Payoff

Last week, we saw what was once a radical idea — giving families unconditional cash every month — become law. In addition to sending $1,400 direct checks to 85% of adults and extending unemployment insurance, the American Rescue Plan transformed the Child Tax Credit (CTC) and expanded the Earned Income Tax Credit (EITC). Combined, these policies will deliver “more immediate cash assistance to families at the bottom of the income scale than any federal legislation since at least the New Deal.”

  • The Child Tax Credit amount was increased from $2,000 to $3,000 for each child ages 6 to 17, with an even more generous payment of $3,600 for each child under 6. This expanded CTC can be paid monthly and will become fully refundable, meaning if one does not owe taxes, they will still receive the full credit. Perhaps most notably, the work requirement for the Child Tax Credit was dropped.
  • The minimum age to claim the Earned Income Tax Credit was lowered from 25 to 19, and the dollar amount and pay phase-out were both increased.

“For far too long, we’ve been sold a reductive story that people are poor because they don’t work hard and deserve to be,” write ESP Co-chair Natalie Foster and Springboard to Opportunities CEO Aisha Nyandoro in MarketWatch. “This morality tale is a lie.” Together they observe a change in the way that policy treats people, no longer holding employment stipulations against children in need. During the pandemic, we all had a chance to see how the myth of “the dignity of work” was holding people back from getting medical attention, building up a financial buffer and spending time with their loved ones. Now, we’re moving away from this punitive ideology.

Many drew a connection between this policy breakthrough and our longtime work on a guaranteed income. In The New York Times, Jason DeParle wrote, “the child benefit has the makings of a policy revolution. Though framed in technocratic terms as an expansion of an existing tax credit, it is essentially a guaranteed income for families with children.” NPR’s Morning Edition pointed to the Stockton Economic Empowerment Demonstration as proof that people spend the extra cash on necessities. To drive home the efficacy of distributing the CTC without a work requirement, shared stories of Magnolia Mother’s Trust moms getting out of debt, pursuing educations and cooking healthy meals for their families.

These programs were considered big bets at the time, and we’re already seeing them blossom and bear fruit. In Jackson, the Magnolia Mother’s Trust announced that 100 more mothers would receive $1,000 a month for a whole year. This came with news that previous recipients of the Magnolia Mother’s Trust were 27% more likely to go to a doctor if they were sick, and were more financially independent.

The last two weeks also saw a tremendous reaction to the new research on the Stockton Economic Empowerment Demonstration. We learned that guaranteed income recipients’ employment numbers increased, at twice the rate of non-recipients, and they were healthier, happier, and less anxious than non-recipients. The steady cash allowed for “goal setting, risk-taking, and personal investment,” as well as “dignity purchases” like birthday presents and vacations, according to researchers Stacia West and Amy Castro Baker. You can hear directly from Castro Baker, and SEED Director Sukhi Samra in a segment on the “Groundbreaking Revelations on Guaranteed Income,” on Amanpour & Company.

“People aren’t lazy, people aren’t waiting for the government to save them, people just need a fair shot and an economic floor,” said Michael Tubbs on MSNBC. A new member of California Gov. Gavin Newsom’s Council of Economic Advisors, Tubbs provocatively pushed for leaders to see direct cash as an investment in our communities’ collective well-being in The Atlantic: “Cash is a better way to cure some forms of depression and anxiety than Prozac.” Our economic systems were not designed to protect the well-being of gig workers, caretakers and many more — but a guaranteed income would be a critical tweak to improve their outcomes.

Over the next few weeks, we’ll hear more about “ Biden Bucks,” and the immediate benefits that people experience having a newfound sense of financial security. We must push others to see the bigger picture, and call for an economy where people can depend on government to provide economic stability in uncertain times. We continue to make the case for recurring direct checks for the duration of the economic crisis, and to make our nation whole after months of sacrifice.

Alongside getting money into people’s mailboxes and bank accounts, we are seeing new ways that this administration is moving to improve people’s lives. President Biden nominated antitrust scholar Lina Khan to the Federal Trade Commission and appointed Tim Wu to work on technology and competition policy at the National Economic Council. Both of their perspectives have shaped a realignment in our understanding of the power that monopolies hold over our economy and our democracy, and what the government’s role can be in combating this power.

And this week, Anti-Monopoly Fund grantee Liberation in a Generation released a new report offering insight into how our economy has disproportionately failed workers, consumers and communities of color. In Anti-Monopoly Activism: Reclaiming Power through Racial Justice, they offer an anti-monopoly primer for grassroots organizers and campaigners, and call for organizers of color to be centered in the anti-monopoly fights to come. They connect stats to people’s first-hand experiences of economic pain through stories that show how concentrated economic power has kept people of color out of sharing in the rewards that our nation’s wealthiest enjoy.

We hope you will take a moment to celebrate these important milestones in our fights for a guaranteed income and anti-monopoly action. It’s important to recognize how events of the past month came together, in part with your support, which we are always grateful to have.

The Economic Security Project challenges the status quo by catalyzing ideas that build economic power for all Americans.

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Economic Security Project

Economic Security Project

The Economic Security Project challenges the status quo by catalyzing ideas that build economic power for all Americans.

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