We are public opinion scholars at the Harvard T.H. Chan School of Public Health. We conducted a survey to try to understand how the first round of aid had affected American families in need. What we found shocked us.
We are public opinion scholars at the Harvard T.H. Chan School of Public Health. In cooperation with our partners at the Robert Wood Johnson Foundation and National Public Radio, we conducted a survey in July and August of last year to try to understand how the first round of aid had affected American families in need. What we found shocked us then and feels relevant now as the government negotiates its next steps.
Despite trillions of dollars in government assistance, about two-thirds of families that suffered job losses or reduced wages during the pandemic still reported facing serious financial hardship.
Many people were struggling – and still are – just to pay for basic necessities, like food and rent.
The first round of pandemic aid
Congress passed most of the initial relief in March, including direct payments to qualifying families, expanded unemployment benefits and loans to small businesses that turned into grants if they kept workers on their payroll.
By July 1, when we began our survey, most Americans entitled to a direct check should have received it, and unemployed adults were still receiving supplemental aid of $600 a week on top of state benefits.
We wanted to understand the financial burdens experienced by American families that were economically harmed by the coronavirus pandemic. And we wanted to see whether the government aid was helping the people who needed it most.
Using a nationally representative, randomized survey design, we contacted 3,454 adults and asked them about the financial problems facing their households.
We focused on the 46% who said they or other adults in their household either lost a job, had to close a business, were furloughed or had their wages or hours reduced since the start of the coronavirus pandemic. We published our findings in the economic affairs journal Challenge in January.
Serious financial problems
While it seems like a no-brainer that Americans weren’t ready for the unexpected employment disruptions caused by the COVID-19 pandemic, it was surprising to us that federal aid and charitable assistance seemed to be doing so little to support the people it was intended to help.
We found that the aid didn’t put much of a dent in the financial problems faced by families earning less than $100,000, whether because relief was delayed or wasn’t spent, the amount wasn’t adequate or the funds never made it to the intended recipients.
Among households with employment or wage losses during the pandemic, 87% of those earning less than $30,000 a year and 68% of those earning $30,000 to $99,999 told us they were still facing serious financial problems. And more than half of households in these income brackets reported they had already used up all or most of their savings – or they didn’t have savings to begin with. That share jumped to over three-quarters for people with incomes under $30,000.
Savings take years or decades to accumulate, so it’s likely these households are in even worse trouble now. What’s more, significantly less aid has been provided from the federal government since we conducted our survey.
Julie Dzerowicz, Member of Parliament for Davenport, has introduced legislation in the House of Commons that would enable a national strategy for a guaranteed basic income in Canada.
This is the first time a bill has been introduced in the House of Commons on guaranteed basic income.
If passed, this bill would enable the federal government to establish pilot projects in one or more provinces to test models of implementation of a guaranteed basic income program; create a framework of national standards to guide the implementation of a guaranteed basic income program in any province, and collect data on the impact on government (including responsiveness, cost and reducing the complexity of and/or replacing existing social programs), on recipients, and on recipient communities (including entrepreneurship, job creation and civic action).
Canada’s current social welfare system was created in the 1970s. No matter how many times it is adjusted still too many people fall through the cracks, says a media release.
“Canada needs a robust social welfare system that meets the needs of the 21st century worker, that is more flexible and adaptive while being less complex and better at tackling inequality,” says Dzerowicz.
“It is also important to provide Canadians stability with full and equal access to opportunities so they can be more innovative. I believe that guaranteed basic income could be the key tool that helps deliver on all that and this bill enables us to test it,” she adds.
The world of work is under constant change with many shifting to the gig economy of temporary and short-term contracts and others are being impacted by the effect of automation and AI. It is important for our social welfare system to better reflect the needs of Canadians for today and tomorrow and to be much more flexible at managing labour changes, disruptions and transitions. Bill C-273 proposes that guaranteed basic income is tested as a model that may deliver more flexibility for the new world of workers.
Sheila Regehr, Chair, Basic Income Canada Network, says “This bill takes the building blocks of better income security for all Canadians—the experience, evidence, expertise and know-how we possess—and puts the gears in motion to make it happen.”
BICN is a non-partisan organization that has been working with all parties. This bill, calling for a national strategy, is in line with recommendations in BICN’s brief to the 2021 Pre-Budget Consultations.
Floyd Marinescu, Executive Director, UBI Works, says “Basic Income could create 300,000-600,000 jobs and add $80B/yr to Canada’s GDP while ensuring we have abolished working poverty.
“In this period of rapid disruption of work and declining social mobility, basic income defends equality of opportunity and unlocks our ability to take risks: a key factor for improving Canada’s innovation and labour market productivity.”
As Canada moves its way through this pandemic, it is planning for post- COVID with the intention to spend $70-$100 billion over three years to jumpstart the Canadian economy, it’s the perfect time to fix structural issues, to test innovative ideas, and to build our economic and social foundations back better.
Canada has been criticized for lagging on innovation and productivity. Strong policies, mechanisms and programs are needed to fully focus on improving our innovative potential including ensuring Canadians have the stability they need in order to innovate and take risks, which guaranteed basic income can provide.
Basic income experts, academics and thought leaders have made it clear that there is already strong existing information that supports the effectiveness of guaranteed basic income but less so on the best ways or models to implement and deliver it.
Bill C-273 is focused on enabling the capacity to frame, test and validate different models of implementation to get to those answers and that data.
This legislation comes as provinces like Newfoundland and Labrador and Prince Edward Island consider their own basic income pilots.
“A Guaranteed Basic Income has been bandied about for years and this Bill could provide for the implementation of pilot projects that would allow the collection of data; therefore, decisions could be made on real facts rather than assumptions. I would welcome such a pilot for PEI,” says Wayne Easter, Member of Parliament, Malpeque, Prince Edward Island.
One universal truth holds both pre-pandemic and now: The number one obstacle to escaping an abuser is financial insecurity.
This article contains descriptions and discussion of violence and abuse.
Opinion by Stacey Rutland, founder of Income Movement
When I was 7 years old, my mom woke my sister and me in the middle of the night and told us to pack our belongings into the black garbage bags she handed to us. “And be as quiet as you can,” she told us. We were leaving our abusive stepfather for the first of what would become many times. That night, we drove 200 miles to a close family friend who had offered us her living room couch as a safe space to regroup.
Four years later, the same stepfather left us. After beating our mom, he abandoned us in a home with rent we couldn’t afford without him. It was winter, and our heating bills skyrocketed. Free lunch at school was the primary nourishment for my sister and I during those cold months.
Over the past months, I have imagined what these two crisis moments for our family would have looked like if there had been a quarantine-in-home order and a pandemic raging across the globe.
But millions of women and children don’t have to imagine it; they are living it right now, with dire consequences.
The increased stress that comes from more time spent at home during the pandemic has led to massive spikes in domestic violence, a crime in which women are victims 85% of the time. Early pandemic data shows that in some areas, domestic violence homicides have more than doubled.
Less alone time has also made it harder for victims to access help, as they are unable to escape the watchful eyes of their abusers (the National Domestic Violence Hotline’s website has a quick-exit button on every page to address this devastating reality).
But one universal truth holds both pre-pandemic and now: The number one obstacle to escaping an abuser is financial insecurity.
Our federal leaders have an opportunity in front of them. They can move forward with a standard solution for financial support during this pandemic. Or they can recognize our current reality and build legislation that addresses the needs of those most at risk, those our systems have pushed to the farthest margins. By doing so, they can design a solution that takes care of nearly everyone—including women and children facing quarantine with an abuser.
What does such a program look like? To combat the financial control abusers exert over domestic violence victims, relief measures should use distribution methods that limit an abuser’s ability to isolate his victims by denying him access to existing bank accounts and credit cards. Rep. Rashida Tlaib’s Automatic Boost to Communities Act outlines the use of pre-loaded debit cards that are unique and specific to stimulus support.
This means women would receive their own cards with their own money.
Rep. Tlaib’s proposal outlines distribution of cards via easily accessible public locations, further ensuring funds get into the hands of their intended recipients.
A young woman suffering from domestic violence stands alone in the bay window of her home. (Photo by In Pictures Ltd./Corbis via Getty Images)
Monthly $2,000 checks for the duration of this pandemic would also provide a critical lifeline to victims of domestic abuse. Most abuse survivors have only $250 in savings. These were the findings of a recent report by FreeFrom, a group that focuses on the nexus of intimate partner violence and economic security that has given out thousands of cash grants to survivors throughout the pandemic. Abuse survivors are also four times more likely than the average adult to have faced food or housing insecurity in the past year.
Survivors report the pandemic has made things worse, from the stress of having fewer financial resources to slowed court proceedings delaying critical income like child support.
FreeFrom also found that the average survivor needs just $730 right now to stay safe. Stop and think about that for a moment. In a country that can find billions for corporate bailouts and trillions in tax cuts for the wealthy, it is nothing short of shameful to ask women and children to quarantine in abusive conditions for lack of money.
Instead, what if this economic crisis and health pandemic became an opportunity for women and children to leave a violent situation? What if our leaders wrote legislation that would consider these most vulnerable members of our community?
What if this pandemic was, instead of a prison sentence for these women, an opportunity for independence and freedom?
One $2,000 deposit onto an accessible debit card would pull them out of harm’s way. Recurring checks throughout the pandemic would make sure they have the financial security to stay safe and build new lives. And it would help the vast majority of those facing economic precarity during this pandemic as well.
I know that access to financial resources would have given my mother the ability to leave my stepfather far sooner. I cannot change that for her. But I can fight to make sure that families in the same situation today have the economic security that paves their path to safety.
I should not be alone in this fight. I urge the Biden administration and Congress to join me and protect our country’s most vulnerable by providing a literal lifeline to those who need it most. Pass legislation for monthly stimulus checks today. Support those who need it most during this devastating time.
Stacey Rutland is the founder of Income Movement, an organization that’s been at the forefront of the fight for recurring stimulus checks.
President Biden, the House Ways & Means Committee, and Senator Mitt Romney (R-UT) agree: They want to increase child benefits to parents who work and those who do not, and they want to deliver benefits regularly throughout the year rather than waiting until families file their tax returns each spring.
But what federal agency should administer such a program—the IRS or the Social Security Administration (SSA)?
Neither SSA nor IRS is the obvious best choice. In the short-term, the IRS holds a slight edge: It has political support and expanding a program is easier than starting a new one. In the long-term, SSA may be better because it has experience delivering monthly payments and shifting benefits when families change. But transitioning from a tax credit delivered by the IRS to a child allowance delivered by SSA might prove difficult and should be done cautiously.
What is the proposed policy?
The House Ways & Means Committee and President Biden would make the child tax credit (CTC) fully refundable, which means even very low-income families would get the full credit. This is a departure from current policy. The credit would continue to be administered by the IRS, but it would be delivered monthly or quarterly.
Romney, by contrast, has his eyes set on a monthly child allowance administered by SSA.
Which agency would likely reach more children?
Any new benefit will succeed only if it can actually reach children. The IRS now delivers a tax benefit to 95 percent of all families with children. About half of the children it misses are in high-income households that are ineligible for the benefits.
But half are in low-income households that would mostly be eligible for the expanded CTC. Some children live in households that don’t file a tax return because their income is too low, even though tax is being withheld from their paychecks. Others may live in households that file a return but are ineligible for a benefit because they do not meet all the eligibility criteria.
Reaching children whose parents don’t file taxes will be difficult for the IRS. In 2021, this might be simpler than in years past, since some families either used the IRS non-filer portal to claim an economic impact payment or received a COVID relief payment based on information the IRS received from SSA. Either way, the IRS has reasonably recent information on those families.
SSA has a more complete registry of all children since almost all parents apply for a Social Security Number for their newborns. But SSA has little current information about where to send payments.
Even if it could match children with parents, SSA still would not know where to send the payments since it generally does not track address changes for children. The one exception: SSA does send payments to 6.5 percent of children who are eligible for a monthly benefit from Social Security. But that’s not much of a base to work from if the Administration wants to stand up a program quickly.
Which agency would be better at delivering regular payments?
Monthly or quarterly payments would be much more helpful for cash-constrained families than annual ones. My TPC colleague Howard Gleckman and I suggested the IRS could administer the advance payments – but only with substantial additional resources.
SSA, on the other hand, already delivers payments to about 69 million people each month. A universal child allowance would double its workload. Still, while both agencies would need time and funding to deliver a monthly child benefit, SSA is closer to reaching this goal than the IRS.
Which agency can adjust to changes in family structure?
Family structure evolves throughout the year for many people. Parents marry and divorce. Children move among different households. As a result, advancing the child tax credit means some people will receive payments for which they will be ineligible while others may receive less than they are owed.
The Ways & Means legislation allows that some CTC payments made in error will not need to be paid back, limiting the risk that low-income parents will face a surprise tax bill when they file their returns. The legislation would not provide payments until July, so advance payments may not present a problem this year.
But changes in family structure that lead to erroneous payments would be an issue if Congress continues the program. The annual nature of filing a tax return limits the IRS’s ability to deliver a partial credit to multiple households caring for a child over the course of the year.
SSA determines eligibility for some benefits monthly, and it can respond to changes such as when a child who receives Supplemental Security Income (SSI) moves from one household to another. In that case, the benefit could follow the child. It does not have a system to track changes in family income so may not be able to react in real time to a benefit that phases out with income.
Are payments from SSA treated differently than tax credits from the IRS?
In general, benefits delivered through the tax code by IRS don’t count as income for purposes of determining eligibility for other federal benefits such as Supplemental Nutritional Assistance Program (SNAP, formerly food stamps). Payments from SSA, on the other hand, typically do count as income when determining eligibility for other benefits.
Congress could make an exception for a child allowance administered through SSA, but that might be confusing for those receiving both child payments and, say, SSI. Legislators would need to be careful transitioning from a tax benefit to a child allowance, making sure to minimize unintended consequences.
Over the long run, SSA’s flexibility and its experience delivering monthly payments might make it the better agency to deliver a regular child benefit. But if lawmakers want to stand up a program quickly, IRS seems like the better bet.
Walmart CEO Doug McMillon said more customers spent their recent stimulus checks on necessities, such as groceries, rather than big-screen TVs.
He said the spending patterns indicate that more families are hurting and need help.
The retail chief stressed that message when he met with President Joe Biden last week.
When Walmart CEO Doug McMillon went to the White House last week, he said he gave a clear message: Americans urgently need another round of stimulus checks.
Walmart’s stores and websites reflect consumers’ spending patterns, the retail chief said in an interview with CNBC’s Courtney Reagan on “Squawk Alley.” The company could tell when they stocked up on food and cleaning supplies in the early part of the Covid pandemic and gravitated toward bikes, puzzles and hair color as they remained stuck at home.
When consumers got the most recent stimulus checks at the end of the year, he said a new pattern emerged: more shoppers put the extra dollars toward buying necessities.
“We can see in our customer behavior that some customers — as they received this most recent stimulus — are spending it more on basics, more on private brands, smaller pack sizes, things like that as opposed to some of the stimulus dollars that came out earlier last year that were spent more like tax rebate checks, where people were buying televisions and things to entertain themselves at home,” he said.
“There’s a bit of a mix shift now and we think it reflects the fact that customers out there do need some help.”
McMillon met with President Joe Biden and Treasury Secretary Janet Yellen last Tuesday, along with JPMorgan CEO Jamie Dimon, Gap CEO Sonia Syngal, Lowe’s CEO Marvin Ellison and Tom Donohue of the U.S. Chamber of Commerce. He said he urged help for American families and small businesses during that meeting.
The current bill calls for direct payments of $1,400 per individual, or $2,800 per married couple, plus $1,400 for both child and adult dependents — but lawmakers are still hammering out a deal and numbers could change.
If approved, it would be the third direct payment to Americans since the start of the pandemic and the largest check so far. The government sent payments of up to $1,200 in the spring and another that was up to $600 in December, but the amounts and eligibility were based on a person’s income.
As a major retailer, Walmart would benefit if customers have more money in their pockets.
Its chief financial officer, Brett Biggs, told CNBC that its fiscal fourth-quarter earnings got a lift from stimulus payments and it would expect similar results if consumers get another check.
Yet McMillon said he stressed stimulus checks during his Oval Office visit because of what he has seen and heard at the company’s stores.
He said some families have increasingly dire financial circumstances as they struggle to find work.
McMillon said he recently spoke to a customer who was trying to stretch $20 to cover all of his expenses for the last week of the month, from groceries to gas.
“Those customers are the ones that the stimulus package needs to go help and go help quickly,” he said.
The expert panel would have benefited from a political scientist or, heaven forbid, one or two people actually living in poverty sharing the pen.
By Hugh Segal
A recent report of the British Columbia Expert Panel on Basic Income prepared over two years by three economists, two from B.C. and one from Alberta, has given encouragement to long standing opponents of a basic income.
In some ways, however, the very nature of their sixty-five recommendations for program changes in income security and related programs in B.C. undercuts the anti-basic income orientation of the report itself. The analysis and recommendations of the report do appear to have the authors bumping into themselves while coming around the corner.
They are right, of course, in one central conclusion: basic income is not affordable by any one province on its own.
Important pillars of Canada’s poverty reduction program, the Guaranteed Income Supplement for seniors, and the Child Benefit for low-to-modest income families with children are national programs administered by Ottawa. They are successful and efficient — and did not and do not require building new administrative capacity to administer them, now, or in the future — as would be very much the result for the multi-program fix called for by the B.C. expert panel.
The other rather intriguing conclusion from the content of the report, was the agreement of all three panel members to downplay the value of “autonomy” for those in poverty who might be lifted out of poverty by basic income.
Better, the report concluded, to shower the poor with a myriad of different programs, each incrementally adjusted or improved over the present version, in the belief that will create the village necessary to help the poor.
It is the classic government conceit, that if “we build it” they will come — the “they” here being the poor with no other choice.
Our First Nation brothers and sisters understand the sound of “the crown knows best” trumpet. It is simply a colonialist response that denies poor Canadians the life choices, however modest, that a basic income would provide.
The B.C. report embraces costing of a basic income with assumptions about the option of sending a cheque to everyone, whether needy or not, and taxing back the excess from those not in need.
There are few proponents in Canada of this Andrew Yang-style American proposal.
As is the case with the Guaranteed Income Supplement and the Child Benefit, that has not been the Canadian way. Our tax system is an excellent way of determining need, through the statutory filing we all make, and enhanced automatic filing now being considered by Ottawa.
The Guaranteed Income Supplement for those over sixty-five is based on the premise that every senior needs around $1,500 monthly ($2,400 for a couple). The gap between what they do have and $1,500 is topped up by the supplement — the opposite of “the same cheque for everyone” as opponents of a basic income allege. Recipients will need different levels of top up, and that is exactly what happens now.
The B.C. report buries very little of the compelling case for basic income by questioning the improvement in health outcomes that would accompany using a basic income to lift the poor into the mainstream.
The three economists set aside decades of empirically reviewed literature on the social determinants of health.
Most disappointed at the report are the members of the B.C. Green party, whose alliance with the New Democrats allowed the Liberal government to be replaced without an election. They sought action on the basic income, as a condition of that alliance.
The B.C. NDP government may well use the expert panel as a rationale to do little if anything other than tinker incrementally with a myriad of programs.
Poverty levels in B.C. will not come down as a result of any of report’s recommendations.
There are lessons here for those who care about government and the quality of expert advice it seeks and, on occasion, receives.
The expert panel would have benefited from a political scientist or, heaven forbid, one or two people actually living in poverty sharing the pen.
Even Adam Smith, the market and society theorist from the eighteenth century, whom they cite in their anti-basic income rationale, might well have told them that.
One woman’s work to get UBI onto the screens and into the hearts of Americans.
By Diane Pagen
People who care about winning a Universal Basic Income (UBI) have done many things to push it into the public consciousness and onto the desks of public servants. Over the years, a host of things including flyers, street outreach, interviews, calling elected officials, public art, community groups, conferences, demonstrations, and now many online activities are ways people have worked to move progress on UBI.
No one ever thought of doing a Public Service Announcement (PSA). Until 2021. Until Gisèle Huff.
I remember PSAs when I was a kid. They were short and to the point. They helped people understand important community problems, and solutions. They appealed to our desire to be a community. There was one to remind kids to be kind to seniors; one to remind people how to cross the street (“cross at the green, not in-between”); to be a good friend (include the new kid at recess); to pick up your trash (“don’t be a litterbug!”) and to guard against prejudice (we need to bring that one back).
Gisèle Huff’s project to create a PSA for a Universal Basic Income began more than a year ago. Her late son, Gerald Huff, was a proponent of UBI for many years before his death in 2018.
The grief Gisèle endured and her desire to continue Gerald’s legacy led to her declaration that she would continue to work for the world Gerald envisioned — one where people’s basic needs were met so they could fully realize their talents and humanity.
Gisèle established the Gerald Huff Fund for Humanity to advance work toward a national UBI.
In conversation, she explained to me how she re-connected with one of her late son’s childhood friends, who is now active in public relations and advertising. They talked about her idea for creating a PSA. This led to introductions to a marketing team that was excited to work on a PSA as Gisèle envisioned it.
The PSA launched Thursday, January 14th and has reached almost 3 million viewers during its broadcast across the digital space, which has included airtime on news organizations sites like The Wall Street Journal, Buzzfeed, Vice and more.
Who are the target demographics for this PSA? “Young people, and people of modest incomes or low-incomes with children are some of the people who most need to see this and hear its message,” Gisèle said. “Also, people who have so-called ‘good jobs,’ because over the past several decades, job security has eroded. The person with a ‘good job’ is more and more finding themselves on the losing end of the employer-employee equation. A Universal Basic Income will provide the income security that will matter as traditional job security disappears, exacerbated by increasing automation.”
The second group of people who need to see it, Gisèle explained, are politicians. “Our biggest problem is our leadership. They are stuck in the 20th century and they can’t seem to climb out on their own.” The PSA will help politicians and leaders connect our current economy to the experience of the American people and help them think about “earned” income in new ways.
“With COVID, workers in low-paying jobs, who were previously thought of as expendable, are now recognized as ‘essential,’’ Gisele continued. “A Universal Basic Income is a great way to recognize worker value with tangible cash to meet their own needs.
“When we look at our economy in highs and lows, every single person is essential. We need to start demonstrating that we know this through our economic policy.”
Gisèle is 84, with a lot of lived experience. She emigrated to the U.S. from France as a child with her mother, after living under Nazi occupation during WWII. They came knowing no English and with $400 to their name. From that humble beginning, as Gisèle explains, “it was possible for me to climb the economic ladder as the epitome of the American Dream.”
“Back then, the economy was very different. A worker was able to advance with relative security. I was able to succeed in that economy. But we are telling today’s workers a lie — that that model of work and economic reward is still the foundation of America’s economy. It isn’t that way anymore.”
Despite the disastrous toll that COVID-19 has had on the world economy, there continue to be those in power who insist the traditional job market is still intact. Resistance to cash relief by some in Congress is proof that many leaders are so detached from ordinary people that they do not see the economy clearly. The PSA invites people to undergo a “mind shift” in how they think of their own worth, and the worth of everyone else, friends, neighbors, even strangers.
The PSA says simply that Universal Basic Income is the way forward for American society.
“We must communicate that the way to show that our society is really one that values people is to legislate it,” said Gisèle, “with a Universal Basic Income.”
Recurrent, direct payments should be a permanent part of the U.S. recession-fighting arsenal.
Opinion by Mark Blyth
Early in the COVID-19 pandemic last year, just one month after dropping out of the U.S. presidential race, Sen. Bernie Sanders (I-VT) took a clear and bold stance for families:
$2,000 monthly checks until the crisis is over.
Sanders’s fight for direct checks is right, as checks are a much needed lifeline for families in the midst of the COVID-induced recession. But there’s more that must be done.
So let’s ask the bigger questions here. Why on Earth in the year 2021 are we relying on checks? And why do we have a political bun-fight over this issue every time it happens?
First, checks. Really? Practically every American has a smartphone. There are tons of banking apps from Paypal to Zelle to Venmo. The U.S. Treasury has a website called Treasury Direct that allows anyone to set up an account to buy Treasury bills and bonds.
The government could simply reverse the direction of those transactions and send cash from the Treasury to those account holders.
No holdups in the mail. No missing addresses. Best of all, we could make it recurring.
We have all heard about the “K-shaped” economic recovery that the U.S. is experiencing. The top 20% of U.S. society commands 80% of the wealth. Whenever that is threatened by a market crash or a pandemic, the Fed swings into action to provide “support” for those markets. What that really means is buying lots of bonds and flooding banks and businesses with cash to stabilize them. The Fed can even promise to buy certain types of assets, such as corporate bonds, to stabilize their price.
The Fed is able to do this because its “pipes” flow from the Fed to the big banks and then out to big firms. The Treasury, what the rest of us rely on, has no pipes, hence the checks.
This is not only unfair — boosting the price of assets held by society’s richest citizens while telling the vast majority to wait for a check is a first-rate inequality booster.
It’s also harmful and needlessly expensive. Recognizing this, we should rethink our financial plumbing and the purpose of our pandemic response. Not just for this crisis, but for the future.
Let’s start with the basics. Can we please stop calling them stimulus checks? That makes them sound like a party drug. They are not. They are better thought of as insurance checks. Why? Because by insuring families against job and income loss, you stop an already bad recession from becoming a deeper crisis.
It simply makes sense to insure society against depressions and families against bankruptcies.
Second, rather than pumping hundreds of billions of dollars into the banking and corporate sectors, somehow hoping that this will impact employment, let’s make these insurance payments electronic, automatic and targeted at families up to the 60th percentile of the income distribution.
Congress can set an employment target such that when U.S. unemployment reaches a certain level the Treasury automatically sends out checks. When the target goes back to its pre-recession peak, the checks automatically stop. This would impact families directly, and given that they will spend what they receive it will not all end up pumping up an asset bubble and ever greater inequality with it. This would be far cheaper than what we currently do and far more effective. It would give the Fed less to do and target Treasury resources far more effectively. Worried about cost or even future inflation? Easy. Once we return to the target, raise taxes. Both problems are solved.
Direct payments to families are effective. The first check issued in the spring of 2020 was a primary reason that U.S. poverty fell at the start of the recession.
But as the money ran out, up to 8 million people were forced into poverty. As chair of the Senate Budget Committee, Sanders has the opportunity to continue to lead the fight to get money to those most impacted by the pandemic — and make sure it continues until the crisis is over.
But Sanders should push his Senate colleagues and President Joe Biden to make recurrent electronic payments to the bottom 60% of American families a permanent part of the U.S. recession-fighting arsenal. This is the 21st Century, so why are we using a 19th Century technology (the check) to fight today’s economic problems? That’s politics — and it’s politics America can do without.
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Mark Blyth is the William R. Rhodes ’57 Professor of International Economics; The Watson Institute for International and Public Affairs, at Brown University.
Giving people money is a proven, fast, equitable strategy to spur economic recovery. The truth is, we need recurring stimulus checks in addition to established progressive policies.
The hole America faces is deep and getting deeper every day as COVID-19 cases mount and the economy struggles to restart. Which is why Washington must think bigger for the recovery package. The biggest danger right now is doing too little, rather than too much. President Biden’s leadership on bold relief comes at a crucial time.
The idea of $2,000 stimulus checks has exploded in popularity over the past few months. Georgia Senators Jon Ossoff and Rev. Raphael Warnock ran, and won, in large part on checks. President Joe Biden committed to introducing legislation for additional direct payments to families.
While a one-time stimulus check is critical to help people in the midst of the pandemic, for a real and sustainable recovery, we’ll need recurring checks until the crisis is over.
Giving people money is a proven, fast, equitable strategy to spur economic recovery. The truth is, we need recurring stimulus checks in addition to established progressive policies—like unemployment insurance and the Child Tax Credit and Earned Income Tax Credit—that uplift all Americans, especially communities of color, until this pandemic is over.
The jobs crisis is severe and worsening: According to recent data, US employers cut 140,000 jobs in December. All were held by women, while men gained employment. On top of that, women ended 2020 with 5.4 million fewer jobs than they had in February, before the pandemic began, while men lost 4.4 million jobs over that same time period.
And beneath this gender disparity was another problematic difference in job loss; Black and Latinx workers lost more jobs in December than their white counterparts. That’s a major blow, considering that Black and Latinx households are twice as likely to have difficulty paying their bills. They also face higher levels of food insecurity, COVID-19-related mortality, and business closures than their white counterparts.
Families experiencing economic hardship need relief that is both fast—the IRS can get money into most Americans’ bank accounts in a matter of days—and sustained. Bills keep coming, and the checks need to keep coming too: Data suggests the CARES Act checks ran out for many families after a couple of months. The programs we already have are essential to expand but we need to do more — and faster. Expanding unemployment insurance essential, lifesaving for workers who get it, but it’s not reaching most of the people who have lost income. Urban Institute estimates that regular checks could keep 3.5x more people out of poverty than unemployment insurance alone. In other words, while these essential programs complement direct checks, they are not alternatives.
Alongside unemployment insurance, a relief proposal at the scale of the crisis should include the promised $2,000 check, followed by additional checks of $1,000 or more, monthly or at least quarterly, until employment approaches pre-pandemic levels. We can target this relief to families who need it and will spend it – to help those who are struggling and drive the recovery.
The Urban Institute research shows that just one more $1,200 stimulus check could keep 8 million Americans out of poverty, while two more checks could save 14 million from falling into poverty.
Imagine what monthly checks could do for struggling American families. Direct checks targeted to the bottom income earning half of households would also ensure those same families aren’t left behind, and would disproportionately benefit Black and Brown families hit hardest.
If relief is big enough, Brookings analysis confirms, direct payments would have a greater impact on our GDP in the immediate term than many other major policies under consideration.
We’ve learned this lesson before. The Obama-era 2009 Recovery Act was too small, and a decade later many Americans still struggled. Many economists agree that the Recovery Act fell short of delivering a speedy recovery and the decisive political win that would have come with it, because it wasn’t sustained enough or visible enough to everyday Americans (and thus was often viewed as a corporate bailout).
President Biden appears to understand: we must avoid that mistake this time and “failure to do so will cost us dearly.” Checks make government support visible to Americans. We must not underestimate the power of putting money in people’s pockets at a time when so many are barely scraping by.
The economic conditions facing most Americans are getting worse, not better. We should target checks to those who need help most and who will spend it to spur the economic recovery. But a one-time check will only last people a couple of months, at most. To truly build back better, we need recurring payments until the crisis is over. People who are going without food, medicines and electricity cannot afford to be held hostage to political games in Washington. They need steady and regular relief, and it is the duty of our president and Congress to provide it to them. It’s good economics and the moral thing to do.
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Foster is the co-founder and co-chair of the Economic Security Project, an organization focused on cash-based policies, guaranteed income and curbing corporate power.
Americans are strongly in favor of a very large Covid-19 relief bill. It seems likely that this enthusiasm reflects more than just anxiety over the pandemic; many Americans are fed up with decades of a stingy welfare state, and in this crisis they finally see an opportunity to make back some lost ground.
A recent report by McKinsey & Co. found that countries that generally spend less on social welfare ended up increasing their government spending by more during the pandemic. A look at the data shows this relationship fairly clearly:
Source: OurWorldinData.org
The Anglosphere countries — the U.S., U.K., Australia and Canada — tend to do substantially less social spending than European countries like France, Germany and Sweden in normal times. But the U.S., UK, and Canada boosted their spending much more in 2020 than those other countries (Australia did less, but probably just because it wasn’t hit as hard by the virus).
Thus, the pandemic relief package was so big precisely because it had to be — there was not as much of a pre-existing safety net to catch Americans when they lost income due to the pandemic.
Not surprisingly, a recent Quinnipiac Poll showed 68% in support of President Joe Biden’s new $1.9 trillion relief proposal.
The most popular spending measure, according to a recent YouGov survey, is the broadest one: a one-time payment of $2,000 per family member. Biden’s actual proposal calls for an additional $1,400 on top of the $600 already allocated in the December relief bill.
Although some on the political left are demanding much more, $2,000 per person is actually a lot of money. Real income per capita in 2020 was only $2,300 lower than in 2019. Thus, a $2,000 payout to every person in America, combined with the previous $1,200 payout in the Cares Act, would more than cancel out the entire 2020 income loss from the pandemic, on average.
Of course that’s just an average. Many people have suffered far worse drops in income, usually as a result of unemployment. But remember that the cash handouts are far from the only form of relief.
There’s also the special pandemic unemployment benefit, which was so generous that poverty actually fell during the darkest early days of the pandemic. There were also supports for businesses to keep workers on payroll, as well as various other forms of aid. Globally, the U.S. has been above average in its generosity with overall aid during the pandemic, and Biden’s bill would move us further up the rankings.
The very generosity of the Cares Act seems to have awakened something in the American psyche. It was the most transformative, effective government social program since the creation of Medicare in 1966. And it was so simple: the government just gave people a bunch of cash. It appears to have vindicated the refrain of those who have been calling for the U.S. to increase the welfare state by adding direct cash benefits rather than expanding the typical thicket of vouchers and conditional aid.
People want more.
After decades of cuts to welfare programs, austerity in the middle of recessions, and hectoring lectures about how the American people don’t deserve government bailouts, the Covid-19 relief effort has finally helped Americans to realize that the government can just send them cash, and that this makes their life better.
They’re not ready to stop at a measly $1,200.
And yet while helpful in the short run, cutting Americans $2,000 checks won’t fix the underlying problem of the welfare state. If the U.S. is going to add cash benefits to the current mix of government rograms, it needs to add them on an ongoing basis. This is what Biden’s child tax credit proposal and Senator Mitt Romney’s even more generous counter-proposal are all about.
Though it’s not quite a universal basic income, these cash payments — $3,000 to $4,200 per year for each child in a family — would be very widely targeted.
They represent the country’s best shot at the dream of a bigger but simpler welfare state. So one-time $2,000 checks are fine, but child tax credits would be a much more enduring way of giving Americans a boost.
As Congress debates a new COVID-19 aid package, millions of Americans are struggling to pay for rent, groceries, utilities and medical bills, or to keep their small businesses from shutting down.
We know their needs are both large and urgent because they tell us about them.
Since March, an American has started a COVID-related fundraiser on GoFundMe every two minutes. It’s not something they do lightly. Asking for help is difficult. People do it when their needs are dire and they have nowhere else to turn.
In fact, when the pandemic began, 1 in 3 fundraisers on GoFundMe were related to COVID-19, and the activity has persisted at an alarmingly high rate.
Their pleas have turned GoFundMe into a leading indicator of the biggest pandemic-related hardships. Even before the weekly jobless claims, the monthly unemployment numbers and the quarterly gross domestic product reports tell us the state of the economy, we at GoFundMe learn firsthand about the real struggles Americans face.
Surge of people asking for help
It will surprise no one, then, that in the past year, we’ve seen an unprecedented surge in fundraisers of all kinds, as the economy tanked, millions lost their jobs and nearly 1 in 4 families faced food insecurity.
From March 1 to Aug. 31 alone, people started more than 150,000 fundraisers for COVID-related assistance on our site, and the requests for help have yet to abate. Last month, even after Congress passed a second relief bill in December, the number of new fundraisers on GoFundMe was higher than in May during the first wave of the pandemic.
The situation is nothing short of a national emergency. Congress should treat it as such by quickly passing a large relief bill whose generosity is commensurate with the need.
We’ve known for years that most Americans don’t have $500 to spare to cover unexpected emergencies, like a car breakdown. Now, it’s as if their entire lives are breaking down again and again and again. The scale and variety of the fundraisers we see point to the level of desperation among Americans and give us a window into where the relief could be most helpful.
Monthly bills. In October, after seeing a steady rise in fundraisers from people struggling to pay bills like rent and utilities, we created a new category for those on our site. In just a few months, it has grown into one of the largest categories on the platform, accounting for 13% of fundraisers.
A new round of stimulus checks would help scores of needy families, like that of Martha Zepeda of Houston. While Zepeda, a single mom who has struggled to make ends meet throughout the pandemic, has been out of a job for three months, she didn’t tell her daughter, Alondra Carmona, a high-school senior. By the time Carmona found out earlier this month, they were two months behind on rent and faced a likely eviction in March. Carmona, who has been accepted to prestigious Barnard College, decided to put the entirety of her college savings to support her family. “As much as I dream of going to Barnard College, it is not looking promising right now,” Carmona wrote on GoFundMe, as she sought to raise the money she needs to make that dream a reality.
Restaurants and small businesses. During 2020, fundraisers seeking donations for small businesses — previously a rarity — became commonplace: 3 of every 5 COVID-related fundraisers in the United States sought to support small businesses and their employees, with restaurants alone accounting for tens of thousands of fundraisers. After ebbing during the summer months, fundraisers for struggling restaurants spiked anew toward the end of the year.
Many are small family-owned businesses like Ray’s Ice Cream, which has served its community in Royal Oak, Michigan, for 63 years, employing thousands of local youngsters along the way. Last year, as sales to restaurants flatlined and COVID-19 restrictions forced Ray’s to close, it faced the prospect of having to lay off its employees. “I would love to make payroll for all these great kids that work for me,” owner Tom Stevens wrote on GoFundMe.
Food. It’s no secret that hunger and food insecurity have risen sharply during the pandemic. As millions turned to food banks across the nation, we also saw a sharp increase in fundraisers from people seeking help to cover their next meal. After spiking in April, the fundraisers for food leveled off at rates that are far higher than typical. In January, for example, they were 45% higher than a year earlier.
These are hardly the only areas of need. We’ve seen high-profile appeals for support for renters facing eviction, front-line workers who need personal protective equipment and a never-ending stream of fundraisers aimed at supporting students, classrooms, charities and more. The surge in these types of fundraisers is a direct result of government programs coming up short.
We are pleased that the fundraisers for Ray’s Ice Cream and Alondra Carmona resonated with the GoFundMe community. Donations to Ray’s topped $78,000, allowing Stevens to make payroll and keep the store open. And in just a few days, Carmona easily surpassed her goal of raising $75,000 so she can pursue her dreams of a STEM education at Barnard.
They’re not alone in benefitting from the kindness of relatives, friends, neighbors and even strangers. Someone makes a donation on GoFundMe every second.
Much of it comes from regular folks: 70% of donations are for less than $50. And we’re stepping up, too, donating millions to family and business relief efforts through our charitable arm.
We are proud of the role that GoFundMe plays in connecting those in need with those who are ready to help. But our platform was never meant to be a source of support for basic needs, and it can never be a replacement for robust federal COVID-19 relief that is generous and targeted to help the millions of Americans who are struggling.
Last spring more than 50 members of the Senate of Canada urged the federal government to implement a guaranteed basic livable income program. At the same time, a special committee of the Prince Edward Island legislature called on Ottawa to join the province in creating a guaranteed livable basic income (GLBI).
Doubters suggested a GLBI would be too costly, and too complicated. They’d prefer tinkering with the status quo. The GLBI idea seemed stalled.
Faced with this hurdle, a group of Island Senators has written Premier Dennis King and Prime Minister Justin Trudeau to suggest a way to end the stalemate. Why not start with a small pilot project in Prince Edward Island?
In our letter we reminded Mr. Trudeau that Prince Edward Island’s modern economy is a result of an innovative 1969 federal-provincial program called the “P.E.I. Comprehensive Development Plan.” Ever since, successive governments have used P.E.I. (population ~150,000) as a “test bed” for important innovations in agriculture, fisheries, energy from waste, wind energy and so on.
Now out of the economic disruption caused by COVID-19, P.E.I. and the federal government have another historic opportunity for social innovation. The arguments for a GLBI are well-known and are persuasive, especially in an economy like PEI’s with an ageing demographic.
Last week the British Columbia government stepped away from the GLBI idea because of the plan’s perceived potential shortcomings. A pilot project in P.E.I. would test those concerns and allow the program to be adjusted as needed.
Critics may argue against an incremental approach, but we should not forget that medicare, our most successful social program, began incrementally, one province at a time starting with Saskatchewan.
In 1984, the Macdonald Royal Commission recommended a GLBI as a counterbalance to the negative effects of free trade with the United States. The Mulroney government passed free trade, but ignored the rest of Macdonald’s report.
Mr. Trudeau now has an opportunity to finish that work and, in so doing, turn the page on the economic devastation caused by COVID-19 and build a brighter future for P.E.I., and one hopes, eventually for millions of Canadians.
The government response to the economic disruption caused by the pandemic was a scramble, with some covered and others not. Had a Guaranteed Livable Basic Income been in place, Canadians would have been automatically protected.
We closed our letter by urging Mr. Trudeau to begin Canada’s post-pandemic recovery with a pilot GLBI program in Prince Edward Island, the birthplace of Confederation.
A guaranteed livable basic income truly is – an idea whose time has come!
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Diane Griffin, Brian Francis and Mike Duffy are Senators for Prince Edward Island.
When governments in developed countries like the U.S. and Britain provide extra support for low-income people through tax credits and more generous unemployment benefits, individuals’ mental health and wellbeing generally improve, according to a new paper by a group of U.K. researchers.
By contrast, however, introducing benefit restrictions like work requirements and time limits generally worsen mental health.
The conclusion, which is based on a comprehensive review of published quantitative observational studies over decades, has increased importance as the coronavirus pandemic and accompanying economic turmoil has led governments around the world to overhaul social assistance programs.
“Changes to social assistance policies, reductions in those, were a very common policy that was studied, and were mostly related to detrimental outcomes in terms of mental health,” said lead author Julija Simpson, a Ph.D. student at Newcastle University.
Simpson wrote the paper, which will be published in the March 2021 issue of Social Science & Medicine, alongside Newcastle University colleagues Viviana Albani, Zoe Bell, Clare Bambra and Heather Brown.
The paper comes as U.S. lawmakers consider overhauling the child tax credit system, and the U.K. is mulling additional austerity measures that would cut unemployment benefits, possibly sending hundreds of thousands of British children into poverty.
Simpson said the mental health implications of these policies must be considered alongside other health and economic concerns.
“We’re all vulnerable to what happens, and it could be the global pandemic or it could be your own life circumstance, but we all need social security,” said Simpson. “If you’re always concerned with survival, then you can’t really do much else.”
The paper was the first review to systemically examine the effects of social security reforms on mental health, meaning the researchers synthesized a variety of past quantitative studies on the topic rather than conducting their own.
To do this, they searched several academic databases for studies on the topic between January 1979 to June 2020, coming up with more than 20,000 results. They then used screening criteria to narrow the sample down to just 38 studies.
“Because I tried to be quite careful not to exclude any relevant studies, the search terms were relatively broad,” said Simpson.
Out of the studies, 21 examined social welfare expansions and 17 evaluated contractions.
Eight of the studies examined the Earned-Income Tax Credit — or EITC — in the U.S., a policy that subsidizes earnings for low-income families. Four of the studies found that expanding the EITC significantly improved mental health outcomes. An additional study found that introducing a high-rate state EITC reduced the annual age-adjusted suicide rates by nearly 4%. Another study on suicides, however, contradicted this claim.
Two studies also examined an EITC-like “welfare-to-work” program from the U.K. that expanded support for low-income families by providing more generous tax credits. Both studies showed a positive effect on mental health for low- income people.
“They were generally found to improve mental health for the recipients,” said Simpson of both the U.S. and U.K. policies, adding that tax credits are “a good way to improve both employment outcomes and health outcomes.”
The researchers also examined seven studies on 1990s welfare reform in the U.S., in which the federal government replaced the Aid to Families with Dependent Children program with a far more limited program called Temporary Assistance for Needy Families, which contained restrictions like work requirements and benefit time limits. Single mothers were most severely impacted by the changes, Simpson said.
The seven studies were mixed, with some showing a significant deterioration in mental health and others showing no effect.
“Those studies mostly showed that [the reforms] had negative effects on mental health,” Simpson said.
The researchers also examined studies on disability and retirement benefits and mental health, though with much smaller sample sizes.
In aggregate, the studies have a clear message, the researchers found: Expanding social welfare benefits improves mental health.
The review comes amid a rapidly growing academic interest in examining secondary and potentially unintended effects of social safety net policies. For example, University of Strathclyde economist Otto Lenhart has recently found that raising the minimum wage is associated with a drop in teen births and that providing paid family leave reduces child hunger.
Simpson said she plans to focus further research on ongoing social security reforms in Britain. She’s also interested in conversations around universal basic income in the U.S.
The paper, titled “Effects of social security policy reforms on mental health and inequalities: A systematic review of observational studies in high-income countries,” is forthcoming in the March 2021 issue of Social Science & Medicine and was made available online Jan. 18. The authors are Julija Simpson, Viviana Albani, Zoe Bell, Clare Bambra and Heather Brown of Newcastle University. Simpson is lead author.
The most visible—and popular—pieces of economic relief Congress has approved over the past year have been relief payments and enhanced jobless benefits.
The initial $1,200 payment, combined with the $600 weekly boost to jobless benefits, lowered poverty rates in the midst of a pandemic and worst economic crisis in 100 years.
Surveys of the American people throughout the past year have been consistent—there is overwhelming support for a stronger safety net—in the form of simple, straightforward relief—in the midst of a pandemic.
The American people recognize that their neighbors are experiencing unprecedented financial challenges through no fault of their own.
As Democrats move forward with President Biden’s American Rescue Plan, the income thresholds for relief checks are still being debated.
President Biden has proposed beginning to phase out the checks at $75,000 for an individual and $150,000 for a couple, which I also support. Let me explain why this is the right approach.
Families who have not experienced job loss are still struggling due to fewer shifts, less business, and new child care responsibilities.
Picture a couple with two children in elementary school. They made $140,000 prior to the pandemic. Dad made $75,000 and Mom made $65,000. Mom was able to work from home and managed work, remote school, and child care for months into the pandemic, but quit her job in October when she could no longer manage it all. That’s been the experience for millions of working women.
Now they are trying to make ends meet with half their previous income. Mom is hoping to begin looking for work when school reopens, but her children have fallen behind in school and she’s spending much more time helping them with their work.
This family would have received a relief payment in January and is surely counting on another one to help pay their bills and relieve some of the stress of their new situation.
While the IRS would use their 2020 income if they file early when determining whether they receive a relief payment, even their 2020 income does not reflect their current circumstances.
I agree with my colleagues that “high income” families should not receive help, but I don’t think they would consider the family described above as “high income.”
While they aren’t facing the same struggles as other families who have lost jobs, they clearly need more help.
New polling from Data for Progress and Groundwork Collaborative shows strong support for prioritizing getting relief out the door quickly, over even further targeting of payments—77 percent of Democrats, 61 percent of independents, and even 46 percent of Republicans—support getting checks out the door quickly and aren’t too concerned about whether families with a bit more of a financial cushion get additional relief.
The bottom line is that the American people recognize the unprecedented nature of this crisis. They know that families are experiencing their own unique challenges, which is why they strongly support being more generous with relief, not less.
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Senator Ron Wyden is the Democratic Chair of the Senate Finance Committee.
Members of Congress, mayors, organizers, small business owners, and individuals impacted by the pandemic participated in events across the country on Thursday, February 6th as part of a nationwide Day of Action demanding that Congress pass recurring $2,000 checks.
Recent polling shows that more than 80% of the public supports $2,000 checks, including 74% of Republicans. And 60% support recurring monthly payments of $2,000 until the pandemic is over.
The “Make it Monthly” Day of Action, organized by Economic Security Project Action, Change.org, Income Movement, and The People’s Bailout, included events in 12 states; a live, national conversation with Members of Congress, our very own Natalie Foster, and restaurant owner Stephanie Bonin; an ad in TIME from 33 mayors.
“Past Due” Events
The delivery of $2,000 “past due” invoices to 19 Members of Congress in 12 states by grassroots organizers and individuals impacted by the pandemic. The invoices contained the names of more than two million people who signed a Change.org petition asking Congress to authorize $2,000 monthly checks.
In Irvine, CA, activists met with staff of Congresswoman Katie Porter who accepted the invoices, and listened to stories from some UCI students and a constituent who had to close his business.
In Hanford, CA, Lemoore resident Aurora González delivered a message to Congressman David Valadao: Congress must include monthly stimulus checks in the next COVID relief bill. Oralia Vallejo of the Kings County Latino Roundtable noted that government COVID relief has not been sufficient, especially for the low-income residents who have lost their jobs as well as farmworkers.
“We really need this support so we can improve the lives of everybody.”
In Orlando, FL, organizers Erica Wright and Stacey Rutland from Income Movement delivered petitions representing 154,000 signers to the office of Senator Marco Rubio.
In Portland, ME, Lewiston resident Gina Morin, a volunteer with the Maine People’s Alliance, helped deliver 6,000 invoices to the office of Senator Collins.
In delivering the petitions, Morin said, “I know what it’s like to have been forced onto the street, and I’ve been working with other volunteers to help folks here in Lewiston but there’s only so much we can do.”
In Las Vegas, NV, organizers delivered petitions to the offices of Senator Catherine Cortez Masto. Nick Rampone with Humanity Forward said, “People just need [checks]. Our belief is that recurring cash stimulus, direct to the people, is the most effective way to do that.”
Live Conversation with The Appeal
Congresswoman Ilhan Omar (D-MN), Congressman Tim Ryan (D-OH), former Stockton Mayor and Founder of Mayors for a Guaranteed Income Michael Tubbs, Economic Security Project Co-chair Natalie Foster, and restaurant owner and Change.org petition organizer Stephanie Bonin, joined a live conversation hosted by The Appeal and NowThis, about how one stimulus check isn’t enough, and they should be recurring.
Congresswoman Ilhan Omar: “Every single day, our office is inundated with voicemails, emails from people who are desperately struggling to put food on the table, to keep a roof over their heads, just to survive…
“Many of us who have, unfortunately, known what real struggle looks like, which unfortunately isn’t that much here in Congress, can attest to the dire struggles that people are faced with, the anxiety that they’re living with, the desperation in their voices as they leave voicemails for us. And we have to do everything that we can.”
Congressman Tim Ryan: “This has been an issue from before the pandemic. We’ve seen income inequality continue to be exacerbated by globalization, by automation, by huge tax cuts over the past 20 years that went primarily to the top 1%. This has led to the level of income inequality that has been unsustainable for so many families.. The economy is clearly on the wrong track for 80% of the American people, and this is an opportunity to highlight that, to talk about investments into families.”
ESP co-chair Natalie Foster: “Direct cash payments are the best, fastest way to put relief into people’s hands. Because rent comes every month, the bills come every month, putting food on the table happens every month, and so should the checks… It will be hard to do, but we can do hard things. And we have to do hard things.
“There are now 35 mayors across the country who have called for a federal guaranteed income, and many of them are demonstrating the idea in their cities, from St. Paul, to Columbia, SC, to Atlanta, GA.
“There is a groundswell of support for monthly checks.”
Former Stockton Mayor and MGI Founder Michael Tubbs: “There always seems to be a lot of hand wringing and heart wrenching discussion about how to help the majority of people. But just four years ago, we passed $2 trillion in tax cuts — not in the pandemic, in regular times — to the richest among us, which is even more than President Biden is proposing with his $1.9 trillion package.
“This is a question of values, a question of who we are as a country, and a question of do we want to not just recover, but do we want to build back better from where we were.”
Restaurant Owner and Change.org petition organizer Stephanie Bonin: “What people are spending the checks on is different, whether it’s diapers, or being able to make our rent, or being able to make up for reduced hours, it’s all different. But what we have in common is that we’re all trying to be survivors of COVID-19, and in doing that, we need help. And that’s what we’re calling on.”
— Mayors for a Guaranteed Income (@mayorsforagi) January 21, 2021
While everyone was coming out for the Day of Action, mayors were also speaking out for checks. Mayors for a Guaranteed Income, representing 33 mayors from cities and towns across the country, ran an ad in TIME calling for recurring checks until the end of the pandemic.
Billboard for Recurring Checks in West Virginia
Income Movement put up a billboard in West Virginia urging Democratic Sen. Joe Manchin to back $2,000 stimulus checks, garnering several local news stories and a response from Sen. Manchin indicating his openness to targeted direct checks.
More Perfect Union joined in on the local efforts, interviewing West Virginians who would be the most affected by austerity measures.
In their own words, families and workers asked Sen. Manchin to “come to the people of West Virginia, and tell our people why we don’t need this money.”
We sponsored this billboard to call out @JoeManchinWV for not supporting stimulus checks. What a great video by @MorePerfectUS to give voice to the People of West Virginia and how they feel about higher min wage & $2k Checks @JoeManchinWVpic.twitter.com/5rrhNH3BCK
— Income Movement #MakeItMonthly (@income_movement) February 4, 2021
A new report from AARP’s Public Policy Institute explores how the coronavirus pandemic has amplified chronic problems in long-term care, as nursing homes became COVID hotspots and hiring home health aides was complicated by shortages and the need to isolate. More family caregivers have stepped in to provide help for their loved ones over the past year, at significant personal financial cost, due to lost wages and spending to cover needs.
The report finds that expanding state programs that compensate family caregivers for some of the assistance they provide to their family and friends can be an important solution – during COVID and beyond – for providing caregiving needs in a cost-effective way that also meets many families’ desires to be there for their loved ones.
In the past year, 15 additional states have expanded their self-directed programs to allow hiring of family members.
Many people prefer to hire someone they know, such as a family member, friend or neighbor, and a majority (65%) of those caring for an adult have said a program under which they were paid for at least some of their caregiving hours would be helpful.
“The vast majority of older adults want to stay in their homes as they age, and allowing them to pay a friend or family member to help with their daily needs can make that possible,” says Susan Reinhard, Senior Vice President of AARP’s Public Policy Institute.
“The pandemic provided a push for states to expand this option, and we hope many of them will make their policy changes permanent. Paying family caregivers is a solution that saves states money and meets the growing need for long-term care.”
The report also looks at possible cost savings from providing more home and community-based care. According to a multi-state analysis from Public Partnerships, participants in self-directed care programs received an average monthly budget of $1,774 in 2019, compared to a monthly cost of $6,175 for a Medicaid-funded semi-private room in a nursing home. Most programs that allow family members to be paid for caregiving are operated under Medicaid, with a smaller number funded by individual states or the Veteran-Directed Care program.
This paper is the fourth in the AARP Public Policy Institute’s LTSS Choices initiative – a series of reports, blogs, videos, podcasts, and virtual events that seeks to spark ideas for immediate, intermediate, and long-term options for transforming long-term services and supports. Click here to learn more.
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AARP is the nation’s largest nonprofit, nonpartisan organization dedicated to empowering people 50 and older to choose how they live as they age. With a nationwide presence and nearly 38 million members, AARP strengthens communities and advocates for what matters most to families: health security, financial stability and personal fulfillment. AARP also produces the nation’s largest circulation publications: AARP The Magazine and AARP Bulletin. To learn more, visit www.aarp.org, www.aarp.org/espanol or follow @AARP, @AARPenEspanol and @AARPadvocates, @AliadosAdelante on social media. Source: AARP
In 2019, Mitt Romney became the first Senate Republican to endorse a form of child allowance, where all low- and middle-income parents would get a cash benefit to help raise their kids, regardless of whether or not they’re able to work. At the time, the plan was modest, amounting to only $1,500 a year for kids under 6 and $1,000 for kids 6-17.
But on Thursday, Romney went further and proposed the Family Security Act, one of the most generous child-benefit packages ever, regardless of political party. The plan completely overhauls the current child tax credit and turns it from a once-a-year bonus to massive income support, paid out monthly by the Social Security Administration. (The bill text isn’t final, but you can read the Romney team’s summary here.)
Romney’s plan would replace the child tax credit, currently worth up to $2,000 per child and restricted to parents with substantial income (it doesn’t fully kick in until you reach an income of over $11,000), with a flat monthly allowance paid out to all parents:
Parents of kids ages 0 to 5 would get $350 per month, or $4,200 a year
Parents of kids ages 6 to 17 would get $250 per month, or $3,000 a year
Parents with multiple kids could get a maximum of $1,250 per month or $15,000 a year; that translates to five kids between the ages of 6 and 17. Very large families would be somewhat penalized, but many families with three or four kids will get the full benefit.
Just like the current child tax credit, Romney’s proposal would phase out for wealthy parents — the benefits begin phasing out for single filers with $200,000 and joint filers with $400,000 in annual income.
But the phaseout would be implemented on the back end, through the tax code — even the richest parents would still get their $250-$350 per-kid checks in the mail every month; they’d just return the money on April 15.
That helps ensure the benefit is truly available to all eligible people and not delayed due to concerns of “overpayment.”
If you’re a liberal reading this and wondering if there’s a catch, there is — but it’s not necessarily a huge one. Romney doesn’t want his plan to add to the deficit, and he wants to simplify the set of child-related benefits the government currently offers. So his plan would pay for the child allowance by eliminating a number of other programs, including some that mostly benefit the poor (more on those below).
They estimate that poverty as they measure it would fall by nearly 14 percent across the board (lifting 5.1 million people out), and by one-third for children. The effects would be even more pronounced for extreme poverty, defined as living under half the poverty line. Some critics argue the poverty line Niskanen uses is too low, but the point remains: This plan would do an awful lot to chip away at poverty in the United States. (You can read Niskanen’s full report on the plan here.)
Poverty effects of the Mitt Romney child allowance plan.
That poverty effect, Niskanen concedes, is smaller than the effect of Joe Biden’s proposed one-year child tax credit expansion would have during that one year. But that’s only because the Romney plan curtails tax breaks and cuts spending, including getting rid of other programs for low-income people that the child allowance renders redundant.
The upside of Romney’s plan being fully paid for, however, is that it would allow Congress to make the measure permanent under budget reconciliation rules, whereas the Biden proposal that relies on deficit funding is a temporary one-year measure.
The Romney plan also has some advantages over the Biden plan as currently presented, even beyond being permanent. Checks are sent in a truly universal manner, which makes for easier monthly payments. As of this writing, the Biden administration hasn’t commented on whether or not its plan will include monthly payments, though some Democratic offices in Congress have told me on background they are pushing for monthly payments. A White House spokesperson told me, “We are working with Congress and the Treasury Department to determine the best way of getting families this relief in the American Rescue Plan.”
The Romney plan has already earned praise from surprising quarters.
Matt Bruenig, the leftist writer and founder of the People’s Policy Project think tank who writes frequently about child benefits, told me:
“Among the child benefit policies that have been proposed so far, Romney’s is the best. It has the highest benefits and the simplest administration. I’d like to see Romney get rid of his proposal’s benefit phaseout and child cap, which create hassle without meaningful savings, but otherwise it’s a pretty solid proposal.”
Sharon Parrott, president of the left-leaning Center on Budget and Policy Priorities, which pushes for expanded benefits for low-income people, was more skeptical. “This proposal shows growing bipartisan support for expanding the child tax credit, but it’s misguided to undercut the policy’s poverty-reducing impact by using deep cuts in other critical forms of support for low-income people to pay for it,” Parrott told me.
“They want to talk about it as consolidation, but they are massive cuts. Their own document shows an EITC cut of $47 billion.”
In its current form, the Romney plan may not be able to make it through Congress, for reasons Parrott highlights and detailed further below. But if the Biden administration embraces it and tweaks it, it could hit on a rare achievement: a truly bipartisan expansion of the social safety net that permanently reduces poverty in America.
The background to Romney’s proposal
To understand the Romney plan and why it’s so important, you have to understand a bit about how the child tax credit works now.
Currently, the credit offers parents up to $2,000 a year (up from only $1,000 a year before the Trump tax cuts). But the benefits are sharply limited when it comes to poor families. That’s because households have to earn at least $2,500 per year for the credit to be “refundable,” or for households that don’t have a tax liability to actually receive the benefit. And only $1,400 of the $2,000, at most, is refundable; poor families that don’t make $2,500 a year can never get the full $2,000.
An American without any taxable income — say, a single mom with a kid who lives with family but doesn’t have a job because of the recession or some other barrier — won’t owe any taxes, but because their income falls below that $2,500-a-year threshold, they don’t get any benefit from the current child tax credit.
The problem is more severe than that, though, because even above $2,500 per year the credit phases in slowly, at a rate of 15 percent. A parent has to earn at least $11,833.33 to qualify for the full refundable credit, a bar that the poorest households can’t meet.
That has led to a variety of proposals meant to expand access to the credit for poor people. The most modest suggestion, pushed in the Senate by Marco Rubio (R-FL) and Mike Lee (R-UT), was to let families that pay payroll taxes, but not income taxes, claim the credit. That still excluded the poorest families where the adults are out of work. The Rubio-Lee measure failed on the Senate floor during the 2017 tax cut debate (though they did succeed in increasing the credit to $2,000 per child for people with high enough incomes to owe taxes).
Democrats went bigger. During the tax cut fight, Sens. Michael Bennet (D-CO) and Sherrod Brown (D-OH) proposed a bill called the American Family Act (AFA) that would make the child tax credit fully refundable — meaning poor families could access the full benefit right away, no phase-ins or income thresholds. They refined the bill with Reps. Rosa DeLauro (D-CT) and Suzan DelBene (D-WA) and reintroduced it in 2019; by the end of the last Congress, 38 of 47 Senate Democrats had sponsored or cosponsored it, as had 188 of 232 House Democrats. The latest version is expected to be reintroduced for 2021 soon.
The AFA looks a lot like the Romney proposal. It would also offer $3,000 a year or $250 a month for parents of kids aged 6 to 16; 17-year-olds would not be eligible, and are not eligible under the child credit now.
It offers a lower payment compared to the Romney plan, $3,600 a year or $300 per month, to children under 6. But it also includes no cuts to other programs that might offset the credit’s benefits.
The AFA also envisioned the payments being made by the IRS and/or the Treasury Department, rather than through the Social Security Administration as in the Romney plan. There are advantages and disadvantage to using each agency, Elaine Maag, an expert on child and family benefits at the Urban Institute, told me:
“SSA does have experience delivering monthly payments, which is certainly an advantage they have over other agencies … but SSA does not have information about who a child lives with, which means they would likely need to coordinate with the IRS on who should receive the payment.”
Joe Biden, as part of his American Rescue Plan, has essentially proposed implementing the AFA for exactly one year. His plan as proposed does not specify that the payments will be monthly, though his campaign proposal did include monthly payments. Biden’s campaign plan and the American Rescue Plan also include 17-year-olds, which neither the current child tax credit nor the AFA did.
The key to Romney’s plan: It’s deficit-neutral
Mitt Romney walking to the floor of the Senate on January 26.
Mitt Romney, a Republican, is calling for an even bigger child benefit for kids than President Biden is. So why might Democrats not immediately want to sign on?
The short answer is the pay-fors. Romney’s plan is deficit-neutral at least through 2025 (when many Trump tax breaks expire, making analysis beyond that year tough), and to do that he pairs his remarkably generous child allowance plan with some cuts to other tax breaks and spending programs.
The state and local tax deduction (SALT) in the income tax, which critics decry as regressive but also provides a subsidy for blue states with high income and property taxes
Romney would also replace the earned income tax credit (EITC), which currently offers more benefits to families with more kids, with a flat credit worth up to $1,000 per working adult, with no child-related component. The EITC for adult dependents, however, would be unchanged.
The Niskanen analysis suggests that poor Americans, overall, would come out ahead in this trade.
The SALT deduction, for instance, is highly regressive. Per the Tax Policy Center, about 75 percent of the benefit of the deduction goes to the richest 20 percent of Americans; the bottom three-fifths of Americans get roughly nothing from it.
The child and dependent care credit, while well-intentioned, is also poorly targeted. It’s not refundable, so the more than 40 percent of households without a positive income tax burden cannot benefit from it. As a result, the Tax Policy Center estimates only 12 percent of families with children benefited from the credit in 2020. By contrast, roughly 100 percent would benefit from Romney’s plan.
Eliminating the head-of-household filing status, while boosting other benefits for single parents and caretakers (as through a child allowance), is a common feature of tax reform proposals because it makes filing taxes more complex without much payoff. And while TANF is supposed to benefit poor families, in practice states tend to use it as a slush fund to fund whatever they like. For every 100 families in poverty, only 23 got TANF benefits in 2019, while 100 would qualify for the Romney allowance.
That said, the people who do rely heavily on the program might suffer.
“Eliminating TANF as one way to help pay for the costs of the new benefit is tricky,” Urban’s Maag says. “TANF is a small program affecting a small population. Eliminating it will likely create difficulties for those families; it’s a relatively small but disadvantaged group.”
But while all of Romney’s pay-fors may appear to be reasonable trades for a generous child allowance, they might create political headaches for the plan in Congress. Democrats in rich blue states like New York and New Jersey are fervent defenders of the state and local tax deduction, with many pushing to repeal even the modest limits on the deduction put in place in the 2017 tax bill. (Less cynically, some tax experts have argued that state and local taxes really should be tax-free, to encourage rich people to live in high-tax states and subsidize their poorer neighbors.)
Meanwhile, Biden has proposed dramatically expanding the child and dependent care credit by making it fully refundable and much, much more generous. Eliminating it entirely obviously goes in the opposite direction.
And, Parrott notes, Romney could have financed the plan with tax increases on the rich, rather than cuts to other safety net programs.
“The question is how you’d finance a child tax credit expansion for low-income kids,” Parrott says. “Their answer, largely, is to take away resources from low-income kids.”
The bottom line: The Romney plan would make a real dent in poverty
Democrats do not, on their own, have 60 votes in the Senate, which means that Republicans opposing a bill can block it by filibustering. The only way around that, for the time being, is the budget reconciliation process, which enables 51 senators (or 50 and tiebreaker Vice President Kamala Harris) to pass legislation.
It’s hard to see Romney’s proposal gaining enough Republican support to get the plan above 60 votes, though I’d be thrilled to be proven wrong on that front. But it could easily, with Romney, Democrats, and maybe a few other Republicans on board, make it into a reconciliation package.
The difficulty with reconciliation packages is that they normally cannot increase the deficit after 10 years. When George W. Bush passed his tax cuts in 2001 through reconciliation, those tax cuts had to sunset in 2011.
A permanent child allowance, without any pay-fors, would definitely increase the deficit. That’s part of why the Biden administration has so far only proposed a one-year variant of its plan to expand the child tax credit.
So Romney’s plan offers a plausible and appealing alternative. It’s almost as effective at reducing poverty, even when taking into account its pay-fors, as the Biden plan, and because it’s deficit-neutral, it can be enacted permanently as part of a budget reconciliation package. And obviously, a permanent plan is more valuable to poor families than Biden’s one-year package.
If Biden wants to tweak it by slightly changing the pay-fors, that’s fine; I’d prefer a more generous allowance paid for by higher taxes on the rich, to make up for the EITC cuts.
But it’s important not to let the perfect be the enemy of the good. And as it stands, the Romney plan is better than the Biden plan, in my estimation, if only because it’s permanent. A Romney aide told me they have reached out to the president already on the topic and are hoping they can negotiate.
It might not be Chuck Schumer’s ideal plan, but it would help millions of families with children in a straightforward way. It would meaningfully slash poverty and provide a base from which to slash it more in the future.
Programs that give families cash, according to UC Irvine economist Greg Duncan, result in better learning outcomes and higher earnings for their kids.
One study found a $3,000 annual income increase for poor parents is associated with 19 percent higher earnings for their child once he or she grows up. That implies that a child allowance of that size could dramatically improve the lives of children decades later.
Romney’s plan presents an opportunity to enact that kind of profound change in the lives of millions of impoverished children. Congress shouldn’t pass it up.
The Biden administration and its allies in Congress are pushing for a new round of $1,400 checks to all but the richest Americans. If you’ve been following the ins and outs of Covid-19 relief politics in recent weeks, this isn’t surprising news.
The $1,200 checks were not refunds. They were just checks, and they were available even to low-income Americans with low or no tax burdens.
These checks were the closest the US, or most other rich countries, had ever come to trying a universal basic income. By one estimate, 93 percent of Americans got money from the program, which offered benefits to, say, a family of four as long as they earned under $218,000. “93 percent basic income” is not quite universal basic income, but it’s not far off, either.
March 2020 was a strange time when it felt like the world as we knew it was collapsing, so it was natural to think this would be a one-off policy. But it wasn’t. Democrats in Congress pushed for more cash in the spring and summer. So did President Trump and some Republicans like Sen. Josh Hawley (R-MO) late last year. The result was a surprising second batch of stimulus checks: $600 in cash sent to most adults.
In the wake of the December stimulus bill’s passage, Trump expressed his preference for an even bigger $2,000 check, a target enthusiastically embraced by Democrats in Congress.
Riding that momentum, Biden and his allies in Congress are trying to send out $1,400 checks to reach that $2,000 goal. Meanwhile, progressives are pushing the administration to support even larger checks — not just $1,400 to top up the $600 from December, but a full $2,000.
Whatever the final figure ends up being, it’s worth stepping back to appreciate just how much the politics of giving people money has shifted in the past year. Sending cash is hugely popular and has become the subject of mass public attention in a way that’s rare for legislative proposals.
Cash’s bipartisan popularity, and its ability to muster large-scale public interest and support, suggests that the future might involve a lot more policies like checks — even when the pandemic has passed. Covid-19, in other words, may have done what years of basic income advocacy could not do on its own: convinced our political class that handing out cash is a good, popular, economically effective policy.
More than that, the surprising embrace of checks by some Republicans suggests that the tax cut-centered right-wing politics that emerged in the Reagan era may be waning. If slashing rates is replaced in the Republican toolkit with handing out checks, that’s a win for basically everyone.
The self-sustaining politics of checks
There’s a great bit in the pilot episode of The Carmichael Show where Jerrod Carmichael’s dad, played by David Alan Grier, confesses that he voted for George W. Bush in 2004. His liberal Black family is shocked and horrified. But his explanation is simple: Bush gave him a check in 2001. “He sent me that stimulator check. No president ever sent me $1,600. Nobody ever sent me $1,600. You can bomb whoever you want long as you send me $1,600.”
Sen. Phil Gramm (R-TX) holds a mock tax refund check while speaking in support of President George W. Bush’s tax cut plan in 2001.
I don’t know how common a reaction that was to the 2001 tax cut checks (which were more like $600 for married couples). But Grier’s character’s reaction gets at the heart of why checks have taken off this year.
Members of Congress often act, in the words of political scientist David Mayhew, as “single-minded seekers of reelection.” There are lots of ways to get yourself reelected, but wouldn’t sending your voters money be the simplest way of all?
Congress does all kinds of other giveaways, of course, from the mortgage interest deduction for the affluent to the earned income tax credit for the working poor. But they tend to be relatively complex and buried in the tax code, where it’s hard for voters to know who, exactly, in Congress made this help for them possible. Why not simplify it dramatically?
For years I’ve been somewhat baffled, as a writer on social policy, that this logic hadn’t taken off more. Examples like Bush’s 2001 refunds were rare; Wisconsin Gov. Scott Walker (R) tried a similar approach with his “sales tax rebates” for families with kids in 2018, but the amounts were paltry, at just $100 per child.
It seemed like there was a strong taboo against simply attempting to send money to voters, as evidenced by the criticisms that Walker was engaged in “vote buying” by introducing his refund plan in the months leading up to his election.
A common genre of viral tweet in 2020 involved insisting that $1,200 was all the US did for people, usually while exaggerating what other countries did (by, say, insisting Canada gave everyone $1,433 a month when it just did so for unemployed people, to whom the US gave at least $2,400 a month):
But this reaction tells us something important: The flat cash checks to almost every American were by far the most visible part of the country’s policy response to the Covid-19 pandemic.
Even other good, relatively broad-eligibility policies like the unemployment bonuses were less salient to people.
And for politicians, there’s a real advantage to offer tangible, salient relief that’s visible to all. This helps explain why Jon Ossoff and Raphael Warnock, the two Democrats who flipped both Georgia Senate seats on January 5, made the $2,000 checks proposal central to their campaigns. Ossoff is now reportedly urging fellow Democrats to be “bold” in pushing for actions that result in immediate material gains for voters. It’s not hard to see why: That’s a big part of the political strategy that made him a senator.
Cash politics has downsides, but they’re easy to overstate
Not everyone, even on the left, is enthusiastic about the rise of checks as the de facto language of economic populism. The most compelling critique is that giving money to citizens is just one of many functions the government will perform — and that if checks become too popular, the other functions will get starved.
The way conservatives are going to do fiscal policy in 2035 is by giving everyone $10,000 checks and lowering the cost of the total package by gutting entitlement programs. https://t.co/XSFPwnvA0A
How much check money is given out, economic policy analyst Nathan Tankus notes, is “becoming a proxy for how good or bad legislation is. If this continues to be established as a benchmark, we will get worse and worse legislation.”
More money in checks can mean less money for public health infrastructure, education, medical research, and basically everything else the government does other than hand out money.
That may not be a terrible thing if the benefits being crowded out can be replicated with cash — $1,000 in cash is more valuable than $1,000 in food stamp benefits, for instance, because it can be spent more flexibly and on more material needs, a common argument UBI advocates make. But there are other priorities like schools or medical insurance for which checks cannot substitute.
This has already happened to some degree in the one US state with a universal cash program: Alaska, which pays out a “dividend” from its oil wealth to all residents every year.
Pressure to increase that dividend has translated into spending cuts, rather than tax hikes, from the state’s Republican leadership. Depending on what’s being cut, that can translate into a net loss for many residents.
This is a valid concern, and people like Tankus are right to raise it. But I still think check politics is an improvement on the politics surrounding fiscal policy that preceded this moment.
To see why, it helps to break down the approach to checks taken by the two parties. Are Democrats eschewing non-check investments in favor of checks, now that they have unified control of Congress and the presidency? Not really, no.
The checks are the largest provision in the plan, per the Committee for a Responsible Federal Budget, at about $465 billion, but state and local aid isn’t far behind at $350 billion, and another $350 billion would go toward expanding unemployment insurance.
Democrats just don’t seem to be using checks as an excuse to avoid investing in other non-cash priorities.
Republicans are a different story. Figures like Hawley or Sen. Mitt Romney (or Donald Trump) who embraced checks over the past year do not typically pair this with a commitment to invest elsewhere in the budget, at least outside of defense. Trump’s budgets as president frequently included deep safety net cuts, even as he pushed hard for $2,000 checks. So it’s reasonable to worry that the future is Republicans pushing for big cash payouts at the expense of other priorities.
My optimistic read on this, though, is that this means Republicans are using check politics for the same purposes they have used tax cut politics in the past. And check politics is a marked improvement.
The end of tax cut populism?
It’s easy to forget this now, but the Reagan tax cut project of the 1980s was largely a populist endeavor. Business interests, sociologist Monica Prasad has found, were not particularly enamored of Reagan’s and other supply-siders’ plans to slash the top individual tax rate from 70 percent to 50 percent.
Business interests were understandably more focused on pushing through substantial corporate tax rate cuts and saw individual rate cuts as a distraction. But the Republican coalition embraced across-the-board individual rate cuts, at least in part, because the idea was genuinely popular, Prasad argues.
President Ronald Reagan signs tax and budget cuts while on vacation at his ranch in 1981.
Tax rates were much higher across the board in 1981 than they are now, and even more importantly, inflation was high and rising, and tax brackets were not indexed for inflation. This meant that with each passing year, more people were getting pushed into higher tax brackets, which angered middle-class taxpayers, not just the rich.
The key to victory for conservatives, supply-siders like Jude Wanniski argued, was not to become Scrooges decrying government spending, but to become like a “second Santa Claus.” The first Santa Claus was the Democrats, who offered benefits through more spending programs. The second Santa Claus would be the Republicans, offering benefits through tax cuts. It was an explicitly populist strategy, and it made sense politically, if not economically.
As critics of the tax cuts, then and now, have noted, across-the-board tax cuts have the effect of helping the rich more than the middle class. But that doesn’t mean they were unpopular.
Reagan’s subsequent political success, followed by the relative failure of George H.W. Bush when he raised taxes, served to convince Republican operatives that across-the-board cuts were a winning strategy.
And so across-the-board cuts made their way to the top of George W. Bush’s agenda in 2001, with measures like the $600 refund checks as a way to bolster the populist appeal of the changes to folks like Jarrod Carmichael’s TV dad. As the political scientist Larry Bartels noted in his classic paper on the Bush cuts, “Homer Gets a Tax Cut,” the result was that a plurality of Americans supported Bush’s policies even as they acknowledged the tax cuts mostly helped the rich. It’s just that they perceived the cuts as also helping them.
The net effect of these policies was not far from the one feared by check skeptics today — that checks will mean less money for public health, education, and other priorities.
Bush’s and Reagan’s policies ballooned deficits, which enabled the successful calls for austerity by Republicans in Congress like Newt Gingrich in the 1990s and John Boehner and Paul Ryan in the 2010s.
The tax cut-fueled deficits enabled Gingrich, Boehner, and Ryan to chip away at spending priorities important to Democrats through a series of deals with former presidents Bill Clinton and Barack Obama. This is not to say that the “starve the beast” strategy — cutting taxes to force reductions in government spending later — was always successful. But it’s hard to see measures like the “sequestration” cuts of the Obama years happening without the Bush tax cuts increasing the national debt, and Republicans’ ensuing use of the debt as a rationale for budget cuts.
President Trump holds up a tax overhaul bill after signing it into law in the Oval Office in December 2017.
In the Trump years, though, tax cut populism ran dry. Republicans had cut middle-class taxes to the bone under Reagan and Bush and so focused their attention on slashing the corporate tax rate.
The result was the Tax Cut and Jobs Act of 2017, an unpopular package the American public rejected, seen as a giveaway to corporate America.
The bill did cut rates for individuals by a few points here and there, and more importantly greatly expanded the standard deduction, but the public correctly saw middle-class benefits as minimal compared to what corporations and the rich got.
The poorest Americans got $60 each back on average, the Tax Policy Center found, while the top 1 percent got over $50,000 apiece.
This was a development some conservative policy analysts and thinkers had anticipated. The “reformicon” movement of the 2010s sought to reorient Republican economic policy away from tax rate cuts and toward more concrete benefits for middle-class taxpayers, like a more generous child tax credit. The idea was that the Reagan formula of slashing rates across the board couldn’t work anymore. The party was running up against the limits of what rate cuts could do. They had to figure out how to be a different kind of Santa Claus.
The signature proposal of the reformicons — a child tax credit refundable against both the income and payroll tax, not just the former — did not exactly set the world on fire, perhaps because it was mostly about adjusting refundability formulas, and no ordinary person knows what the phrase “refundable tax credit” means.
Indeed, the main legacy of that proposal has been that Democrats picked it up beginning in 2017, made it simpler to understand ($3,000 cash to every child every year, plus an extra $600 to young kids), and used it as a centerpiece of their tax agenda starting in 2019, most recently by including it in Biden’s American Rescue Plan.
A simple plan
You can think of stimulus check politics, then, as a kind of round two of the reformist conservatives’ ideas. It’s even simpler than Democrats’ “$3,000 to every child every year” plan.
Everyone below the phaseout — in Biden’s proposal, $75,000 for individuals, $150,000 for households — gets money: adult, child, whoever. Unless you’re pretty rich, you get a check. It’s a better way to be a second Santa Claus than either the Reagan/Bush tax cut approach or the convoluted tax credit plan of the reformicons.
If Republicans arrive at check politics as a replacement for tax cut politics, it will be good for their political prospects — but also incredibly good for the country. What made tax cuts politics somewhat deceitful was the idea that to help the middle class, you needed to help the rich even more.
Pushing “across the board” tax cuts was essentially a way to bribe the middle class into going along with rate cuts that primarily helped the richest taxpayers (like slashing the top rate from 70 percent to 50 percent back in 1981), because at least the middle class got something too. The rich got more in both dollar and percentage terms than anyone else, but all boats (at least of people who make enough money to owe income tax) were rising, so complaints were limited.
President Biden and Vice President Harris meet with Treasury Secretary Janet Yellen in the Oval Office on January 29. Biden stressed the urgent need to pass a Covid-19 relief package.
But giving everyone under a certain cutoff a check is truly progressive. The $1,400 that Biden is proposing is always going to be a higher percentage of income for a poor person than a rich person. And 2020 set a precedent that when the government sends cash, it sends it to everyone — including the roughly 40 percent of Americans who earn too little money to pay income taxes, who were left out of the Reagan and Bush efforts.
The net effect of the 2020 stimulus debate may be to transform the Republican Santa Claus — a huge elitist throwing big stacks of bills at the rich plus a little bit for the plebes to keep them at bay — into an egalitarian handing out checks to the bottom half of the income ladder.
That would be a huge win. Republicans have always run on returning your tax dollars to you; this would simply be settling on a much more equal way of doing so. This shift won’t solve every problem with budget debates, of course; checks will compete with spending priorities the same way tax cuts did and do. But it’s a better Santa Claus.
Their output has ‘kept us all alive throughout this pandemic.’ But several blows have made the creative life too precarious.
After a year of upheaval for the arts and culture sector, an Ontario-based advocacy group is collecting testimony from artists to support a national basic income plan.
Over the weekend, the Media Arts Network of Ontario hosted two full-day panels inviting 20 artists from across Canada to testify to a group of sector experts about the merits of a basic income.
The commission will gather information from these testimonies for a report that will inform advocacy work in advance of a possible federal election this year.
Independent filmmakers, media artists, writers, theatre workers and musicians testified to the panel.
Participants called in from Newfoundland to Vancouver and from every province, both from urban centres and rural areas.
While the artists spoke from a range of lived experiences, many of their testimonies overlapped. One key element that emerged was the struggle to meet basic needs as an artist on insufficient and insecure income.
Brenda McIntyre, an Indigenous hand-drummer and musician whose testimony was read by a panel host, spoke about the challenge of being adequately paid for the work she produces.
“Artists are severely undervalued and constantly asked to work for free, as if it’s expected and as if we don’t have bills to pay,” she said.
“I often feel like I’m creating music just so I can give it away to corporations like Spotify that are compensated for my work. When people choose to stream and not buy, the artist makes almost nothing from it.”
Like several other artists on the panel, McIntyre has chronic health issues that make her situation even more challenging. She is on the Ontario Disability Support Program, which allows $1,169 maximum in support each month for a single person. But McIntyre can’t earn more than $200 extra each month without this government support being taken away.
She said that she has been unable to heal from chronic pain and PTSD because of constant fear her disability benefits will be revoked. Because she is immunocompromised, she has had to turn down in-person gigs during the pandemic and worries about future opportunities as it drags on.
If Canada instituted a national basic income, McIntyre said she would be able to work without worrying about having enough money for personal, medical or business expenses.
“If we artists had a basic income, that stress and fear over basic necessities would no longer weigh over our heads and we could be much more productive. It would help grow the economy, because when people have the means to do more than just get by, they put more back into the economy.”
McIntyre qualified for the Canada Emergency Response Benefit throughout the pandemic, which she said gave her a taste of what it could be like to spend more time being creative and worrying less about food and rent.
Not all artists on the panel were able to qualify for the emergency benefit, though. One woman calling from Manitoba, where she had to move back in with her parents during the pandemic, said she did not qualify because of her low earnings in 2019.
She also did not qualify for the Canada Recovery Benefit, as recipients were required to have experienced a 50-per-cent-or-greater loss of income from their previous year’s earnings. The small amount she was earning to keep herself afloat during the pandemic took her over that threshold.
Tia Julien, a music writer and editor living in Halifax, was in a similar situation. She did not qualify for CERB and as an immunocompromised person was unable to return to work once the pandemic hit.
“Myself and many others like me really depend on support from the government in emergency situations like this,” she said.
“Every single Canadian should be eligible for support in a crisis situation like the pandemic.”
“The means-tested options that were released left too many people out. They made people dependent on their families, and unable to contribute to their work environment or practise as an artist. The main priority, more than ever, became surviving.”
Julien testified about the difficulties that young artists face when trying to get their careers started in an industry based on scarcity of opportunity and fierce competition.
“When you’re starting out, there’s no possible way to actually support yourself until you’ve had a chance to establish yourself and make connections, which often takes years and thousands of dollars in investment upfront.”
She said grants — which many artists rely on — are tenuous and hard to get, as they often require previous experience, offer limited application categories and take much work and many months to secure. They are not dependable income, she said.
Like many other artists, Julien has had to support herself in ways other than her art. But even with two part-time jobs that equal full-time hours she has not been able to sustain a living.
“UBI would not be a fix-all, but a start. It would provide an opportunity to take care of basic needs, to afford prescriptions, studio space and materials.”
“Culture has kept us all alive throughout this pandemic,” she said. “That is all the output of artists, and that deserves to be recognized, rewarded and sustained.”
After each artist’s testimony, the commissioners asked the person testifying to answer questions about how they would benefit from a basic income project, and how it should be administered.
One participant emphasized the need for any basic income plan to “de-commodify basic needs” such as housing and health care. A national plan should include access to affordable housing, she said, so that artists are not pushed out of the communities they are working in as a result of unaffordable rents.
Another woman suggested that a basic income would allow artists to access skills-training programs and educational opportunities such as mentorships.
Several participants agreed that a basic income would mean that artists would not have to be forced to work with institutions that do not treat them well or abuse positions of power.
For racialized artists, and artists from other marginalized communities, it would allow the ability to pursue their art free from hierarchal structures that do not always have their best interests in mind.
The presentations underscored the economic benefit that a basic income plan would provide Canada, especially when it comes to artists’ contributions to the country’s gross domestic product. In 2017, the latest data available from Statistics Canada indicated that the arts and culture sector accounted for $53.1 billion of Canada’s total GDP.
In B.C., the culture sector makes up roughly three per cent of provincial GDP and provided nearly 100,000 jobs across the province before the pandemic.
Despite the benefits that a universal basic income could provide in ensuring the sector rebuilds and flourishes after the pandemic, a B.C. panel recently rejected it at the provincial level.
The panel’s report recommended several changes to social security programs, including raising disability rates and providing extended health benefits to low-income workers, but did not support a minimum income that would ultimately help raise many people out of poverty.
Artists, many of whom work contract and gig jobs, say they need more than just health benefits to survive.
“We should spend to prevent, rather than to rescue,” said one of the last testifiers on Sunday’s panel. “I believe enacting a basic income is a first step towards ensuring that no one has to go without basic necessities in this country. Lifting people up from the economic bottom lifts us all up.”
And lifting artists up, in particular, lifts up the whole.
“Artists engage in projects of mutual support and reciprocity. But those who work with the imagination must be given time and access to contribute their creativity to society.”
The U.S. could afford to give every working adult $1,875 stimulus checks for eight months for the same cost as the tax cuts that Trump passed in 2017, argued Robert Reich. Reich, the Secretary of Labor under Bill Clinton and author of the forthcoming book, “The System: Who Rigged It, How We Fix It”, tweeted the comparison saying “it’s a question of priorities” for the country. His comments come after Senate Republicans blocked at least four votes that would have increased the size of stimulus check payments from $600 to $2,000.
McConnell Blocked $2,000 Stimulus Check Votes
Reich’s comments were an implicit rebuke to remarks made by Senate Majority Leader Mitch McConnell (R-Kentucky) who blocked attempt after attempt to unanimously approve a House-passed bill that would have increased stimulus payments to $2,000. McConnell had called the effort to augment stimulus checks “socialism for rich people.”
“Borrowing from our grandkids to do socialism for rich people is a terrible way to get help to families who actually need it,” McConnell speciously argued.
Reich essentially subtweeted McConnell, saying that “Trump’s tax cuts for the wealthy and corporations will cost $2.3 trillion over ten years. For the same cost, we could afford to give every American $1875 checks for the next 8 months.” His criticism of McConnell’s dubious claims reinforced the argument that Senator Bernie Sanders (I-Vermont) had assiduously made on the Senate floor last week.
In response to McConnell’s “socialism for the rich” claim, which he repeated four times during one Senate floor speech, Sanders replied, “the majority leader helped lead this body to pass Trump’s tax bill. You want to talk about socialism for the rich Mr. Majority Leader?!”
Trump Tax Cuts Will Cost Americans $2.3 Trillion Over 10 Years
Reich and Sanders are not wrong. The tax cuts passed by President Trump and a Republican Congress in 2017 have added trillions to the deficit; there was no concern voiced about grandkids and their future when the bill was being debated.
Despite Treasury Secretary Steve Mnuchin’s famous claim that “not only will this tax plan pay for itself but it will pay down debt,” his own department’s analysts recently pegged “the 10-year cost at $2.3 trillion given the administration’s assumption that tax breaks for individuals and large estates will be extended past 2025.”
Moreover, the tax cuts were and continue to be heavily skewed towards the rich. In 2018, households earning $1 million or more received roughly 16.5 percent of the total tax cut benefit, despite only being 0.4 percent of all tax filers, according to the Congressional Budget Office (CBO). By 2027, those million dollar or more households are projected to be 0.6 percent of all tax filers, but would get a staggering 81.8 percent of the total benefit from the tax cut bill.
“For most Americans, the proposed tax cuts are tiny and temporary,” Reich wrote in a blog post on his website.
“Meanwhile, the top 1 percent will get a gigantic tax cut. The Tax Policy Center estimates that the current plan will save the bottom 80 percent between $50 and $450 in taxes per year, but that it saves each person in the top 1 percent an average of $129,000 a year,” he added.
In other words, socialism for the rich.
Had we not thrown over $2 trillion out of the national piggy bank and into corporate coffers, the country would be in a stronger position to support hard-working Americans who are still struggling to make ends meet months into the coronavirus pandemic.
To complain about “borrowing from our grandkids” in the context of stimulus checks, but not in the context of a $2 trillion-plus tax cut is pure hypocrisy. Let’s also not forget about the tax cuts that Republicans sneaked into the Cares Act that provided 43,000 millionaires with a $1.7 million windfall each.
Reich’s Stimulus Check Calculation
Reich suggests that instead of the tax cuts that cost taxpayers trillions, the government could give a $1,875 stimulus check for eight months, which is the equivalent of a $15,000 aggregate payment per person.
Given the $2.3 trillion cost he is using as a comparison, this would equate to giving stimulus checks to roughly 153 million people.
Reich clarified via e-mail that he was using “working adults” in his calculation. While 153 million people may not directly equate to “every American” – the U.S. population was roughly 331 million people in 2020 – it does roughly square with 160 million economic impact payments that were sent following passage of the Cares Act. If we were to use a higher figure, like 331 million people, the stimulus check amount would slightly decrease, but the underlying argument would still hold.
The Upshot
Reich’s rebuttal of McConnell’s ridiculous claim that $2,000 stimulus checks are “socialism for the rich,” is spot on. While the majority leader succeeded in blocking the vote on stimulus checks at the end of the 116th Congress, the question for the 117th Congress along with President Biden will be simple: what are your priorities?
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Published originally on January 4, 2021 by Forbes.
Even though President Joe Biden’s coronavirus relief plan has been met with skepticism from some Republicans, more and more GOP lawmakers have backed another round of higher stimulus payments that his plan includes.
“Given the nature of COVID, given the nature of the impacts and financial struggles, people are hurting and I think people need [direct payments] as soon as possible,” said Rep. Tom Reed, a New York Republican who co-chairs the bipartisan Problem Solvers Caucus and has been in close talks with Biden officials.
While some have decried stimulus checks as “socialism,” their implementation was could become the “conservative approach” to economic recovery, said Greg Nasif, a spokesman for Humanity Forward. “Something so efficient … and something without bureaucracy, without paperwork or applications, I think that’s more American.”
Even though President Joe Biden’s coronavirus relief plan has been met with skepticism from some Republicans, more and more GOP lawmakers have backed another round of higher stimulus payments that his plan includes.
Biden’s $1.9 trillion plan includes $1,400 cash payments to Americans earning less than $75,000, and while it is all but certain to change as Congress debates it, most Republicans have objected to the overall size of the bill rather than the checks it allots.
“I do support those checks,” said Rep. Tom Reed, a New York Republican who co-chairs the bipartisan Problem Solvers Caucus and has been in close talks with Biden officials and senators from both parties.
“Though I think that there’s broad support that the bill may need to be a little bit more targeted … given the nature of COVID, given the nature of the impacts and financial struggles, people are hurting and I think people need [direct payments] as soon as possible and [they] are the best way to get that relief to people,” Reed told the Daily Caller News Foundation, adding that while it was “too early to judge” whether a $1.9 trillion package was too large, he would support stand-alone bills providing cash payments or relating to coronavirus vaccine distribution.
Reed, whose caucus was instrumental in crafting the eventual $900 billion relief package that passed in December, was one of 11 Republican co-sponsors of the Coronavirus Assistance for American Families Act, which would have given $1,000 payments to Americans earning less than $75,000.
Despite the bill’s bipartisan support, it was never signed into law.
Rep. Tom Reed (at lectern) and Rep. Josh Gottheimer (2nd R), co-chairs of the bipartisan Problem Solvers Caucus, hold a news conference with fellow members of Congress (Chip Somodevilla/Getty Images)
After the $900 billion package passed, granting $600 checks to Americans earning under $75,000, former President Donald Trump urged Congress to pass a standalone bill authorizing $2,000 checks. While the bill passed the House – with 44 Republicans joining the vast majority of Democrats – it was effectively killed by Senate Republicans even though some, including Missouri Sen. Josh Hawley and Florida Sen. Marco Rubio, had supported it.
“Rubio and [South Carolina Sen. Lindsey] Graham are on the winning side of this issue,” Greg Nasif, a spokesperson for Humanity Forward, a non-profit organization pushing for additional stimulus checks to help Americans and jumpstart the economy, told the Daily Caller News Foundation.
“[Two-thousand dollar checks] are the fastest, most efficient way to help people who are struggling,” he said.
They also appear to be resoundingly popular among Americans. Nearly 80% of Americans supported the standalone $2,000 bill, according to the left-leaning Data for Progress, while a Business Insider survey found that 76% of Americans supported stimulus payments greater than $1,000.
Most Republicans who oppose another round of stimulus payments have fallen back on the $27.5 trillion national debt, arguing that the country can only avoid addressing it for so long without facing serious consequences.
“Since I arrived in Congress in 2011, federal debt has almost doubled, from nearly $15 trillion to more than $27.5 trillion. The passage of $900 billion in additional relief, combined with a $1 trillion projected deficit for 2021, will increase federal debt to over $29 trillion,” said Wisconsin Sen. Ron Johnson in a USA Today op-ed.
“Unfortunately, few in Congress seem to care.”
Nasif, however, argued that stimulus payments and the economic benefits they could generate were cheaper in the long run than doing nothing.
“If we were to wait and do nothing, and the economy gets worse, that’s going to cost us more in the long run. Direct cash relief goes to everyone, it helps everyone … and it immediately circulates back into the economy,” he said.
His argument has been echoed by both officials in Biden’s administration and the president himself, who have argued that not passing his bill could imperil the nation’s economic recovery.
“The very health of our nation is at stake,” Biden said on Jan. 14 when he first announced his recovery plan. “[It] does not come cheaply, but failure to do so will cost us dearly.”
President Joe Biden speaks about the coronavirus pandemic in the State Dining Room of the White House on January 26, 2021 in Washington, DC. (Doug Mills-Pool/Getty Images)
Nasif also argued that despite some who decried stimulus checks as “socialism,” their implementation was could become the “conservative approach” to economic recovery.
“Something so efficient … and something without bureaucracy, without paperwork or applications, I think that’s more American. That invokes less government and less involvement in how folks get their money,” he said. “It trusts the American worker, the American family, to know what to do with their money.”
Nasif’s argument was echoed by none other than Reed himself, who said that direct payments give Americans “the tools to help themselves.”
“When we talk about direct checks, there are a lot of positives from a conservative point of view,” he said. “Why are we building bureaucracies upon bureaucracies of public assistance programs when we say we trust people to make the best decisions as to what they need?”
Georgia Sens. Raphael Warnock (D) and Jon Ossoff (D), both of whom won January runoff elections on the promise of a Democratic senate passing another round of direct coronavirus payments, have pushed their caucus for speedy action on the issue, The Washington Post reported.
By Zack Budryk
Both Warnock and Ossoff in a lunchtime call with Senate Democrats and White House economic advisers Thursday described the pledge as pivotal to their respective victories, according to the newspaper.
Sen. Richard Blumenthal (D-Conn.) said the general consensus in the meeting was the need for quick, decisive action on another round of coronavirus relief.
“My strong impression was that there is general unanimity, and it’s strong that we need to be bold and decisive, particularly in putting shots and putting vaccines in people’s arms and putting money in people’s pockets and putting kids back to school,” Blumenthal said, according to the Post.
“And one way to put money in people’s pockets is to fulfill our promises on stimulus payments.”
White House participants in the call included senior adviser Anita Dunn, National Economic Council Director Brian Deese and Jeff Zients, the administration’s point man on the coronavirus response.
The meeting occurred the same day that Speaker Nancy Pelosi (D-Calif.) said the House and the Senate were set to vote on a budget resolution next week.
“By the end of the week we will be finished with the budget resolution, which will be about reconciliation if we need it,” she told reporters, according to the Post.
Under reconciliation, the resolution could pass the chamber with a simple majority if every Democratic senator and Vice President Harris vote for it.
“I do think we have more leverage to get cooperation on the other side if they know we have an alternative,” Pelosi said.
The Hill has reached out to Warnock’s and Ossoff’s offices and the White House for comment.
But who will pay? Two-thirds reject increase in their own taxes, most feel wealthy should be responsible
June 18, 2020 – As the federal government extends the Canadian Emergency Response Benefit, a program that has sustained more than seven million Canadians amid the COVID-19 pandemic, for eight more weeks, some have wondered aloud if this is the time to test a universal basic income (UBI) in Canada.
While the Liberals rejected a call from New Democratic Party leader Jagmeet Singh to turn the CERB into a universal benefit in April, a new study from the non-profit Angus Reid Institute finds the concept of universal basic income popular among Canadians.
Indeed, at proposed levels of $10,000, $20,000 or $30,000 annual income, the idea garners support from three-in-five.
And as estimates of the cost of such a program range from 15 to 90 billion dollars, Canadians have someone in mind to pay for it; the “wealthy.”
More than 60% say that they would support the funds coming from higher income Canadians. These higher income individuals are less enthused, however.
Two other items divide Canadians close to evenly on this issue. Close to half feel a UBI would make Canadians less inclined to work (55%) while a similar number disagree (45%). Further, Canadians are divided over whether a UBI is too expensive (54%) or if Canada can afford it (46%).
More Key Findings:
Political preference drives opinion: three-quarters of those who supported the Liberal Party in the last federal election support a UBI. More than four-in-five New Democrat voters do as well. Past CPC voters are not in favour
Women are more likely than men, and younger people more likely than those who are older, to support a UBI. That said, across age and gender groups, at least half in every category express support.
Despite support levels, at least 48% of residents in every region of the country feel that a UBI would be too expensive for Canada. This rises to 66% in Alberta and 58% in Quebec
About ARI
The Angus Reid Institute (ARI) was founded in October 2014 by pollster and sociologist, Dr. Angus Reid. ARI is a national, not-for-profit, non-partisan public opinion research foundation established to advance education by commissioning, conducting and disseminating to the public accessible and impartial statistical data, research and policy analysis on economics, political science, philanthropy, public administration, domestic and international affairs and other socio-economic issues of importance to Canada and its world.
INDEX:
Part One: A universal basic income
Majorities support program at 10, 20 or 30 thousand dollars per person
Demographic datapoints
Part Two: How to pay for it
Majority agrees wealthy should fund program
Just one-quarter of those with highest household incomes willing to pay more
Part Three: Division and debate
Half say Canada could afford a UBI, half disagree
Canadians divided over incentive to work under UBI
Part One: A universal basic income
One of the proposed solutions to an unprecedented economic crisis that has gripped most of the globe in the first six months of 2020 is a basic income program.
Briefly, a basic income program is one where citizens, either all of them or groups targeted by income level or other conditions, are offered a “minimum living stipend.” A person need not necessarily be unemployed to receive the benefit.
Some argue that a basic income provides stability for Canadians to pursue work or education with less stress, knowing they have a baseline of income.
Opponents are wary of the immense cost of such programs and argue that it may disincentivize work or that those who do not need it will receive it, which would be a waste of taxpayer funds. Estimates about the costs of such a program in Canada range from $15 to $90 billion.
Majorities support basic income of 10, 20 or 30 thousand dollars per person
The Angus Reid Institute asked about this concept in 2016 and finds support relatively unchanged since then. Today, six-in-ten Canadians support such a program at the $10 thousand, $20 thousand, and $30 thousand level:
Demographic datapoints
In order to understand regional and demographic trends, support and oppose responses across the three levels of the proposed programs ($10K, $20K, $30K) were grouped together for this segment of analysis. This aggregation finds residents in Quebec and Atlantic Canada most supportive of a UBI, while residents in Alberta are the only group who oppose such an idea more than they support it.
The idea of a universal basic income is most popular with those who would benefit most – Canadians from low income households.
Meanwhile, in households where income exceeds $150 thousand, the proposal is divisive:
Both Liberal and New Democrat voters from the 2019 federal election are overwhelmingly in favour of a UBI. At least three-quarters in each group support the idea. One-quarter of past Conservative voters favour a basic income program (26%) while three-in-five oppose it (60%):
Notably, a majority of all age and gender combinations support a UBI. Opposition is highest among men over the age of 34 but peaks at 40%:
Part Two: How to pay for it
Majority agrees wealth tax should fund program
Funding for a program as large as this is one of the most obvious sticking points for opponents. For most Canadians, the wealthy are a much more popular source of funding than their own taxes. Consider that just 36% of Canadians say they would be willing to pay more in taxes to create a basic income for everyone, while 61% say they agree that the wealthy should pay more in taxes to support it:
Just one-quarter of those with highest household incomes willing to pay more
In 2019, the federal NDP proposed a super-wealth tax that would charge one percent each year “on the value of household assets above $20 million”. This would collect more than $5.6 billion in the first year from around 2,000 Canadian families, rising to more than $9 billion a year in the near future. That proposal is incredibly popular, even across partisan lines, and likely what Canadians have in mind to pay for a universal basic income. This, given that few would like to pay for it themselves.
Close to two-thirds of those earning between $100,000 and $150,000 per year are opposed (64%) and three-quarters of those earning more than $150,000 per year say the same (76%).
Notably, support is highest among those in the lowest income level, whose gain would likely be much greater than any increase to their taxes:
Part Three: Division and debate
As with any potential transformative public policy proposal, there are proponents and skeptics debating the issue. The fundamental criticism from opponents is that the program is simply too expensive. This is an argument that finds purchase with half of Canadians.
Half say Canada could afford a UBI, half disagree
Fully half of Canadians (54%) say that they do not feel Canada can afford a universal basic income. The projections for necessary funding range widely, depending on how targeted the benefit is. Nonetheless, the estimates are all immense. Still, 46% of Canadians disagree with the notion that the cost would preclude Canada from launching a UBI.
While there are smaller demographic disagreements within the population (see detailed tables) the biggest division is ideological.
Four-in-five past Conservative voters (82%) do not think Canada can afford to invest in a UBI, while three-in-five past Liberals (59%) and 71% of past New Democrats disagree:
Canadians divided over incentive to work under UBI
Another concern that critics have about universal basic income programs is that they will create a disincentive for people to work. Proponents point to research that suggests this concern is misplaced. Canadians are again a house divided. Just over half (55%) say Canadians would find ways to work less if a UBI were in place, while 45% disagree.
The same partisan differences in opinion are evident on this question as the last and the perception that Canadians would work less with a guaranteed income rises alongside wealth:
For detailed results by age, gender, region, education, and other demographics, click here.
For results with total support for UBI at 10K, 20K, 30K level, click here.
To read the full report, including detailed tables and methodology, click here.
More than 50 House progressives are pushing President Joe Biden to prioritize recurring direct checks instead of one-time payments in the next rescue package, upping the demands on Democratic leaders in their race to draft a bill.
The group of House Democrats, led by Rep. Ilhan Omar (D-Minn.), sent a letter to the Biden administration last Thursday calling for regularly delivered checks through the end of the pandemic, rather than a single $1,400 payment that is likely to fall short of expenses like rent or mortgage payments.
The letter obtained by POLITICO — which was also signed by Congressional Progressive Caucus Chairwoman Pramila Jayapal (D-Wash.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) — does not call for a specific dollar amount. But Omar and other progressives have been vocal in their support for monthly $2,000 checks.
“One more check is not enough,” progressives wrote in their letter to Biden and Vice President Kamala Harris.
White House and congressional officials are moving quickly to draft the next stimulus package, with Democrats working on legislation that would meet the broad outlines of Biden’s $1.9 trillion proposal and could pass by mid-March.
Biden’s proposal includes long-time priorities of the left, like a $15 minimum wage and a paid leave program — though it remains unclear if either can make it into the package given initial GOP resistance and certain procedural constraints if Democrats deploy budget reconciliation to evade a Senate filibuster.
Now progressives say Biden must also go further on stimulus checks, which remain overwhelmingly popular with the public despite resistance from the GOP’s deficit hawks as well as some Democrats.
While the lawmakers do not threaten to withhold their votes, the progressives’ push to prioritize recurring payments could drum up pressure on top Democrats in a narrowly divided House and Senate.
“Recurring direct payments until the economy recovers will help ensure that people can meet their basic needs, provide racially equitable solutions, and shorten the length of the recession,” the letter reads.
The group also told Biden and Harris that the checks should go to “all immigrant workers, refugees, and their families,” which would include people who file federal taxes but are not legally authorized to work in the U.S.— a group that is not currently eligible for payments.
The letter also calls for more outreach by state and local officials “to ensure families are aware of payments” and to offer more help to people who may not have access to bank accounts.
The letter is endorsed by more than two dozen progressive groups, including Demand Progress, Indivisible and the Universal Income Project.
The Gerald Huff Fund for Humanity, a non-profit organization dedicated to furthering the understanding, acceptance, and implementation of Universal Basic Income (UBI) programs to benefit all Americans today announced that it launched a public service announcement campaign.
The campaign conveys a powerful message about how UBI can help reverse the effects of the severe economic downturn of 2020 wrought by the pandemic at a time when Congress is considering cash payments and other stimulus initiatives proposed by the Biden administration. The campaign’s public service announcement video will appear online for a period of six weeks in January and February on WSJ, CNN, BuzzFeed, Meredith, Condé Nast, Vice, Complex, Bustle, Imgur, iHeart Media, Verizon Media, Viacom, and Influencer Network posts on Instagram and Twitter.
The public service announcement is also the subject of a Facebook targeted ad campaign and an ongoing Google ad campaign made available on a no-charge basis to non-profit organizations. Its purpose is to educate and incentivize viewers to sign a petition to Congress asking for the implementation of UBI.
In partnership with Income Movement, the Fund for Humanity is also undertaking an aggressive social media campaign.
Dr. Gisèle Huff, president of the Fund, stated:
“When I founded the Fund in February 2019 in memory of my late son, I sought a role for it that filled a vacuum in the field.”
“The concept for a UBI was formulated at the time of our nation’s founding by Thomas Paine and has since been espoused by both Milton Friedman and Martin Luther King, Jr. My due diligence revealed that, other than media coverage of Andrew Yang’s 2020 presidential campaign and of the activities of UBI advocacy organizations, there was no sustained effort, at scale to promote its widespread adoption.”
Huff resolved to take up the slack and has since invested in the launch of the news outlet Basic Income Today edited by the internationally-recognized UBI expert Scott Santens who asserted that, “The concept of unconditional basic income has been important for centuries, but going forward post-2020, UBI has become an absolute necessity.
“There is nothing more important than building our future together upon a stable financial floor for all American families.”
Former Democratic Party Presidential candidate and current New York City mayoral candidate Andrew Yang had this to say about the effort to make UBI a reality: “There is nothing stopping us as Americans from issuing ourselves a dividend as citizen shareholders of the United States. The only thing that has ever stopped us is a scarcity of will, not a lack of abundance. May we together find the will soon to end American poverty forever.”
About The Gerald Huff Fund for Humanity:
The Gerald Huff Fund for Humanity is a Section 501(c)3 non-profit organization that was created in 2019 to promulgate the vision of the late Gerald Huff, an ardent proponent of Universal Basic Income (UBI) as a transitional solution to the existential threat of technological unemployment. Through various programs and initiatives, the Fund supports UBI by collaborating with education and advocacy programs and individuals to further its understanding, acceptance, and implementation to benefit all Americans. Among the Fund’s current initiatives are Basic Income Today, an online information and community site dedicated to providing news and information and furthering the discussion and debate about UBI.
What do comedian Amy Schumer, actress Eva Longoria, Planned Parenthood president and CEO Alexis McGill Johnson, #MeToo movement founder Tarana Burke, and Bumble founder and CEO Whitney Wolfe Herd have in common this morning?
They’re among the 50 female celebrities, business leaders, and activists who signed an open letter to President Joe Biden in today’s New York Times, asking that he come up with a COVID-19 pandemic plan to pay mothers for the work they do and pass policies for parental leave, affordable childcare, and pay equity.
The full-page ad was conceived of and organized by Girls Who Code founder and CEO Reshma Saujani, who first proposed the idea in an opinion piece for The Hill on December 7.
It’s dubbed a “Marshall Plan for Moms,” a reference to the 1948 federal government initiative that ultimately spent more than $12 billion to help rebuild Europe after World War II.
“It’s time to put a dollar figure on our labor. Motherhood isn’t a favor and it’s not a luxury. It’s a job. The first 100 days are an opportunity to define our values. So let’s start by valuing moms,” the ad says.
The letter also cites statistics that have overwhelmingly devastated the professional lives of female parents: More than 2 million women have left the workforce, and millions of others have had to work fewer hours or must work around the clock to stay employed and be full-time caregivers. In September, the rate of women leaving the workforce was four times higher than the rate for men.
“There’s a collective sense of exhaustion for women,” Saujani tells Fast Company in an exclusive interview.
“We’re in a national crisis for mothers. This crisis has exposed the undue burden we place on mothers. The labor participation of mothers is what it was in the 1980s. Think about how much we’ve lost in the last year.”
She envisions a needs-based $2,400 monthly check with the money coming from the federal coffers.
Other signatories of the open letter include ClassPass founder and executive chairman Payal Kadakia, model and transgender advocate Geena Rocero, SHE Summit founder Claudia Chan, The Cru founder Tiffany Dufu, Birchbox cofounder and CEO Katia Beauchamp, Rent the Runway cofounder and CEO Jennifer Hyman, and actresses Gabrielle Union, Julianne Moore, and Alyssa Milano.
“Given the current crisis and the need for the urgent decisions to address the devastating humanitarian crisis facing the country, it would be opportune for the NEC to exercise its leadership and authority to provide/amend policy guidance within the current administration.“
By Ray Mahlaka
ANC head honchos have proposed two key income-relief measures for poor people hit the hardest by the Covid-19 lockdown: the extension of the R350-a-month social grant beyond January, and the introduction of a basic income grant (BIG).
The R350 social grant was introduced by the government in May 2020 to provide relief to individuals above the age of 18 who are unemployed, do not receive any income or any other social grant or support from the National Student Financial Aid Scheme or the Unemployment Insurance Fund.
By December 2020, payouts of more than R15-billion had been distributed by the SA Social Security Agency to up to 8-million beneficiaries.
But the social grant scheme ends in January and there is no indication of whether the government will extend the scheme for as long as lockdown rules remain in place.
Economists, academics, and civil society groups have long argued that the introduction of a basic income grant will go a long way to provide income to people who have lost their jobs due to lockdown restrictions, have no income, or cannot find an entry point into the job market.
Unlike other social grants that are targeted to specific beneficiaries, a basic income grant is universal as it is offered to every person – from birth to death – regardless of whether that person has an income.
The ANC National Executive Committee’s (NEC’s) three-day lekgotla – a meeting to discuss the governing party’s priorities for the year – resolved to extend the R350 social grant beyond January and for the state to develop a policy framework to introduce a basic income grant.
President Cyril Ramaphosa has come under fire from labour and business representatives for tightening lockdown regulations to Level 3 since 29 December 2020 without announcing additional income-support measures to the public, including the extension of the R350 social grant.
In a 132-page presentation to the lekgotla, the ANC social transformation subcommittee said extending the R350 social grant would be easier than introducing a basic income grant.
This is because a policy mandate regarding the basic income grant has to be drawn up by the governing party and the government before the grant can be introduced to the wider public.
The committee said: “A policy mandate is required by the government from the current governing party since the BIG was not part of its 2019 manifesto for its current term. Normally resolutions are taken at a policy conference [of the ANC] in the year preceding an election.
“However, given the current crisis and the need for the urgent decisions to address the devastating humanitarian crisis facing the country, it would be opportune for the NEC to exercise its leadership and authority to provide/amend policy guidance within the current administration.”
The subcommittee said getting a decision from the government on a basic income grant, drawing up financing mechanisms for it, and getting Parliament to approve it could take from one to two years.
Thus, the subcommittee said, the R350 grant should be extended beyond January and be “used as the interim measure to serve as the foundation for the BIG”.
“Proceeding with the termination of the [R350 social] grant will be a huge setback for advancing the BIG agenda.”
The subcommittee said between R55-billion and R200-billion would be required from the state to fund the R350 social grant and basic income grant for an unspecified period, depending on how they are implemented.
The ANC’s economic and social transformation subcommittees plan to draft a report on the mechanics of how the basic income grant can be introduced.
A first draft of the report will be presented to the NEC in February and the final report will be completed in May.
Civil society group the Black Sash, has proposed a targeted approach in introducing the basic income grant, saying the state cannot afford to provide a universal, cradle-to-grave basic income grant to every person during the Covid-19 pandemic.
The Black Sash has proposed that the grant initially target those aged 18 to 59 and caregivers who already receive the child support grant.
If a Biden relief package isn’t open-ended, and tied to a full recovery, America is doomed to repeat last-minute partisan fights over aid.
Opinion by Claudia Sahm
On Tuesday, the Senate confirmation hearing for Janet Yellen, President Biden’s nominee to be the next Treasury secretary, turned into a de facto hearing on the president’s economic relief plan. While Ms. Yellen, a former Federal Reserve chair, is expected to be confirmed, the fate of the Biden plan is up in the air and became the focus of senators’ back and forth.
Democrats generally cheered Mr. Biden’s proposed $1.9 trillion package, while Republicans peppered Ms. Yellen with questions about whether that level of spending might be overkill.
The price tag is indeed big — as it should be. This moment of crisis demands it.
But members of Congress should carefully consider the necessary levels of spending, particularly amid so much uncertainty.
Many lawmakers seem to be asking, “How much is enough?” while “When have we done enough?” is the better question. When those 10 million jobs still missing are back, when the half of families who have lost income from work are made whole and when those who had to leave their jobs because of extra parenting burdens begin to return — that’s when relief should turn off.
Rather than setting an arbitrary expiration date and banking on yet another 11th-hour scramble for more relief, Congress could base its policy on how people and businesses are doing, not on the passage of time.
In policy circles, such tools are known as “automatic stabilizers.” They’re quite simple: If the economy comes roaring back, then the stabilizers put in place turn off; if it takes longer to recover, they stay on.
A broad cross-section of research shows that auto stabilizers will help us do enough without doing too much.
Putting policy on autopilot is not new. For the U.S. government, it began in 1935 when, with the guidance of Labor Secretary Frances Perkins, our first female cabinet secretary, the Roosevelt administration introduced unemployment insurance as part of the New Deal. Employers pay into the system, so that laid-off workers can receive benefits. More workers are laid off in recessions, so more money is spent on benefits. Then in expansions, much less is spent.
Food stamps and progressive income taxes are also, in their own ways, automatic stabilizers.
Another great advantage to automatic stabilizers is that Congress can bump up the generosity of their benefits in bad times. Currently, 16 million people are receiving some form of jobless benefits — more than seven times the number of recipients a year ago.
In light of the pandemic, it was both humane and economically astute when, this past March, Congress made jobless benefits more generous through the CARES Act: The $600 a week federal supplement to state unemployment checks; the expanded eligibility for benefits; the increased number of weeks the unemployed could get support; the $1,200 direct checks to the vast majority of adults. It was all a strong start.
Then, political will eroded. The extra $600 expired on July 31, leaving millions with much less to make ends meet.
In the meantime, a zombie debate over whether to renew that extra money — along with a bucket of other crucial economic benefits — dragged on for months.
Only over the holidays, once the remaining relief in the CARES Act was expiring, did Congress and the Trump administration act, approving a new $900 billion package. Now, the unemployed get an extra $300 a week and the long-term unemployed and those not normally eligible for benefits are covered, but only through early spring. Meanwhile, the eviction moratorium was only extended one month and extra food stamps only until June.
President Biden’s current plan calls for a $400-per-week federal unemployment supplement through September. But his pledge to “work with Congress on ways to automatically adjust the length and amount of relief depending on health and economic conditions” suggests he and his team are open to tweaks.
Ron Wyden, the incoming chairman of the Senate Finance Committee, who will play a significant role in shaping any bill, used his time during Ms. Yellen’s confirmation hearing to highlight his bolder proposal to put federal unemployment benefits on autopilot, then phase it out gradually as the unemployment rate falls.
In fact, many of the strongest supporters of automatic stabilizers since the beginning of the pandemic have been moderate Democrats in the House.
Each of these plans is evidence-based and deserves to be closely considered. Policy experts like me have worked with several Congress members and their staffs for over a year on how to do this right: what economic indicators to use (whether the unemployment rate, work force participation or inflation), when to start and when to phase out the extra support.
The surest sign that automatic stabilizers stand a fighting chance of being included in the stimulus is that Ms. Yellen may be on board, too.
[Yellen] endorsed using automatic triggers this summer, explaining her reasoning that struggling Americans “need relief and support for as long as the job market remains weak.”
In early 2019, based on research and my experience working at the Fed amid the Great Recession, I argued in a chapter of the policy volume “Recession Ready” that we should make direct payments to people automatic in recessions — starting as soon as the unemployment rate begins to rise in a way that we know a recession has arrived and continuing until unemployment comes back down.
We should send more direct checks to all families except high-income households now and be ready to repeat some level of them on a monthly or quarterly basis until the crisis is over.
If another relief package fails to provide households and businesses consistent, predictable support soon, we’ll be doomed to repeat the inefficient, cruel and unorganized cycle of last-minute partisan fights over aid.
Americans deserve more relief; they deserve the peace of mind of knowing that relief will continue as long as they need it.
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Claudia Sahm, a contributing opinion writer, and the author of the “Sahm Rule,” an early recession signal, was a section chief in the division of consumer and community affairs at the Federal Reserve.
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