Would Americans spending like crazy pull the economy out of the coronavirus sparked recession? Billionaire investor Mark Cuban says that’s just the ticket and that’s why the government should be sending out $1,000 checks to taxpayers every two weeks with instructions to spend it all – fast.
“Those without [help] are struggling badly,” Cuban told CNBC last week. “We need to get them help.”
Some 20 million Americans lost their jobs as a result of coronavirus lockdowns in early spring, and since then, only about half of those jobs have returned, with Yelp estimating 60% of small businesses (97,966) are closed permanently.
The idea of universal basic income has its appeal. It’s defined as a government payment that would cover the basic cost of living to give people a sense of financial security. Plans differ. Some would target such income to the poor while others would make the stipend available to everyone. The question is how to pay for such programs, with proposals ranging from increasing taxes on the wealthy to increased corporate taxes.
Cuban’s proposal is reminiscent of the universal basic income proposal suggested by entrepreneur Andrew Yang during the early stages of the Democratic presidential nomination process. Yang suggested giving all Americans a $1,000 a month “freedom dividend.” Yang predicted a third of Americans could lose their jobs in the next decade or so due to automation, a theory knocked down by economist Paul Krugman.
Cuban first proposed the bi-weekly checks in May and said he still believes it’s a good idea. The checks would come with the stipulation that the money must be spent within 10 days or it would need to be returned. Otherwise, he said, people might be inclined to save it to protect themselves in uncertain times. In fact, that’s what many Americans did at the start of the pandemic, sending personal savings to a record high. The savings rate, however, has since fallen.
In May Cuban told KNX-AM, Los Angeles, he doesn’t “care what they spend [the money] on. It could be candy, it could be rent, it could be their mortgage, it could be anything they deem necessary or that they want” just to get money into the economy.
“Once businesses start having demand, even if they’re closed and working online, then there is a reason for them to be able to bring back employees and retain those employees if demand is sustained,” Cuban posited.
Americans, however, are cool to the idea. A recent Pew Research Center survey indicated 54% of Americans – mostly Republicans – oppose the idea compared to 45% — mostly Democrats – who are in favor.
The World Bank reported no country currently provides a universal basic income although Mongolia and Iran tried such programs for brief periods.