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Delivering Benefits: The Federal Government Goes Electronic

Food stamps, one of the nation's main tools for alleviating hunger, actually exacerbate some other national problems; as an underground currency, they are occasionally used to buy drugs and guns. Before long, however, government will have a powerful new weapon not only to help detect and prosecute trafficking, but to cut costs and deliver services better: a nationwide program of electronic benefits transfer (EBT).

Federal and state programs deliver nearly $500 billion in cash benefits and food assistance each year. At least 12 federal and state programs are involved, including such programs as Social Security, unemployment benefits, AFDC, and food stamps.

In May, the federal government outlined a plan to develop a nationwide EBT system in partnership with the states. The report envisions a national system that relies on direct deposit to deliver benefits to those with bank accounts, and on one user-friendly EBT card that can be used at grocery stores and automated teller machines (ATMs) to deliver benefits to those without bank accounts.

When fully operational, the EBT card will deliver more than $111 billion in benefits each year. [6] It will also cut the costs of delivering these benefits by an estimated $195 million a year, strengthen the management of program funds, and reduce fraud.

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