Millionaire Applies for and Receives Food Stamps; USDA Closes the Loophole

Jul. 26, 2019
Bob Adelmann

Rob Undersander, a millionaire living in Waite Park, Minnesota, is no fraudster. On the contrary, a retired engineer, he now spends his days helping low income people in his community with their Medicare enrollment applications and other social services. But he discovered that Minnesota, along with 42 other states, grants food stamp eligibility to people with low incomes without checking on their assets.

Smelling a loophole, he applied for food stamps – officially called the Supplemental Nutritional Assistance Program, or SNAP – for himself. He even enlisted the assistance of people in the local office to make sure he completed the application properly. A month later he got a letter in the mail from the USDA, which administers the program, along with his first EBT (electronic benefits transfer) card in the amount of $278.

Over the next 19 months, his benefits grew to as much as $341 a month. By then he had received about $6,000 from the government. In June, the House Agriculture Committee's nutrition, oversight, and department operations panel held a hearing, and Undersander's name came up in the discussion. Rep. Jim McGovern (D-Mass.) pointed to Undersander, who was attending the meeting (but not testifying), and accused him of "intentionally defraud[ing] the federal government." When asked about the charge afterwards Undersander said that McGovern wasn't "the first Democrat that wanted to send me to jail. The problem is, I was following their rules and the laws that they support."

How many have discovered the loophole is unclear, but if the USDA's estimate is even close, the rule change will remove 3.1 million from SNAP's monthly flow of EBT cards. In that same meeting where Undersander was excoriated by bleeding heart liberals who never saw a government give-away problem they didn't like, a Republican from South Dakota, Dusty Johnson, came to the millionaire's defense:

A man with assets in the millions – who was able to receive more than a nominal SNAP benefit, month after month, because of Minnesota's abuses of their administrative flexibility – Mr. Undersander is not alone.

Mr. Undersander didn't lie on his forms. He exposed the flaws of a failed system. It's not his fault that we in D.C. haven't done our job. Receiving a welfare check shouldn't be easier that applying for a job.

If millionaires are receiving those benefits – as they have – this committee has work to do.


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The result is the change in the rules for eligibility that the USDA posted on Tuesday. In essence, it tightens the requirements to receive SNAP benefits so that only those truly "in need" of them receive them.

For the record, Undersander made it clear that not only did he not need the benefits, he gave an equivalent amount away to various charities in his neighborhood, explaining that he "did a better of job of distributing that money than the government did."

With Tuesday's announcement of the rule change – and the start of the 60-day comment period – Agriculture Secretary Sonny Perdue had this to say:

For too long this loophole has been used to effectively bypass important eligibility guidelines. Too often, states have misused this flexibility without restraint. The American people expect their government to be fair, efficient, and to have integrity – just as they do in their own homes, businesses, and communities. That is why we are changing the rules, preventing abuse of a critical safety-net system, so those who need food assistance the most are the only ones who receive it.

Assuming the rule becomes effective in 60 days, the removal of those millions using the loophole to game the system will save SNAP an estimated $2.5 billion a year. That's a miniscule amount compared to the $65 billion U.S. taxpayers are forced to pay to support the program. But it's a start.

And it will give the president another "talking point." During his State of the Union address in February, President Trump said: "Wages are rising at the fastest pace in decades, and growing for blue-collar workers who I promised to fight for. They're growing faster than anyone else thought possible … [applause] … Nearly five million Americans have been lifted off food stamps." [applause]

Once the new rule is applied, the president will be able to claim that the real number "lifted off food stamps" is closer to eight million.

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An Ivy League graduate and former investment advisor, Bob is a regular contributor to The New American primarily on economics and politics. He can be reached at bobadelmann@msn.com.

Sources:

DailySignal.com: Proposed Trump Administration Rule Would Close Eligibility Loophole, Reducing Food Stamp Rolls

Total cost of SNAP for 2018 ($65 billion)

TwinCities.com: Minnesota millionaire tells lawmakers he got food stamps to make a point

FNS.USDA.com: The proposed rule

DailySignal.com: After Legally Receiving Food Stamps, This Millionaire Is Trying to Change the System

ThePoliticalInsider.com: Trump Administration Rule Proposal Will Cut 3 Million People Off Food Stamps

MPRNews.org: Self-described millionaire collected thousands in food stamps to make point about SNAP

FEE.org: Why Are Millionaires Able to Receive Food Stamps?

Background on SNAP Food Stamp program

Reuters.comTrump administration proposed rule would cut 3 million people from food stamps

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