Newt Gingrich has recently alleged that food stamp recipients have used their EBT (Electronic Benefits Transfer) cards to pay for trips to Hawaii.
While Gingrich has offered no evidence that this claim is true, and in fact the SNAP (Supplemental Nutrition Assistance Program) or food stamp program uses EBT debit cards to minimize fraud, allowing purchases for specific food items only, there are private interests making big money from food stamps.
JPMorgan Chase, one of the big banks bailed out in the financial crisis of 2008, is a private contractor retained by over half of US state governments to issue EBT cards and manage recipient accounts amounting to billions of taxpayer dollars every month.
Because of increasing numbers of Americans falling into poverty, and qualifying to receive food stamps, JPMorgan Chase has seen increased profits from its public-sector benefit payments business, in part from punitive fees charged poor Americans using the bank-issued EBT cards.
Asked last year about the role food stamps played in JPMorgan's business, Christopher Paton, managing director of JPMorgan's "Treasury Solutions" business, said:
"This business is a very important business to JPMorgan. It's an important business in terms of its size and scale…Right now, volumes have gone through the roof in the past couple of years. The good news, from JPMorgan's perspective, is the infrastructure that we built has been able to cope with that increase in volume."
The other "good news" for Morgan is that the increase in volume of food stamp recipients the bank manages, means an increasing share of the billions of dollars being spent by recipients.
Additionally, Paton said retailers such as Walmart and Costco saw increasing portions of their businesses supplied by customers shopping with EBT food stamp cards:
"It's an increasingly large part of Walmart's transaction flow. Walmart, Kroger, an even bigger part of the business for smaller merchants."
As of August of this year, almost 46 million Americans (14.93% of the US population) received SNAP benefits. That is an increase in participation of 66% since January, 2008. Paton noted that ⅓ of Americans who are eligible for food stamp benefits did not apply for them, meaning almost 70 million Americans (more than 1 in 5) actually qualify for food stamps.
Meanwhile, total monthly benefit payments have increased since January, 2008 120% to over $6 billion/month from $2.77 billion/month. Additionally, the average monthly benefit per person and household have increased 32.7% and 26% respectively, aided by an increase from federal government stimulus spending.
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