[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



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              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:]

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    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:]

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    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:]
  
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    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:]

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    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.]

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