U.S. Stimulus Checks and Cash Benefits May Be Biden’s Economic Legacy

Whether Joe Biden’s presidency will be as transformative as many hope remains to be seen. But if it turns out to be one of those landmark presidencies like that of Ronald Reagan or Franklin D. Roosevelt, what will be the big economic idea? For Reagan, it was tax cuts. For Biden it will probably be cash benefits.

(See also Allison Schrager, “Biden’s trickle-up economy is doomed to fail“For an opposing view.)

America’s traditional government welfare programs, developed primarily during the New Deal by FDR and the Great Society by Lyndon Johnson, were intended to reassure a nation deeply skeptical of government assistance. Some programs required people to actively look for work, or they didn’t join until people started earning some income. Others were limited to the elderly or the disabled. Still others were in-kind benefits such as health care, home vouchers, and food stamps. Any restrictions should ensure a suspicious public that healthy, able-bodied people don’t idle on the state allowance or spend government money on vices like alcohol.

But these precautionary measures left a highly complex mess in the US welfare state. The thicket of programs is so dense that people who do qualify often don’t even apply to the many of them. The blizzard of work demands and complex incentives confuses poor people who are already spiritual overloaded of the trials and tribulations of their troubled lives. Many fall through the cracks.

In the 2020 pandemic, circumstances forced the US to try a different approach. Pandemic unemployment benefits went to a much broader section of the population than traditional unemployment insurance, and multiple rounds of checks were sent out to anyone making less than $ 75,000 to $ 100,000 a year. These cash benefits were a resounding success – income and consumption actually rose despite the huge wave of unemployment and programs Not Convince people to quit their jobs.

Now the pandemic relief programs are ending, but the idea of ​​cash benefits has stayed as always central element President Biden’s economic plans. Most importantly, if it becomes permanent, the monthly child benefit of up to US $ 3,600 per year per child should cut child poverty in half.

Meanwhile the idea of ​​cash benefits was up tie in with in different regions and corners of the political spectrum, even before the Covid-10 pandemic. The basic income was at the heart of Andrew Yang’s presidential and mayoral campaigns. A pilot program in Stockton, California, found that regular cash payments were made actually increased Full time employment.

Cash benefits have several advantages and are far more convenient and simple than the traditional American welfare approach. Instead of telling people what to spend their money on, cash lets people decide for themselves. Although there are a few exceptions, people generally know what they need better than government policy makers. Some people may have to pay to get their car from the tow area; others could spend the money on night classes; still others can cover emergency medical expenses, pay for child care or help a sick family member. The government cannot foresee all of these needs; Cash covers them all.

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