Boomtown 2: The Business of Food Stamps

This is a rush transcript from "Hannity," April 5, 2013. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Welcome to the special edition of "Hannity." Now this is the second part of our Boomtown series where we have been taking a close look at the business of Washington, D.C., and how it's making a lot of people very rich all with your money.

Now we've seen how nation's capitol and the surrounding suburbs have become a new American boomtown with government contractors, lobbyists and all those connected with all aspects of politics, making the region almost immune to our country's financial woes. Now Peter Schweizer heads back out to look at another aspect of the business of government.


PETER SCHWEIZER, GOVERNMENT ACCOUNTABILITY INSTITUTE: Washington, D.C., America's new boomtown. Tonight we're going to find out how this city has become so fabulously wealthy, the wealthiest in the United States today.

When we think of the federal government, we think about programs, the most well-known perhaps is the food stamp program.

(voice-over): How to pay for America's welfare programs is a hot topic in Washington, and food stamps are at the center of that debate. Now the left see these programs as pillars of a generous and caring nation, a sign of our commitment to the poor. It injects a lot of cash into our economy.

SEN. KIRSTEN GILLIBRAND, D-N.Y.: It pays salaries for grocery clerks, truckers who haul the food. The USDA estimates 16 cents go right back to the farmer. Food stamps are such a good investment into our economy, for every dollar that you put into food stamps you get a $1.71 back into the economy!

SCHWEIZER: Conservatives, on the other hand, see these programs out of control, wasteful, riddled with abuse, and they harm economic growth.

SEN. JEFF SESSIONS, R-ALA.: Why don't we provide everybody's clothes, shoes? When you take money from the economy or borrow it as we're doing today to provide food stamps for somebody, you don't get a net gain to the economy.

SCHWEIZER: The food stamp program is only one of a huge number of antipoverty programs offered by the federal government. The current tally, 126. The current cost? Over a trillion dollars a year. But what if Washington's most vested interests in the country's biggest corporations are profiting from the explosive growth of these programs designed for the poor?

Welfare in America is supposed to be a safety net for those in need, but instead, it's become an insider's game of power and profit.

(on camera): Tonight, you're going to learn that food stamps are not just a program, it's an industry. It begins here at the U.S. Department of Agriculture. But the tentacles of this industry extend to Wall Street and Madison Avenue and includes some of the largest corporations in America. It's an industry that has lobbyists, advertisements and promotions and an increasing market share.

(voice-over): It started as a way to get farm fresh produce onto the tables of the hungry and give a boost to struggling farmers along the way. But the program has grown enormously. Big corporations and their lobbyists spend millions to try to get their hands on a piece of this $75 billion pie.

Food stamps have become big business in America. They were originally intended for things like cheese, eggs, meat and vegetables. But thanks to the aggressive lobbying of large corporations, they can be used for everything from soft drinks to in some cases, fast food.

Chains like Pizza Hut and Taco Bell have fought with mixed results to get a cut of the money with only some states green-lighting the use in certain locations. At the same time, corporations like Coca-Cola and Kraft Foods have successfully lobbied against bills that would block soda and junk food from being food stamp eligible.

With the program experiencing explosive growth, it shows no signs of slowing down, because the politicians argue that the bigger the program gets, the better it is for America.

REP. NANCY PELOSI, D-CALIF., HOUSE MINORITY LEADER: If you want to create jobs, the quickest way to do it is to provide more funding for food stamps. Nothing creates jobs faster than the injecting demand into the economy, and that demand is created when people use the food stamps.

SCHWEIZER: During the sequester debate, food stamps were deemed off limits for any cuts. In fact, the program is undergoing explosive growth. Through the lens of D.C., a bigger program is good for America, and it's great for boomtown.


HANNITY: Joining us now, Peter Schweizer and Steve Bannon of the Government Accountability Institute, and also Karen Hanretty is back with us, the vice president of Public Affairs for the American Beverage Association. Good to see you guys.


HANNITY: Let's go to -- nothing creates jobs faster than food stamps, Nancy Pelosi's comments. And Senator Gillibrand, 16 cents goes right back to the farmers, and you get $1.71 back into the economy for every dollar spent, so


SCHWEIZER: Yes, that's the traditional Keynesian argument, that you spend government money and somehow it multiplies. The simple fact is there is no economic evidence of that. What we're talking about here is a program that is a nutrition program. That's what it was designed to do, to provide supplemental nutrition to people having a hard time make ends meet.

But as you saw in the clip, you see a lot of politicians who are now trying to turn this into some kind of economic program or jobs program. That's not what this is about. It's about meeting the basic nutritional needs of people.

HANNITY: Karen, what Peter is saying, to use the term food stamps, big business, an industry goes from Wall Street to Madison Avenue, $75 billion he's talking about. You disagree with that? Because you're generally conservative but --

KAREN HANRETTY, AMERICAN BEVERAGE ASSOCIATION: Here is where we don't see eye to eye on this, which is this notion that the food companies and of course, you know, I represent the nonalcoholic beverage industry, Coke, Dr. Pepper --

HANNITY: That's a shame. I'm sorry, nonalcoholic.

HANRETTY: I know, I know.

HANNITY: My attempt at humor. Go.

HANRETTY: You know, this notion that they are spending millions of dollars lobbying in order to get their hands on this money, which is just simply not the case, because the USDA has never had a list of excluded foods. They've never had a list of good foods versus bad foods, healthy foods versus unhealthy foods.

That's the way we should want it. As a conservative, you do not want the federal government getting in the business of saying you're on the good list, you're on the bad list. That's a very slippery slope to go down.

SCHWEIZER: Karen, with all due respect, the program was set up initially to provide basic nutritional needs. So it was cheese and it was meat --

HANRETTY: In the 30s, right.

SCHWEIZER: -- it was originally set up. What you had is the expansion of it. So now you have snack foods and soft drinks --

HANRETTY: You had that for decades. You had that going back in the '60s, they passed the stamp act in 1964.

SCHWEIZER: Right. How did that act get implemented? It didn't get implemented because you had food stamp recipients coming to Washington asking for it. It happened because industries saw and recognized that government money puts money on the table and they were looking to make that money. I have no problem --

HANRETTY: Actually, that's not entirely accurate either, because if you look at the congressional record in 1977, Congress -- there has been a lot of debate. How do you insure that your taxpayer dollars are going toward only -- I think what commonly would be referred to as healthy foods, right? In 1977, Congress said listen, trying to sort through the good versus the bad is a cure worse than the disease of so called junk food.

SCHWEIZER: That's not what we're talking about. We're not talking about sorting between good and bad.

HANRETTY: You would have to sort between good and bad. You have over 300,000 food products that government bureaucrats will have to go through.

STEVE BANNON, BREITBART NEWS: It's pretty simple. You make this argument of like a libertarian argument that's about freedom. This is a $75 billion industry that's metastasizing. It's doubled in the last four years. In an age of austerity, tough measures have to be taken. This is an assistance program that's taxpayer funded.


BANNON: The beverage industry, the soda industry I think gets $4 billion of that 75 today. At 20 percent margin, that's a $1 billion cash benefit to the soda industry underwritten by people making $50,000 a year. That's just not -- in an age of austerity, that cannot go on.

HANRETTY: So the answer then is to go to the USDA and say, listen, we would like you to expand the size and scope of your bureaucracy --

BANNON: No, not at all.

HANRETTY: That's what the USDA says they would have to do if you're going to start picking and choosing, based on -- I don't know how you define nutritional foods. There are 15,000, for instance, 15,000 savory snacks with bar codes. You're going to sort through 15,000 savory snacks and say what's good, what's bad?

SCHWEIZER: No. But Karen, the bottom line is this is not a lifestyle program. This is a nutrition assistance program. There are all kinds of limitations --

HANRETTY: How should the federal government go about determining if your private company is on the good list or the bad list? Fat, sugar, sodium --

SCHWEIZER: Right now in the state of New York, there is a debate going on because it was found out welfare money has been used at strip clubs, to buy cigarettes, all sorts of things.

HANRETTY: That's waste, fraud and abuse.

SCHWEIZER: No, it's not, because it's legal. What's happening is the same argument --

HANNITY: In fairness to Karen, that's not the same --


HANRETTY: You can't put food and beverage --

SCHWEIZER: What I'm saying is this, that there is a debate going on right now in Albany, New York, about restricting that. The argument that those defendants are making is that we should let them choose.

HANRETTY: That is not our argument.

HANNITY: Hang on a second. The biggest problem we have are the sheared numbers, and Steve touched on this a little bit. We now have 50 million Americans on food stamps. It's doubled under Obama and we have 14 million Americans on disability. That's one in five Americans getting almost their life sustenance from the government.

HANRETTY: That's 47 percent of people on SNAP are children, eight percent are senior citizens.

HANNITY: Karen, good to see you. Thank you.

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