With Democrats in control of the White House and both houses of Congress, negotiations over President Joe Biden’s $1.9 trillion stimulus are in full swing.
Biden’s bill includes more spending on COVID-19 vaccines, additional funds for state and local governments and small businesses, higher federal unemployment insurance payments (from $300 to $400 per week), more generous food stamp payments (up 15 percent), an extension of the ill-enforced federal eviction moratorium, and a token amount of money for renters facing eviction and utility shutoffs.
But the portion of the bill that has received the most attention is the direct payments of up to $1,400 per person. And it is on this highly visible part that Biden and some congressional Democrats are falling into their old pattern of negotiating against themselves.
Perversely, their major concern is whether too many people might get help. While everyone making under $75,000 per year got a full stimulus check under Trump, some Democrats want to lower that threshold to $50,000 per year — and Biden is entertaining the idea.
The discussion has brought into sharper focus a problem that has long plagued Democrats: the false economy and bad politics of means testing.
The Messiness of Means Testing
“Means testing” is the policy of granting government benefits only to those who meet certain criteria. For example, If someone makes less than a certain amount of money — usually annual income, though there are often other factors — they qualify for the benefit. If they are found to be above the specified means, they don’t.
On its face, the idea sounds fair. Why should millionaires get free college, free health care, or in this case, stimulus checks? By definition, they don’t need those things. It would waste society’s resources, the argument goes, to give them such benefits.
But the more you examine this argument, the more it falls apart. Here is one big problem: proponents of means testing present it as a technical question: “How do we give the most help to the people who need it?” Yet there is a moral question embedded in that technical question, one that usually goes unacknowledged. The question is: “Who deserves to receive this benefit?” and unless your answer is “everyone,” the answer is almost always, at best, arbitrary.
Here is Joe Biden making the case for means testing the stimulus checks on Friday:
The American Rescue Plan is going to keep the commitment of $2,000: $600 has already gone out; $1,400 checks to people who need it. This is money directly in people’s pockets. They need it. We need to target that money. So, folks making $300,000 don’t get any windfall. But if you’re a family that’s a two-wage earner, each of the parents — one making thirty grand and one making forty or fifty — maybe that’s a little more than — well, yeah, they need the money, and they’re going to get it.
Critics have rightfully pointed out that to determine who passes and fails this means test, the government will have to use income tax returns from 2019 — before mass unemployment hit the workforce. The people who will pay for lower income threshold are not the rich — as Biden says, they’ll be fine. It will be working-class people who may not be in poverty, but certainly aren’t wealthy. As Bernie Sanders rightly argued, “In these difficult times, ALL working class people deserve the full $1,400. Last I heard, someone making $55,000 a year is not ‘rich.’”
Let’s take one concrete example: the starting salary for a Chicago Public Schools teacher is roughly $53,000 per year. That means anyone who was a teacher in Chicago in 2019 would miss out on the full stimulus, as would the vast majority of educators in urban districts.
Do teachers need or deserve the cash more than anyone else? Maybe not. But can anyone honestly argue that they need it, or deserve it, less? Does a nurse making $60,000 a year at Elmhurst Hospital in Queens deserve less help amid a pandemic than a day trader or a writer working from home who made $49,000?
Why make the cutoff $50,000 (or $75,000, for that matter)? What power does that number have? Why not some other number?
Every means-tested program rests on exactly these shaky assumptions — some people deserve help, others don’t. And in most cases, the rationale for who does and doesn’t deserve it falls apart under scrutiny.
Engines of Solidarity
Perhaps you might say I’m playing around at the margins here. What about Biden’s core point, that there’s no need to send a stimulus to the rich? Wouldn’t that be wasteful? In short: yes, but the savings are minuscule and there are better ways to address the problem.
Let’s take Biden’s own metric of “folks making $300,000.” The US Census found that roughly 7.7 million households made $250,000 or more in 2019 (the nearest available number to Biden’s figure). Giving all of these high-earning households the full stimulus check would cost roughly $10.8 billion — or about one-half of one percent of the proposed legislation’s cost.
Meanwhile, if we set the threshold too low, there could be an even greater cost: a worker who made a fair amount in 2019 but was hammered by the recession could be left out.
The focus on whether someone who isn’t poor enough (according to what rationale?) might benefit from a government program is a red herring. And the more Democrats focus on this supposed problem, the more ground they will needlessly cede to the Right. Biden ran heavily on bigger stimulus checks. To now offer them to fewer people than Trump did would be disastrous. But this course now seems increasingly likely.
A much better alternative to means testing is to construct social spending so programs become what Robbie Nelson has called “engines of solidarity.” Engines of solidarity, in Nelson’s formulation are universal and visible: everyone benefits, the benefits are obvious, and they are easy to access. Means-tested programs don’t just fail on all these fronts, they do the opposite. They’re at once bad politics and bad policy.
Yet instead of just cutting $2,000 checks, no questions asked, Democrats have decided to create confusion over who will benefit from what is supposed to be their marquee legislation. Even if the final bill doesn’t end up lowering the threshold, they’ve already sowed doubts about their sincerity in voters’ minds.
We’re in the middle of a devastating recession and a deadly pandemic. We should be making sure that no one falls through the cracks, not worrying that a single “undeserving” person might slip through the door.