Most people, especially hard working taxpayers, would likely say no. But it’s happening and reforms are needed in order to stop it.
There’s something disturbing about seeing someone buy groceries with an EBT card only to load them into the back of their Cadillac or Lexus, but the feds in Washington don’t seem to care. They’re all too happy to let states side-step the asset tests, allowing millionaire lottery winners and people with vacation homes spend your tax dollars on their groceries, rather than preserving our safety nets for the truly needy.
In fact, the Obama Administration has actively encouraged states to use backdoors to sign up people onto the welfare rolls without verifying their assets.
Federal law limits the value of assets non-disabled food stamp recipients under 60 at $2,250. The law does exclude some types of property from being counted, and then states are also able to determine other exemptions from the asset tests for home values and vehicles, so the asset limits vary around the country. But as food stamp enrollment and spending has exploded, even in the face of a recovering economy, so has the use of loopholes by states.
The use of one particular loophole, Broad-Based Categorical Eligibility, has skyrocketed from just 7 states using it in 2001, rising to 13 by 2007. As of April of this year, 42 states were using this loophole to skirt asset tests. While some of these states retain some form of asset testing when they use BBCE, their asset limits are higher than federal law.
This policy enables people with lots of expensive toys like boats, vacation homes, and RV’s to get Supplemental Nutrition Assistance Program benefits, or food stamps. The problem is those benefits are intended for the disabled, elderly, the unemployed poor, and our other vulnerable neighbors.
Because spending on food stamps and other welfare programs has gotten out of hand, a number of states have started looking at ways to protect their limited resources for those in true need. There’s no reason our tax dollars set aside to protect someone’s disabled grandmother should also be going to the 30-year-old with two jet skis.
A wave of states have finally come to their senses and started enforcing asset tests on their welfare recipients. The Maine Department of Health and Human Services just announced a policy change that “will impose a $5,000 asset test to households without children” that receive the state’s food stamps through the SNAP program.
Under the rule, those applying or re-applying for SNAP benefits will be required to disclose certain assets. If those assets exceed $5,000 in value, the applicant will be ineligible for benefits.
The rule only applies to able-bodied childless adults receiving the benefits and does not include “equity in a home or a household’s primary vehicle.” The state does however consider “the balance of bank accounts, snowmobiles, boats, motorcycles, jet skis, all-terrain vehicles, recreational vehicles, campers, and other valuable assets.”
Up until this point, Maine like many other states, allowed food stamp recipients to keep their boats and expensive toys while taking money meant to help those really in crisis. While this move doesn’t quite bring Maine in line with federal asset limits, it’s definitely a step in the right direction. There’s just no reason to use the money from hard-working people to pay the bills of someone who has tens of thousands of dollars in the bank.
“Most Mainers would agree that before someone receives taxpayer-funded welfare benefits, they should sell non-essential assets and use their savings,” said Maine Gov. Paul LePage. “Hard-working Mainers should not come home to see snowmobiles, four wheelers or jet skis in the yards of those who are getting welfare. Welfare is a last resort, not a way of life.”
Asset tests are an important means of keeping those people off welfare programs who do not truly need the help. Michigan, which had stricken its asset test, restored it recently after discovering several high-profile cases of lottery winners who were still collecting food stamps. In fact, in 2013, after restoring the asset test, the state identified more than 7,000 lottery winners who were receiving welfare benefits at the time of their jackpots, including individuals whose winnings were in the millions of dollars. Under the old policy, they would not have been removed from the program.
It is estimated that four million people receiving food stamps have assets higher than the federal limits. Nationally, about 21% of the households on food stamps with assets higher than the federal limits are able-bodied childless adult households. This is the same population that is being added to Medicaid rolls as part of ObamaCare. The same population that is robbing resources from those who need it most.
As DHHS Commissioner Mary Mayhew said,
“When people see that some are using welfare as a first line of defense to keep their boats and motorcycles, rather than using welfare as a safety net, it hurts the public perception of the program.”
It’s time to look to the states for leadership to protect our public safety nets. Our governors and our state legislatures should be stepping up and putting an end to this problem, even in the face of a lax attitude from Washington. It’s time for our states to be better than what Washington expects of them.
Kristina Ribali is the Senior Coalitions Director for The Foundation for Government Accountability. Follow her on Twitter or you can also reach her by email at .