Voters listen to Democratic 2020 U.S. presidential candidate and entrepreneur Andrew Yang as he speaks during a campaign stop in Nevada, Iowa, January 28, 2020.
Sen. Mitt Romney of Utah wants the government to cut a $1,000 check for every American adult as the spread of the coronavirus rapidly shuts down the economy. Fellow Republican lawmaker Sen. Tom Cotton of Arkansas is proposing cash stipends to help people pay their bills. Treasury Secretary Steven Mnuchin said at a White House press briefing on Tuesday that “Americans need cash now,” meaning “in the next two weeks.”
On the other side of the aisle, Democratic Reps. Tim Ryan of Ohio and Ro Khanna of California support a payment of $1,000 to adults, as part of a plan laid out by President Barack Obama’s former chief economist Jason Furman. Rep. Katie Porter, another California Democrat, tweeted her support for Romney’s effort on Monday.
For anyone who followed Andrew Yang’s performance in the Democratic primary, this idea that’s now percolating in Washington sounds familiar. Well before COVID-19 became a worldwide health crisis, Yang was proposing a “freedom dividend” that would put $1,000 a month into the pockets of every American over a certain age, a reflection of the impact automation is having on the workforce.
Off the campaign trail, it’s called universal basic income, or UBI, and it’s been a topic for years in Silicon Valley, where the world’s top engineers are building algorithms to replace humans across seemingly every sector of the economy. Billionaire techies Mark Zuckerberg and Elon Musk have endorsed UBI, and start-up incubator Y Combinator launched a trial in Oakland in 2016 and has since expanded it.
The city of Stockton, California, about 80 miles east of San Francisco, started an 18-month pilot early last year, paying $500 a month to 125 low-income residents. Rep. Alexandria Ocasio-Cortez, the Democrat from New York and a Bernie Sanders backer, praised Stockton Mayor Michael Stubbs on Monday for leading the charge.
Not until a global pandemic landed in the U.S., forcing the widespread closure of businesses across cities and states, did the concept of UBI move from the labs of northern California into the mainstream. Policymakers are rapidly discovering that, with income poised to completely dry up for workers at restaurants, bars, movie theaters and hotels, millions of non-salaried Americans living paycheck to paycheck could soon be unable to afford food, rent and utility bills.
Putting cash in their pockets may be the most efficient way to ease the burden.
“This is waking the world up to the fact that people need an ability to weather systemic shocks,” said Sam Altman, the CEO of research lab OpenAI and previous president of Y Combinator, where he helped start the basic income project. “One way to do that is to give them cash.”
The Democrat-led House of Representatives passed a coronavirus relief bill on Saturday, as legislators from California to New York prepared to implement rules that would force residents to stay home. While the bill would require health plans to cover testing at no cost, ensure that large employers offer two weeks of paid sick leave, offer payroll tax credits for employers providing leave benefits and provide funding for state unemployment benefits and local food assistance, there’s nothing about sending money directly to families.
Former Governor and presidential candidate Mitt Romney addresses a full house of more than 600 people during a speech for Hinckley Institute of Politics at the University of Utah in Salt Lake City March 3, 2016.
Ed Kosmicki | AFP | Getty Images
Romney said that, in taking up the House bill, the Senate needs to do more: “Every American adult should immediately receive a one-time check for $1,000 to help ensure families and workers can meet their short-term obligations and increase spending in the economy,” he said in a press release.
Cotton, considered one of the most conservative U.S. senators, criticized the House’s legislation for its complexity and said, “we need cash in the hands of affected families,” though he didn’t specify an amount.
There are Democrats who want to go further and move faster than their colleagues. Ryan and Khanna have proposed legislation that would provide between $1,000 and $6,000 for Americans earning under $65,000, with payments starting three weeks after passage and continuing monthly through the end of the year.
They’ve got the support of Natalie Foster, former digital director for Obama’s Organizing for America, who’s spent the past four years working to make universal basic income a reality. In 2016, she started the Economic Security Project with Facebook co-founder Chris Hughes. One of the main goals from the beginning has been to guarantee an “income floor for all Americans,” according to its website.
“There has been a long history of thought on this idea, and now is a moment to put it into action,” said Foster, who’s based in Oakland. “We need to put money into the hands of people that need it as fast as we can and that needs to happen regularly until the crisis is over.”
The group has written up a stimulus package that it claims would help three-quarters of Americans, putting $2,000 into the hands of each adult and $1,000 per child for families earning up to $100,000, followed by quarterly checks as long as needed.
Foster said that in addition to cash payments, she’d like to see enhanced unemployment insurance, mortgage payment relief and a cessation of evictions. Alameda County, which includes Oakland, announced on Monday that its sheriff’s office “will temporarily suspend evictions due to the
The concept of UBI has its share of critics. It sounds like a handout, some say. It’s patronizing. It encourages people not to work. Yang’s argument to the skeptics throughout his campaign was that the freedom dividend would stimulate the economy, giving a little cash on the side for Americans to “pay their bills, educate themselves, start businesses, be more creative, stay healthy, relocate for work, spend time with their children, take care of loved ones, and have a real stake in the future.”
Altman even said he’s heard from some of his friends who had been opponents of UBI and are now reconsidering.
Some tech companies are taking action on their own. Cloud software maker Workday said on Monday it will pay lower-level employees the equivalent of two weeks pay as a cash bonus to help support them during the fallout from the pandemic. Facebook followed on Tuesday, announcing bonuses of $1,000 to every employee to support their efforts to work remotely.
Aneel Bhusri, CEO, Workday, speaking at the World Economic Forum in Davos, Switzerland, Jan. 23, 2020.
Adam Galica | CNBC
Paul Vallee, the CEO of Canada-based software developer Tehama, is a longtime supporter of UBI and has spent the past five years on the board of the Basic Income Canada Network.
Vallee says there’s no better stimulus in a crisis than giving money to people who need it because you know with relative certainty that it won’t go to waste. They’ll buy the things they need the most, leading to economic efficiency.
The U.S. government is going to have to spend a “gargantuan amount” over the coming months and years to help the private sector, he said, and the Federal Reserve has already dropped its benchmark interest rate to zero.
To protect families now, Vallee is urging the government to create a simple online application process that allows anyone to register. Some rules can be included so that people who make more than a certain amount will have to pay back the money at tax time, filtering out most Americans who don’t need the cash.
“I can’t imagine a stimulus that can be rolled out as fast as this that helps families dealing with immediate financial strain,” said Vallee, who was in self-quarantine at his house in Ottawa on Monday after returning from out of the country over the weekend. He’s encouraging lawmakers to get something through without debating the merits of every piece of every proposal.
“Achieving consensus on the details of a plan can be toxic to society right now,” he said.