Profiting From More Food Stamps
Food Stamps Brought To You By The Great Society
Taxpayers Money Redistibuted to Banks...Again!
Food stamp usage in the United States has surged during the steep economic downturn. The number of Americans using food stamps in 2007, was 26 million. The most recent reports show that 43 million people are in the food stamp program. That's a 65% increase in less than 5 years. This is of course one of the terrible ramifications of the financial crisis and it's a losing situation for all Americans. Obviously most food stamp users are enrolled in the program because of financial hardship (although there is also sure to be some fraud too) and it's the other taxpayers who have to foot the bill. But wait, is everybody really losing from this situation? In fact there is actually a beneficiary from the rising food stamp usage. A really big beneficiary. It turns out that mega bank JP Morgan has been cashing in on this national tragedy. They have become the largest processor of food stamp transactions, with contracts in 26 states and the District of Columbia. To understand how it came to be, that JP Morgan is reaping the biggest rewards from the jump in food stamps, you would need to review some history.
Food Stamps Have Transformed Into Government Funded Debit Cards
In 1996 the U.S. Congress mandated that states begin to transition from the paper stamps to an electronic system of delivery for food stamp benefits. This new plan was fully completed in 2004 under the Bush administration. Paper food stamps or coupon booklets have been fully done away with in favor of tax payer backed food debit cards, commonly referred to as Electronic Benefit Transfer (EBT). Once this mandate took effect, the states, which are responsible for issuing food stamps, they found it to be cheaper to outsource the processing of these Electronic Benefit Transfers to JP Morgan and others. Morgan, it seems, has been able to capitalize on this new mandate more than others, though. The banks collect a fee for each food stamp case they handle. They also charge fees for various other services in relation to using the cards and processing payments. It's certainly a profitable program for the big banks who have contracts and especially JP Morgan. Let's just look at Indiana as an example. JP Morgan gets 62 to 64 cents for each case. So if you take the 296,245 cases in Indiana right now, you come to $183,673 a month. And remember that's not counting the other fees for card replacements, etc. that JP Morgan is collecting. In this video JP Morgan executive Christopher Paton describes their processing for the food stamp benefits as "A very important business for JP Morgan". He also mentions the surprising fact that 40% of people receiving food stamp benefits are employed.
They and other banks are also contracting to provide these same type of processing services for other government welfare programs like unemployment insurance, and Medicare.
Wall Street Profiteering From Welfare Expansion Equals Trouble!
As usual when concerning issues of ever evolving government programs, there are a number of things wrong. One of these things is the entire reasoning behind why our government decided to shift from the paper stamps. As this New York Times article explains, part of the government's strategy in changing to debit cards, was to actually Encourage as many eligible people as possible to participate. Using debit cards in the program helps to facilitate this by taking away the stigma and embarrassment that went along with using the stamps to purchase food. In an astounding part of the article it is stated that "The government has been encouraging eligible people to participate, emphasizing that the program is not welfare but nutrition assistance." Isn't that just incredible! The government was actually trying to expand the tax payer funded food stamp program on purpose for the absurd reason that they feel they need to provide nutrition assistance!? And this was before the economy even got really bad. That brings me to another problem. As the food stamp program and even the rest of the welfare system expands it turns out that big Wall Street banking powerhouses like JP Morgan now stand to profit from that expansion. Now I'm not against businesses making a profit at all, but when a bank like JP Morgan who received billions in bailout money is turning around and profiting from increased taxpayer expenses on the always expanding entitlement system..... Well there is just something seriously wrong with that picture!
Corruption, Entitlements, and Government Lunacy Are Damaging Our Country Everyday!
This of course is just one of the many situations were individual taxpayers are being hosed at the expense of more powerful and connected interests. Entitlement for various groups of people in need, privilege and welfare for corporate and banking interests, along with our misguided attempt to police planet earth, are quickly leading our country towards possible ruin. Where it ends I don't know, but I don't think it's looking very good.
Some Links To My Other Hubs On Out of Control Government