Washington Insider -- Monday

SNAP Errors and State Manipulation

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Ross Confirms Sunset Provision Under Consideration, Mexico And Canada Reject It

The issue of a five-year sunset period for NAFTA as part of the 2.0 negotiations underway with Canada and Mexico continues with Commerce Secretary Wilbur Ross confirming at a Politico Pro Policy Summit that there is an active discussion on the matter.

"The five-year thing is a real thing," Ross said. The view of those favoring it is that it "would force a systematic re-examination" of NAFTA every five years. "Why that's important is the forecasts that have been made at the initiation of NAFTA and of other trade agreements mostly have been wildly optimistic as to the results," he said. However, Ross acknowledged it is not yet a "done deal" as far as a U.S. proposal.

Canada and Mexico indicated they will not back the concept. Canada's Ambassador to the U.S., David MacNaughton, said that a five-year sunset raises Canadian concerns and should also raise concerns with U.S. businesses that have to made long-term investment decisions. Geronimo Gutierrez, Mexico's ambassador to the U.S., said that re-examination would introduce economic instability, which would harm industries across all three countries.

NPPC Continues Push for FMD Vaccine Bank as Part of Farm Bill

Ken Maschhoff, National Pork Producers Council (NPPC) president, and other pork producers were in Washington this week. One of the topics was urging lawmakers to include $150 million per year in the upcoming new farm bill. They want USDA's Animal and Plant Health Inspection Service (APHIS) to move forward on establishing a vaccine bank that would be adequate to protect the pork and beef sectors.

Iowa State University estimates an FMD outbreak would cost the U.S. over $200 billion across the entire agriculture sector, not just the pork industry, including lost pork production, decreased need for grain, and other factors. “I guarantee you every member of Congress, if they knew that for $150 million, they could have insured against (Hurricanes) Irma and Harvey combined, they’d have written that check in a heartbeat,” he said. Currently, the U.S. only has access to enough vaccine to deal with a small, localized FMD outbreak. “One thing that is not in these numbers is the fact the government would be able to sell the vaccine to other countries around the world should we not need it. It would offset some of the cost,” Maschhoff said previously.

Washington Insider: SNAP Errors and State Manipulation

Well, there are a lot of things going on in Washington now, mainly focused on health care, the tax reform proposals and other national economic matters. However, Politico focused the result of a Senate Ag hearing on the Supplemental Nutrition (SNAP) program and some surprising results.

The Senators examining the SNAP program found some good news in the fact that its costs have declined substantially, almost 40% from Fiscal 2014 to Fiscal 2017, USDA officials reported.

At the same time, Politico reported that since the SNAP program is so large, it has been under political scrutiny for years, in part because program spending had declined slowly after the end of the last recession. In addition, Committee members are always interested in how efficient the program is and in any finding of waste and abuse.

Brandon Lipps, the Acting Deputy Under Secretary for Food, Nutrition and Consumer Services and Administrator for the Food and Nutrition Service testified that SNAP operates a quality control system to measure improper payments.

He defined the SNAP payment error rate as a “measure of the extent to which SNAP benefit amounts are issued in the proper amount to the targeted households. The error rate is the combination of payments to recipients that are too high as well as payments that are too low, not the difference between the two.”

Lipps noted that, “quality control is a shared responsibility between the States and FNS. States review cases for errors and FNS reviews a sample of those to ensure that States have made the correct determination. Then he delivered a bombshell; “As you may know, USDA and the Office of Inspector General both found bias in the QC data which impacted our ability to release a national error rate for FY 2015 and FY 2016.”

Lipps elaborated that many states were bypassing USDA’s data controls. In some cases, these were inadvertent process errors, “but more often, States were altering what information and data they reported to FNS so Federal reviewers would not even see many of the errors. Therefore, we could not detect this level of bias until we developed the new statistical measures to catch it.”

“We found that confidence cannot be placed in FNS’ reported QC error rate,” he said. “States weakened the QC process by using third-party consultants and error review committees to mitigate individual QC-identified errors rather than improving eligibility determinations. FNS’ QC process thus tended to understate SNAP’s error rate.” And, he said that, “the OIG has found that we have a number of states that have defrauded the federal government and are being investigated by the Department of Justice.”

So, he has no results for 2015, he said. The data is “so significantly biased that we do not feel we can provide you an accurate measure of that rate.”

Politico noted that that, “Senator Debbie Stabenow of Michigan, the panel’s top Democrat, said that even with the uncertainty about the figure, nutrition programs ‘have an extremely low rate of error and fraud.’ She drew a distinction between fraud committed by food-stamp recipients with misreporting by states. She urged committee members not to let reporting problems drive discussion of the program.”

Chairman Pat Roberts, R-Kan., Stabenow and other committee members avoided lending ammunition to critics who argue that SNAP is riddled with waste and fraud—“at the same time the program administrators were arguing that they lacked good data to evaluate the programs.”

SNAP has long been one of the most controversial and highly scrutinized poverty programs. It also is widely seen as crucial to the passage of the next farm bill because it attracts votes from members representing both urban and rural areas.

Politico says, “there is no question states have been gaming the system,” and have done so for a long time—possibly since 2004, Lipps said.

So, Ag Committee members appear to have their work cut out for them. Budget hawks, especially, hate SNAP because it is part of a political coalition that supports expensive farm programs, and because it is itself a critical part of the nationwide economic safety net and is strongly supported in many quarters. Questions of who was responsible for the newly discovered errors, and for not finding and fixing them long ago will be hotly and bitterly debated—and could result in wrong-footing the coming farm bill debate, even before it begins in earnest. This is a process producers should watch closely as it proceeds, Washington Insider believes.

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