WASHINGTON - A new federal law may require states to prevent the use of cash benefits in liquor stores, gambling establishments and adult entertainment businesses by 2014, USA Today reports. States that fail to establish such policies will be subject to federal support cuts.
A report by the House Ways and Means committee cited reports from eight states about people with welfare debit cards withdrawing money from ATMs located in casinos, liquor stores and strip clubs.
Last year, 4.4 million people received cash benefits that ranged up to $1,000 a month, with the federal government distributing $16.5 billion. Food stamps pay for food and welfare cash is supposed to pay for non-food necessities, but states have said it has been difficult to police the program.
"Until we figure out how to program the machines, it's tough to stop someone from taking cash out of an ATM and buying liquor," said New York state Sen. Thomas Libous.
According to Elizabeth Lower-Basch, a policy analyst for CLASP, an advocacy group for low-income people, the federal law and any state laws cannot restrict how someone spends cash once it is distributed. "It's a way for legislators to look like they are on top of things," she said. "It plays into people's stereotypes of the undeserving poor who buy things that are wasteful."
A Louisiana proposal would have barred all ATM cash withdrawals with welfare debit cards in strip clubs or to buy liquor or cigarettes. It has since stalled.
Last year, Massachusetts passed a law that prohibits spending cash assistance on alcohol, tobacco and lottery tickets, but it has "not possible to pinpoint what is being purchased, as many retail stores sell a variety of products including food, household items, alcohol and tobacco," said Alec Loftus, a spokesman for the Office of Health and Human Services.
Store owners in Massachusetts who knowingly let welfare recipients spend money on prohibited items are subject to a $1,000 fine. To date, there have been no fines assessed.