The Coastal Packet: Maine about to punish the poor for saving money

Sunday, November 1

Maine about to punish the poor for saving money

In Maine, the governor has fired up a debate about whether an individual can have a bit of money in the bank and still need governmental assistance. Starting as early as Nov. 1, Maine is going to limit the financial assets of welfare recipients, effectively discouraging them from saving money.

The state will place a $5,000 cap on the savings and other assets of residents enrolled in the Supplement Nutrition Assistance Program. Those whose bank accounts, secondary vehicles and homes, and other assets considered non-essential by the government, exceed the limit will no longer be eligible to participate in the food stamp program. An individual's primary home and vehicle won't count toward the limit.

The thinking, according to the Gov. Paul LePage's office, is simple: People shouldn't be allowed to take money from the government if they don't need to. "Most Mainers would agree that before someone receives taxpayer-funded welfare benefits, they should sell non-essential assets and use their savings,” LePage said in a written statement.

But the unintended consequences of asset tests, like the one soon to be implemented in Maine, can be crippling, according to a growing pool of people who oppose such requirements. They argue that impoverished Americans, hoping to break from the cycle of poverty, are instead further bound by it. Many in Maine, struggling to make ends meet, will no longer put money aside, since doing so could jeopardize their ability to eat.

"There's a reason most states have moved away from asset tests," said Ezra Levin, who is the associate director of the Corporation for Enterprise Development, a nonprofit organization that fights poverty. Levin specializes in tax and asset-building policies, and is highly critical of LePage's plan. "The tests are counterproductive. They don't help people become self-sufficient. They actually do just the opposite."

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