[Congressional Record Volume 140, Number 7 (Wednesday, February 2, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 2, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
ELIMINATING WASTE AND FRAUD IN FEDERAL NUTRITION PROGRAMS BY ADOPTING A 
              NATIONAL ELECTRONIC BENEFITS TRANSFER SYSTEM

 Mr. CONRAD. Mr. President. Today I attended a hearing held by 
the Senate Agriculture Committee on fraud in Federal nutrition 
programs. I wanted to bring this important issue to the attention of my 
colleagues. Significant efforts are needed to prevent waste, fraud, and 
abuse in programs that are designed to help those most in need.
  Fraud in Federal nutrition programs is, unfortunately, a significant 
problem in this country. This fraud takes a number of different forms: 
trafficking, counterfeiting, and forgery of food stamp coupons; 
embezzlement and theft of government benefits; and racketeering of feed 
stamp coupons. Fraud in Federal nutrition programs wastes scarce 
Federal dollars because it requires the expenditure of Federal money 
for investigations, arrests, and prosecutions of those who defraud the 
Food Stamp, WIC, and other Federal nutrition programs, and because of 
the losses incurred through the fraud itself. Fraud leaves many 
eligible families hungry because money that should be available to 
provide for their nutritional needs goes instead to unscrupulous 
people.
  I am pleased to say that my home State of North Dakota has been 
virtually free of fraud in Federal nutrition programs. Only one case of 
food stamp counterfeiting has ever been discovered in the State. 
Trafficking and forgery are not problems in my State. And the workers 
in our health clinics do not embezzle, take kickbacks, or set up phony 
recipients of these programs. I wish the same were true of other 
States. Illegal activities that defraud Federal nutrition programs, 
especially the Food Stamp and WIC programs, often run rampant in bigger 
cities with large low-income populations.
  In addition to fraud, the costs of administering certain Federal 
benefit programs are too high. The Food Stamp Program is a good 
example. In fiscal 1993, the Federal Government spent a total of $22 
billion providing food stamps to eligible individuals and families. 
Although the Federal Government shares the costs of administering the 
Food Stamp Program with the States, $1.75 billion was spent by the 
Federal Government in administering the program that same fiscal year. 
This $1.75 billion represents 8 percent of the cost of the program. 
Clearly, we should be able to reduce these administrative costs and 
save taxpayers money.
  The Food Stamp program also demonstrates why paper-based benefit 
programs are so costly to operate. Currently, the program prints over 
2.5 billion paper coupons per year at a cost of between $30 to $40 
million. It is estimated that the annual costs of printing food stamps 
will rise to approximately $70 million by fiscal year 1995. This is an 
increase of close to 100 percent. Clearly, we must find ways to get 
these costs under control.
  Not only is the paper-based Food Stamp Program expensive and 
difficult to administer, it is also highly susceptible to waste, fraud, 
and abuse. New technology, called Electronic Benefits Transfer [EBT], 
may be the answer to reducing costs and preventing abuse of the Food 
Stamp Program.
  Fraud and overpayments in the Food Stamp Program are currently 
estimated to cost the Federal Government $1 billion per year. Although 
the exact number and dollar value of counterfeit food stamp coupons may 
never be known, the food and nutrition service estimates that $1.2 
million in counterfeit coupons were discovered between 1986 and 1992. 
The nationwide implementation and use of an EBT system would reduce 
fraud and discourage the diversion of benefits.
  Fraud in Federal nutrition programs is far too costly to American 
taxpayers. We must take strong action to prevent these types of abuse. 
The criminals who abuse these programs are not only stealing from those 
who can least afford it, they are also stealing from every taxpayer who 
is forced to pay for investigations and prosecutions of these criminals 
in addition to losing the tax dollars through the fraud itself. They 
must be stopped, and future fraud must be prevented. A national EBT 
system has many of the qualities necessary to reach this goal. The key 
question is how much, if anything, can be saved by adopting a national 
EBT system. I hope that the Senate Agriculture Committee will carefully 
examine this issue in the weeks ahead.

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