The Right Way to Give Everyone Cash in the Midst of the Coronavirus Crisis

For a cash payout plan to work it must be universal, long-lasting and supplemented with other social programs.

Jim Pugh March 18, 2020

Americans need cash payouts—now. (Xinhua/Liu Jie via Getty Images)

There is a rapid­ly emerg­ing con­sen­sus in Wash­ing­ton, DC: The best response to the coro­n­avirus pan­dem­ic is to give peo­ple cash.

With cash, people are better equipped to handle whatever comes their way.

A slew of pro­pos­als has been put forth by leg­is­la­tors over the past two weeks. Rep. Ro Khan­na (D‑Calif.) and Tim Ryan (D‑Ohio) have called for an expan­sion of the Earned Income Tax Cred­it to pro­vide imme­di­ate pay­ments from $1,000 to $6,000 for every Amer­i­can earn­ing below $65,000 a year. Oba­ma admin­is­tra­tion econ­o­mist Jason Fur­man has pro­posed giv­ing $1,000 to every adult and $500 to every child, and Rep. Ilhan Omar (D‑Minn.) is plan­ning to intro­duce leg­is­la­tion to do exact­ly that. Rep. Tul­si Gab­bard (D‑HI) has put out a res­o­lu­tion that would pro­vide $1,000 per month to every adult as long as the pan­dem­ic lasts.

Even Repub­li­cans are get­ting on board. Sen. Mitt Rom­ney (R‑Utah) has pro­posed giv­ing every adult $1,000, and Sen. Tom Cot­ton (R‑Ark.) wants to give $1,000 per adult and $500 per claimed depen­dent to fam­i­lies earn­ing less than $100,000 per year. Trea­sury Sec­re­tary Steve Mnuchin has said the White House plans to include imme­di­ate cash assis­tance as part of its coro­n­avirus stim­u­lus package.

In my role as co-direc­tor of Uni­ver­sal Income Project, I’ve seen exten­sive evi­dence and exam­ples of the vital role cash assis­tance can play in peo­ple’s lives, includ­ing from the basic income pilot pro­grams under­way in Stock­ton, Cal­i­for­nia and Jack­son, Mis­sis­sip­pi. Recip­i­ents con­sis­tent­ly report that cash gives them the flex­i­bil­i­ty to address their spe­cif­ic chal­lenges — and in a time of dras­tic and unpre­dictable dis­rup­tions, that’s exact­ly what’s need­ed. We don’t yet know all the ways in which the virus and the result­ing con­tain­ment mea­sures will impact Amer­i­cans’ lives. With cash, peo­ple are bet­ter equipped to han­dle what­ev­er comes their way.

What’s more, the finan­cial secu­ri­ty that comes from cash pay­ments allows peo­ple to engage in more social­ly respon­si­ble behav­ior. Right now, many who have been exposed to the coro­n­avirus are faced with the impos­si­ble deci­sion of con­tin­u­ing to work and risk spread­ing the infec­tion or stay­ing home and being unable to feed their fam­i­lies. With cash, it’s a lot eas­i­er to make the choice that’s bet­ter for the com­mon good.

While it’s crit­i­cal to act quick­ly to get cash into peo­ple’s hands, it’s also impor­tant to get the struc­ture of the pro­gram right. There are three key points that should be considered:

1) We should pro­vide cash for every­one, includ­ing chil­dren and regard­less of income lev­el. Fam­i­lies with kids are being hit par­tic­u­lar­ly hard at this moment, since many rely on sup­port from local schools that are now closed, and they need addi­tion­al sup­port. And while tar­get­ing based on income may seem like a smart move, it car­ries sig­nif­i­cant risks in unin­ten­tion­al­ly leav­ing out peo­ple who should be includ­ed, par­tic­u­lar­ly giv­en how many are los­ing their jobs right now. As Jason Fur­man put it when con­trast­ing the virus to the 2009 Oba­ma finan­cial cri­sis response, it’s real­ly hard to get that right, and you’ll end up miss­ing a lot of peo­ple that real­ly need what you want.”

2) We shouldn’t try to solve every­thing with cash. While cash can do amaz­ing good, it will be far more effec­tive if sup­port­ed by oth­er crit­i­cal response mea­sures, includ­ing paid sick leave, extend­ed unem­ploy­ment insur­ance, mort­gage and rent pay­ment sus­pen­sions, a nation­al mora­to­ri­um on evic­tions, and waived health care costs for treat­ment of the virus. These inter­ven­tions should not be viewed as alter­na­tive approach­es, but rather as com­ple­men­tary parts of a larg­er package.

3) Cash sup­port should be reg­u­lar and ongo­ing. We don’t yet know how long this cri­sis will last, and while a large ini­tial cash infu­sion will pro­vide imme­di­ate relief, con­tin­ued sup­port on a month­ly basis will give peo­ple the finan­cial secu­ri­ty to make it through to the end. What’s more, the ongo­ing sup­port will give peo­ple greater resilience to deal with what­ev­er oth­er chal­lenges may arise beyond the pan­dem­ic — and could give us a mod­el for what a per­ma­nent uni­ver­sal basic income might look like in the Unit­ed States.

In this time of cri­sis, we have a rare moment of bipar­ti­san agree­ment that giv­ing peo­ple cash is the way to go. Let’s act fast to make that hap­pen — and make sure that we do it right.

Jim Pugh is the co-direc­tor of the Uni­ver­sal Income Project.
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