WASHINGTON — Congress wants to write checks to Americans to help them get through the coronavirus crisis, and it's debating how to target the money to those who need it most. Some experts say that's a bad idea.
The checks, they say, should be universal — because means-testing is a complicated process that takes time the country can't afford.
"The idea of universality versus targeted — what matters the most is that it happens fast," said Amy Castro Baker, an assistant professor at the University of Pennsylvania with expertise in guaranteed income. "One of the draws to the idea of unconditional cash transfers is this idea of saying we want to boost efficiency and we want to lower the unnecessary bureaucracy."
"Any proposal in response to this massive crisis that increases the amount of bureaucratic steps necessary to get people money is automatically going to increase the amount of time it takes, and decrease the amount of people who are going to get help," she said. "We should be looking to maximize efficiency, not maximize the number of people we cut out."
Congress is grappling with many questions: Should it be universal or targeted? If it's targeted, who should be excluded and on what parameters? Should it be a single payment or recurring?
House Speaker Nancy Pelosi, D-Calif., insists it be targeted. Senate Majority Leader Mitch McConnell, R-Ky., wants a one-time check. The Trump administration has called for sending Americans two checks. Senate Minority Leader Chuck Schumer, D-N.Y., wants the payments to be recurring through the crisis.
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The Senate Republican bill out Thursday would cut a $1,200 check per person with income under $75,000, decreasing gradually after that and zeroing out at $99,000 income. Checks would fall to $600 for those with little or no income tax liability. They'd throw in $500 per child. Eligibility would be based on 2018 tax filings, which may leave out people who have suddenly lost their job.
Democratic presidential candidate Sen. Bernie Sanders, I-Vt., has proposed universal $2,000 checks per month "for the duration of the crisis." Six Senate Democrats have suggested quarterly checks that begin at $2,000 per person and decrease over time based on economic triggers.
Others say any targeting should factor in cost of living if the goal is to make sure people can pay their rent or mortgage and afford necessities like food. After all, a dollar buys more in rural North Dakota than it does in New York City.
"That's one of the main arguments in favor of universality — that you hopscotch over these debates which, as we've seen, are really complicated," said Jennifer Burns, a history professor at Stanford University who has studied guaranteed income.
She said the imperative is to "pump out cash in the system" and added, "I'm not sure the IRS is equipped to do these analytics and get it out quickly."
The case for means testing was laid out succinctly this week by Treasury Secretary Steven Mnuchin: "We don't need to send people who make $1 million a year checks."
Burns floated a workaround in which the checks are universal at first for the sake of efficiency and later "clawed back" for people who don't need it: "You can tax it back for high incomes."
She said that basing the eligibility on 2018 tax returns may not be representative of Americans' financial situation today — many have lost their jobs just in recent days or weeks.
The proposal mirrors a framework known as universal basic income, which has gained popularity in some economic circles as a means to bolster the safety net, and received a boost from former candidate Andrew Yang in the Democratic presidential race. But the cause has been largely confined to the left fringes of the U.S. political debate — the fact that congressional leaders are seriously considering a version of it reflects the disruption and desperation created by the coronavirus outbreak.
A senior Democratic aide said "nobody really knows" how the policy will shake out: "This thing is the most fluid, changing and uncertain package that I have ever seen negotiated."
A $1,000 check for all U.S. adults would cost $250 billion, according to the Committee for a Responsible Federal Budget, which found that phasing it out for individual incomes above $100,000 would reduce the price tag to $225 billion.
Baker posited that a one-time payment is "not enough for the scale of the crisis," particularly because many Americans never fully recovered from the 2008 downturn.
"It’s not just the fact that we have the coronavirus crisis. It's that we have that layered on top of households and neighborhoods that still haven’t recovered from the last economic recession," Baker said. "Things spiral really quickly. If you're living paycheck to paycheck, one missed paycheck, one week and even two weeks, can spiral people quickly into poverty and homelessness. So a single payment is not going to be enough to stem that tide."
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As Congress debates who gets a check, some experts say: Make it universal - NBC News
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