The rich should get stimulus checks too
During last week’s congressional wrangling over COVID- 19 relief payments, Senate Majority Leader Mitch McConnell ( R- Ky.) held that $ 2,000 checks were not going to happen because it would be “socialism for rich people” to give so much money to Americans who didn’t need it. Sen. Bernie Sanders ( I- Vt.) jabbed back at Republicans via Twitter: “Funny. They had no problem giving a $ 1.4 billion tax break to Charles Koch and his family with a net worth of $ 113 billion.”
McConnell’s hand- wringing represents a long- standing debate in American social policy that COVID relief highlights: Should public benefits be given universally, to all citizens, or be targeted to the truly needy?
When it comes to COVID relief, many argue for giving funds only to the poor. After all, what does somebody like Koch need with a piddly $ 2,000 check from the rest of us when he’s already rolling in dough? And if we forgo giving money to those who already have plenty of it, we could give more to those who really do need it.
That reasoning is not as ironclad as people may think it is.
More than two decades ago, Swedish researchers Walter Korpi and Joakim Palme noticed a paradox as they studied social policy around the globe.
Needy people, they argued, may do better when government benefits are distributed equally and universally rather than when benefits are specifically given to the needy.
Why is that? It turns out that redistribution can work better, and poor people can fare better, when the rich also get benefits.
A universal system creates a direct, personal nexus between tax revenue and public goods. It embodies a “from us, for us” approach that ties citizenship to paying taxes and mutual aid.
When public benefits and programs are aimed at the poor instead, it can create a “from me, for them” impression — an altruism model but based on taxation. This approach can cause citizens to resent programs and minimize the amount of aid they are willing to have their governments provide overall.
In this way, targeted programs can erode social unity, and they can do so through what are called “notch problems,” which utterly defy common sense. For example, imagine if COVID relief checks go out only to those who make less than $ 150,000 a year. So the person who is a dollar short of that f igure merits help, but the person who makes a dollar over does not. When that happens, some are left out of the benefit but stuck with the bill. Nobody can blame them if they feel like government failed to serve them, and arbitrarily at that. Universalism can avoid that perception.
One- time payments associated with targeted relief — like the previous COVID stimulus checks — also can create a timing glitch. A person may have held down a good- paying job for years and not qualify when it is time to distribute those one- time checks, but in an economic crisis they can lose that job a week after the payments have gone out. When programs direct aid to specific groups, people like this are out of luck.
Universalism may give some people a one- time windfall they don’t need, but they can always donate to worthwhile causes. But those who f ind themselves suddenly facing f inancial hardship — despite the rosy picture their tax returns might paint — have far fewer, and much less attractive options when they are passed over for targeted aid. Some can raid retirement savings, and others can fall back on generous family. Otherwise, the options are debt, losing their homes, bankruptcy, or all three.
Social scientists continue to wrangle over whether Korpi and Palme are right about universalism. That debate may be academic, but if there were a time to err in favor of unity and equality, it’s now.
America is at a crossroads after years of vicious, us- and- them politics. COVID would have been horrible regardless, but Republican politics that turned mask- wearing into a culture war made it all the worse. More than 350,000 Americans have died of COVID while other Americans seemingly shrug.
Universal COVID relief would offer us a chance to see ourselves, albeit in a small way, as one united nation again — a nation of vastly different people capable of pulling together when hard times come and investing in ourselves, every one of us, from richest to poorest.