Public health requires temporary universal basic income
The social distancing required to limit the spread of the novel coronavirus that causes COVID-19 is having a devastating impact on our globalized and consumption-based, service-oriented economy.
Across the nation, businesses large and small are closing to minimize contact between people. Over the long term, we will need to make significant investments to aid recovery, but in the near term, we need to provide direct relief to all Americans.
Bipartisan support for sending out $1,000 checks is already coalescing in Congress. I propose this idea be expanded to a temporary universal basic income for all until the national emergency is lifted.
Our society is particularly unprepared for a catastrophic event that requires all of us to stay home. The service sector accounts for more than 70 percent of U.S. gross domestic product and employs tens of millions of Americans. Many businesses that fall into that sector, such as bars, restaurants, hotels, care-providing, and ride-sharing services are seeing their revenue drop precipitously.
Last Friday night our family was out to dinner at one of our favorite pizza places. Today, North Carolina Gov. Roy Cooper ordered the closure of all restaurants and bars for all but take out and delivery. What happens to our server now? How will she pay her rent on April 1? Can she afford groceries? What if she gets a cough and a fever — can she pay for the doctor?
Some 40 percent of Americans lack the cash to cover a personal emergency cost $400, according to an oft-cited government report. This suggests that well over 125 million of our fellow citizens will face financial catastrophe if they lose their income.
This could easily lead to a downward economic spiral with its own viral results for the broader economy. As the government is doing for public health, it must now intervene for the nation’s economic health.
We need a real stimulus that will provide income to all Americans so that they can continue to pay their bills while also complying with the strict public health requirements that are necessary to stop the spread of the coronavirus. The fairest, most efficient and effective tool is the provision of direct cash assistance to all for the duration of the crisis. I propose that this be:
- Structured as a refundable tax credit in an amount equal to $1,000 per month for each adult and $500 per month for each child
- Administered by the U.S. Department of Treasure and distributed by the IRS
- Paid monthly for as long as the national state of emergency is in effect
Certainly, this proposal is not cheap — it would cost about $260 billion per month. But there is no question that we can afford it. As I write this, the Trump administration is announcing a proposed $850 billion stimulus package that will include a bailout for the airlines and provide aid to some workers by providing a payroll tax cut.
The payroll tax cut comes from a good place — the desire to help working Americans — but it is the wrong tool. It is expensive and inefficient. Moreover, it will become less effective as unemployment rises. As a result, economists from across the political and philosophical spectrum have criticized it.
For less than that, we can give all Americans direct cash assistance for three months — or until the state of emergency is lifted. This will enable those who are losing income and jobs to pay for food, housing, medical care, and childcare. And it will allow those who won’t lose their jobs to put the extra money back into the economy.
This will go a long way to stabilize Main Street. Moreover, this is the kind of people-centered public policy that will keep the bottom from falling out and establish the foundation on which to build a strong recovery once this health crisis is over. It is time for our government to make an investment in all of us, just as we are being asked to make shared sacrifices for the good of the country.
Andrew Foster is a clinical professor of law at Duke University School of Law, where he serves as director of its Community Enterprise Clinic.