$1,200 Payments To Workers Is A Good Idea- But Not Good Enough.
Thanks to the COVID-19 pandemic, the world economy is now in the worst shape it has been since the financial crisis of 2008. The stock market has taken multiple historic plunges, worse than either Black Monday of 1987 or even the crash of 1929, going purely by the number of points dropped on the market in a single day.
The United States’ political leadership in Washington is now scrambling on multiple fronts to respond to the pandemic. Containing the spread of the disease itself is obviously paramount, but no less important is the need to contain the economic damage as well. An initial emergency stimulus package was passed through Congress and signed by President Trump this past week, but negotiations are in process this weekend to pass a second, far larger stimulus, although it may take longer to work through the bill’s issues than originally anticipated.
The economic rescue package would call for expenditure of $1.6 trillion, roughly double the amount that was contained in the stimulus bill passed by Congress and signed by Barack Obama in 2009. The stimulus bill contains a number of proposed measures, from expanding unemployment insurance to paid sick leave to bailouts for vulnerable industries affected by the pandemic, such as airlines. But one proposal seems to have garnered an outsized amount of media attention.
The proposal in question would be including in the bill a provision to give direct cash payments out to every individual American worker. The amount has been in flux, but the most recent figure believed to be in the stimulus bill calls for a payment of $1,200 to every American worker, as well as payments of $3,000 to families of four or more. It would essentially be instituting a one-off form of universal basic income, or UBI.
Surprisingly, the proposal to include these payments in the stimulus bill came from two Republican Senators, Mitt Romney of Utah and Tom Cotton of Arkansas. However, the idea of cash payments to Americans may not have been such a mainstream proposal, were it not for it being taken into mass consciousness by Andrew Yang’s presidential campaign.
The story of Yang is by now well known. A totally unknown venture capitalist with no political experience whatsoever, his campaign was always an extreme long shot, but captured the public imagination through his proposal of $1,000 cash payments to each American every month, something he called the “Freedom Dividend.” Although Yang dropped out of the race following a sixth place finish in the Iowa caucus, he lasted longer in the primary contest than anyone would have anticipated, longer than established names like Kamala Harris and Beto O’Rourke.
Yang’s uniquely awkward form of “anti-charisma” helped endear him to many, but undeniably part of his appeal was just how favorable those who heard his message were disposed to the idea of a $1,000 payment monthly to every American. In 2009, stimulus checks were sent out, but only to a comparatively limited subset of people, not to every American (under a certain income threshold), as the current proposal under debate in the Senate would have it.
Andrew Yang reacted on CNN (where he is now a commentator) to a version of the payment proposal originally tabled by Treasury Secretary Steven Mnuchin, and no doubt must have felt vindicated by these developments. But Yang did note that a mere one time payment of $1,000 would likely not be sufficient, and called again for the minimum of cash payments to be in the amount of $1,000 per month.
He is entirely correct to suggest that a one time cash payment will not be nearly enough to stave off the economic challenges now faced by millions of Americans. In some major cities, $1,200 (the amount currently in the Senate bill under debate) is barely enough to cover one month’s rent, let alone other expenses. The argument even comes to mind that the payment should be a good deal larger, if the aim is for Americans to actually inject the cash into the economy through spending rather than just immediately socking all of it away into their savings accounts (though the majority will likely do this regardless of how much the amount is).
Already, others are taking up the call that the cash payment needs to be substantially larger, and rightly so. In an interview with CNN’s Jake Tapper, Congresswoman Alexandria Ocasio-Cortez called for checks to be sent out to every American in the amount of $2,000 dollars. This seems closer to the mark of what is necessary to even begin to reassure Americans that they will have enough cash on hand to provide for their immediate needs during this crisis.
One of the ostensible reasons that Democrats in Congress have been reluctant to include direct cash payments in the stimulus bill has been that they are being pushed by Republicans as an alternative to things like unemployment insurance increases or paid sick leave, rather than an enhancement. But Ocasio-Cortez correctly sees her payments as being part of a broader strategy, as in the Tapper interviews she outlines plans to suspend mortgage, rent and debt payments. If enacted, this would allow for Americans to feel secure enough to maybe, just maybe, begin injecting cash into the economy from these payments.
The economic shock that this country is facing due to COVID-19 is one that could be the worst within living memory if appropriate measures are not taken. Paying out cash to every American can be a vital part of the measures needed to stave off disaster, but one time payments of $1,200, although welcome, are insufficient. The payments need to be larger, on a monthly basis for the indefinite future, and part of a broader push to make sure that the cash is actually able to address the costs facing the most vulnerable members of society. If they are not, then they will be merely a drop in the bucket against the downpour that is upon us.
