The Department of Agriculture promised it would start paying off the loans of Black and other minority farmers this month before a Wisconsin federal judge halted the program on Thursday.
US District Judge William Griesbach issued a temporary restraining order suspending the program because of a lawsuit by the Wisconsin Institute for Law and Liberty, a conservative group based in Milwaukee, who filed the suit on behalf of white farmers who said it was discriminatory towards them, the Milwaukee Journal Sentinel reported.
The $1.9 trillion American Rescue Plan signed by President Joe Biden in March set aside $4 billion toward debt relief for socially disadvantaged farmers to pay off burdensome debts. It would pay up to 120% of direct or guaranteed farm loan balances for Black, American Indian, Hispanic, Asian American, or Pacific Islander farmers.
“This is a big deal for us,” John Boyd, Jr., president of the National Black Farmers Association, told CBS MoneyWatch in March. “We see this as a great opportunity to help thousands.”
The program, however, was opposed by 49 Republican senators.
USDA did not respond to Insider’s request for comment at the time of publication but officials told The Washington Post that 17,000 farmers of color qualify for this assistance so far and vowed to defend their efforts in court.
“We respectfully disagree with this temporary order and USDA will continue to forcefully defend our ability to carry out this act of Congress and deliver debt relief to socially disadvantaged borrowers,” Matt Herrick, USDA director of communications, told The Post. “When the temporary order is lifted, USDA will be prepared to provide the debt relief authorized by Congress.”
But the May jobs report released on Friday, which saw 559,000 payrolls added – a sharp increase from April – and a bigger-than-expected drop in the unemployment rate, suggests the labor-market recovery is accelerating just fine on its own.
After all, none of the GOP-backed enhanced-UI cuts have even gone into effect yet.
Calls from the GOP to cut enhanced UI grew louder after April’s jobs report, which saw a shocking drop in new payroll additions that defied all economist forecasts. Upon seeing that, Republicans blamed the enhanced measures for disincentivizing work, which prompted a growing number of GOP-led states to end them.
On Friday, despite the acceleration of payroll additions from April’s numbers and lower-than-expected unemployment, some members of the GOP were still quick to brand the jobs report as a miss.
Republicans and businesspeople have been critizing expanded UI – which was inserted into March 2020’s CARES Act by Democrats in the House – since the pandemic first hit in 2020. The US Chamber of Commerce quickly called for its cancellation in the wake of the April jobs numbers.
But Democrats have disagreed with that assessment. Sen. Bernie Sanders wrote on Twitter in April that we “don’t need to end $300 a week in emergency unemployment benefits that workers desperately need. We need to end starvation wages in America. If $300 a week is preventing employers from hiring low-wage workers there’s a simple solution: Raise your wages. Pay decent benefits.”
Some Democrats are even pushing for continued unemployment benefits tied to economic activity beyond the pandemic, but Biden said in a speech on Friday that while the benefits have been effective thus far, “it makes sense” for them to expire in September.
“A temporary boost in unemployment benefits that we enacted helped people who lost their jobs through no fault of their own, and who still may be in the process of getting vaccinated,” the president said in brief remarks following the May jobs report. “But it’s going to expire in 90 days – it makes sense it expires in 90 days.”
And while Republicans largely blame unemployment benefits for discouraging work, a JPMorgan note last week wrote that ending the benefits early is “tied to politics, not economics,” and Insider previously reported that there are a range of factors that could be preventing people from returning to work, like COVID-related concerns and lack of childcare.
So given that unemployment benefits haven’t ended yet, and payrolls were still added in May, the benefits might not be as big a disincentive as Republicans think, and experts are optimistic that the labor shortage should fade by the fall.
“The supply-demand mismatches in the labor market are likely to be temporary, and I expect to see further progress on employment in coming months,” the Federal Reserve governor Lael Brainard said in a Tuesday speech.
Americans have so far received three stimulus checks. The first two were distributed under President Donald Trump’s watch and not a single Republican voted for the third round, and yet, only half of rural voters are giving Democrats the credit.
A poll conducted by Rural Objective PAC – a super PAC that works to build support for Democrats in rural areas – found that 50% of voters in rural areas associate providing COVID-19 stimulus checks directly to American families with the Democratic Party, while 32% associated the payments with Republicans, 11% with neither party, and 7% weren’t sure.
“We’re not connecting with these voters, even if we have great policy,” JD Scholten, the executive director of the Rural Objective PAC, told Greg Sargent and Paul Waldman of The Washington Post, which previously reported on the poll’s findings.
The poll surveyed 2,149 voters in nine battleground states – Arizona, Georgia, Iowa, Kansas, North Carolina, Ohio, Pennsylvania, South Carolina, and Wisconsin – and while 68% of those voters support stimulus checks, it’s clear that Democrats aren’t getting credit for a cornerstone of President Joe Biden’s American Rescue Plan.
The majority of rural voters did associate Democrats with extended unemployment benefits and state aid, though, and even as Democrats are calling for recurring stimulus aid, voters are not associating the already provided aid with Democrats. Biden’s $1.9 trillion stimulus plan passed using budget reconciliation without a single Republican voting for the plan, which included $1,200 checks.
It’s true that the first two checks occurred under Trump, since he signed a $1,400 check and a $600 check into law as part of his pandemic aid efforts, although he signed both of those while Democrats controlled the House under Speaker Nancy Pelosi.
Some Democratic lawmakers are also calling to make stimulus checks permanent – something that has received broad support from both Republican and Democratic voters given that it would cut the number of Americans in poverty in 2021 from 44 million to 16 million.
Twenty-one Democratic senators urged Biden in a letter to include recurring direct payments in his $4 trillion infrastructure plan and said that “a single direct payment will not last long for most families, and we are worried about the cliff facing unemployed workers when the unemployment insurance extensions expire on September 6.”
But voters not knowing who to credit for certain policies is nothing new. When former President Barack Obama was attempting to reform the healthcare system over a decade ago, many voters don’t want the government to interfere with their Medicare when Medicare is, in fact, a government-run program.
“I got a letter the other day from a woman. She said, ‘I don’t want government-run health care. I don’t want socialized medicine. And don’t touch my Medicare,'” President Barack Obama said at an AARP-hosted town hall on healthcare in 2009. “I wanted to say, you know, that’s what Medicare is: a government-run health care plan that people are very happy with.”
The Washington Post separately reported in 2009 that a rural voter told South Carolina Rep. Robert Inglis to “keep your government hands off my Medicare,” to which Inglis had to explain to the voter that his healthcare was provided by the government.
As Scholten told the Post, if there’s one thing that Democrats could use to win support of rural America, it would be direct payments.
“This was one of the biggest investments we’ve seen in rural America since the New Deal,” Scholten told Sargent and Waldman. “It’s good policy. It should be good politics, too, but right now Democrats aren’t taking advantage of it.”
You’ve probably heard that it’s hot vax summer. Vaccination rates have climbed, mask mandates are lifting, and Americans are slowly starting to venture into the first semblance of the After Times. In anticipation of the US fully reopening, cooped-up Americans are buying new going-out clothes and getting ready for the intimacy they put on pause. Even brands are getting thirsty.
But another thing will be heating up this summer: tax policy. President Joe Biden has already shepherded a law through Congress that will change the tax code (for a few years) to send monthly checks to American families, and he’s hard at work on another that would raise taxes on corporations and families earning more than $400,000 a year.
Biden wants to raise taxes on the wealthy and corporations to offset massive infrastructure spending
Some of the country’s highest earners will see tax increases if Biden gets his way. He’s proposed increasing the income tax rate to 39.6% for Americans earning over $400,000, and raising the capital gains rate to the same level.
That increase – targeted only at Americans earning $1 million or more – would hit wealthy investors who get the bulk of their income from assets like stocks. The capital gains rate is generally lower than the rate that income is taxed at. As Insider’s Liz Knueven reported, the change would affect just about 0.4% of American taxpayers.
“This is about making the average multimillionaire pay just a fair share,” Biden said in a fiery speech defending the increases. “It’s not going to affect their standard of living a little bit.”
Significantly, Biden also wants to close up some tax-code loopholes and to ramp up tax enforcement on the wealthiest American, who have been found to hide billions in income from the IRS. The IRS estimates that there’s a tax gap of $441 billion a year. But Charles Rettig, the agency’s commissioner, has told Congress that the number could actually be over $1 trillion.
The gap between taxes owed and taxes paid could grow only if left untouched, according to the Department of Treasury. Treasury estimates that Biden’s proposed $80 billion investment in the IRS could bring in an additional $700 billion over 10 years. That would still leave hundreds of billions in taxes going uncollected each year, as Insider’s Ayelet Sheffey reported.
Meanwhile, an expanded tax credit will start putting checks into families’ pockets
Regardless of what happens with the infrastructure negotiations, many Americans will start feeling the effects of new Biden tax policies this summer.
Beginning July 15, families will start receiving monthly checks of up $300 from the IRS. Every 15th of the month for the next year – unless it falls on a holiday – checks will come. Those checks come from the expansion of the child tax credit, which was revamped under Biden’s $1.9 trillion American Rescue Plan.
One of Biden’s proposals in the American Families Plan is extending those checks through 2025 (many Democrats want to make them permanent). The checks are, as Insider’s Aria Bendix reported, essentially akin to basic income, and most children in the United States are set to benefit from then.
Low-earning Americans will also see an income boost from the expanded Earned Income Tax Credit, which subsidizes wages. According to an analysis from the left-leaning Center on Budget Policy and Priorities, over 17 million adults will now be eligible for an expanded subsidy.
As Politico reported, lobbyists and executives think that they’ll be able to kill off many of the tax hikes that the president is putting forward. That could put some of Biden’s promises in jeopardy.
So while it’s not clear what, exactly, taxes will look like on the other side of all of this, they’re already in the spotlight – and they’ll probably only become a hotter topic as the temperature goes up this summer.
President Joe Biden said in a speech on Monday that Americans receiving unemployment benefits must either take a job that is “suitable” or lose their benefits, as he encouraged states to reinstate a pre-pandemic policy of requiring people to search for work.
“We’re going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits,” Biden said at the White House.
According to a White House fact sheet released after the speech, the Department of Labor will “reaffirm longstanding” unemployment-insurance requirements to ensure that states, workers, and employers understand the rules regarding the benefits.
The Department of Labor will also issue a letter to states reaffirming that people receiving benefits cannot turn down a suitable job to continue receiving their benefits.
Experts said these job-seeking guidelines were in place before the pandemic, and states scrapped them last year as the economy crashed, which caused a surge in unemployment. While the economic situation is improving, those experts said factors like a lack of childcare and school closures were keeping some people out of the workforce.
“On the whole, the Biden Administration is moving to return UI slowly like the rest of the economy to its” pre-pandemic rules, Andrew Stettner, an unemployment expert at the Century Foundation, said in emailed comments to Insider.
“Advocates are concerned that policy makers ensure that no workers are cut of off benefits because they cannot find affordable child care, and the reinstatement of work search requirements raises the stakes for this type of protections,” he added.
This announcement came after a jobs report last week that fell significantly short of expectations, with Republican lawmakers casting the blame on too-generous unemployment benefits disincentivizing Americans from returning to work.
While Biden said in his speech that “we don’t see much evidence” of benefits hurting job growth, his remarks suggested he was listening to GOP criticism on the issue.
Since the start of the pandemic, Republicans and businesspeople have criticized expanded unemployment insurance – inserted into March 2020’s CARES Act by Democrats in the House – as too generous. While the $600 federal unemployment addition to weekly benefits expired last year, Congress reinstated it in December at $300 a week, which Biden extended through September 6 as part of the stimulus law in March.
The US Chamber of Commerce called for an end to the benefits in the wake of the April jobs numbers, but Democrats like Sen. Bernie Sanders of Vermont said on Twitter that “workers desperately need” the benefits.
While states waived their unemployment-benefits work requirements at the start of the pandemic, 39 of them have already started, or are planning to, reimpose them.
Biden said: “We’ll insist that the law is followed with respect to benefits, but we’re not going to turn our backs on our fellow Americans.”
At least 276,000 workers are at risk of losing federal unemployment benefits in GOP-led states.
Several states are moving to cut expanded unemployment insurance in an effort to push those collecting jobless benefits to return to work.
The move comes as April’s surprisingly dismal jobs report showed just a fraction of anticipated jobs returning, and anecdotal evidence of (generally low-paying) companies having difficulty hiring enough workers to reopen in a fuller capacity.
South Carolina, Montana, and Arkansas are ending their participation in federal assistance programs for the unemployed in late June. They are chiefly targeting the $300 federal unemployment supplement, a key part of President Joe Biden’s $1.9 trillion stimulus law which expires on Labor Day.
Republican Gov. Greg Gianforte in Montana slammed the enhanced unemployment insurance on Friday, calling it “no-work bonuses” in a tweet. Prior to the jobs report, South Carolina Gov. Henry McMaster – another GOP member – said the state will stop its participation in federal unemployment by the end of June.
“This labor shortage is being created in large part by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits,” McMaster wrote.
‘They’re canceling federal pandemic benefits’
“They’re not just taking away the $300 supplement, they’re canceling federal pandemic benefits,” Andrew Stettner, an unemployment expert at the Century Foundation, told Insider.
“Those who are on PUA and PEUC, their benefits will get cancelled,” he said, referring to Pandemic Unemployment Assistance, the program providing benefits to gig workers and contractors, and Pandemic Emergency Unemployment Compensation, which doles out aid to the long-term unemployed.
Stettner calculated that at least 276,000 people could be affected in the states slashing aid two months before it is set to expire, though the amount is likely to grow as other GOP-led states like Indiana suggest they could soon follow suit.
Other states are reinstating job-searching requirements that were waived during the pandemic. Those include Maine, New Hampshire, North Carolina, Pennsylvania, and Rhode Island, The Associated Press reported.
Individual states rolling back federal unemployment benefits could have a disproportionate impact on marginalized workers. A report from the left-leaning Economic Policy Institute (EPI) looked at how much of the UI disbursed in each state was from federal benefits. The EPI report notes that this could impact workers along racial lines, since states where Black Americans make up a larger share of the population tend to have weaker UI benefits.
In South Carolina, for instance, around 76% of total UI came from federal programs in the fourth quarter of 2020. Arkansas and Montana both leaned heavily on federal benefits in disbursement of UI benefits, with federal UI making up 74.7% and 68.7% of their total disbursed benefits, respectively.
“The US economy is still down 8.2 million jobs from what we had prior to the pandemic – and if you account for people newly entering the workforce since then, we are down over 11 million jobs,” David Cooper, a senior economic analyst at EPI, said in an email to Insider. “So, the economy is simply not at a place where we should be cutting back UI benefits. There are far more people looking for work and unable to find it than there are employers unable to fill vacancies, and pulling back on UI will only slow down the recovery.”
President Joe Biden doubled down on the need for unemployed workers to get back to work in a Monday address, saying “we’re going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits.” But, he noted, COVID-19 exceptions are still in place “so that people aren’t forced to choose between their basic safety and a paycheck.”
Biden’s statements don’t amount to a new policy change from his administration, therefore they only underscore steps already on the books that states can take to encourage people to jump back into the workforce.
But, Biden said, his father used to tell him that a job is more than a paycheck.
“I think that people who claim Americans won’t work, even if they find a good and fair opportunity, underestimate the American people,” Biden added. “So we’ll insist that the law is followed with respect to benefits, but we’re not going to turn our backs on our fellow Americans; 22 million people lost for jobs in this pandemic through no fault of their own.”
In some ways, the April jobs report resembled an optical illusion, with people making differing observations from a dataset that didn’t fit into a clean narrative.
In this case, Democrats and Republicans came to opposite conclusions about the report and what it means for the way forward in healing an economy battered by the pandemic.
The Friday report showed the economy recovered 266,000 jobs, a smaller amount defying expectations of a massive job surge on the back of government stimulus dollars, increased vaccinations, and easing restrictions. Economists had forecasted at least 1 million regained jobs.
In response, the GOP is demanding to end parts of President Joe Biden’s stimulus and calling for the government to slam the brakes on its spending. Democrats instead urged the passage of Biden’s $4 trillion infrastructure plans, viewing the lackluster report as another pillar in their argument that more spending, in part on childcare, would accelerate the recovery.
It sets the stage between the parties for a multitrillion-dollar fight on infrastructure, jobs, and families that will take up much of the White House’s time over the next few months.
The president argued for patience with his economic agenda on Friday. He said “more help is needed” and mounted a robust defense of his $1.9 trillion stimulus, which provided $1,400 direct payments and a $300-per-week federal unemployment benefit.
“When we passed the American Rescue Plan, I want to remind everybody, it was designed to help us over the course of a year – not 60 days – a year,” Biden said. “We never thought that after the first 50 or 60 days, everything would be fine.”
He flatly rejected the argument from Republicans and business groups that federal jobless aid has been sidelining people from the workforce, saying that was “nothing measurable.”
“We’re still digging out of an economic collapse that cost us 22 million jobs,” Biden said. “Let’s keep our eye on the ball.”
“The evidence is clear that the economy demands urgent action, and Congress will not be deterred or delayed from delivering transformational investments,” she said in a statement.
Republicans had already lined up against Biden’s plans, criticizing the proposed tax hikes on large firms and wealthy Americans as a future anchor on the economy. They pounced on the report in a fresh sign of their hardening resistance.
The GOP swung at Biden’s handling of the economy, arguing that the jobless aid was disincentivizing people from searching for a new job.
“This is a stunning economic setback, and unequivocal proof that President Biden is sabotaging our jobs recovery with promises of higher taxes and regulation on local businesses that discourage hiring and drive jobs overseas,” Rep. Kevin Brady, ranking Republican on the House Ways and Means Committee, said in a statement.
He also contended that jobless aid was disincentivizing people from returning to work. The argument mirrored one made by the Chamber of Commerce, an influential business group which on Friday called for an end to the $300 federal unemployment benefit.
Many economists have long disputed that federal jobless aid has kept people from returning to work. Unemployment claims has steadily fallen over the past month. They tend to cite other factors like the lack of available childcare and school closures.
Those burdens have fallen more on women, causing 2 million women to leave the workforce in the past year. Still, experts say the US will regain its economic footing eventually, though the nation faces a rocky path ahead.
“We’re gonna see pockets of strength, pockets of weakness, areas of overheating, areas where it is uncool – it’s going to be complicated and messy,” Jason Furman, a former top economist to President Barack Obama, told Insider in an interview. “But I think hopefully all moving in the right direction.”
The White House press secretary, Jen Psaki, on Friday defended a letter that President Joe Biden sent to tens of millions of Americans who received a third round of COVID-19 stimulus checks this spring.
The letter, mailed by the Internal Revenue Service and signed by the president, touts his $1.9 trillion American Rescue Plan, which was passed in March, and highlights key provisions of the bill, including $1,400 direct payments, funding for small businesses, and an expanded child tax credit.
“A key part of the American Rescue Plan is direct payments of $1,400 per person for most American households,” Biden wrote in the letter obtained by Insider. “This fulfills a promise I made to you, and will help get Americans through the crisis.”
The letter is “pretty standard” and was “not intended to make it about him,” Psaki told reporters during a press conference on Friday. “It’s about the American people.”
Psaki said the letter “goes out with physical checks.” But people who got the federal aid through direct deposit have also received the letter. The IRS said all recipients of the third payment will get the letter, which “should be kept with tax year 2021 records.”
Psaki’s comments come after some have criticized the letter as an act of self-promotion and compared Biden’s move to that of his predecessor, President Donald Trump, who sent a similar IRS letter to Americans about coronavirus stimulus checks enacted during his administration.
Biden’s letter appears identical in format to the one Trump sent last spring. Both letters were mailed by the IRS, displayed the White House letterhead, are signed by the president, and addressed to “My fellow American.”
But Biden did not include his signature directly on the stimulus checks, which Trump did – a decision that may have delayed their delivery to the public. “We didn’t have [Biden] sign the checks because we were concerned about any impact that would have on delaying them going out to the public,” Psaki reiterated on Friday.
At the time, Trump’s letter prompted criticism that he was politicizing the IRS for his benefit. Citizens for Responsibility and Ethics in Washington, a government watchdog group, called Trump’s letter “self-aggrandizing.”
The organization reacted negatively to Biden’s letter as well.
“This trend toward presidents sending self-serving signed letters at taxpayer expense is unfortunate regardless of who does it,” said Noah Bookbinder, CREW’s president. “I hope that President Biden will not learn the wrong lessons from his predecessor and continue this kind of tactic.”
A $28.6 billion restaurant aid program received 186,200 applications in its first two days, according to the White House.
Bars, restaurants, and other eligible businesses could start applying for the Restaurant Revitalization Fund (RRF) on May 3. The initiative is part of President Joe Biden’s $1.9 trillion American Rescue Plan, and provides grants of up to $10 million for businesses that lost revenue in 2020.
More than $9 billion of the program’s funds were set aside for businesses that made under $500,000 in 2019; those businesses represent 61,700 of applicants so far.
For its first 21 days, the program will prioritize applications from small businesses owned by women, veterans, and those who are “socially and economically disadvantaged.” According to the White House, 97,600 applications came from those groups.
In a Wednesday address, Biden said it looks like about 100,000 restaurants and other eligible businesses will be able to receive relief, and he wrote a similar statement on Twitter.
“Right now, only about a quarter of the restaurant owners expect to return to normal operations in the next six months. We can do much better than that with the American Rescue Plan,” Biden said.
As the economy has reopened, the ailing leisure, hospitality, and retail industries have seen employment rebound. A third of March’s surprisingly robust job additions – 916,000 nonfarm payroll jobs – were in those industries. Small businesses have also been increasingly opening up as vaccinations ramp up and restrictions lift in many areas.
However, small businesses in the service sector have seen a bleaker outlook: A new analysis from the New York Federal Reserve‘s Liberty Street Economics of about 100,000 such businesses found that 35% of businesses active prior to the pandemic remain closed. Just about 4% of workers laid off from those closed businesses will be rehired, according to the analysis, and likely only 3% of those businesses will actually reopen.
“We’re relying on restaurants to play a big role in our recovery,” Biden said. “We want our economy to recover in a way that deals everyone in and our restaurants need a seat at the table – no pun intended.”
With President Biden’s signature now sealing the $1.9 trillion American Rescue Plan, most households nationwide are set to receive their third stimulus check in a year. This relief is urgently needed as new unemployment insurance filings continue to surpass one million on a weekly basis a year into the pandemic. However, for the third time, policymakers will rely on an inefficient, patchwork system to deliver this relief – a system that previously excluded millions, and left others waiting months for support.
The lesson is clear: our policies are only as good as the plumbing that delivers them. To better respond to this crisis and those to come, Congress needs to scrap the current fragmented system and build a direct and seamless infrastructure capable of sending cash quickly and automatically when families – and the economy – need it. In short, Congress needs to create a “cash button.”
Direct cash payments are a time-tested economic relief and recovery strategy. In the 2001 and 2008 recessions, and as economic stimulus tax credits in 2009 and 2011, cash was a standard feature. But despite their demonstrated value as a countercyclical measure, the government has not invested in the infrastructure to ensure that cash payments can be efficiently and equitably distributed. A strong foundation for cash relief will also be necessary for the new income support program provided within the expanded child tax credit.
This first attempt last year to get aid to struggling families suffered a number of setbacks. Despite the CARES Act passing in late March, by October, around 12 million people, disproportionately Black and Latinx households, had yet to receive their Economic Impact Payments. Even state unemployment insurance systems, a longstanding source of income support, were unable to distribute cash quickly. The Century Foundation estimated that by the end of May 2020 less than 60 percent of the 33 million UI claims made since the start of the pandemic had been paid – leaving millions of families experiencing or on the brink of financial hardship.
To be sure, the federal and state governments patched up issues throughout the months-long rollout of CARES Act checks, as well as the December stimulus. They included the creation of systems for low-income families who do not file taxes to receive the payments, and used the federal Direct Express debit cards and state EBT systems to speed disbursement. Yet problems remain: due to the inefficient and incomplete infrastructure, many people in need still haven’t received their benefits.
First, using records maintained by the Social Security Administration (SSA) and the IRS, the government can build an integrated database of individuals who would receive cash, similar to what was proposed by Rep. Rashida Tlaib in her BOOST Act, to ensure minimal coverage gaps. The SSA could then administer payments automatically to those in need, in particular because the SSA is already tasked with sending out tens of millions of payments through direct deposit and Direct Express debit cards each month.
Second, to reach those not covered by federal records, the government can allow individuals to apply for cash support and qualify through any existing state-administered benefits systems, such as the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps.
Lastly, the federal government should establish public bank accounts to provide a secure endpoint for cash assistance and ensure that the millions of households currently unbanked and underbanked could receive aid without having to rely on check cashers or paid tax preparers as they currently do. Two options for public banking are postal banking and private federal reserve accounts. A no-cost checking account through the USPS would allow anyone with an address to receive electronic transfers, from the Treasury, the Social Security Administration or the Federal Reserve.
Fed accounts, free, personal, no-cost bank accounts set up through the Federal Reserve system, would allow instantaneous cash transfers to account holders and could be linked to existing accounts at commercial banks or set up as part of postal banking, creating a seamless pipeline for disbursement. Since the USPS operates ubiquitous local branches, including in rural and low-income areas where commercial banks do not maintain a presence, postal banking could serve as a platform for a host of other financial services and help foster financial inclusion.
These three steps will create a safety net for the 21st century. As we saw with the CARES Act, poverty rates decreased nationwide and an estimated 12 million people were saved from falling into poverty. While delays and missteps blunted its impact, we have an opportunity to do better and we must take it.
There is extensive evidence that cash works, and with the federal government now tasked with distributing the American Rescue Plan’s child allowance (which is likely to become a permanent part of the safety net), it is time for policymakers to establish the plumbing required to provide cash relief nimbly and efficiently when crises occur. We need to build a cash button, and legislators have the options at hand to make that a reality.
Stephen Nuñez has over a decade of experience in research and program evaluation related to welfare policies and economic inequality. He holds a PhD in sociology from Stanford University, and in his current role, leads JFI’s research on guaranteed income in the US and internationally.
Rachel Black is an Associate Director of the Aspen Institute’s Financial Security Program (FSP). She previously served as Director of New America’s Family-Centered Policy program. Her work has been featured in a diverse set of outlets, including The Washington Post, The New York Times, The Atlantic, Slate, and Essence.