Last Updated on January 20, 2026 by Chicago Policy Review Staff
Suppose it is payday and you are patiently waiting for your paycheck to hit your bank account. You do not have a particularly large cushion of savings, so the upcoming deposit will be covering groceries and other necessities, little else. Now imagine your shock: the bank has mistakenly allocated that paycheck to somebody else and there is no way for you to get it back. Furthermore, you are not the only victim of the bank’s mismanagement: hundreds of thousands like you also fail to receive their correct paychecks. Plus, to add insult to injury, this happens once every ten paydays, a systemic issue that has remained unaddressed for ages. If such a situation were to manifest in real life, people would be furious — and understandably so. They would promptly withdraw their savings and deposit them into the competition’s vaults, protest in front of the bank to demand their paychecks be sent and petition their representatives to pass new regulations to ensure that such a situation does not happen again.
Nonetheless, this scenario is far from unrealistic. A comparable level of governance failure occurs quietly every month within one of America’s largest social programs: the Supplemental Nutrition Assistance Program (SNAP). During Fiscal Year 2023, SNAP provided federal food assistance to more than 42.2 million individuals across 22.3 million households—just over 12 percent of the U.S. population. The program’s objective, helping low-income families put food on the table, is both necessary and widely supported. Yet in FY 2023, from a budget exceeding $110 billion, the Government Accountability Office (GAO) reported that roughly one in every ten SNAP dollars—about $10 billion in total—was classified as an improper payment. The GAO uses this term to encompass a broad range of failures, including administrative errors, eligibility mistakes, and fraud, though not all cases reflect intentional wrongdoing. Consistent with prior findings reported by the U.S. Department of Agriculture, the persistence and scale of these losses point to structural weaknesses in SNAP’s governance—particularly in oversight, accountability, and incentive design—rather than isolated or incidental errors.
Access to food, recognized as a fundamental human right, is being directly undermined, as one in every ten SNAP dollars does not reach families who urgently depend on it to purchase basic groceries. Moreover, money collected through taxation is not being used as intended. These concerns should be directed toward understanding the three main ways in which SNAP benefits are misallocated.
The first source of misallocation stems from administrative errors by the state agencies handing out the benefits. The GAO attributes these mainly to not verifying basic information such as citizenship, education, employment, finances, household size, identity, and residency — which make or break people’s eligibility for SNAP and the amount of benefits they may receive. In principle, the states would recover the excessive benefits of the first month by reducing them in the subsequent one by exactly the same amount. However, an independent by the Mercatus Center at George Mason University of USDA SNAP State Activity Reports found that while overpayments totaled $10.7 billion in 2023, only $389 million—less than four percent—was recovered
The second source arises from fraud at the level of the recipients and the retailers. On top of providing inaccurate, or false information to receive SNAP benefits or enrolling in SNAP in multiple states under different identities to receive multiple times what they would get otherwise, recipients engage in different modes of trafficking. One mode involves selling one’s EBT cards to another individual for a fraction of the cash value to buy other non-SNAP eligible items. Other methods require collusion with a retailer who fabricates a grocery purchase, refunds part of the value in cash — or in kind with EBT-prohibited items and charges the government for the full amount. The latter case is so vast that in 2021 the USDA estimated that 14% of all EBT-licensed retailers had engaged in these schemes between 2015 and 2017..
The persistence of these improper payments is not merely an administrative problem, but a symptom of deeper governance failure embedded in how SNAP is structured and overseen. One would expect states administering the handouts have the greatest incentive to crack down on incompetent elements in their bureaucracy and the corrupt ones among the recipients. In practice, the opposite is true. SNAP is federally funded but state-administered, and states are responsible for reporting their own payment error rates to the federal government. Those reports, in turn, determine the financial penalties states face. As a result, states face a perverse incentive: higher reported error rates trigger higher fines, discouraging full transparency. If states conceal the extent of the problem by, for instance, taking advantage of the fact that they need not report wrongful transfers under $58, they can decrease the fine or even avoid it altogether — even if GAO, a think tank or a journalist discovers the scandal later on.
With all the former taken into account, it should be no surprise that the program is stuck in the gutter. Reform proposals are vast and while a comprehensive list falls beyond the scope of this work, let us focus on tackling the conflict of interest at the heart of SNAP. The swift abolition of the $58 tolerance threshold is the first step, forcing the states to admit the fullest extent of their mismanagement rather than sweeping it under the rug at the expense of everybody else. In tandem, states should be required to report all the errors to Food and Nutrition Service (FNS), the USDA agency that oversees SNAP, who would not only keep a sound record of the waste and fraud at the state level, but also ensure that the entities responsible for distributing billions in taxpayer funds are not also the judges of their own performance, effectively dissolving the perverse incentive. Lastly, mandating a federal audit whenever a state’s error rate exceeds 1% of annual disbursements, meaningful enough to compel states to invest in better verification systems, staff training, and anti-fraud technologies, or punish bad actors in the state administrations or the streets for their malice or incompetence.
If the public would not tolerate a bank that loses one in every ten paychecks, it should not tolerate a public program that misdirects one in every ten nutrition dollars. SNAP’s mission is too important to rely on trust alone. A program designed to feed the nation’s poorest households, funded by taxpayers, must meet a basic standard: the money must go where it is intended. Anything less undermines both public confidence and the very people the program exists to serve.