Tag Archives: Social Policy

Pandemic Cash Made a Difference

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Millions needed help and got it. From The New York Times:

In offering most Americans two more rounds of stimulus [or relief] checks in the past six months, totaling $2,000 a person, the federal government effectively conducted a huge experiment in safety net policy. Supporters said a quick, broad outpouring of cash would ease the economic hardships caused by the coronavirus pandemic. Skeptics called the policy wasteful and expensive.

The aid followed an earlier round of stimulus checks, sent a year ago, and the results are being scrutinized for lessons on how to help the needy in less extraordinary times.

A new analysis of Census Bureau surveys argues that the two latest rounds of aid significantly improved Americans’ ability to buy food and pay household bills and reduced anxiety and depression, with the largest benefits going to the poorest households and those with children. The analysis offers the fullest look at hardship reduction under the stimulus aid.

Among households with children, reports of food shortages fell 42 percent from January through April. A broader gauge of financial instability fell 43 percent. Among all households, frequent anxiety and depression fell by more than 20 percent.

While the economic rebound and other forms of aid no doubt also helped, the largest declines in measures of hardship coincided with the $600 checks that reached most people in January and the $1,400 checks mostly distributed in April.

“We see an immediate decline among multiple lines of hardship concentrated among the most disadvantaged families,” said H. Luke Shaefer, a professor at the University of Michigan who co-authored the study . . .

Given the scale of the stimulus aid — a total of $585 billion — a reduction in hardship may seem like a given, and there is no clear way to measure whether the benefits were worth the costs. . . . Still, the aggressive use of stimulus checks coincides with growing interest in broad cash payments as a tool in social policy, and the evidence that they can have an immediate effect on the economic strains afflicting many households could influence that debate.

Starting in July, the government will mail up to $300 a month per child to all but the most affluent families in a yearlong expansion of the child tax credit that Democrats want to make permanent. . . .

“Cash aid offers families great flexibility to address their most pressing problems, and getting it out quickly is something the government knows how to do,” Mr. Shaefer said. Extrapolating from the survey data, he concluded that 5.2 million children had escaped food insufficiency since the start of the year, a figure he called dramatic.

The experience of [Chenetta Ray], a warehouse worker at a recycling company in Houston, captures the hardships that the pandemic imposed and the varied ways that struggling families have used stimulus checks to address them. Earning $13 an hour, Ms. Ray had an unforgiving budget even before business closures reduced trash collection and cut her hours by a third.

Her car insurance lapsed. Her lights were shut off. She skipped meals, even with food pantry aid, and re-wore dirty work clothes to save on laundromat costs. When her daughter discovered that they owed thousands in rent, she offered to quit high school and work, which Ms. Ray forbid. A stimulus payment in January — $1,200 for the two of them — let her pay small parts of multiple bills and restock the freezer.

“It bridged a gap,” Ms. Ray said, while she waited for slower forms of assistance, like rental aid.

Then she got cancer. To confirm the diagnosis and guide her treatment, she had to contribute $600 to the cost of a CT scan, which she did with the help of a payment in April totaling $2,800.

In addition to providing for the test, Ms. Ray said, the checks brought hope. “I really got down and depressed,” she said. “Part of the benefit of the stimulus to me was God saying, ‘I got you.’ Spiritual and emotional reassurance. It took a lot of stress off me.”

Helping Children Thrive (and Giving Parents a Hand)

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From The New York Times:

Obscured by other parts of President Biden’s $1.9 trillion stimulus package, which won Senate approval on Saturday, the child benefit has the makings of a policy revolution. Though framed in technocratic terms as an expansion of an existing tax credit, it is essentially a guaranteed income for families with children, akin to children’s allowances that are common in other rich countries.

The plan establishes the benefit for a single year. But if it becomes permanent, as Democrats intend, it will greatly enlarge the safety net for the poor and the middle class at a time when the volatile modern economy often leaves families moving between those groups. More than 93 percent of children — 69 million — would receive benefits under the plan, at a one-year cost of more than $100 billion.

The bill, which is likely to . . . be signed by Mr. Biden this week, raises the maximum benefit most families will receive by up to 80 percent per child and extends it to millions of families whose earnings are too low to fully qualify under existing law. Currently, a quarter of children get a partial benefit, and the poorest 10 percent get nothing.

While the current program distributes the money annually, as a tax reduction to families with income tax liability or a check to those too poor to owe income taxes, the new program would send both groups monthly checks to provide a more stable cash flow.

By the standards of previous aid debates, opposition has been surprisingly muted. While the bill has not won any Republican votes, critics have largely focused on other elements of the rescue package. . . . Senator Mitt Romney, Republican of Utah, has proposed a child benefit that is even larger, though it would be financed through other safety net cuts.

While the proposal took center stage in response to the pandemic, supporters have spent decades developing the case for a children’s income guarantee. Their arguments gained traction as science established the long-term consequences of deprivation in children’s early years, and as rising inequality undercut the idea that everyone had a fair shot at a better life. . . .

Mr. Biden’s embrace of the subsidies is a leftward shift for a Democratic Party that made deep cuts in cash aid in the 1990s under the theme of “ending welfare.” As a senator, Mr. Biden supported the 1996 welfare restrictions, and as recently as August his campaign was noncommittal about the child benefit.

The president now promotes projections that the monthly checks — up to $300 for young children and $250 for those over 5 — would cut child poverty by 45 percent, and by more than 50 percent among Black families.

“The moment has found us,” said Representative Rosa DeLauro, a Connecticut Democrat who has proposed a child allowance in 10 consecutive Congresses and describes it as a children’s version of Social Security. “The crystallization of the child tax credit and what it can do to lift children and families out of poverty is extraordinary. We’ve been talking about this for years.”

The campaign for child benefits is at least a half-century old and rests on a twofold idea: Children are expensive, and society shares an interest in seeing them thrive. At least 17 wealthy countries subsidize child-rearing for much of the population, with Canada offering up to $4,800 per child each year. But until recently, a broad allowance seemed unlikely in the United States, where policy was more likely to reflect a faith that opportunity was abundant and a belief that aid sapped initiative.

It was a Democratic president, Bill Clinton, who abolished the entitlement to cash aid for poor families with children. The landmark law he signed in 1996 created time limits and work requirements and caused an exodus from the rolls. Spending on the poor continued to grow but targeted low-wage workers, with little protection for those who failed to find or keep jobs.

In a 2018 analysis of federal spending on children, the economists Hilary W. Hoynes and Diane Whitmore Schanzenbach found that virtually all the increases since 1990 went to “families with earnings” and those “above the poverty line.”

But rising inequality and the focus on early childhood brought broader subsidies a new look. A landmark study in 2019 by the National Academies of Sciences, Engineering and Medicine showed that even short stints in poverty could cause lasting harm, leaving children with less education, lower adult earnings and worse adult health. Though welfare critics said aid caused harm, the panel found that “poverty itself causes negative child outcomes” and that income subsidies “have been shown to improve child well-being”. . .

Under Mr. Biden’s plan, a nonworking mother with three young children could receive $10,800 a year, plus food stamps and Medicaid . . . Full benefits extend to single parents with incomes of $112,500 and couples with $150,000.

. . . Samuel Hammond, a proponent of child allowances at the center-right Niskanen Center, said the politics of aid had changed in ways that softened conservative resistance.

A quarter-century ago, debate focused on an urban underclass whose problems seemed to set them apart from a generally prospering society. They were disproportionately Black and Latino and mostly represented by Democrats. Now, insecurity has traveled up the economic ladder to a broader working class with similar problems, like underemployment, marital dissolution and drugs. Often white and rural, many are voters whom Republicans hope to court. . . .

A Great Opportunity for the Democrats

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Having fifty votes in the Senate and the Vice President gives the Democrats a chance to make real progress and seriously damage the radical right. From Greg Sargent of The Washington Post:

In the early morning hours on Friday, Senate Democrats passed a measure laying the groundwork to move President Biden’s big economic rescue package via the reconciliation process, by a simple majority. Republicans are already thundering with outrage.

The move does indeed pose a serious challenge to Republicans. But it’s one that runs deeper than merely moving toward passing this one package without them. It also suggests a reset in dealing with GOP bad-faith tactics across the board — and even the beginnings of a response to the . . . ideology loosely described as “Trumpism.”

First, the new move suggests a growing recognition that the conventional understanding of how “bipartisanship” works has things exactly backward — and that Republicans have manipulated the public debate on this topic for far too long.

For instance, Sen. Mitch McConnell (R-Ky.) is already denouncing this move. The minority leader railed that Democrats have “set the table to ram through their $1.9 trillion rough draft,” adding: “notwithstanding all the talk about bipartisan unity, Democrats are plowing ahead.”

McConnell’s underlying claim is that Democrats should allow their plan to be subject to a supermajority requirement via the filibuster [of 60 Yes votes] to facilitate bipartisanship. The idea is this: If a partisan majority [in this case, the 50 Democrats plus the Vice President] can’t pass things by itself, it must reach out for bipartisan support [from at least ten Republicans] . . .

This is a scam. The reality is the other way around: In McConnell’s hands, the filibuster has actually made bipartisanship less likely.

By preventing a partisan majority from passing things, McConnell has created the conditions for withholding the support necessary to enact them, for the instrumental purpose of casting Democratic presidents (such as Barack Obama) as failed conciliators.

This has worked as follows: GOP senators have withheld support regardless of the concessions made to win them over, because they calculate the president’s party will take the political hit for failing to make bipartisan deals.

The paradox here is that using reconciliation — moving to pass something by a simple majority — actually could bolster the conditions for good-faith bipartisanship. GOP senators who might be gettable will no longer have a built-in incentive to oppose a particular bill. It’s likely passing anyway, so the lure of helping [their own] party by opposing it — because the Democratic president will get blamed for failure — isn’t nearly as strong.

Under those conditions, Biden actually would have an opening to negotiate with Republicans in the quest for bipartisan support. In the conditions McConnell wants, the incentives for moderate GOP senators point in the other direction.

Whether Biden actually will end up negotiating down to win a few Republicans is an open question. But the point is, in McConnell’s cynical scenario, this would be nothing but a fool’s errand, because it would be far less likely to work.

McConnell’s other basic idea — that a supermajority requirement protects the minority — is also nonsense. Adam Gurri makes a key distinction between protecting the rights of the minority party and protecting those of minorities of voters. The latter are protected by many other veto points in the system. Protecting the minority party’s rights by subjecting all Senate business to a supermajority requirement is only about facilitating its ability to obstruct.

Senior Democrats have begun to articulate the idea that the true way to revitalize faith in government — and in democracy — is by successfully delivering on big-ticket items. Achieving bipartisan cooperation for its own sake will do far less to address deep civic division and disillusionment than robust and effective action on behalf of the common good.

The Biden plan now will be written by Congress. But the new move lays the groundwork for passage of a package that could spend as much as $1.9 trillion. . . .

In an interesting column, David Brooks suggests that such large-scale spending could begin to accomplish “social repair.” We should spend far more than what’s merely needed to fill the “output gap.” We should spend to address the deep inequalities and injustices revealed by the pandemic and longer-term structural ills such as flat wages and regional stagnation. Undershooting here, Brooks notes, carries far greater moral and civic risks than overshooting.

I’d go further: Such an approach also contains the seeds of a broader answer to Trumpist populism. Success in using robust government action to charge up the recovery and get the coronavirus under control — including sinking medical resources into rural America — could clear political space for Biden to restore humanity to our immigration system and sanity to our international climate efforts.

Spending effectively toward the common good might begin to defang destructive zero-sum nationalist appeals. That could pave the way for a “new synthesis” that combines bolder progressive economics with a refusal to backpedal on issues that Democrats have long seen as politically perilous in the face of right-wing populist demagoguery. Biden’s ambitious actions so far on immigration and climate suggest just this understanding of the moment.

All this might sound overly optimistic. And there are countless ways Democrats can screw this all up. But the early returns suggest they are constructively breaking with old ways of thinking. And that could portend a serious long-term challenge to the Trumpified [Grotesque Old Party].

Unquote.

Senate Democrats can change the Senate rules whenever they want. They just need the courage to do so (and the cooperation of their least progressive members).

This Is How Government Is Supposed To Work

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When giving poor families help buying food, should the government err on the side of caution (we don’t want money to be wasted) or generosity (we don’t want poor families to miss out)? The Biden administration knows the answer. From Politico:

Millions of low-income households with children are about to get more help buying groceries during the pandemic under a new policy released Friday by the Biden administration.

The backstory: Congress last spring launched Pandemic EBT, a program that aims to replace free and subsidized meals kids normally get at school. After schools broadly shut down last year, billions in aid was sent out to low-income families with school-aged children on debit-like EBT cards that can be used to buy food, but this school year the program has been bogged down in bureaucracy.

As POLITICO reported last month, the vast majority of households eligible for assistance haven’t seen any P-EBT payments several months into the school year, even though Congress re-upped the program in September — a failing that has kept roughly $2 billion in aid from going out to families each month.

The Agriculture Department, which oversees school meals and P-EBT, released guidance today that makes it easier for states to get aid to more families — and at a higher payment rate than under the [previous] administration.

“We want to put more money into the hands of people with kids,” said Stacy Dean, deputy under secretary for Food, Nutrition and Consumer Services.

What’s new: The changes unveiled Friday allow states to simplify how they figure out which children are eligible for benefits. The administration also outlined how to get P-EBT benefits to children who are younger than school age for the first time — an expansion of the program Congress asked for in last month’s aid package.

“We’re hoping that it will make it easier for states to implement the program,” Dean said in an interview.

The political context: Congress last month directed USDA to simplify the program, but Friday’s guidance and the increase in aid also marks a significant ideological shift at USDA.

During the Trump administration, the mandate was more to err on the side of caution, to put in place policies that focused more on individually verifying which households were eligible for P-EBT and for how many days — a task that was so administratively complicated with some schools open, some online-only, and some a hybrid, that it delayed the program from being implemented at all.

Under the Biden administration, the mandate is more to err on the side of getting more aid out quickly to as many low-income households as possible, even if it means inadvertently including some kids who are doing in-person learning.

What it means: The new policy means that soon many households that are already participating in the Supplemental Nutrition Assistance Program — still known to many as food stamps — will get additional benefits if they have children under the age of six.

It also means all families eligible for P-EBT will receive more aid. The reimbursement rate for replacing school meals is being bumped up by about $1 per day, bringing it up to $6.82 per child, per day of school missed — which adds up to just over $136 per child, per month. . . .

The USDA is encouraging states to retroactively apply the increase in benefits to the entire school year, which means that if a household already received P-EBT aid for August and September, for example, they could be owed nearly $20 more per child, per month.

Most states are not ready to roll: Just nine states and territories have been approved so far to restart paying out P-EBT benefits: Illinois, Indiana, Massachusetts, New Mexico, Ohio, Puerto Rico, Rhode Island, Vermont and Tennessee. [The Agriculture Department] said it has received plans from 22 states and territories, with more expected in the coming weeks.

Helping Helps

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The Biden administration and House Democrats are working on legislation that would send monthly checks to people with children:

In one draft of the proposal, the IRS would deposit checks worth $300 every month per child younger than 6 and $250 every month per child age 6 to 17. This would give parents $3,000 per year for each child between the ages of 6 to 17, and $3,600 per child under age 6. . . .

Eligibility for the benefit, similar to the stimulus checks, would be based on family income for the prior tax year and be phased out at a certain income amount . . . 

Paul Krugman thinks it’s a very good idea: “it could, among other things, cut child poverty in half”:

America stands out among wealthy countries for its failure to provide much help to families with children. U.S. expenditures on family benefits as a share of G.D.P. are less than a third the rich-nation average. Largely as a consequence, we have a much higher rate of child poverty than our peers.

Our stinginess does a lot of harm. Economists have shown that previous extensions of aid to families with children, like the gradual rollout of food stamps in the 1960s and 1970s and the expansion of Medicaid in the 1980s, didn’t just improve children’s lives in the short run; children who received the aid grew into healthier, more productive adults than those who didn’t receive the aid. By not doing even more for children, we are stunting their future, and that of the nation as a whole.

And aid to children would achieve what proponents of the tax cut promised but failed to deliver: an improvement in America’s long-run economic prospects. If the children we help today grow up into healthier, more productive adults than they would otherwise — which they will — that will eventually mean higher G.D.P.

And aid to children would also indirectly help the budget, because those children would later pay more in taxes and be less likely to call on safety net programs. These fiscal benefits might even be big enough that helping children pays for itself, and in any case they mean that the true cost of aiding children, even in narrowly fiscal terms, would be less than it might appear.

All in all, then, increased aid to families with children is a really good idea. It would immediately improve millions of Americans’ lives, it would make us stronger in the future, and it would have only modest budget costs. 

By “modest”, Krugman means it would cost around half of the 2017 Republican tax cut, which mainly benefited the rich. Of course, there will be Republican opposition:

We’ll surely hear some version of the standard conservative argument that any policy reducing misery reduces the incentive to be self-sufficient — you know, unemployment insurance encourages people to stay unemployed, food stamps encourage them to be lazy, and so on. Making this argument about a broad-based program to help children will be hard, but they’ll find a way.

He discusses a broader issue in his NY Times newsletter:

What should we do about Americans with low income — and their children? Should we make a new push to reduce or eliminate poverty, and if so, what should it involve?

. . . As with everything else in modern America, the two parties have starkly different positions on this issue. . . . I don’t believe that the Republican position on this, or for that matter on any major policy issue I can think of, reflects a good-faith attempt to figure out what works best. But the expressed views of the parties do show a big divide about how the world works.

The Republican view is basically that anti-poverty programs aren’t the solution, they’re the problem. How so? When you have “means-tested” programs — programs that are only available to people with sufficiently low incomes, or that phase out as income rises — you are in effect imposing high marginal tax rates on the relatively poor. That is if, say, a single mother manages to increase her earnings from $15,000 to $20,000 a year, she will find much of that extra $5,000 taken away in the form of reduced benefits.

This high de facto taxation, conservatives say, discourages efforts to break out of poverty. And they also say that it fosters a culture of dependency. So they argue that to help the poor we should, well, offer them less help.

Progressives don’t deny that incentives can matter. To use one of my favorite examples, countries that offer generous benefits to people who retire early, like France, end up with many people, you guessed it, retiring early.

But economists on the center left generally argue that the disincentives created by anti-poverty programs are exaggerated, and that the main thing actually trapping people in poverty is a lack of resources: It’s hard to get an education, start a business, even move to a place where jobs are available, when you have no money in the bank and are living hand-to-mouth.

Also, being poor imposes a lot of cognitive stress: It’s hard to focus on self-improvement when you’re constantly worrying about where the next rent check will come from or how to pay medical bills.

If you see resources as the main problem for the poor, the answer to poverty is to provide more resources; this doesn’t just improve the lives of the poor in the short run, it also increases their chances of breaking free of the poverty cycle.

This is the kind of debate that should be settled with evidence. And for what it’s worth, there is growing evidence that the resources view of poverty is much closer to the truth than the incentives view. . . . This is especially true for programs that help families with children, which seem to improve the lives of those children long after they’ve matured past receiving aid.