Corporate Cronyism and the Food Stamp Army

The Obama administration is proudly shattering welfare records with an astonishing number of people collecting public benefits long term, especially food stamps. 

In fact, as I discussed in a special to be aired on Hannity tonight, Obama and his friends have actually found a way to meld corporate cronyism with food stamp abuse to line their pockets while undermining our election systems at the same time.

Under Obama, the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, has exploded with a record number of people – 46 million and growing – getting free groceries from the American taxpayer. Adding insult to injury, a federal audit revealed last year that many who don’t qualify for food stamps now receive them under a new “broad-based” eligibility program that disregards income and asset requirements.

Obama says the food stamp extension is part of his intention to eradicate “food insecure households.” However, it’s really part of a massive redistribution of wealth. Last year, taxpayers were forced to pay more than $80 billion, including an estimated $750 million a year in outright fraud.

The term “estimated” is used advisedly here, because the fact is the government is involved in a deliberate cover-up to prevent taxpayers from learning the full truth about who receives food stamps, how they spend the money, and how much of it is going for illicit – and even nefarious – purchases. As a stunning study by the Government Accountability Institute (GAI) recently revealed, “The USDA already collects such data. So far, however, the data have not been made available to the public.”

Now, you might be wondering why the federal government would want to withhold such vital information from those who have been forced to pick up the food stamp tab. In particular, why would it be so reluctant to thoroughly investigate and expose food stamp fraud? Well, a large part of the answer lies in the title of the GAI study: “Profits from Poverty: How Food Stamps Benefit Corporations.”

According to the study, the current food stamp Electronic Benefit Transfer (EBT) card industry is dominated by three main players: J.P. Morgan Electronic Financial Services, Affiliated Computer Services, and eFunds. Together they collect money from 49 states and three territories. In fact, since 2004, 18 of 24 states that contract with J.P. Morgan have paid more than $560 million to the financial monolith.

There is little wonder then that those three companies appear to be perfectly content with the exploding food stamp rolls – and wholly unconcerned about rampant fraud and abuse. As the GAI study observed, “The more persons enrolled in the program, the more money the EBT industry makes.” That may also help explain why, when the state of Florida initiated an eight-month program to detect and prevent fraud among its three million EBT card users, J.P. Morgan saw fit to assign just one employee to the program.

And then there is this: During the 2008 election, Barack Obama received more than $800,000 from J.P. Morgan alone. After his election, the American Recovery and Reinvestment Act, initiated by Obama and passed by a compliant Congress, made two major changes to existing food stamp policies. First, it increased benefits by 13.6 percent. Second, it actively encouraged states to add more recipients to their food stamp rolls.

And the corporate cronyism and political payoffs don’t end there. The House and Senate Agricultural Committees have jurisdiction over all food assistance and distribution programs, including the food stamp program. So, just as one might expect, analysis by the GAI uncovered a clear trend of increasing contributions to Agriculture Committee members of both the House and Senate on the part of J.P. Morgan that clearly coincides with their entry into the lucrative EBT card, food stamp market. 

Between 1998 and 2002, JP Morgan’s total contributions per election cycle averaged $82,897. After the bank entered the EBT services market until the 2010 election cycle, their average donation per cycle more than doubled to $215,120. And the Agriculture Committees, in turn, have broadly expanded the number of food stamp recipients.

Of course, the more recipients that are added to the food stamp rolls, the more voters Obama can count on at election time. And the offshoots of Obama’s former client and campaign partner ACORN not only assure that those voters are registered but also that they know to whom they are beholden for their government handouts.

The GAI study concludes, “Increasing profits for JP Morgan in turn means increasing returns for investors.” Unfortunately, they also appear to mean an exponentially increasing food stamp bill for the American taxpayer. And Obama’s new Food Stamp Army is seen as a reliable source of new voters for the progressive agenda.

ACORN’s Project Vote remains highly active in registering voters on public assistance.  In Colorado, for instance, Judicial Watch uncovered documents proving that ACORN/Project Vote successfully pressured Colorado officials into implementing new policies for increasing the registration of public assistance recipients during the 2008 and 2010 election seasons. After the policy changes, the percentage of fraudulent voter registration forms from Colorado public assistance agencies was four times the national average.  

Our investigations also show that the Obama Justice Department is partnering with Project Vote in this campaign to register as many public assistance voters as possible, while neglecting to enforce (or outright opposing) legal requirements that ineligible voters are kept off of the voting rolls. 

You can see that there are many big lies in the food stamp program. Rather than putting food on the table for poor people, the program is now about massive cash transfer payments to not-so-poor people and major corporations, greased by campaign donations – all in the hope of gaining new voters – legal or not. Accordingly, the Hannity special tonight, which, as far as I can tell, is the first major television news exposé of the out-of-control food stamp program, is appointment television for concerned taxpayers.

Judicial Watch President Tom Fitton is author of the NY Times Best Seller “The Corruption Chronicles” and executive producer of the documentary “District of Corruption.”