Survival Checks Forever?

January 14, 2021 Updated: January 14, 2021

Commentary

Even while $600 stimulus checks are being deposited in tens of millions of bank accounts, congressional Democrats are laying the groundwork for even greater stimulus payments, which some call “survival checks.”

As Senate Democratic leader Chuck Schumer (D-N.Y.) recently said, “One of the first things that I want to do when our new senators are seated is deliver the $2,000 checks to the American families.” With Democrats preparing to take power in Washington, a critical question will be whether such survival checks will be one-time payments or recur each month “for the duration of the pandemic,” as Sen. Ed Markey (D-Mass.) and others have suggested.

But supporters of recurring payments ignore the fact that, once started, it might be politically impossible to turn off such massive new benefits, requiring huge federal tax hikes to cover their enormous ongoing cost.

Recurring monthly $2,000 checks would mirror the payments proposed in the “Monthly Economic Crisis Support Act” that Vice President-elect Kamala Harris (D-Calif.) introduced in the Senate in May 2020. While not truly “universal” in that its payments would phase out for high-income households, Harris’s survival checks would significantly exceed other recently proposed universal basic income-like payments.

For example, Democratic presidential candidate Andrew Yang touted monthly $1,000 per adult “freedom dividends,” while Sen. Bernie Sanders (I-Vt.) in March proposed $2,000 monthly payments “to every household in America” for “the duration of the crisis.” Harris upped the ante to $2,000 per month per adult, plus $2,000 per up to three children. That means a household of five (mom, dad, and three children) would receive an astonishing $10,000 per month in federal payments.

Those checks would flow regardless of whether adults are working; in fact, most of Harris’s payments would be made to households headed by workers. When one-time $2,000 checks were passed by the House in December, Sen. Majority Leader Mitch McConnell (R-Ky.) described them as “socialism for the rich.”

In truth, Harris’s payments amount to socialism for everyone except the very rich, with payments phased out only for single adults earning more than $120,000 and a married family of five earning above $300,000, closely matching the phaseouts of the House legislation.

Harris’s payments would continue until three months after the “health emergency” ends. There’s no telling when that would be, but even if payments lasted only six months, a family of five would receive a stunning $60,000 in federal payments. Starting such massive payments to most households would create enormous political pressure for simply extending the health emergency, or continuing payments beyond its end. Once started, payments might be politically impossible to shut down, especially for the incoming Democrat-led administration and Congress.

The price tag would be ruinous—recent legislation suggests recurring $2,000 checks would cost over $600 billion every month, requiring federal taxes to triple to cover the annual expense.

The “survival check” moniker also suggests such payments are all that stand between Americans and destitution. That’s hard to square with current economic conditions, including the December unemployment rate of 6.7 percent—less than half the 14.4 percent rate in April and well below expert projections. It also completely ignores the extraordinary assistance that continues to be provided to tens of millions of Americans in need. That includes the latest $600 stimulus payments for most Americans, $300 per week additions to millions of unemployment benefit payments, expanded food stamp benefits, increased rental assistance, additional childcare funding, and much more.

Unsurprisingly, survival checks come with heavy political implications, starting with the fact that “President-elect Joe Biden pledged that $2,000 checks would be a priority for his administration if Georgia delivered a victory to two Democrats running for Senate in a runoff election.”

It’s one thing to satisfy a past campaign promise, but supporters of recurring payments aren’t stopping there. As the liberal Economic Security Project, a cheerleader for universal basic income schemes, bluntly noted, making survival checks recurring could unlock future “political dividends”: “(N)o voter will forget receiving a relief payment in the first few months of a new administration, especially if it continues monthly or quarterly and helps them meet their basic needs. That will pay crucial political dividends in the midterm elections and in the 2024 presidential race.”

That naturally ignores the massive tax hike pain needed to keep such payments from further exploding federal deficits, which promises to be memorable as well.

Matthew Weidinger is the Rowe Fellow in poverty studies at the American Enterprise Institute. He served for more than two decades as a staff member of the House Ways and Means Committee. From RealClearWire.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.