New Kansas law picks the pockets of the poor while humiliating them in the process

By Marc Jampole

When Republicans support or pass a law to address a non-problem, they usually have an ulterior motive. Take the slew of recent state laws making it harder to vote. The stated rationale behind these laws is to prevent voter fraud, a complete non-problem since there is virtually no voter fraud perpetrated by individual voters anywhere in the country. The ulterior motive is to make it harder for the poor and minorities to vote.

The state of Kansas presents the most recent example of using a non-existent problem to ram through legislation that has as its goal something completely different, and devious. The Republican-dominated state legislature has passed and Republican Governor Sam Brownback has signed a law that limits where people who receive cash assistance can spend their money and also limits how much they can withdraw in any single day.

The new Kansaslaw prevents those receiving state cash assistance from spending it on alcohol, cigarettes, tobacco products, lottery tickets, concert tickets, professional or collegiate sporting events, tickets for entertainment events intended for the general public or sexually oriented adult materials. Among the more than 20 types of retail establishments where poor people can’t spend their public assistance money are bail bond companies, movie theatres, swimming pools, jewelry stores and spas. 

To this progressive, these holier-than-thou Kansas lawmakers are imposing their value system on the poor living in their state in a particularly humiliating way. They are essentially saying that if you’re poor, you don’t deserve to enjoy your life, nor do you have the ability to make wise decisions about how to spend money. The law prevents the poor from using their welfare to take their kids to a public swimming pool or to sit in the “cheap seats” at a baseball game.

Kansas reserves this moral harshness for the poor. There are no restrictions on fast-food franchise owners, whose businesses are subsidized because their employees receive so little in wages they qualify for state benefits. Fast-food franchise owners can spend their state subsidy on anything they like. There are also only loose restrictions on how businesses spend the funds they get from tax rebates and other state government support. No state auditor inspects a business office to make sure the business didn’t buy expensive luxury furniture, pay themselves too much money or subscribe to non-essential magazines.

I know that conservatives will disagree, averring that we need to treat our poor with “tough love,” instead of incentivizing poverty.

But we don’t even have to get into a discussion of the rights of those who receive cash assistance to evaluate the efficacy of this new law. All we have to do is look at the facts to see that Kansas is addressing a non-problem.  A 2014 federal report showed that less than one percent of all cash assistance in eight states it studied was spent at liquor stores, casinos or strip clubs. In other words, it’s not really a problem. In other words, those receiving cash assistance do not spend it frivolously or on goods and services that offend some people’s sense of morality. 

We know what the non-problem is that the new Kansas law is trying to solve. The question is what is the ulterior motive? What are these Republican lawmakers really trying to do?

The answer lies in the payment system, I believe. The poor don’t get a check anymore, they get an ATM/debit card, which is why the state can so confidently ban purchases at particular locations like swimming pools and movie theatres.

It usually costs money to extract cash using an ATM card, an average of $4.35 pertransaction nationally, according to bankrate.com. The $25 limit per day means that the poor have to keep coming back to get more money, racking up additional transactional fees. The law prohibits a clever and frugal poor person from getting all her or his money at once to save on fees. 

It’s worse than you think, because, as Elizabeth Lower-Basch, director at Center for Law and Social Policy, an advocacy group for low-income people, notes, virtually no ATM machine gives out $5 bills, so the real limit is $20. At $4.35 a transaction, that’s a more than 20% fee that the poor have to pay to get access to their cash.

What a windfall for financial institutions! 

I think all the other restrictions in the new Kansas law are meant as window-dressing and a diversion from the true purpose of this law—to take from the poor and give to the wealthy, in this case the financial institutions that charge withdrawal fees on those receiving cash assistance. The real reason for the law is not to humiliate the poor, but to divert some of the money earmarked for them to financial institutions.

It’s an interesting twist on the basic Republican economic playbook, which has been to fund massive tax cuts to the wealthy by cutting government spending on everything except the military and the security state apparatus. In this case, the Kansas state government is sanctioning the kind of usury we associate with payday loans and sub-prime used-car loans.