More Cash Transfers, Please and Pronto

Ideas and Issues
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February 9, 2021

New Orleans       Way back when the pandemic was over there, and then over here, and the shutdown of peoples’ lives and work began, can you remember in the first CARES Act stimulus there was a $2000 payment that went straight into Americans’ bank accounts. No account, then you got a debit card to spend. If you weren’t filing taxes, because you made too little, there were still workarounds for you to get the money. If you made more than $100,000 or so, you got nada, but no one complained. It was about saving the economy, but for a change saving the economy meant making sure that families everywhere, many of whom were losing their jobs, had a chance to make it and maybe survive, until the end of the pandemic.

There were some lone voices complaining about the fact that some people were making more money unemployed than they had been making working for those employers, but, frankly, there weren’t too many people listening, especially as the pandemic and its shutdowns lasted longer and longer. Partially, that was because they were getting bailed out with PPP and SBA loans and grants that were even bigger numbers. Turned out that most of America depended on lower waged workers because they were essential. The Federal Reserve, most economists, and even the White House and most Republicans were happy because these payments were central, along with other measures, in saving the economy and people generally.

We’ve now seen many Americans get another $600 last winter and many can hardly wait for the next stimulus where they are likely to receive another $1400. Make no mistake, these programs are popular. Big or small, this is the magic of cash transfers as opposed to something like tax credits.

When you are poor, cash transfers are called welfare, not stimulus, but survival. For fifty years or so, cash transfers have been anathema to the political class, because they needed to demonize the poor, rather than address poverty directly. Organizing for welfare rights, the members were clear, More Money Now! We fought “means tests,” and lost. Maybe the tide is shifting. These are cash transfers without apology and without any work tests or never mind.

President Biden’s childcare tax credit proposal, as part of the current proposal before Congress in an important breakthrough, is almost a cash transfer raising the level to $3000 per child from $2000 per child and delinking it from work. Unfortunately, the proposed expanded EITC, earned income tax credit, boosts the amount but still ties it to work giving more to people with a job than people who desperately need it because they can’t find a job. Matt Bruenig of the People’s Policy Project nailed it in the Times , saying, “While there is merit to helping people find work, it is morally wrong to do so by tying important social benefits to work when the jobless are among those struggling the most.”

Here’s where I’m going. Cash transfers are popular in America, who can deny it? We can call it a guaranteed annual income or a universal basic income, or, even god forbid, welfare, but there’s no question that it works and is a barrier between families and poverty. If it’s good enough for all Americans, why isn’t it simply great for the very poor? Here’s my hope that people are finally starting to realize how powerful cash transfers are, so perhaps we’re once again going to be able to talk about politics and poverty realistically rather than ideologically. Heck, and even bring morality back into the discussion, which is where it belongs in our rich country.