Many commentators have panned the idea, typically by saying the program would be a wasteful, regressive giveaway. “If the next round of stimulus checks goes out they should be targeted to those who need it,” said Sen. Joe Manchin III (D-W.Va.), a key vote in the Senate. But these views are mistaken. The survival checks are the best way to reach the neediest people in our society and compare favorably with existing tax-credit programs that are widely celebrated.
Critics’ “need”-based objections are twofold. First, some commentators argue that unemployment benefits would be better targeted toward the needy than survival checks. But this approach would leave out millions of the poorest Americans.
People who have lost their jobs have seen their incomes decline and need their lost income replaced. But they are not necessarily “needy” in the sense that they are destitute. Some might have spouses who have not been laid off while others might have substantial assets that they can draw upon.
On the other hand, poor people who were already not working when the coronavirus hit have not necessarily seen their incomes decline from previous levels, but they need more income to escape the absolute destitution they are living in. More than two-thirds of the poorest 20 percent of Americans did not work at all in 2019, before the start of the coronavirus recession. These non-workers are overwhelmingly children, disabled people and elderly people, meaning they are not eligible for the expanded unemployment benefits in the latest round of coronavirus legislation. For them, the $2,000 survival checks are their only hope for alleviating their material suffering, which in many cases has increased under the pressure of the current downturn.
The battle between unemployment benefits and survival checks is thus a false choice. Unemployment benefits replace incomes. Survival checks bail out the poorest in our society. You need both to provide adequate relief.
The other claim that opponents of the survival checks make is that they include too many high-income households. The current survival-check proposal begins phasing out on single tax filers who earned more than $75,000 and married tax filers who earned more than $150,000 in 2019. This objection is overconfident in asserting that incomes from before the pandemic are a reliable indicator of the financial situation of families right now. Furthermore, other widely lauded policies hand even more benefits to rich households. Take the child tax credit (CTC). Just like the survival checks, the CTC benefit level is set at $2,000, but the CTC phases out at $200,000 for single tax filers and $400,000 for married tax filers. In addition to being more generous to the rich, the CTC’s benefit structure is also more stingy to the poor, as the bottom 35 percent of American children are not eligible for the full $2,000 benefit.
Remarkably, the CTC is not just tolerated in American politics, but is in fact a widely celebrated program that advocates tout as helping the poor and middle class alike. Given this general sentiment toward the CTC and other tax-credit programs, it is hard to understand how survival checks, which include all of the poor and exclude more of the rich, have come to be derided as some kind of wasteful giveaway.
In fact, the survival-checks program is better and more well-targeted than every other major tax-credit program that currently exists. Hopefully, Senate Democrats can look through all the nonsense that has been thrown at the proposal in the past few weeks and keep Biden and Schumer’s promises to send out these $2,000 checks. America’s poorest are depending on them.