Why not pay welfare in cash?

Originally published in The Guardian

A computer crashed in Connecticut last week, so welfare recipients couldn’t buy food. How often does this happen? I don’t know; it didn’t make the news, and I learned of it only by chance.

Near my house there’s a discount food store that sells things like old canned goods set to expire in two weeks (whereas a new can might last several years). I don’t trust their off-brand items but they also stock local farm products, so last week I went to buy eggs. As I inspected a carton for cracked shells, the PA system came on and said they weren’t accepting EBT cards since the computers were down.

Cue massive groans throughout the store. EBT stands for Electronic Benefits Transfer, the debit-card system used in lieu of what used to be called “food stamps”. Cashiers said the whole state computer system was down.

Customers put groceries back on shelves, or simply abandoned their carts and left. Others waited for the system to come back online. I made the only purchase in the store – $1.50 for a dozen eggs, which shouldn’t be a conspicuous consumption in a rich country.

The EBT shutdown didn’t last long; next morning the store had returned to normal. A couple of days later, a violent storm knocked out power in my neighbourhood all day and night; stores with generators held limited cash transactions but EBT folk were SOL again.

The fragile EBT system wouldn’t be an issue if we’d go back to old-school food stamps, the quasi-cash coupons redeemable only for specific food items in particular places. Better still, we could abandon food stamps and coupons and vouchers altogether, and just give poor people money. Two hundred dollars cash requires far less overhead than $200 in EBT credit, and cash buys food even when computer systems fail.

But cash also buys anything else for sale in America, and the fear is if we just give poor people money, they won’t spend it responsibly. Sometimes that’s true – look at the lottery winners who go bankrupt a few years later – and there’s plenty who became poor through their own irresponsibility; witness the never-married single mothers who keep having children when they can’t afford the ones they’ve already got.

Too bad. Some people are simply screwups, which no government programme can cure. But not everyone who’s down and out fits that description, especially in this economy. Job disappearance, medical emergency, residence on the oil-poisoned Gulf Coast – America offers plenty of opportunities to plunge into poverty through no fault of your own.

Not that we always admit this; with unemployment ranging from 9.5% to almost 25% (depending on who you listen to and how you define “unemployed”), it’s still considered a major victory when Congress and the Senate agree 26 weeks of unemployment benefits won’t cut it during the worst recession in modern memory.

To be fair, some opposition to the unemployment extension is based not on heartlessness but pragmatism: “We can’t afford it.” That’s why we’re going deeper into debt to pay for it, and we’d sooner cut welfare benefits than reduce welfare bureaucracies debating exactly which brands of processed cheese welfare recipients can buy.

In college I had a friend who applied for food stamps, and when she got them she bought far more expensive foods than she usually ate. Her food-stamp allotment was more than she actually spent on groceries; she’d rather have put the extra money toward her school costs but that wasn’t allowed, and she had to spend her full allotment lest her benefits be cut. So she bought steak instead of ground beef.

Of course, if my friend were dishonest she could’ve sold her extra food stamps; such sales were illegal but happened anyway. EBT cards reduce this fraud, and if the system sometimes crashes so poor people can’t buy food at all – well, that’s a minor event, not worthy of official response or even a blurb in the news.