What if millionaires could get food stamps? As it turns out, this has actually been legal for decades.
The loophole that makes this riddle a reality is called “broad-based categorical eligibility.” Thankfully, this loophole is finally getting the attention it deserves, as the Trump administration is taking steps to close it and restore integrity to our food stamp program.
Welfare fraud isn’t a new concept, but what makes broad-based categorical eligibility so perverse is that it is essentially a form of state-sponsored fraud. Federal and state agencies have slowly turned an administrative shortcut into a full-blown bait-and-switch. The result? Millions of people are now receiving food stamps despite having incomes and assets above threshold limits, including some millionaires.
States can automatically enroll individuals onto food stamps if that person already received cash welfare benefits. Those benefits are more restrictive in their income and asset limits than food stamps, and avoiding unnecessary paperwork probably makes some sense.
But this is government, so, naturally, this loophole has expanded.
With the help of the Clinton administration’s purposefully loose regulations and the Obama administration’s explicit encouragement, state agencies have learned to call almost anything a welfare “benefit” under broad-based categorical eligibility. In states that exploit this loophole, anyone who receives a “benefit” — even if that is a welfare brochure or the number to a toll-free hotline — becomes categorically eligible for food stamps.
Gone are asset tests to ensure that the people receiving taxpayer-funded food stamps were actually eligible. That’s how even lottery winners and millionaires have qualified, putting resources for those who truly need them at risk. More than 30 states operate this way. But broad-based categorical eligibility is more than just willful defiance of congressional intent — it is a crowbar jammed into a Pandora’s box. All told, today there are more than 5 million people who are ineligible to receive food stamps under federal asset guidelines yet receive benefits anyway.
But with the Trump administration’s announcement of a proposed rule to close this loophole, policymakers are finally taking notice. Sen. John Kennedy has filed a bill that should spark a debate about how the administrative state has distorted congressional reforms beyond recognition for decades, and the Louisiana Republican’s efforts to provide legislative firepower to the executive branch’s rule should be commended for restoring program integrity within the food stamp program.
Broad-based categorical eligibility has tangible effects across the country. In the more than 30 states that operate under the loophole, people are continuing to abuse the system, taking resources that should be reserved for those with assets under the legal threshold. Millions more are trapped in dependency, and they don’t need the government to make the path to dependency easier than the path to self-sufficiency. They need a rescue mission that starts with independence. Getting there requires states and agencies to help move people off their welfare rolls and into work that helps them build financial and personal freedom.
Those who truly need aid deserve a system that prioritizes them, not one that encourages people with thousands of dollars in assets — or even millionaires — to collect food stamps.
If the rule to close this loophole goes into effect, that’s exactly what they’ll get. Taxpayer savings of up to $7 billion per year provide an added bonus, making the government program that was designed to serve the neediest among us as a temporary safety-net more sustainable and in line with the program’s original intent.
Scott Centorino is a senior fellow at the Foundation for Government Accountability.
