Trump Admin Moves to Close SNAP Loophole That Costs Taxpayers Billions of Dollars Per Year
The Trump administration wants to close a SNAP loophole that allows states to add people to the program who may not actually be eligible.
The Department of Agriculture wants to rein in a back door to the Supplemental Nutrition Assistance Program, still often referred to by its original name of food stamps, that could cut 6.3 million people from the program in fiscal year 2029, according to Politico.
Although SNAP was created with very defined limits, a bureaucratic creation known as “broad-based categorical eligibility” allowed those who did not fit in the initial rules for the program to be added.
As noted by the Cato Institute, “States can make most, if not all, low-income households categorically eligible for SNAP if they receive or are authorized to receive minimal noncash TANF benefits or services.”
TANF is the acronym for Temporary Assistance for Needy Families.
The effect, it noted, is that “states can bypass federal eligibility standards and draw down more federal dollars.”
The result is that “millions of people are receiving SNAP benefits that Congress never intended.”
A Federal Register notice wrote that the rule-bending was encouraged “under the Obama administration explicitly ‘to increase SNAP participation.’”
The notice said that income levels for TANF are often higher than those for SNAP. Of the 46 states using the loophole for SNAP eligibility, “thirty-seven States have gross income limits higher than the SNAP gross income limit and forty-one States have no resource limit at all.”
Playing by the rules would cut 17.6 percent of SNAP participants, the notice said.
Federal SNAP spending would drop by nearly $45 billion from fiscal 2027 through fiscal 2031, while states would see a $5.2 billion drop in their costs associated with SNAP, the notice said.
“The Department believes the proposed changes would ensure States implement categorical eligibility in accordance with its original intent and would address concerns that States used BBCE to expand SNAP eligibility beyond congressionally-approved limits intended to preserve benefits for the truly needy,” according to the draft proposal.
“Broad-based categorical eligibility has bloated the welfare rolls for decades,” a USDA representative said in a statement, according to Politico.
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“It has allowed States to take short cuts, error rates to balloon, and those with income and assets far above federal limits access to a benefit meant for the neediest among us. Correcting this loophole is long overdue,” the representative said.
The Trump administration proposed a similar reform in 2019 that was scrapped when the Biden administration took power. The Cato Institute has said that because administrative reforms can be undone, Congress needs to close the loophole permanently.
In 2023, Rep. Ben Cline, a Republican from Virginia, proposed legislation to address the issue, according to a news release on his website.
“It’s no surprise that Big Government just keeps finding ways to spend more of Americans’ taxpayer dollars and encourage waste and fraud — even if it comes at the expense of the truly needy,” Cline said.
“The Broad-Based Categorical Eligibility loophole is a system created by federal bureaucrats that allows the wealthy to receive taxpayer-funded food stamps without checking their assets. Whether intentional or not, no one should be able to receive these benefits if they are ineligible,” he said.
“The No Welfare for the Wealthy Act will prevent states from abusing this loophole and protect resources that should only go to the most vulnerable among us.”
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