SUMMARY AND ANALYSIS OF SECRETARY SIMON'S

STATEMENT BY THE

SELECT COMMITTEE ON NUTRITION AND

HUMAN NEEDS

SUMMARY

The original purpose of the food stamp program was to help the very poor obtain an adequate diet. Now, the program serves instead as a kind of income support for others who are not truly in need.

Transfer payments, including food stamp benefits, are becoming am ever-increasing share of total Federal Government expenditures. There are also problems in the structure of public assistance programs, which tend to overlap, creating inequity and inefficiency.

From a very small program begun in 1961, the food stamp program has grown rapidly. This growth was due to four major factors: (1) The rising cost of food and therefore the increasing value of the stamps; (2) increases in unemployment which enlarge the eligible population; (3) increases in other costs which increased income deductions, and (4) implementation of the program in Puerto Rico. Even if the economy continues to improve, growth in the food stamp program could continue as more of the eligible population participates. The food stamp program is also prone to abuse. Some abuses that occur are theft of the stamps, manipulation of the program by local administrators, misrepresentations by recipients of their income or household size, overissuances and underissuances, illegal use of the stamps by individuals and retailers, and counterfeiting. States are not encouraged to investigate fraud and prosecute abusers of the program. As a result, very few food stamp abuses are prosecuted.

Audits and the quality control program have turned up a high incidence of maladministration and error. The two major causes are the complexity of the program and the system of establishing eligibility through the use of unlimited deductions.

Other major problems with the food stamp program are the determination of resources, the definition of gross and net income, the use of monthly income, and the eligibility of students, strikers, and the voluntarily unemployed.

Major reforms are needed in the program to: (1) Insure that it is not used by high income families, (2) simplify eligibility requirements to reduce error and misrepresentation, (3) focus benefits on the needy, and (4) reduce food stamp use by the voluntarily unemployed. President Ford's proposed food stamp reforms would accomplish these objectives.

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