New domestic threat: Food-stamp riots

WASHINGTON, D.C. – With 20 percent of all American households on food stamps, amounting to 23.1 million households and 47.6 million individuals in July, a little-known across-the-board cut in food-stamp benefits is scheduled to go into effect in November.

According to the U.S. Department of Agriculture’s Food and Nutrition Service, the benefit increase granted by the American Recovery and Reinvestment Act of 2009 to help people adversely affected by the recession is scheduled to expire Nov. 1.

The USDA projects that the average monthly food stamp payment of approximately $272 per household will decline in November by $36 for a family of four.

Austerity riots in the EU

Will the resulting drop in benefits prompt riots?

For the past two years, austerity riots have swept across many countries in the European Union.

On Nov. 14, millions of workers went on strike across Europe to protest against cuts in government spending, as labor unions coordinated general strikes in Spain and Portugal, while calling for workers in Greece and Italy to walk out in sympathy with the protest.

The Guardian in London reported the European Day of Action and Solidarity was designed to send a message to government leaders urging them to abandon programs of increasing tax rates implemented while cuts were made in social welfare benefits.

The European Trade Union Confederation organized the European Day of Action and Solidarity with the slogan “For Jobs and Solidarity in Europe. No to Austerity.”

Food-stamp chaos in Louisiana

The U.S. recently experienced a fit of social disorder related to the government food-stamp system.

On Oct. 14, police were called in to maintain order at two Wal-Mart stores in Louisiana when a temporary power outage in the Electronic Benefits Transfer system, or EBT, removed spending limits on the cards of food-stamp recipients.

When Wal-Mart corporate headquarters allowed the card holders to buy food anyway, with no spending limit, word quickly spread, and a flood of shoppers in the Wal-mart stores in Springhill and Mansfield, La., stripped shelves bare.

Wal-Mart discovered shoppers with as little as cents on their food-stamp cards were attempting to steal as much as $700 worth of items.

When the outage was solved, overflowing grocery carts were abandoned in the aisles.

According to an ABC News report, the Louisiana Department of Children and Family services ruled Wal-Mart would be responsible for paying for unauthorized purchases because the retailer chose not to adhere to procedures limiting sales to $50 per cardholder during emergencies.

IRS paid out billions in bogus tax credits

The food-stamp program is not the only federal transfer payment program to the poor that could meet adverse public reaction if payments are reduced.

An internal IRS audit showed the IRS paid as much as $13.6 billion in bogus claims for the Earned Income Tax Credit, or EITC, last year. Overpayments as large as $132.6 billion were paid out over the last decade, despite an executive order President Obama signed in 2009 instructing federal agencies to devise ways to reduce improper payments.

EITC payments, designed to transfer money to the working poor through the tax system, were found to account for between 21 percent and 25 percent of all EITC claims. Somewhere between $11.6 billion and $13.6 billion was misspent.

‘The IRS met with the Office of Management and Budget on July 12, 2013, to discuss proposed supplemental measures,” Pamela J. LaRue, the IRS' chief financial officer explained. “We will continue to work with them to finalize these measures and to obtain written concurrence that the IRS is meeting reporting expectations.”

The IRS did not speculate on consequences should tighter enforcement procedures result in denied or reduced EITC payments to applicants, or whether collection efforts would be initiated to recover overpayments identified in previous years.

IRS pays illegals to stay

According to a recent Center for Immigration Studies report, the Treasury Department’s Inspector General for Tax Administration estimates that $4.2 billion in payments were sent to families of illegal aliens under the Additional Child Tax Credits, or ACTC, in the tax processing year 2010. Many of the payments went for non-existent children, or for dependent children found living outside the United States.

The ACTC program, first initiated in 1997, is an income-transfer program for low-income families that offers up to $1,000 per child per year to all resident families, including evidently those of illegal aliens.

Unlike the EITC program in which the filer and his dependents must have Social Security numbers to obtain a tax-credit refund, the ACTC program has no such requirements.

“Since earned income is taxable whether or not the worker is legally in the country, the IRS had to create a system to identify individuals who had tax obligations even though they were not here legally,” the CIS report noted.

“Hence the Individual Taxpayer Identification Number (ITIN). But the IRS also decreed that ITINs can be used to identify dependents when SSNs are not legally obtainable.”

A person must be a legal resident of the United States to get a Social Security number legally. The ACTC program operates for those filing income-tax returns with an ITIN in a manner comparable to the way the EITC program operates for those filing income-tax returns with a Social Security Number.

Bob Segall, a senior investigative reporter for WTHR-TV in Indianapolis, first aired a report on April 26, 2012, detailing widespread abuse with the ACTC program. Lax enforcement by the IRS has resulted in illegal immigrant families applying for ACTC payments of as much as $1,000 per year for as many as a dozen claimed dependents.

An additional problem is that many illegal immigrant families claimed ACTC payments for nieces and nephews who live in countries outside the United States, including Mexico.

If the IRS attempts rigid administration of the ACTC program, many families currently receiving ACTC tax-credit refunds may not receive comparable benefits in the future.