    trafficked more than $5.2 million in SNAP benefits.
        Today, we may hear how SNAP fraud is not extensive, but the
    truth is FNS does not actually know how common fraud is,
    because it is not appropriately measured. The USDA inspector
    general reported in 2012 FNS has not established how states
    could compile, track, and report fraud in a uniform manner.
    Even today, the federal government still cannot fully grasp the
    scope and frequency of fraud in the program. However, we can
    use other sources to obtain a sense of scale.
        In 2016, state investigation data identified almost $600
    million in recipient fraud. Further, FNS data shows SNAP
    retailers traffic about $1 billion in benefits every year. That
    is 1.6 billion, combined.
        In addition, some state agencies are contributing to fraud
    by manipulating SNAP's national payment error rate, the
    nationwide measure of improper payments, an issue this
    committee has worked on to expose, and, hopefully, resolve.
    This includes FNS providing state agencies with bonuses for
    having low error rates, and penalizing those with high ones.
        In 2017, state agencies in Virginia, Wisconsin, and Alaska
    admitted to false Claims Act violations for fraudulently
    reporting low error rates to exploit this bonus system,
    agreeing to repay the $16 million of bonuses they fraudulently
    claimed.
        Despite these obvious signs of abuse, FNS has not followed
    through on commonsense steps to reduce fraud. For example, FNS
    has not followed through on their own proposed rules to tighten
    requirements related to retailer trafficking. Similarly, FNS
    has not followed through on the USDA inspector general's 2013
    recommendations to close loopholes, allowing retailers who
    traffic SNAP benefits to remain active. FNS has proposed weaker
    alternatives instead.
        Also, FNS has ignored the Government Accountability
    Office's 2016 recommendation to help states improve data
    matching processes to detect potential fraud and improper
    payments. In contrast, state agencies are actively responding
    to the need to fight fraud.
        In 2016, state prosecutions increased 14 percent, to over
    9,000 cases, and administrative disqualifications increased 23
    percent, to over 49,000 cases. I believe the states can offer
    insight into ways in which FNS can assist states in fighting
    fraud, as well as ways FNS can make its own fight against SNAP
    fraud more effective.
        Make no mistake, our fellow Americans deserve help in times
    of need, but fraud takes this assistance straight out of the
    hands of those who need it. Fortunately, we have with us today
    a panel that can speak to the role that Congress can play in
    the prevention of further fraud through the SNAP program.
        I thank the witnesses for being here. And I will now
    recognize the ranking member of the--Mr. Krishnamoorthi, for
    his opening statement. Healthcare, Benefits, and Administrative
    Rules Subcommittee. How is that?
        Mr. Krishnamoorthi. You got it.
        Mr. Palmer. Thank you.
        Mr. Krishnamoorthi. Thank you.
        Mr. Palmer. I recognize the gentleman.
        Mr. Krishnamoorthi. Hey, good morning. Thank you to our
    witnesses for being here today, and thank you to Mr. Chairman
    for holding today's hearing.
        The Supplemental Nutritional Assistance Program, SNAP, is
    America's primary anti-hunger program. In 2017, the SNAP
    program fed over 42 million Americans who face hunger and food
    insecurity. In my State of Illinois, SNAP provided about $3
    billion in food benefits, to a monthly average of over 1
    million recipients. I am proud to say that the program served
    100 percent of those eligible for benefits in that same fiscal
    year.
        In my district, over 50 percent of the households that
    receive SNAP benefits have a child or several children under
    the age of 18 years. SNAP is vital to American children. No
    other nutritional or income support program reaches as many at-
    risk children, or contributes as much to helping very low-
    income households with children.
        The average SNAP benefit is very small. It is $1.40 per
    person, per family. And every federal dollar spent on SNAP
    generates $1.79 in economic activity. In 2015, SNAP lifted more
    than 2 million children out of extreme poverty, and kept an
    additional 8.4 million Americans out of poverty.
        As a former SNAP recipient, myself, I take very seriously
    the issue of fraud in the SNAP program. The 2017 rate of 6.3
    percent of improper payments is very troubling, and Congress
    has an oversight duty to ensure that the USDA and state
    authorities are doing everything possible to make sure that all
    SNAP benefits go to those who deserve it.
        The only acceptable rate of SNAP fraud is zero percent. Any
    fraud in the program means taking away food from those families
    who desperately need the assistance.
        That being said, as we work to eliminate SNAP fraud, we
    have to make certain that any proposed fixes do not result in
    more harm to children and families by reducing eligibility or
    making it harder for families to get the food they need.
        It is possible to eliminate any SNAP fraud without reducing
    the number of eligible people who receive food. In fact, this
    is the only moral way to reduce fraud. SNAP is fundamentally an
    essential health program for this country. It promotes healthy
    children, well-fed families, and better health outcomes for
    communities as a whole.
        As such, we should keep the first commandment of healthcare
    in mind when addressing SNAP. First, do no harm. My colleagues
    on the other side of the aisle will spend today's hearing
    trying to justify cutting SNAP benefits. Their proposals,
    whether by design or by accident, would result in hungry
    children and families forced to decide between paying for food
    or other basic necessities.
        The republican farm bill would create administrative
    barriers to enrollment by significantly changing policy that
    automatically enrolls households in SNAP when they qualify for
    temporary assistance for needy families. It would increase
    requirements for SNAP beneficiaries, and would impose new work
    reporting requirements on top of existing work requirements.
    There are already existing work requirements to receive SNAP.
        Reading their bill, one could be forgiven for assuming that
    the whole aim of these provisions is to cut the number of
    people who may receive SNAP benefits. SNAP feeds millions of
    children, seniors, and people with disabilities, including
    veterans. SNAP is efficiently run. If SNAP did not exist we
    would have to create a program to do what SNAP does.
        I look forward to hearing your testimony, and thank you so
    much again for everyone attending today's hearing.
        Mr. Palmer. I now recognize the chairman of the Healthcare,
    Benefits, and Administrative Rules Subcommittee, Mr. Jordan,
    for his opening statement.
        Mr. Jordan. I thank the chairman for putting this hearing
    together. The previous speaker talked about republicans want to
    cut benefits. No, we don't. We don't want to cut benefits. We
    just want to have a work requirement in place that doesn't get
    waived, so that people who get fellow American citizens' hard-
    earned tax dollars have to do something in order to--if they
    are able-bodied, have to do something to get those tax
    benefits.
        Understand what is happening in this program. At a time
    when we have 4.2 percent economic growth, lowest unemployment
    in 20 years, the food stamp population is at 40 million people.
    Ten years ago, it was at 26 million.
        So if this doesn't need some reform--I mean if this isn't a
    program that needs reforms, someone is going to have to show me
    what would. I mean this is crazy. So that is all we are focused
    on. And where there is fraud and abuse in the program, we want
    to get at that as well. So this is real simple. $68 billion
    spent a year on a program where you have millions of people who
    are able-bodied adults, who don't have to do a darn thing to
    get taxpayer benefits. That is just crazy.
        And every constituent I talked to says that is not
    commonsense. And you know what? Here is amazing. This is like
    an 85 percent issue, requiring a work component for able-bodied
    people that doesn't get waived by the federal government for
    respective states. Requiring that is like an 85 percent issue
    across the board. Republicans, democrats, independents,
    everyone says this is good. The only people who are against it
    are democrats in Washington.
        So this makes all the sense in the world. I am glad the
    chairman is having this hearing. I look forward to hearing from
    our witnesses about the fraud and abuse that is going on in
    this program, and how we can pass a simple commonsense measure
    that says don't waive the work requirement concept for
    something where 40 million people are getting a benefit from
    the taxpayer.
        With that, I yield back.
        Mr. Palmer. I thank the gentleman.
        I now recognize the ranking member of the Intergovernmental
    Affairs Subcommittee, Mr. Raskin, for his opening statement.
        Mr. Raskin. Mr. Chairman, thank you very much, and I want
    to thank all the witnesses for coming today, and participating
    in the hearing, which examines fraud and waste in the program
    that provides a modest, but critical benefit to over 20 million
    low-income households.
        SNAP pays, on average, $1.40 per person, per meal. Before
    that tiny stipend is released, Congress requires recipients to
    prove their eligibility, and to work or get training in order
    to continue receiving SNAP benefits.
        The incidents of trafficking fraud, according to the USDA,
    is 1 percent. If we can get it down to zero percent, then, by
    all means, let us do it. But I am afraid that the purpose of
    today's hearing relates more to the intervention by my friend,
    Mr. Jordan, who invites us to believe that the whole purpose of
    the program is suspect, because we have got low unemployment in
    America today, and so why are there millions of people still
    receiving SNAP benefits?
        I think the answer to that is simple, which is that people
    are not making enough money in their jobs. A lot of people are
    working not just one, but two, or three jobs, and still cannot
    support their families on it. And that is what the SNAP program
    is about, making sure that our people have decent, good
    nutrition, and are able to feed themselves and their families.
        Our hearing today is about waste, fraud, and abuse. Are we
    focused on rooting out waste, fraud, and abuse? Well, the most
    extreme incidences of it are found across the river at the
    Pentagon, but we haven't had any hearings on that subject this
    year. An internal report issued by the independent Defense
    Business Board found $125 billion in immediate savings that
    would be available by cutting spending in waste at the
    Pentagon.
        That is almost twice the entire annual budget of SNAP. But
    apparently, we are not interested in the chronic problem of
    Pentagon waste and bloat. Why hasn't this committee held a
    single hearing devoted to eliminating waste, and fraud, and
    abuse at the Pentagon, which is so huge that it eclipses the
    entire budget of the anti-hunger program this hearing is
    examining?
        It is hard to believe that the constant attacks on the SNAP
    program reflect a focus on fiscal responsibility, when the
    majority's tax policies are, of course, producing unprecedented
    and staggering budget deficits.
        According to Maya MacGuineas, of the Committee for
    Responsible Federal Budget, the $1.9 trillion cost of the tax
    cuts were disingenuously sold as the key to such massive growth
    that they would pay for themselves. But the proof is in the
    pudding, or in this case, the national debt. A realistic
    prediction of the tax cuts is they will provide a short-term
    boost, the sugar high that is flooding a strong economy which
    additional money creates, but that deficit finance boost won't
    last, and it will leave us with a predictably large mountain of
    debt that comes with all the borrowing.
        It is irresponsible and incontrovertible to pass tax cuts
    to the super wealthy that we cannot afford, and then to put the
    whole spending spree on a credit card, which our children will
    pay for for the rest of their lives.
        Mr. Chairman, I am told this might be our last week in
    Washington for a bit, and I would hope that as members of the
    Oversight Committee we would be using our time more wisely than
    this. Instead of spreading rumors about SNAP fraud to justify
    draconian cuts to this necessary program, we should be looking
    into the real waste, fraud, and abuse that costs the American
    people billions of dollars a year.
        I yield back. Thank you.
        Mr. Palmer. I thank the gentleman. I just say that if you
    think this is a waste of time you are welcome to not
    participate.
        You know, for the witnesses that I am about to introduce,
    despite the opening statements, this hearing is about fraud in
    the SNAP program. It is not about eliminating the SNAP program.
    It is not about work requirements. It is not about waste at the
    Pentagon.
        So with that, I am pleased to introduce our witnesses. Ms.
    Ann Coffey, Assistant Inspector General for Investigations at
    the U.S. Department of Agriculture, Office of Inspector
    General; Mr. Thomas Roth, the Director, Fraud Investigation and
    Recovery Unit, at the Maine Department of Health and Human
    Services; Mr. Tarren Bragdon, President, CEO of the Foundation
    for Government Accountability; and Dr. Craig Gunderson, Soybean
    Industry Endowed Professor in Agricultural Strategy, at the
    University of Illinois.
        Welcome to all you. Pursuant to committee rules, all
    witnesses will be sworn in before they testify. Please stand
    and raise your right hand.
        Do you solemnly swear or affirm the testimony you are about
    to give is the truth, and the whole truth, and nothing but the
    truth, so help you God?
        (A chorus of ayes.)
        Mr. Palmer. The record will reflect that the witnesses
    answered in the affirmative. Please be seated.
        In order to allow time for discussion, please limit your
    testimony to 5 minutes. Your entire written statement will be
    made part of the record. As a reminder, the clock in front of
    you shows you the remaining time. The light will turn yellow
    when you have 30 seconds left. And unlike traffic lights, you
    can speed up when it turns yellow. And red when your time is
    up. Please also remember to press the button to turn your
    microphone on before speaking.
        The chair now recognizes Ms. Coffey for her testimony.

                           WITNESS STATEMENTS

                        STATEMENT OF ANN COFFEY

        Good morning, Chairman Jordan, Chairman Palmer, Ranking
    Member Krishnamoorthi, Ranking Member Raskin, and members of
    the subcommittees. Thank you for the opportunity to testify
    about the Department of Agriculture Office of Inspector
    General's work regarding the Supplemental Nutrition Assistance
    Program.
        SNAP is USDA's largest program in terms of both dollars
    spent and numbers of recipients. In fiscal year 2017,
    recipients redeemed close to $63 billion in benefits. The
    latest available information shows that through June of 2018
    more than 41 million people redeemed $46 billion in SNAP
    benefits.
        In providing oversight of SNAP, OIG employs a two-pronged
    approach, involving audits and criminal investigations. OIG
    audit staff conducts reviews of SNAP intended to improve FNS's
    overall management controls for the program. Investigation
    staff conducts criminal investigations into alleged fraud
    perpetrated against the program.
        We utilize specific law enforcement authorities, tools, and
    techniques to conduct these investigations. This work is
    intended to result in appropriate actions to resolve
    allegations, and to prevent and deter instances of illegal and
    fraudulent acts or misconduct.
        OIG devotes about 43 percent of its investigative resources
    to SNAP-related criminal investigations. Our main focus is on
    fraud committed by retailers, primarily because FNS is
    responsible for directly reimbursing retailers.
        States are responsible for ensuring that individual
    recipients are eligible to receive benefits and that they use
    those benefits appropriately. OIG allocates considerable
    resources to help FNS ensure the integrity of SNAP as part of
    our mission to promote integrity, efficiency, and effectiveness
    of USDA programs and operations.
        Our investigations yield tangible results and direct
    benefits to the government. In the past 5 years, we have
    completed 857 SNAP investigations that resulted in 2,302
    indictments, and 2,335 convictions. During that time, our
    monetary results have totaled nearly half-a-billion dollars.
        Often, prosecuting a SNAP case is a collaborative effort
    between OIG and other agencies. By sharing information about
    SNAP recipients who illegally exchange their benefits for cash
    with relevant law enforcement agencies, we help states pursue
    prosecution or disqualify recipients from the program.
        OIG also works with federal, state, and local law
    enforcement agencies to investigate SNAP fraud due to
    violations and other laws--of other laws. OIG's primary
    investigative jurisdiction pertains to violations of law
    involving USDA programs.
        When there are other violations of laws involving drugs or
    firearms we work jointly with the appropriate agency to pursue
    those other violations in addition to SNAP fraud. Through our
    various collaborative efforts, we work to identify and resolve
    potential vulnerabilities in the processes that allow bad
    actors to participate in SNAP.
        One of the most common abuses OIG investigates is the
    trafficking of benefits, which is essentially the illegal
    exchange of food assistance benefits for cash. In this scheme,
    retailers will pay recipients for their SNAP benefits.
    Recipients, of course, are then able to spend the cash however
    they like.
        The types of fraud we are seeing in SNAP are changing. In
    particular, with the use of electronic benefits, the fraud
    schemes are becoming more advanced, and relying upon
    information technology. To counteract these schemes, OIG works
    with FNS to develop ways of detecting and investigating
    retailers at high risk of committing various kinds of fraud.
        We also utilize OIG's Office of Data Sciences to help
    identify anomalies that could not easily be identified, and
    provide new perspectives for examining data. These techniques
    ultimately assist us in making critical decisions in the
    allocation of investigative resources. When trafficking occurs
    unchecked, families do not receive nutritional assistance, and
    dishonest retailers profit at the expense of the American
    public.
        This concludes my statement. Again, I want to thank the
    subcommittees for the opportunity to testify today, and I
    welcome any questions you may have.
        [Prepared statement of Ms. Coffey follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Palmer. Thank you for your testimony.
        The chair recognizes Mr. Roth for his testimony.

                        STATEMENT OF THOMAS ROTH

        Mr. Roth. Chairman Palmer, Chairman Jordan, Ranking Members
    Raskin and Krishnamoorthi, and members of the committee, thank
    you for the privilege of testifying and representing the State
    of Maine.
        I am Tom Roth, the Director of the Fraud Investigation and
    Recovery Unit for the Maine Department of Health and Human
    Services. My job is to oversee the daily operations of the
    unit, a group of 35 dedicated employees. I enjoyed a 27-year
    law enforcement career before taking my current position.
        I am a certified Welfare fraud investigator, and in
    addition to supervising Maine's fraud unit, I work an active
    caseload. So I see firsthand the fraud schemes in the SNAP
    program in Maine.
        We receive thousands of tips each year from citizens
    alleging fraud in the Welfare system. In addition to tips from
    the public, we receive information from eligibility workers,
    law enforcement, and other government agencies. Additionally,
    our overpayment specialists identify hundreds of intentional
    program violations committed by recipients.
        Our unit has two focuses. Investigators work cases for
    criminal prosecution. These are large theft cases occurring
    over many years. Our overpayment specialists examine
    administrative cases that are not prosecuted criminally, as
    well as conduct disqualification hearings.
        In 2017, we submitted more than 100 criminal cases for
    prosecution, which totaled more than $1.4 million. In that same
    year, our overpayment specialists identified nearly 5,000
    overpayments, totaling $4.1 million.
        One of our largest criminal cases to date was adjudicated
    this spring. This case involved a Welfare recipient who scammed
    the system for more than 10 years. This client lived
    comfortably with her husband, making more than a decent living
    by Maine standards.
        She failed to report that her husband lived in the
    household. She did not report his income, and she did not
    report her assets or income. Together, she and her husband had
    a six-figure income. Her case involved the theft of more than
    $229,000 from the system. She is currently in jail.
        Another massive case investigated by our unit, along with
    the OIG, involved a retail store in Portland, Maine. In this
    case, two brothers routinely took in customers' electronic
    benefits transfer, or EBT cards, and provided benefit
    recipients with cash. The brothers would pocket a certain
    percentage of the money, with no food or groceries ever being
    purchased.
        Additionally, the brothers were involved in an illegal WIC
    benefits redemption scam. Their deceitful efforts took in more
    than $1.4 million in SNAP and WIC benefits that never went to
    the intended recipients for the intended purpose. These
    brothers are both in jail.
        While these two cases are extremely large, we routinely
    work cases in which recipients provide false information and
    fraudulently receive tens of thousands of dollars. On a smaller
    scale, we also investigate cases involving the misuse of EBT
    cards. These typically involve someone selling or trading their
    EBT cards for drugs. While individually these cases may only
    represent $100 or $200 in theft, they add up quickly, and show
    another mechanism used to commit Welfare fraud.
        Almost weekly we see a new scam involving EBT cards. One
    trick involves recipients returning purchased food items for
    cash. The cash is then used to purchase illegal drugs. Another
    has a scammer weighing beer on a scale at a self-checkout
    register, but entering in bananas as produce, so the user can
    purchase beer with their EBT card. Another scheme involves a
    recipient buying cases of bottled water, and then dumping the
    water out in the parking lot, and returning the empties for the
    5-cent deposit per bottle. We get regular reports of the active
    use of a deceased person's EBT card as well. These are all
    schemes we have seen in Maine.
        My point in providing you with a very brief overview of the
    type of fraud cases we work is to illustrate the fact that
    fraud exists, and when you look for it, you find it. I
    constantly asked what percentage of fraud is occurring out
    there. I can't answer that question. What I can tell you is how
    many people we are discovering, and what that dollar amount
    represents.
        I also routinely get asked if our fraud efforts are paying
    for themselves. Does the operating cost of the unit justify the
    amount of money we are recovering? Again, that is hard to
    answer. I strongly believe the deterrent effects of our efforts
    is invaluable. We try to publicize our indictments and
    convictions so other see that if you commit Welfare fraud, you
    may get discovered, fined, and even jailed. I wish I could know
    how many people see those press releases and think twice before
    gaming the system.
        Maine utilizes a host of mechanisms to detect fraud. We
    have diligent investigators and overpayment specialists working
    cases. We rely heavily on tips and information from the public.
    We do data mining, and we look for fraudulent trends, and we
    scan data bases, looking for unreported income or assets.
        Maine is successful in finding fraud because we take an
    active role in looking for it. We publicize things, and we
    solicit tips from the public.
        Again, thank you for the opportunity to testify before you
    today, and I am happy to answer any questions you may have.
        [Prepared statement of Mr. Roth follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Palmer. Thank you for your testimony.
        The Chair now recognizes Mr. Bragdon for his testimony.

                      STATEMENT OF TARREN BRAGDON

        Mr. Bragdon. Chairman, ranking member, and members of the
    committees, thank you.
        I am Tarren Bragdon, president and CEO of the Foundation
    for Government Accountability, a nonprofit research
    organization that primarily focuses on health and Welfare
    reform in the States, and in Washington, D.C.
        I have worked on this issue for about two decades, from
    when I was a Maine State legislator in the late 1990s, until
    now, where, at FDA, we are directly engaged in Welfare reform,
    including in SNAP, in more than 30 states.
        I am grateful for the committee's work. It is imperative
    that we find solutions to fraud and program integrity to
    protect the program for the truly needy, who rely on it, and
    the taxpayers who fund it. Today, nearly 40 million are on food
    stamps, and almost half are able-bodied adults, and this is
    where the fraud happens. As a Jacksonville, Florida, detective
    told me, no elderly or disabled person tried selling their EBT
    card during his sting operation.
        Some states are leading the way in protecting the food
    stamp program from fraud. At least 13 states are moving forward
    with laws and initiatives specifically designed to root out
    fraud, but it should be mandatory for all. Close to 20 states
    have put into place asset limits to make sure that only those
    without sufficient resources are on the program. All should.
    Food stamps is a federal program, almost all funded by federal
    money, and Congress is right to provide this oversight to get
    rid of fraud.
        My written testimony lists ten areas with recommended
    solutions, but I will just highlight the three most
    significant. One, broad-based categorical eligibility, or BBCE;
    two, real verification; and three, real-time income reporting.
        BBCE is the income and asset eligibility loophole that was
    created through regulation, but it allows people with incomes
    nearly double the poverty limit to be on food stamps simply if
    they are eligible for a TANF-funded non-cash benefit. Could be
    a brochure.
        In addition, it effectively waives the asset test. First,
    this loophole allows rich people, even millionaires, to become
    food stamp eligible. For example, this Minnesota millionaire,
    who was on the program. Tennessee has an asset test, and
    doesn't allow millionaires to be on food stamps. Why shouldn't
    New Jersey?
        Second, this is now the most common way to get onto food
    stamps. Therefore, since it doesn't matter what individual
    assets people have, states don't have to check on individual's
    assets for things like bank accounts, vehicles, homes, or other
    real property. And this makes it much easier to hide unreported
    income or other working members of the household.
        This loophole does not reduce errors, as promised, as GAO
    also concluded. This income and asset loophole should be
    curtailed, preserving food stamps for the truly needy who rely
    on it, those with low incomes and limited assets.
        Two, real verification of income assets and household
    members. Most states are short-changing this, and they are
    relying on self-attestation, or believe what I say on the
    application. This is particularly a problem for people who
    report zero income, because these applications are fast-
    tracked. Since no income was reported, there is nothing to
    verify. More than a third of all applicants report zero income,
    and no one checks.
        For example, as you heard Mr. Roth reference, this Maine
    woman, who didn't report her or her husband's income. The fix
    is states should be required to use reliable up-to-date, often
    state data, to quickly verify income assets and household
    members. Some states are doing this now, with success, but it
    is optional. And the House Farm Bill addresses both of these
    loopholes.
        The last is so-called simplified reporting. This allows
    only large changes in individual's incomes or households to be
    reported when it makes them totally ineligible for food stamps.
    Traditional reporting, or change reporting, is required for all
    changes to be reported to the agency within ten days.
        The idea was that this simplified reporting would have
    lower administrative costs, but in reality, admin costs for
    food stamps have doubled since 2001, and error rates are
    higher. States should use quarterly reporting, or change
    reporting, for able-bodied adults, in particular, and face-to-
    face interviews with able-bodied adults would also give states
    both another opportunity to spot fraud, but also to point
    recipients towards work and training to get out of poverty.
        So often we read stories about food stamp fraud. It is not
    just trafficking. It is happening in consistent, predictable,
    and large ways. Fraud is real, but it can be stopped, and
    Congress can lead the way. My testimony shows ten ways how, and
    I am happy to answer any questions.
        [Prepared statement of Mr. Bragdon follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Palmer. I thank the gentleman for his testimony.
        The chair recognizes Dr. Gundersen for his testimony.

                    STATEMENT OF DR. CRAIG GUNDERSEN

        Dr. Gundersen. Thank you very much for this kind invitation
    to testify this morning. It is an honor. I am Craig Gundersen,
    the Soybean Industry Endowed Professor in Agricultural
    Strategy, in the Department of Agriculture and Consumer
    Economics, at the University of Illinois.
        In addition, I am on the Technical Advisory Group for Feed
    America, the lead researcher on Feed America's Map the Meal Gap
    Project, a Round Table member of the Farm Foundation, a faculty
    affiliate of the Wilson Sheehan Lab for Economic Opportunities
    at the University of Notre Dame, and a research fellow at the
    Texas Hunger Initiative, at Baylor University. For over 20
    years, my research has concentrated on the causes and
    consequences of food insecurity and on the evaluation of food
    assistance programs.
        For over 50 years, SNAP has been a shining example of a
    successful government program. Of greatest importance, it has
    asked to reduce food insecurity in the United States, and it
    does. Study after study has demonstrated this success. By
    reducing food insecurity, research has clearly demonstrated
    that this leads to improvements in health, and reductions in
    mortality and healthcare costs.
        In addition, SNAP leads directly to improvements over
    multiple other dimensions of well-being, including through
    reductions in poverty, improvements in health, reductions in
    anemia, et cetera, et cetera.
        SNAP's success is achieved through the redemption of
    benefits at authorized food retailers, ranging from super-
    stores and large grocery stores, to military commissaries and
    farmers markets. This public-private partnership avoids the
    need to support a parallel government, food distribution
    bureaucracy, and helps retailers remain economically viable,
    especially in rural America.
        Given the profound success of SNAP, it is no surprise that
    this program has received such strong bipartisan support for
    decades. I could spend the full allocated time by covering in
    greater detail all the amazing things SNAP does, and has done,
    and will do for tens of millions struggling Americans, and in
    the process, reducing government expenditures in healthcare and
    other services.
        Instead, due to this hearing's focus, I will address the
    unfortunate perception that SNAP is a program beset with fraud.
    Without a doubt, one could tell anecdotes about fraud in SNAP,
    and these should be met with anger, and forcefully prosecuted.
    But, of course, we shouldn't make public policies based on
    anecdotes. Instead, we should carefully consider those
    safeguards in place to prevent fraud, and despite these,
    whether there is extensive evidence or fraud in SNAP.
        I stated in testimony before this committee in May of this
    year on a similar topic. There are two primary types of frauds
    that USDA has implemented safeguards against.
        The first is to prevent individuals from intentionally
    misrepresenting their household's financial resources in an
    effort to qualify for SNAP, or to increase their benefit
    levels. Individuals who are found guilty by their state of
    residence are banned from receiving SNAP for 12 months, and if
    this happens three times, for life.
        These safeguards have proven remarkably successful. In
    2016, only about 1 percent of SNAP recipients were found to be
    in violation of these rules, and consequently, they were
    punished accordingly.
        The second type of fraud is trafficking on the part of SNAP
    recipients and retailers. This occurs when retailers give cash
    rather than food to SNAP recipients in exchange for benefits.
    To prevent this, the USDA closely monitors SNAP redemptions and
    alerts the relevant authorities when trafficking is suspected.
    The introduction of EBT made this process easier and more
    effective than when paper coupons were used.
        In addition, the USDA has established extensive
    partnerships with local law enforcement to address trafficking.
    Like with fraud, the vigilance of law enforcement and the USDA,
    and the threat of serious penalties, has led to extraordinarily
    low rates of trafficking. In 2016, about 1.5 percent of SNAP
    benefits are trafficked.
        The primary lesson we can learn from current regulations is
    (a) they work, and (b) we should be careful about making
    changes that would hinder the success of SNAP. With respect to
    changes, we should be aware of ideas promoted in the name of
    program integrity that would undermine effectiveness.
        For example, shorter recertification periods would impose
    burdens on working families, who would then need to take time
    off work to recertify. Or, for example, putting client's
    pictures on EBT cards would hinder persons with disabilities,
    seniors, and those in multi-person households from using their
    benefits. In addition, checking photos in
        grocery lines puts an undue burden on cashiers, and
    lengthens checkout lines.
        SNAP works, in terms of improving the wellbeing of tens of
    millions of Americans in multip0le ways, and it does so while
    maintaining low rates of fraud and trafficking. I support
    efforts to continue current investments and the tools that USDA
    and states need to reduce fraud and trafficking. This is a
    critical important aspect of program oversight.
        To conclude, we should all be proud of the profound
    successes that SNAP has achieved over the past 50 years, and in
    the process, has become a model for other government services.
    It truly is a program that all of us can count on in our times
    of need.
        In some future hearing I hope to discuss with you all the
    exciting ways that SNAP can be made even better for Americans
    of all ages. In the meantime, I thank you all again for the
    opportunity to speak with all of you today, and I welcome any
    questions you all may have.
        [Prepared statement of Dr. Gunderson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Parker. I thank the witnesses for their testimony.
    Before we get into questions, there was an issue raised about
    whether or not this committee is investigating waste at the
    Pentagon. And we did have a hearing on that, and I must admit
    that I forgot, and it is even more embarrassing, because I was
    in the chair for part of it. But we held that hearing March
    21st, 2017, and identified $125 billion of potential savings at
    the Pentagon.
        And there is a report that the GAO put out this week on it
    that shows that the Department of Defense has missed their mark
    on what they agreed to do. And I think we are looking at doing
    a follow-up hearing on that in November, and we will encourage
    all the members of the committee to participate.
        With that, I now recognize Chairman Jordan for his
    questions.
        Mr. Jordan. Mr. Roth--thank you, Mr. Chairman. So let me
    start with you, how much were we spending on--how much were we
    spending on the SNAP program, the food stamp program, today?
        Mr. Roth. In the State of Maine?
        Mr. Jordan. Overall, just nationally. Do you know?
        Mr. Roth. I don't know. My unit strictly deals with the --
    --
        Mr. Jordan. Ms. Coffey, how much are we spending on the
    overall, do you know?
        Ms. Coffey. The latest results were about $46 billion.
    Probably the end of the year, the average has been around $60
    billion or so.
        Mr. Jordan. $60 billion. How much were we spending about 10
    years ago, do you know?
        Ms. Coffey. That, I don't know.
        Mr. Jordan. What are the numbers--how many recipients today
    in the food stamp program?
        Ms. Coffey. Approximately 41 million, give or take, on
    average.
        Mr. Jordan. Is that moving up? Is that trending up or
    trending down right now?
        Ms. Coffey. It's trending down right now.
        Mr. Jordan. What kind of decline from last year?
        Ms. Coffey. I don't have that specific information in terms
    of what the--because it is an average. Folks go on the rolls,
    come off the rolls. I just don't have that specific
    information.
        Mr. Jordan. What percentage of the 39, 40 million
    individuals, and I assume some of those are, you know, counting
    children, what percentage of recipients, let's just say it this
    way, have been found guilty of some kind of fraud?
        Ms. Coffey. So that would be difficult for me to respond
    to, simply because we focus on the retailer side of the
    investigations, so our statistical data is really more towards
    retailers ----
        Mr. Jordan. Who can answer that? Mr. Bragdon, can you
    answer that? What percentage of this 40 million population have
    been found guilty of fraud?
        Mr. Bragdon. We don't know that, Mr. Chairman. I think this
    points to the lack of reporting that this committee and this
    Congress has on just basic information about the program.
        Mr. Jordan. Well, I read some number of 11 percent. Is that
    fair? I read it in our ----
        Mr. Bragdon. It depends on what you're looking at. If you
    are looking at individuals, are they the payment error rates,
    or if you are looking at trafficking ----
        Mr. Jordan. Let's go to Mr. Roth then. Mr. Roth, in your
    state, what percentage of the food stamp recipients are found
    guilty of some kind of fraud?
        Mr. Roth. Again, I can't provide that number. I can only
    tell you how many people we catch in a certain calendar year
    for committing fraud. These are allegations we bring forth for
    prosecution.
        Mr. Jordan. What percentage is that?
        Mr. Roth. Again, I don't have those numbers. We deal
    strictly with the investigation. That would be a question
    perhaps for our eligibility people.
        Mr. Jordan. This might be important information for us to
    have if we are doing a hearing. I probably would kind of like
    to know how many have been found guilty of some kind of fraud,
    which would beg the next question, once they have been found
    guilty of some kind of fraud in the system, are they allowed to
    continue in the system, or are they kicked off?
        Mr. Roth. In Maine, we have--the criminal prosecution goes
    through, and there is usually a penalty of that. We also then
    have a disqualification. If a person is found guilty, they are
    disqualified for a year. Second conviction, 2 years. Third
    time, lifetime. So we follow through with that in Maine.
        Mr. Jordan. Someone could be found guilty in a court of
    fraud, defrauding the system, defrauding taxpayers, but they
    are allowed to get back on the program?
        Mr. Roth. That is correct.
        Mr. Jordan. Well, that seems kind of strange, too.
        Ms. Coffey?
        Ms. Coffey. So that is a little bit different on the
    retailer side. If the retailer is found to have committed fraud
    and--retailer is found to have committed fraud and trafficking
    through EBT benefits, they are disqualified from the program.
    They are prosecuted and disqualified from the program.
        Mr. Jordan. So would a work requirement help us cut down on
    the percentage of fraud, even though we don't know what that
    is. Mr. Bragdon, do you think a work requirement would help us
    deal with fraud?
        Mr. Bragdon. I think it would, because individuals would be
    working and getting themselves out of poverty and off the
    program. And so if you have fewer people on the program,
    because the need is less, then you would have less fraud.
        Mr. Jordan. Yeah. Mr. Roth, do you think that is--a work
    requirement would help? You guys have one in your state, right?
        Mr. Roth. Yes. Again, I can't comment on that. We deal
    strictly with the investigations. That is something that our
    policy people work on.
        Mr. Jordan. Well, the example you gave, you said there was
    someone who was deceased whose card was being used. It seems to
    be if that deceased person, prior to being deceased, was able-
    bodied, and they were working, that would prevent fraud in that
    situation at least, right?
        Mr. Roth. Yeah. And I can speak to the fact that, you know,
    a lot of these people that we investigate and prosecute are
    actually working. They are just not reporting that work to us.
        Mr. Jordan. All right. Mr. Bragdon?
        Mr. Bragdon. I can speak to, I live in Florida. The State
    of Florida had about half-a-million childless adults on food
    stamps, and restored its work requirement in January of 2016.
    Today, enrollment for those childless adults is down 94 percent
    as a result of that work requirement.
        Mr. Jordan. Yeah. It seems to me it works. Seems
    commonsense, so it is certainly something we have to get done,
    and I wish the Farm Bill would pass with that requirement in
    it. With that, Mr. Chairman, I yield back.
        Mr. Palmer. I thank the gentleman.
        The chair now recognizes the ranking member, Mr. Raskin,
    for 5 minutes for his questions.
        Mr. Raskin. Thank you very much.
        I actually want to start by following up on Mr. Jordan's
    line of questioning. I don't know where the 11 percent number
    comes from, but if 10 or 11 percent of 40 million people were
    being convicted of fraud under the program, if my math is
    right, that would be more than 4 million people.
        Is there anything like that number of people being
    convicted of fraud under the program, Dr. Gundersen?
        Dr. Gundersen. No, there is not. I mean there is oftentimes
    confusion between error rates, which can arise, because a case
    worker errs, or people making relatively minor mistakes in
    their statements about their income, and other things. That is
    one--and that may be where that 11 percent-- but even that
    sounds high to me.
        If you look at cases of fraud, as defined by the USDA, as
    defined by them, it is about 1 percent.
        Mr. Raskin. Okay. Ms. Coffey, let me just come to you. Did
    I hear you just say that the most common form of fraud is
    retailers giving people money instead of food, and then they
    get some kind of kickback, or that they keep a percentage of
    it? Is that the most common form of fraud we are finding?
        Ms. Coffey. That is correct.
        Mr. Raskin. Okay. And do we have any tabulation of how many
    cases of that are taking place?
        Ms. Coffey. I can only speak to what we have reported on.
    We had about 897 over the last 5 years of retailer fraud cases.
        Mr. Raskin. Uh-huh. So the most common form, there is
    around 900 cases over the last 5 years. So that is something
    less than 200 cases per year.
        Ms. Coffey. On average.
        Mr. Raskin. Is that right? So what happens to the retailers
    that are doing this? Because obviously it is a rip-off of the
    system, and it shouldn't be taking place.
        Ms. Coffey. So in those instances where we have identified
    that the retailer has engaged in food stamp fraud, trafficking
    of benefits, they are prosecuted. And when they are prosecuted
    they receive imprisonment potentially, restitution. There are a
    number of sanctions that are issued by the court when that
    occurs. And then ultimately, they are disqualified from
    participating in the program by FNS.
        Mr. Raskin. But their store, in other words, no longer
    could participate.
        Ms. Coffey. That is correct.
        Mr. Raskin. I see. Okay. Can you just describe--give us a
    prototypical case of how this would--how this fraud takes
    place?
        Ms. Coffey. So normally we receive allegations that come in
    from a number of sources. We also have an OIG hotline. We get
    referrals from law enforcement officials, other agencies, the
    public telling us of potential fraud. We will initiate an
    investigation of a particular retailer. Obviously, data
    analytics plays a significant role in us being able to identify
    where there is potential fraud.
        We investigate. We will do a number of investigative
    techniques, which I probably won't get into here.
        Mr. Raskin. Mm-hmm. But basically, are they printing it out
    as though somebody had just bought groceries, but in reality,
    they are giving them money at a discount, so they can keep
    money, is that ----
        Ms. Coffey. Basically, the person will walk into the store,
    the card will be swiped, cash will be given to that recipient,
    and the full amount of the swipe of the card is redeemed back
    from the government.
        Mr. Raskin. Okay.
        Ms. Coffey. So if they do a $100 swipe, the person may get
    $50. The benefit from the government is $100 to the retailer.
        Mr. Raskin. Gotcha.
        Dr. Gundersen, don't we have work requirements now?
        Dr. Gundersen. So we do have work requirements now across
    different dimensions. But if I may, though, I do want to say
    there is this perception that SNAP discourages work. That
    perception is false, is because for each additional dollar you
    earn with SNAP you only lose--I am sorry. With each additional
    dollar you earn in earnings, you only lose 24 cents in
    benefits. So people may not be working for a number of
    different reasons, but the existence of SNAP, as study, after
    study, after study has shown, does not discourage work.
        So thinking about work requirements in that context of SNAP
    begs a question about whether or not it really is a problem.
    But I will also say that there are work requirements in many
    states with respect to able-bodied adults without dependents.
        Mr. Raskin. I am reading that 93 percent of SNAP spending
    goes directly into the purchase of food. But if we added more
    administrative requirements, then that is going to divert money
    away from food, and put it into more bureaucracy. Can you
    describe--I mean is that intuition correct, that if we impose
    more massive bureaucracy on the process, then we are diverting
    money from getting food to people.
        Dr. Gundersen. Right. So any bureaucratic hurdles that are
    put in place is, as with any bureaucratic hurdles, will
    discourage people from participating in the program. And
    research has shown that those who would be most discouraged by
    these bureaucratic hurdles are those who are most in need, and
    will be least likely to be able to get over these bureaucratic
    hurdles.
        Mr. Raskin. Why is that?
        Dr. Gundersen. Oftentimes people who with very low
    education levels, or chaotic homes, or other issues, or their
    children are having difficulties, or people with disabilities,
    mental health challenges may have difficulty dealing with this.
    So as you make the bureaucratic hurdles higher, and higher, and
    higher for individuals, you put more and more people into
    hunger and food insecurity. And moreover, it is the most
    vulnerable in our society who will be hurt by this.
        Mr. Raskin. My time is up. I yield back, Mr. Chairman.
    Thank you.
        Mr. Palmer. I thank the gentleman. The chair recognizes the
    vice-chairman of the Intergovernmental Affairs Subcommittee,
    Mr. Grothman, for 5 minutes.
        Mr. Grothman. Thank you.
        I will ask any one of you. People, of course, aren't
    supposed to sell their SNAP benefits, but we all know they do.
    We have people from four different places around the country
    here, I guess, three different places around the country. Could
    you all tell me how much SNAP benefits are sold for in your
    area? We will start with Mr. Gundersen, and work our way
    across. How much in the Champaign-Urbana area do you get when
    you sell your SNAP ----
        Dr. Gundersen. For various reasons there is a lot of
    variability across the country. What we see is generally ----
        Mr. Grothman. There's generally no variability, but go
    ahead.
        Dr. Gundersen. It is generally about 50 cents on the dollar
    is approximately what they are being sold for.
        Mr. Grothman. Okay. Mr. Bragdon?
        Mr. Bragdon. The easiest way to find this out is just going
    on Craigslist, because people have ads to sell them, and it is
    about 50 cents on the dollar. But you can look up every
    location.
        Mr. Grothman. In Maine, what do they go for?
        Mr. Roth. We have seen 50 cents on the dollar. And the
    market I talked about in Portland, that was about 20 cents on
    the dollar, so it varies. But generally, 50 cents on the dollar
    is a good benchmark. Yeah.
        Ms. Coffey. Yes. Generally, what we see is 50 cents ----
        Mr. Grothman. Yeah.
        Ms. Coffey.--on the dollar.
        Mr. Grothman. Everywhere I ask in Wisconsin, they are
    selling them 50 cents on the dollar.
        Can we draw any conclusions from the fact that the
    necessity of some of these benefits are whether people are
    getting them that shouldn't need them, that you are selling
    food, in essence, for 50 cents on the dollar? Mr. Bragdon, can
    we draw any conclusions from that?
        Mr. Bragdon. I think if somebody is selling their benefits
    for cash on the dollar, there is a question of whether or not
    they need the benefits for food, or whether they are
    prioritizing getting cash for some other purpose over buying
    food for themselves and their family.
        Mr. Grothman. Okay.
        Next question. This is for Dr. Gundersen. You said that
    SNAP was not discouraging people from work, because it only
    took 24 cents off of every additional dollar you have. But I
    want to point out there are a lot of programs out of there. We
    have an earned income tax credit that disappears the harder you
    work.
        We have low-income housing. The harder you work, the more
    rent you have to pay. Daycare. Just taxes itself. You know, we
    have the Social Security taxes right from the top. You know,
    you are taking money away.
        And when you add them up, don't you easily get, or can you
    easily get to situations in which for every, you know, work
    expenses, too, you are taking 70, 80 cents for every additional
    dollar you work. Don't you think that discourages people from
    working?
        Dr. Gundersen. So I think it's worthwhile in this context
    to separate out the effect of SNAP on work versus the effect of
    other programs on work. You know, as an economist, this is what
    we do all the time, is to figure out the tax rates on various
    things, and whether or not it impedes work.
        SNAP itself does not discourage work, as I mentioned ----
        Mr. Grothman. How about all of them together?
        Dr. Gundersen. That is another question. I can't speak
    exactly, but I do--you know, at certain levels, there can be
    very high tax rates, because of the way other programs are
    being run. So I guess I would say is that if that is the case,
    and there are some programs which encourage work, whether it be
    EITC. There are some programs that don't discourage work, like
    SNAP. There are other programs that may, especially with the
    so-called cliff, that they may discourage work. But SNAP ----
        Mr. Grothman. I'll point at EITC, that is one you said
    doesn't discourage work. That is phased out, depending on how
    many people in the family. And it most definitely discourages
    work.
        I would strongly encourage you, Dr. Gundersen, when you get
    back to Champaign-Urbana, to talk to people who hire people in
    the $9- to $14-an-hour range, and you will have no problem
    finding people who are turning down raises, that sort of thing,
    because it discourages work.
        But I will come back to another question. And my good
    buddy, Congressman Jordan, kind of alluded to this already. We
    are right now in a situation in which we are as close to full
    unemployment as I have seen in my lifetime. Okay? Nevertheless,
    the number of people on SNAP benefits is up 50 percent. It is
    gone down lately, but it is up 50 percent over where it was 10
    years ago.
        Now normally one would say if we have the strongest economy
    I have seen in my lifetime, the need for SNAP ought to be the
    lowest. Could anybody give an explanation as to how there could
    be 50 percent more people on SNAP than, say, 12 years ago, than
    now? Sure, Mr. Bragdon.
        Mr. Bragdon. I think if you look at some of these loopholes
    identified in my testimony, where you essentially widen the
    front door, and don't check on individuals' eligibility, you
    are going to have a lot of people enter, and then stay on the
    program for a long period of time. Because once you are in,
    there is very little checking on an ongoing basis.
        You also have more than a third of individuals who report
    zero income not being verified. They are fast-tracked. I think
    the tragedy is we want people to get out of poverty, not make
    it simple for them to stay in poverty. And that is what could
    happen with a strong work requirement.
        Mr. Grothman. I am always interested in you, Mr. Gundersen.
        Dr. Gundersen. Okay. So I mean there has been ----
        Mr. Grothman. Why is it ----
        Dr. Gundersen. There is extensive research that has been
    done by many economists, including myself, on just this topic,
    as to why the SNAP caseloads rose. The main thing is that
    while--I should also note that they have been declining the
    past 2 years. The strong economic growth of the past 2 years
    has really led to sharp declines in SNAP, the number of SNAP
    participants.
        We have to remember, though, is that the Great Recession
    was the largest recession we have had perhaps since the Great
    Depression. Substantial increases then. But the benefits of the
    end of the recession didn't accrue to people for a long time,
    and hence, caseloads remained high.
        However, if the current economic expansion continues, in 2
    years we will find caseloads roughly what they were 12 years
    ago. I have no doubt about that. Study, after study, after
    study has shown this.
        Mr. Grothman. Okay. I guess my time is up, but thank you
    for indulging me with an extra 30 seconds.
        Mr. Palmer. I thank the gentleman for his questions. The
    chair recognizes Mr. Krishnamoorthi for 5 minutes for his
    questions.
        Mr. Krishnamoorthi. Thank you for allowing me to make some
    remarks and additional questions. First of all, Ms. Coffey, can
    you tell us what the decline has been in the SNAP rolls over
    the last couple of years?
        Ms. Coffey. I don't have that specific information, but I
    know, just from our investigative perspective, that we have
    seen a decrease in our investigative resources. As the
    population of individuals who are participating in SNAP
    increased over the last few years, we saw an increase in our
    investigative resources working those investigations, and we
    are starting to see a downward trend at this time in the amount
    of percentage of work that we have relative to SNAP.
        Mr. Krishnamoorthi. Okay. Dr. Gundersen, can you comment on
    that? You started talking about it, but what has been the
    decline in the rolls in the last 2 years?
        Dr. Gundersen. I mean over the past 2 years I believe they
    have declined, by total expenditures, maybe 5 to 10 percent,
    and the number of people on the caseload has declined by
    roughly--by about approximately that same number. So over the
    past few years there has been these substantial declines, and
    we--we know that it is going to go down again.
        The other thing is we need to be careful about the 50
    percent of what it--increase. I mean there has also been
    population growth over this time period, so what the
    appropriate comparison would be, would be the number of
    participants amongst eligible households in comparison at two
    different time periods. That would be the more appropriate
    comparison.
        Mr. Krishnamoorthi. And do you know the numbers for that?
    What is that comparison?
        Dr. Gundersen. I mean the proportion out of people who are
    eligible for SNAP has remained relatively steady over this time
    period. There hasn't been major increases in the proportion of
    eligible households participating. What has mainly driven the
    increase is there is a lot more people who are eligible for the
    program for various reasons, and that is what has been driving
    the--we had a Great Recession, and then for a long time the
    situation improved for millions of Americans.
        Mr. Krishnamoorthi. Ms. Coffey, what is the current work
    requirement for SNAP?
        Ms. Coffey. That is not something that I am able to comment
    on, in terms of--we handle the investigation side of the house.
    My colleagues and I have done work in that area, but we do not
    address that. For our purposes, we focus specifically on
    whether or not an individual is trafficking their benefits, or
    other fraud.
        Mr. Krishnamoorthi. Dr. Gundersen, isn't there a work
    requirement today for SNAP recipients, even before any
    additional work requirements are imposed, and what is it?
        Dr. Gundersen. So I mean currently it is that for able-
    bodied adults without dependents, between the ages of 18 and
    50, if they are not working for any three-month time period
    within 36 months, or not in employment, or training, or
    something else, are considered to be ineligible for SNAP. So
    there are work requirements basically in the entire country. Of
    course, state and local areas can get waivers for this, but
    there are work requirements already being imposed.
        Mr. Krishnamoorthi. Okay. So if there was any supposition
    that there aren't requirements, that is, in fact, untrue. There
    are work requirements today, and the fraud rate I think you
    said could be as low as 1 percent. And what do you have to back
    up that percentage?
        Dr. Gundersen. So two things about that. First, I really
    want to dispel this notion that work requirements are in any
    way connected to fraud. Those are two completely different
    issues, and I think we--if we want to have a discussion about
    work requirements, fantastic. But it is very different from
    what is going on with fraud. Those are two--and that in terms
    of the information about the extent of fraud in terms of the
    percentages is, I just got that from previous testimony, where
    it is about, you know, about--up to 1.5 percent of cases of
    fraud. As fraud is appropriately defined as people misusing
    their benefits, it is about 1.5 percent.
        Mr. Krishnamoorthi. Okay. So if we currently have work
    requirements, and the fraud rate may be as low as 1.5 percent,
    then, you know, Dr. Gundersen, can you give us an explanation
    of what you believe to be motivating the desire to impose
    further work requirements in SNAP?
        Dr. Gundersen. I don't know. I don't know why we want
    further--leaving aside the issue of work requirements, even if
    we impose work requirements, that is not going to make any
    difference in terms of fraud rates at all. So they should be
    two completely ----
        Mr. Krishnamoorthi. Yeah. Why do you think they are
    separate issues?
        Dr. Gundersen. Why do I think they are separate issues?
        Mr. Krishnamoorthi. Yeah.
        Dr. Gundersen. Because there is no evidence that imposing
    or not imposing work requirements is at all connected to the
    extent of fraud. I haven't seen any evidence that those that
    would have to face work requirements are any more or less
    likely to commit fraud. In other words, I don't know where this
    is coming from. It is baffling to me.
        Mr. Krishnamoorthi. Okay. How about this? What would you do
    to further limit fraud in the system? We don't want any fraud
    in SNAP, whatsoever. So what would you do?
        Mr. Krishnamoorthi. Keep on going along the path we are
    going on. It is all great that everybody has talked about some
    of the neat things they are doing. Let's continue along those
    paths.
        We should also note, SNAP is a model. We should be having
    these discussions about how great SNAP is, and maybe some other
    programs could learn from SNAP, including the IRS, or
    something. Yeah.
        Mr. Krishnamoorthi. Okay. But you said keep doing what we
    are doing. What are you talking about? What are you referring
    to?
        Dr. Gundersen. Well, some of the efforts--for example, one
    of the advantages, now that we are using EBT, is it is more
    easy to track when you see anomalies in stores, in terms of
    their redemptions, which may be an example of trafficking. Or
    with more and more information available online regarding
    people's salaries, regarding people's housing costs in an area
    is that that is what is going on.
        I should also note, one thing I want to come back to is,
    when people at zero income, that means they have zero net
    income. It does not mean they have zero gross income,
    necessarily, and it is really important to make that
    distinction. But there is many ways to get information about
    people.
        Mr. Krishnamoorthi. Thank you. Thank you, Mr. Chair.
        Mr. Palmer. I thank the gentleman for his questions.
        The chair now recognizes the gentleman from Michigan, Mr.
    Mitchell, for his questions for 5 minutes.
        Mr. Mitchell. Thank you, Mr. Chairman.
        It may be tough to get it all in 5 minutes, so help me
    here, Mr. Bragdon, and if you can be brief.
        How many states last year had a waiver from the work
    requirement?
        Mr. Bragdon. It is important to look at it at the county
    level. And about 37 ----
        Mr. Mitchell. Right.
        Mr. Bragdon.--percent of Americans are--jobless adults on
    food stamps are waived from any work requirement. Almost the
    entire State of Illinois, where the Doctor is from, almost the
    entire State of California. So you have wide swaths where there
    is low unemployment, but the state chooses to waive ----
        Mr. Mitchell. Michigan had a state-wide waiver for ----
        Mr. Bragdon. They did, but they are restoring it now.
        Mr. Mitchell. They are just restoring it now.
        Dr. Gundersen, we are going to have fun, because I went to
    school in economics and public policy. Michigan State. Not
    Illinois.
        I would agree with you that work requirements and fraud
    really don't have much of a relationship. So we have something
    that we agree on. But let's start with it is a cost to the
    taxpayer, whether the people aren't working, and could be, and
    should be, or where there is fraud, it is still a cost to the
    taxpayer, which often matters here.
        You need to explain to me why it is that you don't believe
    work requirements will have an impact, when, in fact, the
    unemployment rate in Michigan, or nationwide, let's take that,
    is 3.9 percent, and Michigan is about 4.2.
        The highest percentage of people not participating in the
    labor force are able-bodied men, 25 to 45, 50. By the way,
    before we get to stereotypes, mostly Caucasian males. So
    explain to me how it is that a work requirement saying if you
    can work, you should work, if you need skills, you should get
    training, why that isn't something that makes sense to you as
    an economist.
        Dr. Gundersen. So I say this for a couple reasons. First of
    all, I want to get back to this thing. You know, we are all
    taxpayers here. We have to remember that SNAP recipients also
    are taxpayers.
        Mr. Mitchell. Dr. Gundersen, I have 5 minutes.
        Dr. Gundersen. Okay.
        Mr. Mitchell. I asked you a question. I would appreciate it
    if you answer it.
        Dr. Gundersen. No. No. I was just clarifying this thing
    about the taxpayers.
        So why shouldn't we have this is that work requirements are
    that, the ones that we have in place now is, that, for whatever
    reason, some people are or are not working. The point I want to
    make about this, though, is that if I truly believe that SNAP
    was discouraging people from working ----
        Mr. Mitchell. The question isn't whether they are
    discouraging. That is the wrong assessment to make. The
    question is whether they are--there is an expectation to work,
    and there is an incentive to work, not whether they are being
    discouraged.
        Our systems, our support systems--and Mr. Krishnamoorthi is
    leaving, but I know we have talked about it, is that we should
    not say are we doing something to discourage people from
    working. We should say it is an expectation to work. This
    program is not intended as a lifestyle for long-term.
        Dr. Gundersen. Well, if I could--it is not a lifestyle for
    the long-term. The average length of time on SNAP is 9 months.
    So in other words, most people cycle on and off the program.
        Mr. Mitchell. Multiple times.
        Dr. Gundersen. Right. That is true. Off work, on to work,
    and these are the things that--so rather or not work-- and we
    still--we already have work requirements. And I am not making
    the argument we should get ----
        Mr. Mitchell. Well, we have work requirements, but as Mr.
    Bragdon noted, 37 percent of the country last year weren't
    covered by work requirements for one reason or not, despite
    historically low unemployment rates.
        Second, the work requirements we have don't apply to a
    great number of people, many of which would fit in the category
    you expect to work, able-bodied working adults that are young
    males. So while we have them, they are not working.
        Dr. Gundersen. Right. You know, 37 percent of counties is,
    we would have to look carefully at each of those counties. If
    you look at Illinois ----
        Mr. Mitchell. I think he said 37 percent of the population.
        Dr. Gundersen. Thirty-seven percent of the population. So
    it is worthwhile to have a discussion why is a particular
    county not getting--why is a particular county getting a
    waiver, and other counties not. That is definitely something we
    should be pursuing.
        Mr. Mitchell. Well, then let us not say, as we testify, or
    answer questions, that we have work requirements, so they don't
    matter, because the reality is last year 37 percent of the
    population on SNAP were not affected by work requirements under
    the current law. That is fact.
        Dr. Gundersen. I am not denying that. No.
        Mr. Mitchell. And it matters. Let me change topics, because
    I have one minute left, so we will let--if I can.
        We make a distinction, which I think is artificial, between
    the error rate and fraud. The question is, I guess, what do we
    do with states, Ms. Coffey, that have some extraordinary error
    rates? What is the penalty for states? Because ultimately, it
    still costs the taxpayers. Whether it is fraud or whether it is
    errors, the reality is it is money out of our pocket that
    should not be.
        Ms. Coffey. In terms of what the states--what the penalty
    is for the states, that is not something for investigations
    that we necessarily focus on. That is something that my audit
    colleagues have had--work that has been completed relative to
    the error rates, with respect to SNAP. And the state ----
        Mr. Mitchell. Let me stop you a second. There are some
    states, I've noted, that have some significant error rates.
    They are not minor. But we don't have any process by which to
    take action with the state in terms of a significant percentage
    and ongoing error rates? It is, ``Gee, we hope you do better?''
        Ms. Coffey. I don't believe that is the case. I just can't
    articulate what that process is at this time.
        Mr. Mitchell. Could you ask back at your agency to get the
    report to the committee ----
        Ms. Coffey. Absolutely.
        Mr. Mitchell.--what the process is for dealing with states
    that fail to, under the current regulations even, properly
    mange their program and error rates? Because, in fact, there
    should be, in some manner, sanctions upon states that fail to
    manage their program, because it is other people's money. That
    is not acceptable outcome.
        Ms. Coffey. Absolutely, I will do that, sir.
        Mr. Mitchell. Thank you for your consideration, Mr. Chair.
    I yield back.
        Mr. Palmer. I thank the gentleman for his questions. The
    chair now recognizes the gentlewoman from New Jersey, Ms.
    Watson Coleman, for her questions.
        Ms. Watson Coleman. Thank you, Mr. Chairman. I take an
    opportunity to contextualize our being here today.
        I do have some information that might be helpful. In 2018,
    fiscal year 2018, approximately 40,834 people were on SNAP,
    representing 20,000-plus thousand--million--I'm sorry--million,
    let us talk about million, families, at a total cost of
    $46,253,741,494, $125.88 per person, represents, assuming three
    meals a day, about $1.50 an hour. Just want to contextualize
    this, because we are having such a long hearing on this.
        Because at the very same time this--my republican
    colleagues in this Administration offered an unprecedented tax
    cut bill that represented 83 percent of the benefit,
    representing more than $84 billion of money going to less than
    1 percent of the people in this country. And now we are
    proposing, we understand, even an additional tax incentive to
    ensure that those very same people get $105,000 more each year.
    I just want to contextualize that, because I think there is an
    absurdity in this undertaking that we have here today.
        In May, there was a report that was done and submitted to
    the U.N. by an American, actually, who said that the United
    States has the highest rate of youth poverty, infant mortality,
    incarceration, income equality, obesity among all countries in
    the developed world, and as well as 40 million people living in
    poverty.
        So there is no question about whether or not individuals
    who are on SNAP can work, do work. The issue is that if they
    get a chance to work, they might have to work six jobs in order
    to make enough money not to qualify for SNAP. They are still in
    poverty.
        And it says that the policies here, this is Mr. Austin's
    findings, over the past year seem deliberately designed to
    remove basic protections from the poorest, and punish those who
    are not in employment, and make even basic healthcare into a
    privilege, as opposed to a right. It just seems to see where
    our priorities are, they certainly aren't for the everyday
    working families, hard-working families, and poor families, and
    disabled families. They are for the very, very wealthy. And the
    hypocrisy of that is overstated in this hearing today.
        Not only do we have how badly we are treating Americans,
    but we have found that over the weekend the Department of
    Homeland Security announced a proposed draft regulation that
    targets poor immigrants seeking a better life. This rule will
    deny green cards to immigrants trying to provide food for their
    families with SNAP assistance. That is about $1.50-some-cents a
    meal, given the possibilities of having three meals a day per
    person.
        My republican colleagues would like to focus in this
    hearing a flaw within the SNAP program. It is imperative that
    we discuss the implications of the proposed rule.
        I want to thank you for your testimony, because you are
    talking about a whole range of issues, from the fraud that
    takes place from the individual perspective, the fraud that
    takes place from the provider's perspective, the store, and the
    errors that are made in the system. And this all adds up to
    less money then is given to the very, very, very wealthy in
    this country.
        But the proposed rule as it relates to immigration--our
    immigration system to benefit the rich, crowding out so many
    who have long contributed to America's vivity. This proposed
    rule would force families to make impossible choices, the
    choice between staying together in the country they already
    call home, and providing food, healthcare, housing, and other
    necessities to their loved ones. Families on Medicaid, SNAP,
    Medicare, Part D, or public housing families will face new
    hurdles to getting permanent residency.
        So let us put this hearing in context. Let us understand
    that my republican colleagues and this republican
    administration doesn't give a good damn about those who are the
    neediest in our country, the 90 percent of the hard-working
    people that try to make the ends work, those who can't work
    because of disabilities, or for other reasons, those who need
    to be able to provide food for their children. They don't give
    a damn about them.
        They give a damn about the 1 percent, the very, very, very,
    very hungry, greedy wealthy. They are not asked to create not
    one damn job, or not go to work for not one damn day. They just
    need to be rich, and if they are rich, they will be
    enfranchised even more by this republican-controlled Congress,
    and this administration.
        This hearing should never even be taking place today, with
    all the priorities that we have at stake right now, that fall
    under the jurisdiction of the Oversight Committee. Give me a
    break. America, pay attention.
        I yield back.
        Mr. Palmer. The chair recognizes the gentleman from North
    Carolina, Mr. Walker, for his questions.
        Mr. Walker. Thank you, Mr. Chairman. I think that last, I
    don't know what it was, but I think it was damn preposterous.
        Let's look at the facts here. Mr. Tarren, I am going to
    come to you in just a second.
        In North Carolina, 2016, we had 2,000 people that were
    recipient or disqualified, because of fraud, and we lost over
    $4 million. So I want to address that a little bit, but I
    want--I actually want to start with Dr. Gundersen, kind of
    clear a couple things up here.
        With Representative Mr. Mitchell, in your testimony there,
    I believe you said that within 2 years these numbers would go
    down for people that were on the SNAP program. Is that what you
    are saying?
        Dr. Gundersen. I am saying given current trajectories, if
    the economy stays strong, and the current trajectories that we
    are seeing with this, as I expect, SNAP caseload will continue
    to decline over the next 2 years. All the evidence regarding
    the connection between a strong economy and SNAP caseloads will
    continue to hold, in my opinion.
        Mr. Walker. So you are saying due to the strength of the
    economy, if it stays as strong as it is right now.
        Dr. Gundersen. Right. A strong economy is critical.
    Research has clearly demonstrated that the main driver of SNAP
    caseloads is the economic health.
        Mr. Walker. Yeah. I am glad to hopefully continue the
    policies that keep that economy strong with our team here. The
    problem is, is that we have seen since 2001 the increases of
    SNAP recipient programs have gone from 17 million to right at
    42 million. That should be concerning. And listen, we are not
    coming at this from a position of judgment. My question to you
    is: How do you measure the success of a program?
        Dr. Gundersen. So I measure a--here is how we, as
    economists, measure the success of a program, is we compare
    participants with eligible non-participants. Are people better
    off over multiple different dimensions if they get SNAP, as
    opposed to if they are eligible and not receiving SNAP.
        And as I mentioned in my testimony, study after study has
    demonstrated how successful SNAP is at achieving that goal.
    That is how we define the success of SNAP. And it is one of the
    most well-researched programs out there in literature.
        The other thing I should note is that I agree. I think it
    is a problem that more people are receiving SNAP. It is bad
    that our economy is not--that not everybody is able to have a
    high enough income that they can't be on the program. I agree.
    But I also agree that I am glad that SNAP is there, given all
    the proven benefits of it, and let's hope with the continued
    economic strength those caseloads will fall.
        Mr. Walker. My concern is that your perception as well as
    many in the federal government is that we measure the success
    of a program by how many people we are adding to it, as opposed
    to how many people we are transitioning off. Isn't that the
    ultimate goal in all of this?
        Dr. Gundersen. The ultimate goal in all of this in America
    is that nobody would need SNAP. I am in complete agreement. I
    am not in Washington, D.C. I am at University of Illinois.
        Mr. Walker. I see the sign.
        Dr. Gundersen. I do not define the success of a program as
    to how many people are on it. That is not how ----
        Mr. Walker. But if we are unwilling to make the changes
    necessary to transition people off, specifically able-bodied
    adults, and others, despite the testimony that you just heard,
    nobody is going after people with disabilities, or anything of
    that nature, gross exaggerations again.
        Mr. Bragdon, the pilot results from five states show how
    successful a state-to-state data-sharing program. I know you
    have done some research on this, how it can be successfully
    reducing improper payments, and saving states and federal
    taxpayers hundreds of millions of dollars. Based on these pilot
    results and other available data, do you consider implementing
    a program such as the NAC, or the National Accuracy
    Clearinghouse, a priority, in order to reduce recipient SNAP
    frauds, specifically dual participation?
        Mr. Bragdon. Yes. And USDA estimated that it would save a
    billion dollars. I think this is why it was a priority in the
    House Farm Bill.
        Mr. Walker. Okay. What do you think the drawbacks would be,
    if any, to implementing this program on a nationwide scale?
        Mr. Bragdon. I don't think there are drawbacks. I think it
    would require states to change how they do business, but not
    impose an administrative burden. We haven't seen that from the
    pilot states, so it has been more difficult to do then.
        Mr. Walker. Mr. Roth, I do have a question for you. Earlier
    this year I introduced the SNAP Abuse and Fraud Prevention Act
    of 2018 that would require the USDA to implement the National
    Accuracy Clearinghouse on a nationwide basis to limit
    interstate dual participation in SNAP. Is dual participation in
    SNAP a problem in Maine?
        Mr. Roth. It is. It is not looked at through my unit. We
    just handle the criminal investigations and overpayments, but
    there is a unit within the state that does that. They compare
    out-of-state transaction use, and they do catch those people,
    so to speak, quite regularly.
        Mr. Walker. And the same question to you, would the
    drawbacks to implementing this program, do you anticipate any?
        Mr. Roth. I am not a policy person, so I couldn't comment
    on that, but I see it as, you know, certainly something that we
    would be interested from an investigative standpoint.
        Mr. Walker. Thank you, Mr. Chairman. I yield back.
        Mr. Palmer. I thank the gentleman.
        The chair now recognizes the gentleman from Pennsylvania,
    Mr. Cartwright, for his questions for 5 minutes.
        Mr. Cartwright. And I thank you, Chairman Palmer.
        Well, I want to start with you, Dr. Gundersen. I wrote down
    what I thought you said. This is a hearing about SNAP fraud,
    right? That is the title of the hearing, SNAP Fraud,
    Supplemental Nutrition Assistance Program Fraud. And what I
    thought you said, Dr. Gunderson, is something that I strongly
    agree with, that fraud should be met with anger, and forcefully
    prosecuted. Did you say that?
        Dr. Gundersen. Yes, I did.
        Mr. Walker. Mr. Bragdon, do you agree with that?
        Mr. Bragdon. I do.
        Mr. Walker. All right. We are off to a good start.
        So what I found was that there was recently an article in
    Mathematica Policy Research, actually from this month,
    September 6, 2018, that said that, ``New work requirements on
    SNAP food recipients would cause 2 million participating
    households to lose their eligibility for SNAP. Among those
    households, 34 percent include senior citizens.''
        And Dr. Gundersen, what would putting senior citizens to
    work do to combat SNAP fraud?
        Dr. Gundersen. As I indicated earlier, is there really is
    no connection between fraud ----
        Mr. Walker. So nothing.
        Dr. Gundersen.--and work requirements. So ----
        Mr. Walker. So nothing.
        Dr. Gundersen.--it is an ancillary issue. And I think ----
        Mr. Walker. Nothing, right?
        Dr. Gundersen. It would have no impact on fraud.
        Mr. Walker. Okay. And then it says, ``Twenty-three percent
    would include children.'' What would putting children to work
    do to combat SNAP fraud,'' Dr. Gundersen?
        Dr. Gundersen. It would have no impact on SNAP fraud.
        Mr. Walker. Nothing. And it says, ``Eleven percent would
    include a person with a disability.'' Dr. Gundersen, what would
    putting people with disabilities to work do to combat SNAP
    fraud?
        Dr. Gundersen. It would have no impact.
        Mr. Walker. No impact. Okay.
        And now back to you, Mr. Bragdon, you are here representing
    the Foundation for Government Accountability, is that correct?
        Mr. Bragdon. Correct.
        Mr. Walker. And that is a conservative think tank that you
    started yourself, is that correct?
        Mr. Bragdon. Correct.
        Mr. Walker. All right. You founded it in 2011, am I correct
    in that?
        Mr. Bragdon. Correct.
        Mr. Walker. And you are a young man. I think I have socks
    older than you, and I want to congratulate you on your success.
        Mr. Bragdon. I am 42, so you have some old socks.
        Mr. Walker. You founded it in 2011. First-year revenue was
    $212,000. Second-year revenue was $731,000. In 2016, your
    foundation's revenue had shot up to $4.8 million that year. Am
    I correct in that?
        Mr. Bragdon. Correct.
        Mr. Walker. Again, congratulations.
        Mr. Bragdon. Thank you.
        Mr. Walker. Your foundation is a 501(c)(3) corporation,
    correct?
        Mr. Bragdon. Correct.
        Mr. Walker. And your foundation advocates about things like
    SNAP eligibility requirements, like we are talking about today,
    right?
        Mr. Bragdon. Correct.
        Mr. Walker. Your foundation advocates against Medicaid
    expansion, right?
        Mr. Bragdon. Correct.
        Mr. Walker. Your foundation advocates about Welfare
    requirements as well, correct?
        Mr. Bragdon. Work requirements in Welfare for able-bodied
    adults. Correct.
        Mr. Walker. All right. Has your foundation taken a position
    on last year's tax bill, the one that gives 83 percent of the
    tax revenue back to the 1 percent of Americans? Have you taken
    a position on that?
        Mr. Bragdon. We have not. We focus on getting individuals
    from Welfare to work, and reducing barriers to work.
        Mr. Walker. Now has your foundation been audited to make
    sure you are not doing more lobbying than you are allowed to do
    under the rules under 501(c)(3)?
        Mr. Bragdon. Sir, great question, and I appreciate you are
    asking it. We have an audit every year. We also have a separate
    501(c)(4) organization, where if we are doing lobbying, it is
    done under a separate organization that is not tax deductible.
        Mr. Walker. That is where I was going. The people who are
    giving you money, you have to list their identity.
        Mr. Bragdon. Do we have to list the identity of ----
        Mr. Walker. Of your donors.
        Mr. Bragdon.--our donors?
        Mr. Walker. Right.
        Mr. Bragdon. No. We are not required by law to do that.
        Mr. Walker. You don't list your donors. And these are
    people who get a tax deduction for every dollar they give you,
    don't they?
        Mr. Bragdon. Correct. Just like individuals who give to a
    church, or any other 501(c)(3) organization.
        Mr. Walker. You are not a church, are you?
        Mr. Bragdon. No. No. But anyone in that (c)(3) category is
    tax deductible.
        Mr. Walker. Okay. But let me ask you this. Would it be a
    matter of complete indifference to you if your revenue started
    to decline because your donors don't like your message?
        Mr. Bragdon. I am not sure ----
        Mr. Walker. Do you like it that your donors like your
    message and keep giving you more, and more, and more money
    every year?
        Mr. Bragdon. So we partner with our donors to get more
    people back to work. So they voluntarily give money for us to
    do research and outreach on these issues. So it is a
    partnership with them.
        Mr. Walker. Do you like it?
        Mr. Bragdon. Do I like having donors? Sure. It funds our
    work.
        Mr. Walker. Those are all my questions. Yield back, Mr.
    Chairman.
        Mr. Palmer. If the gentleman from North Carolina would like
    to be recognized, and I would kind of like to get back to the
    topic of fraud in SNAP. And I recognize the gentleman for
    additional questions.
        Mr. Walker. Mr. Bragdon, I would like to see the 435 House
    members answer that same question, do they like their donors?
    But we will move on to the courtesy of the chairman's wishes.
        Ms. Coffey, you note in your written testimony that the
    types of SNAP fraud are changing. How has your office worked
    with FNS to deter these new instances of retailer fraud? Could
    you share a thought on that?
        Ms. Coffey. So when we identify potentially new fraud
    schemes that are arising based on information technology, we
    come across them as we are doing our investigative work. So it
    is critical for us to be able to go back to FNS and have those
    discussions with the agency to say, ``This is what we are
    seeing. This is a potential loophole. And this is something
    that FNS is going to have to make a policy change or a change
    in regulation in order to address those.''
        I can't go into specifics, due to some of them are
    sensitive in nature, and we don't want to disclose those
    publicly to bad actors out there, but that is our general
    practice. If we see some sort of scheme that is out there, we
    will notify FNS, and work with them to try to address that.
        From your perspective, are retailers engaging in criminal
    trafficking of SNAP benefits more or less than they used to,
    and what explains this trend? We are getting information that
    some of the gangs are doing the 50 cents on the dollar, and
    some of the stuff that we are hearing. Tell me a little bit.
    Are you seeing some of the same things, or specifically, don't
    want to lead you. You tell me what you are seeing.
        Ms. Coffey. So in terms of what we are seeing, it is
    typically the retailers who are still doing your standard
    trafficking, in terms of exchanging cash for the benefits.
    There may be other--we are, you know, anecdotally seeing some--
    typically, we do not see trends where we have had drugs, or
    firearms, or other types of offenses in the stores themselves.
    We are seeing a little bit more of that. That is a little bit
    on the increase now. But in terms of, you know, what we are
    seeing, we are still seeing our typical standard trafficking.
        Mr. Walker. This question, I will start with you, but also
    want to get Mr. Roth's input on it. From your perspective, what
    has been the most effective strategy to combat retailer fraud
    within the SNAP program?
        Ms. Coffey. I think in terms of what has been the most
    effective strategy, I know that we partner with other agencies
    to work these investigations. I think in terms of the fraud
    that we are seeing, by taking the retailer out, you are only
    addressing one side of the problem. You have to really address
    both sides of the problem, in terms of making sure that there
    are penalties for individuals who are trafficking their
    benefits, as well as the retailers.
        Because if you take the retailer out of the program, folks
    can take their benefits and go somewhere else to traffic them.
        Mr. Walker. Mr. Roth?
        Mr. Roth. I would agree with that. And oftentimes when
    comparing it, I liken this to a drug dealer and the users. If
    you take out the drug dealer, you still have a user component.
    You still have a problem, and they are going to transfer it to
    another dealer.
        I was recently at the United Council on Welfare Fraud's
    annual meeting, and some of the states were presenting
    mechanisms for which they would look at the after successful
    investigation into a store, how they would deal with the
    recipients. And that is certainly something we are interested
    in doing in Maine.
        Mr. Walker. Okay. Would these strategies be useful for
    state law enforcement agencies, in cases where they have
    statutory authority? Mr. Roth?
        Mr. Roth. Yes. Again, and any state that has the ability to
    conduct these investigations, they are lengthy, but we partner
    with OIG USDA. We find it works a lot better.
        Mr. Walker. Sure.
        Mr. Roth. They've got a lot more resources. We also partner
    with other federal agencies. But they are certainly a
    worthwhile focus.
        Mr. Roth. What about FNS, do you think they could help? Any
    steps to assist?
        Mr. Roth. Absolutely. They help in identifying stores that
    are on that fringe, are conducting themselves in what should be
    looked at, in a manner that should be looked at.
        Mr. Roth. Ms. Coffey, you agree?
        Ms. Coffey. I do agree, and I think FNS plays a critical
    role in when, through our investigative work, we identify an
    issue that needs to be addressed. Because sometimes there are
    loopholes. A number of years ago the definition of trafficking
    prevented us from being able to pursue prosecution in certain
    instances as the schemes became a little bit more convoluted.
        I think you heard Mr. Roth mention dumping water. That
    wasn't something that was prosecutable, because that wasn't
    considered trafficking. So in response to our concerns, FNS
    moved forward to change the definition of trafficking. So yes,
    FNS definitely has a role to play.
        Mr. Walker. Dr. Gundersen, do you believe that somehow by
    reducing the total number of people that are on the SNAP
    program would also help reduce the fraud?
        Dr. Gundersen. It would have no impact on the proportion of
    households that are engaging in fraud. In terms of the absolute
    numbers, if you took--you know, almost by definition, if you
    take away, yes, the numbers will fall if there is fewer people
    on SNAP, but the proportion ----
        Mr. Walker. That wasn't my question. If we somehow can
    provide hope, and opportunity, fulfillment for many people, 40-
    something million, if we were able to--let's just say if we are
    able to reduce that in half, you tell me that that would not
    also have a chance to reduce the fraud as well?
        Dr. Gundersen. Well, right. By definition, is if you have
    fewer people on a program, as the economy expands, then the
    opportunities for fraud decline. But there are lots of ways you
    can ----
        Mr. Walker. I think that was a yes.
        I yield back, Mr. Chairman.
        Mr. Palmer. I thank the gentleman.
        And I am going to recognize myself.
        Mr. Palmer. First of all, I want to try to clean up some of
    the mess that has come out of this hearing, and I want to
    congratulate the witnesses for hanging in there with us,
    despite this hearing going all over the road.
        First of all, in terms of the work requirements on the Farm
    Bill, it only impacts about 29 percent of the people who are on
    SNAP benefits at the time. It is age 18 to 59, so this idea of
    forcing the elderly to get a job is not applicable. It doesn't
    apply to people with disabilities, or the elderly, or for
    caregivers with children under 6 years old. There are waivers
    out of that.
        It increases the amount of assets that individuals can
    have. I mean we haven't increased the value of an automobile
    since the 1970s, and that goes from, I think, 4,000 to 12,000.
    So people who want to get a job will want to be able to get to
    work. And when they get a job, they can continue to collect
    their benefits.
        And Mr. Gundersen, I appreciate your answers to the
    questions. I think what will reduce fraud, because most of it
    has to do with retailers, Mr. Roth, I believe, that is the
    biggest number I saw, is about a billion dollars, is the
    retailers. I think you are going to have bad actors
        regardless the number of people you have on SNAP benefits.
        And it is an effective program. I grew up dirt poor. I get
    it. And I mean I lived in a house my dad built himself, in a
    room that had cardboard between the two-by-fours, in a bedroom
    I shared with my brother. So I understand that people need a
    hand-up. And I think this program has been beneficial, but at
    the same time, we want to encourage people to rise above their
    condition.
        That is not what the hearing is about. It is not about
    abuse and waste at the Department of Defense. Although, we had
    a hearing on that in March of 2017. We are looking into that.
    This is about reducing the amount of money that is lost in the
    program because of bad actors, fraud.
        And in many cases, particularly on the retail side, Mr.
    Roth, the retailers are taking advantage of people by offering
    them cash for their SNAP benefit card. They are taking
    advantage of people. And I think that is not just the loss of
    the money, it is what happens to the folks who give up that
    card. They are not buying food, in many cases. Sometimes they
    are buying drugs. Sometimes they are buying lottery tickets. It
    is not benefiting them or their families. So that is what we
    want to try to focus on, is how do we eliminate the fraud.
        Mr. Bragdon, I apologize for the last series of questions
    directed at you. It has been my experience in the past, having
    run a think tank for 25 years, that when people start trying to
    undermine the legitimacy of your work by questioning who is
    contributing to your work, it tells me that you have already
    won the argument. So I commend you for your work.
        With that, Mr. Roth, it was mentioned that if you want to
    get an idea about the trafficking of SNAP benefit cards, just
    go on Craigslist. Is there any way in your investigations into
    these that you have looked at a sting operation, any way to
    combat that type of fraud on Craigslist?
        Mr. Roth. We haven't seen a lot of the Craigslist ads in
    Maine. They have come up very sporadically. But it is a
    difficult operation to do. It requires, from a safety
    standpoint, extra investigators. But we do pursue those things
    when we have them. We have had some other tips come in from
    people that heard of people trading their cards, but, again,
    those are very difficult investigations to make. We get a lot
    of allegations, but they are hard to work.
        Mr. Palmer. Well, I have also heard that they advertise in
    papers for SNAP benefit cards, and marketing them that way. But
    are there also cases where retailers are kind of networked in
    terms of what they are willing to offer, so that there may not
    be the same group, but they reach some kind of an agreement
    that they won't pay more for a card than the other guy.
        Mr. Roth. Ironically, we got a complaint from one retailer
    that the other one was undercutting him on what he would pay
    for the cards. So it does happen, believe it or not.
        Mr. Palmer. So wait a minute. What you are saying is, is
    one retailer literally turned themselves in by complaining that
    another retailer was offering more for the cards than they
    were.
        Mr. Roth. Yes.
        Mr. Palmer. Well, that goes on another list.
        Mr. Bragdon, in your experience at FGA, Foundation for
    Government Accountability, what have you observed in terms of
    successful ways to reduce fraud?
        Mr. Bragdon. I think one of the things is just, at the
    state level, the verification of actually following up on
    individuals, and requiring regular check-ins. I think that we
    all want people to move off the program, get back to work, and
    out of poverty, and that requires a certain kind of engagement,
    both on the front door, and on an ongoing basis by the state.
    And that is really key.
        Mr. Palmer. Yeah. I know the inspector general's office has
    really focused on the retailer side of it. Have you looked into
    the data analytics to determine if that is helpful in reducing
    the amount of fraud, Ms. Coffey?
        Ms. Coffey. So we have. Actually, that is a critical piece
    of any of the investigations that we do. With the onset of the
    benefits being electronically available, we actually have a
    whole host of data that we are able to utilize for the purposes
    of data analytics, to help us identify where potential fraud is
    occurring, how it is occurring, when it is occurring. And that
    really has given us an opportunity to really move forward on
    some of these investigations, where prior to the electronic
    benefits, it would have been very challenging to try to pursue
    food stamp coupons.
        Mr. Palmer. Have you seen, in terms of the retailer
    trafficking, is that on the rise, or is it fairly steady?
        Ms. Coffey. It is hard to say in terms of if it is on the
    rise. What I can say is we have initiated fewer investigations,
    relative to retailer trafficking, within the last year. Now
    there could be any number of reasons for that. But it is
    difficult for us to say if it is on the rise.
        Mr. Palmer. Have you made recommendations to FNS in regard
    to ways to combat the trafficking?
        Ms. Coffey. There are a number of things that we have put
    forward to FNS that we are working with them on currently, to
    basically identify--where we have identified concerns, FNS is
    aware of that, and we are working to try to figure out the best
    way to address those concerns.
        Mr. Palmer. Have they implemented any of your
    recommendations?
        Ms. Coffey. We are not quite there yet, but I know they are
    definitely working on it.
        Mr. Palmer. I want to get back to how we close some of the
    loopholes. I know the Foundation for Government Accountability
    has done a lot of work on that. And I read a number of your--I
    read all of your recommendations in your written testimony, but
    can you just highlight a couple of--a couple of them that you
    think would really have the biggest impact, Mr. Bragdon?
        Mr. Bragdon. Sure. I think just to punch the point and the
    stat that you started off the hearing with, with the increase
    in the number of prosecutions, and administrative actions, this
    is an area where if you don't look, you won't see it, but if
    you do look, you will see a lot of different things.
        I list off in the testimony ten different areas. A lot of
    them have to do with the certification period, how long before
    somebody has to check back in. Life is dynamic, as you heard
    from the doctor. And so if people are on the program for a
    short period of time, but you are not checking in with them for
    a year-plus, if they go back to work, that is not going to be
    caught.
        A lot of the federal data bases that states are required to
    use are not regularly updated. So if states use their own data,
    they could have more real-time analysis. Even with the
    retailers, more than half of all stores that take EBT cards are
    convenience stores, and yet, we know from the Congressional
    Research Service that only 9 percent of those stores are looked
    into. Yet, it is only 5 percent of the total transactions, but
    it is 20 percent likely chance that each transaction is
    trafficking. And so this is an area where aggressive oversight
    from this committee and from the agencies is really key.
        Mr. Palmer. We have been talking about fraud, but we have
    also got the issue of the payment error rate nearly doubling.
    That has been a big, big issue with me. The improper payments
    issue. We sent out $141 billion last year in improper payments.
        Every agency and every program is required by law to report
    their improper payment rate, and I think for 2 years, the SNAP
    program did not report. I think they reported last year.
        Ms. Coffey, can you give us any idea of why that rate would
    have doubled?
        Ms. Coffey. Recently, our office had done work relative to
    the quality control process, which helps in the calculation of
    the error rates, and had made several recommendations to FNS,
    in terms of how to improve that particular calculation.
        My understanding is, and I would have to basically talk to
    my audit colleagues, that that is really the basis for what the
    changes you are seeing, that some of those, I guess, changes in
    the algorithms they use to calculate that information have been
    implemented. And so you are seeing an increase in the error
    rate at this time.
        Mr. Palmer. You know, it is one of those things that,
    having run a think tank, and being into data and numbers, when
    I first got here and got on this committee, and the comptroller
    general came in a hearing and testified that we were sending
    out $141 billion a year in improper payments, that you have
    that moment where you think your head might explode.
    Considering that we are in deficit, that is 141 billion that we
    had to borrow to send out improperly. And then there were 18
    federal programs that didn't even bother to report. I think it
    is a huge issue.
        It is not only a fiscal issue for the federal government in
    trying to manage our fiscal situation, but it also--for
    instance, on Medicaid, 36.3 billion in improper payments. That
    is money that is not getting to the people that need to get it.
    Not to, again, reinforce the fact, we had to borrow that money
    to send it out to somebody who is not supposed to get that
    money. And some of that, not all of it, but a part of that was
    fraud as well.
        I think it is an issue that we need to crack down on,
    because we have an oversight responsibility to be fiscally
    responsible for the resources that we are putting out there. We
    have a responsibility to provide a program that maximizes the
    benefit to the people who need it. It is not about tax cuts for
    anybody, or any of that.
        I mean, like I said, I grew up dirt poor. I am thankful
    that there are wealthy people out there that started a
    business, and were willing to give me a job, give me a chance
    to be the first person in my family to ever go to college. I
    have never been given a job by a poor person. That would be
    just be brutally honest.
        But at the same time, I have a very strong desire to see
    people do well, and to give people a hand-up, help them to get
    where they need to be, particularly those who are in the most
    difficult circumstances, the disabled and the elderly.
        So with that, I appreciate the witnesses for appearing
    before us today. The hearing record will remain open for 2
    weeks for any member to submit written opening statement, or
    question for the record.
        If there is no further business, without objection, the
    subcommittees stand adjourned.
        [Whereupon, at 11:56 a.m., the subcommittees were
    adjourned.]

                                     [all]