Kansas Republicans have put forward a new policy initiative that’s almost shocking in its clear intent to harm the interests of poor people. The provision, which takes effect July 1, will ban welfare recipients from taking out more than $25 in benefits a day from an ATM.
Other broadly similar benefits-restriction measures — things like laws that require drug testing for welfare or food stamp recipients, for example, or that ban food stamp recipients from buying seafood or steak — normally have at least a veneer of an anti-fraud or public health rationale. But the ATM rule is simply a financial hardship and a logistical hassle that can’t possibly help anyone other than banks collecting the fees.
As the Washington Post’s Max Ehrenfreund explains, this places a massive burden on recipient families. For one thing, it’s a de facto benefit cut. As of last July, a single parent family of three in Kansas with no other earnings received $429 a month from Temporary Assistance for Needy Families (TANF, a.k.a. welfare), according to the Center on Budget and Policy Priorities. Most ATMs don’t stock $5 bills, so the Kansas rule effectively limits withdrawals to $20.
Taking out that money isn’t free. Many banks charge substantial fees for withdrawals from Electronic Benefit Transfer (EBT) accounts to which TANF money is distributed. I called Intrust Bank in Wichita, which says it charges $2 per EBT transaction. Emprise Bank says it charges $1.50. In addition to that, Kansas itself charges $1 per ATM withdrawal. So taking the cheaper option, withdrawing $420 from Emprise under the new rules would mean $52.50 in fees. Effectively you’d be limited to taking out $380 a month if you didn’t want to go over your monthly allowance, fees inclusive.
Assuming you could only take out $420 at a time before, that’s a nearly 10 percent benefit cut. If you went with Intrust, it’d be a nearly 14 percent cut. Say what you will about benefit cuts, but usually the money all goes to the state. Here, most of it goes to banks. It’s like if Congress slashed food stamps and decided to hand the savings over to Citigroup.