Home > Uncategorized > Kansas redistributes money from the poor to the banks

Kansas redistributes money from the poor to the banks

May 22, 2015

Take a look at this article (hat tip Felix Salmon), which has me absolutely raging this morning, about new legislation in Kansas that prevents poor people on welfare from taking out more than $25 per day using their state-issued debit cards.

To be clear, you have to round up to the nearest $20 if you want to take out money from an ATM, so that’s really the limit.

And to be clear, there’s a $1 fee to take out money, and then typically an extra $2.50 fee if you don’t have a bank account, which many of the affected people do not.

So altogether, they’re giving $3.50 for every $20 of their welfare benefits, which I’d characterize as a bank tax of 17.5%. Because poor people don’t need that money, never mind the convenience of paying their actual bills.

For fuck’s sake, Kansas.

Categories: Uncategorized
  1. May 22, 2015 at 9:14 am

    Kansas, Louisiana and Wisconsin the three big experiments in creating Galt’s Gulch in the US. Just look at the economies of the three and look at the psychopaths it takes to lead a state into a Rand Utopia. And two of the three think they can run for President. The scary thing is one may be electable by the fools in this country who still care enough to vote.

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  2. May 22, 2015 at 10:01 am

    Blaming The Victim (BTV) is a psychological and political dynamic that arises from the combination of two main forces:

    Cognitive Dissonance. We have people who selfie themselves as members of power elites, who are in reality too chicken-shit (excuse my military terminology) to speak the truth to power.

    Displacement. The above people need to blame poverty the general state of the economy on somebody, but they cannot face the truth of who is really screwing everybody, so they resort to blaming it on the poor, who have the least control over anything.

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  3. May 22, 2015 at 10:19 am

    I wonder, could we start an atm-only entity, charge lower fees, and make a profit? Or break-even, at least? Seems like it should affect the operating cost all that much to load the atms with 5s instead of 20s, so we bring the transaction amount up to $25. That still isn’t a great deal for the welfare recipients, but at least you’ve dropped the transfer tax to 14% without having to work hard at all.

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    • crocodilechuck
      May 24, 2015 at 5:34 pm

      @ Josh: South Africa has done banking for the poor [disrupting ATMs] using mobile phone handsets with encryption for managing stored value.

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  4. Howard Beale IV
    May 22, 2015 at 12:36 pm

    Yet no one really wants to answer how and why the citizens of Kansas keep electing these people into positions of power in the first place.

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  5. May 22, 2015 at 10:49 pm

    “round up” -> “round down”

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  6. Jeff
    May 23, 2015 at 4:30 pm

    You left out a key restriction mentioned in the article which makes this worse.

    When I read your post, I assumed that a poor person could just pay using their debit card instead of cash. (Certainly this is not true for everything, but it is, at this point, very common to be able to pay with plastic. ) However, it appears that every debit transaction in a month after the second incurs a 40 cent fee. (This probably won’t hit 17.5%, but is still likely to be significant.)

    So a prudent and intelligent person should withdraw all the cash at once – exactly the behavior this legislation prohibits.

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  7. May 24, 2015 at 9:46 pm

    Why single out Kansas? How about blue-as-blue-gets New York City? The Electronic Benefit Transfer (EBT) card for Medicaid, cash assistance, and food stamps is great for food stamps. But for cash assistance of $25, the recipient pays $2 and pockets $23.

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    • May 25, 2015 at 12:26 am

      Brochure on EBT cash assistance (1) makes no mention of any cash withdrawal limit, and (2) states there are two free ATM withdrawals per month (p. 2).

      http://otda.ny.gov/programs/publications/5004.pdf

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      • May 25, 2015 at 12:34 am

        Free in the sense that there is an EBT fee only after two withdrawals, but ATMs are allowed to add a surcharge, and they often do, and hence the warning:

        WARNING: SOME LOCATIONS CHARGE $1.00 OR MORE FOR CASH WITHDRAWALS. LOOK FOR A MESSAGE ON THE ATM TO TELL YOU ABOUT THE SURCHARGE BEFORE YOU WITHDRAW ANY CASH.

        Not everyone lives in Manhattan where there are many competing ATMs.

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  8. Trevor H
    May 29, 2015 at 6:03 pm

    This program sucks. Megan McArdle at Bloomberg put it well recently, the optimal level of corruption in any kind of program is never 0. You cause more harm trying to stamp it all out than you save in waste and abuse.

    The change is clearly intended to discourage users of the card from getting cash at all. The charitable interpretation is that they are trying to steer those benefits to “good” uses like buying healthy groceries. Because once the benefit is converted to paper bills, it can be spent on anything and the legislators want to control where that money is spent. But that’s stupid, since cash is fungible there are plenty of ways the get around this restriction like buying stuff with the card for your friends in exchange for their cash. And 2 free transactions on the card is ludicrous. The $.40 per transaction doesn’t seem like much to someone like me who routinely spends a few bucks on tolls driving home from work, but I’m sure it’s different for folks who rely on these benefits.

    The impact may not be too terrible though. Most bills can be paid by a debit card online or at a grocery store – at least they can in Texas where I live. But it’s still adding completely useless inconvenience and hassle to the lives of people who already don’t have it easy.

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