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This Is What’s the Matter With Kansas

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49024-SOS-ATM

I mentioned this briefly in my recent column about Kansas, but the $25 — i.e. de facto $20 — limit on daily withdrawals for TANF recipients merits more sustained attention. Max Ehrenfreund does so:

It’s hard to overstate the significance of this action. Many households without enough money to maintain a minimum balance in a conventional checking account will pay their rent and their utility bills in cash. A single mother with two children seeking to withdraw just $200 in cash could incur $30 or more in fees, which is a big chunk of the roughly $400 such a family would receive under the program in Kansas.

“The complexity of functioning in that cash economy as a very poor family is just not a reality that most of us experience day to day,” said Shannon Cotsoradis, the president of Kansas Action for Children in Topeka. “I pay my bills online.”

Since most banking machines are stocked only with $20 bills, the $25 limit is effectively a $20 limit. A family seeking to withdraw even $200 in cash would have to visit an ATM 10 times a month, a real burden for a parent who might not have a car and might not live in a neighborhood where ATMs are easy to find.

“Banks have traditionally not located themselves in neighborhoods that they perceive either to be unsafe, or where there’s no customer base,” said Kristin Seefeldt, a professor at the University of Michigan who studies the lives of low-income Americans. “If that’s the way they’re getting cash, that can be a real chore and a challenge.”

Reading the random anecdotes the lawmakers relied on underscores the last point. The fact that lawmakers seem to think that if a poor person uses an ATM at a given location they must be using the cash there as an illustration of one problem that arises from a legislature consisting exclusively of affluent people. But this one time someone allegedly took out $102 at Coors Field so all poor people in the state should pay a huge tax to banks! Can’t argue with that logic!

The welfare reform bill Clinton signed in 1996 is bad, and at the core of its badness is that it gave much more discretion to our glorious laboratories of democracy. Controls were not entirely absent, however, and in this case the policy change is illegal. HHS needs to step up here.

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