There has been ongoing disputes between House Speaker Nancy Pelosi, Treasury Secretary Steve Mnuchin, and Senate Republicans over a second round of stimulus payments – which did not materialize. Do you know what impact the first round of stimulus checks had, especially on black and Latin American households? And how did that work? Not be a second round of payments?
Evidence suggests that the families who received these benefits were more likely to spend the money on the lower-income families, indicating that they had immediate needs, while higher-income households appeared to be more likely to save the money. For example, some of these savings are “I don’t know what’s going to happen on a street” or “All of my needs are already met so I don’t necessarily have to spend this now.” The immediate impact was greater for lower-income households, and how this correlates with race suggests that this had a much greater impact on spending by marginalized racial groups.
The lack of sustained relief, either from expanded unemployment or from additional direct cash from the Treasury Department through IRS checks, will have the greatest impact on these lower income households and households with generally low wealth.
From an economist’s point of view, if you want to reduce the financial volatility faced by Black and Latin American families – and, more broadly, low-income families regardless of their skin color – what would be the most effective way to do it? public order?
There are a couple of things. One is something like an income floor. The universal basic income can mean many different things to different people. It is clear to me that “basic income” means a lower income limit. For example, even if you have no income, you will receive a minimum amount of cash transfers into your household. I would consider this a possible policy.
In addition, many money transfers are made through the tax system and are carried out once a year. It would be worth considering whether some of these transfers are more frequent – monthly or quarterly, with cash being delivered to households as opposed to a one-off annual payment.
On issues of race and racial inequality, this discussion is about the legacy of previous actions in the US that helped cement these racial inequalities. A full discussion or appreciation of what has happened in the past and how it contributes to current inequality is needed – and I think that reparations play a part in helping us achieve partial reparation and some sort of reconciliation.
How optimistic are you about any part of it?
I don’t know if it’s going to happen right away, but there is a great, broad coalition of people interested in things like a universal health system. I think we will continue to move in that direction. Regarding an income floor, I think we get it partially. And as for reparations, I hope we can have a serious discussion about it as we will continue to repeat these cycles of insurrection in response to racism followed by racist backlash. We will keep jumping back and forth between these when we don’t have these types of discussions and political efforts, including redress. So I don’t know how likely it is, but what is If we don’t, these longstanding racial segregations and racial hierarchies are likely to continue in our country.