One California mayor has tried universal basic income. His advice for Trump: 'Think big'

As the Trump administration and lawmakers in Washington debate cash payments to support Americans during the coronavirus crisis, the mayor of one California city that has experimented with universal basic income has advice.

Early findings from Stockton, California, which launched a basic income experiment last year, may offer American policymakers some reassurance – and a few notes of caution.

It’s “heartening” to see a national focus on providing direct cash assistance, said Michael Tubbs, Stockon’s 29-year-old mayor, who championed the city’s basic income experiment. But some choices in the current Republican plan make little sense to him, Tubbs said. “If someone was struggling more than others before a crisis, why should they get less help during a crisis that is going to hit them harder? It defies logic,” he said.

On Thursday, the Republican Senate majority leader, Mitch McConnell, proposed legislation to give middle-income Americans a single, $1,200 payout for each adult, plus $500 for each child in a family. The payments decrease for Americans who earn more than $75,000 a year, and individuals who make more than $99,000 will get nothing. The lowest-income Americans also get less: the plan includes a smaller, $600 payment to adults in some of America’s poorest families. Democratic lawmakers are calling for Americans to receive larger, recurring cash payments, with at least one plan calling for a monthly check of between $1,000 and $6,000.

“We have to make sure that the most marginalized, the most impacted, the folks who were struggling the most before this global pandemic get help and relief,” Tubbs said.

Stockton launched its guaranteed income experiment, the first in modern US history, in 2019. Since that February, 125 local residents in the economically challenged city have received $500 a month to spend on whatever they choose.

The idea of providing a universal basic income to citizens is not new, but it has found new supporters in recent years, as some tech industry leaders have embraced “UBI” as a possible response to rising inequality and a growing number of American jobs lost to automation. The Facebook co-founder Chris Hughes is among the proponents of the policy; the Economic Security Project, which he co-chairs, is helping fund basic income experiments in Stockton and elsewhere.

Related: '$1,000 per person should be the baseline': Andrew Yang on direct payments during coronavirus

Early data from the Stockton experiment is promising, according to the two researchers who are running the evaluation of the program.

“If you give people free cash, how do they spend it? They’re very rational about it, and they make great decisions,” said Stacia Martin-West, an assistant professor at the University of Tennessee College of Social Work and one of the lead researchers.

Direct cash payments are more flexible than a one-size-fits-all government program, and they allow people to adapt to changing needs and new crises. “Everyone we talked to, there was a different way they would use $500, and they all made sense,” Tubbs, the Stockton mayor, said. “There was no way, as a government official, I would be smart enough to think of all that.”

One participant used the money to pay for dentures, Tubbs said. Another was able to take time off work to interview for a better job that paid more and had shorter hours. Participants have talked about finally having the money to buy their kid a sports uniform or a prom dress, or to move to a safer neighborhood.

But the single largest category of spending among Stockton participants so far: food. Nearly 40% of tracked spending monthly went to feeding the recipients and their families.

That number highlights the degree of basic “food insecurity” that Americans have been living with since even before the current crisis, said Amy Castro Baker, an assistant professor at the University of Pennsylvania and the other lead researcher on the project.

The Stockton researchers also found that participants were using their additional cash to invest in healthier food choices for themselves and their kids, additional evidence that the barrier for lower-income Americans to eat healthier is not education about what they should and should not be eating, but access to affordable, high-quality food.

Scaling a direct cash payment program nationwide during a pandemic could end up having broader public health benefits, beyond just preventing the spread of the virus, Baker said. It could give more Americans the resources to eat healthier meals. If lawmakers provide continuous payments, reducing residents’ fears about being able to make it through the crisis, their lower levels of anxiety could also lead to better overall health outcomes.

‘As long as the crisis lasts’

As policymakers in Washington debate which Americans to exclude from direct cash payments, and whether they should send just one check, or two or three, Tubbs, the Stockton mayor, encouraged them to think bigger.

Direct cash payments should last “as long as the crisis lasts, and even a little bit after”, Tubbs said.

Receiving $500 or $1,000 monthly isn’t much during a global pandemic that has destroyed the economy, Tubbs said: “If they were working two or three jobs, this is not replacing what they made, this is enough to let them get by.”

Martin-West and Baker, the researchers evaluating the Stockton experiment, agreed that an effective program of national cash payments needed to match the scale and scope of the problem. That means payments should go out immediately, within 10 to 14 days; they need to recur throughout the crisis; and they need to reach Americans with as few bureaucratic hurdles as possible.

Since the 2008 recession, “the average household has not recovered,” Baker said. Banks got bailed out, the stock market boomed, but the government did not do enough to help most Americans.

“What we have now is an entire economy of people living paycheck to paycheck because they were left out,” Baker said. “We have been a house of cards for a really long time, and it wasn’t going to take much to blow it over.”

A big, sustained program of direct cash payments was a chance for the American government to “course-correct” and make up for the failures of the 2009 bailout, she said.

How big and how sustained? A good benchmark for the size of the checks the government should send to Americans now, Martin-West said, might be some common financial wisdom.

“The advice that we’ve all heard for how to be financially savvy is: you’re supposed to have three months of income saved up. If we look at the median income for Americans, that would mean $7,500 in the bank,” she said.

That benchmark would mean supporting Americans with roughly $2,500 per month throughout the crisis. “At minimum, a year of those cash transfers would be ideal,” Martin-West said.

Lawmakers need to specify in the legislation that the coronavirus payments do not count as income that could later disqualify low-income families from receiving food stamps, or other continuing government assistance, the researchers said. If lawmakers fail to do that, families could lose their eligibility for other programs, hurting them more over the long run.

While both Republican and Democratic plans call for reducing or even eliminating direct payments to higher-income Americans, Tubbs also said that he believes payments should be “closer to universal” since “the crisis will impact everyone.”

“I don’t know what the difference between [an income cutoff of] $99,000 and $100,000 is, especially at at time when we’re laying people off and shutting down industries,” he said.

The two researchers suggested that the federal government should channel money to Americans through multiple programs, to make sure they reach everyone in need. Why not increase the amounts of existing welfare and disability payments, as well as using tax records to send taxpayers cash?

But even large direct cash payments aren’t a substitute for other kinds of government action, they cautioned. Other solutions are needed during the coronavirus crisis, including paid sick leave and better healthcare. In Stockton, the guaranteed income pilot has made clear that more money is not enough to help residents deal with systemic problems, like California’s lack of affordable housing.

Baker also questioned why the McConnell legislation was benchmarked against Americans’ 2018 tax returns, when so many Americans, including freelancers and gig economy workers, see their incomes change dramatically over time.

Related: America is in crisis. We need universal basic income now | Karl Widerquist

And the researchers worried about the part of McConnell’s legislation that envisions a lower, $600 payout to Americans who do not reach certain income tax cutoffs. A single mom who spends most of her time caring for a child with a serious disability, for example, might not make the income cutoff for a full $1,200 check, even though she’s “certainly going to be struggling in the middle of a public health crisis”, Martin-West said.

Not all lawmakers are onboard with even a single direct cash payment to Americans, and some key Senate Republicans expressed reservations about McConnell’s plan on Thursday, including Lindsey Graham, an influential Trump ally.

But merely focusing on increasing unemployment insurance, as Graham has suggested, Tubbs said, would leave out too many people who might not fit the criteria for unemployment, including women doing domestic and caregiving work, freelancers, barbers and hairdressers, and Lyft and Uber drivers.

Americans needed both more unemployment insurance and direct payments, Tubbs said, not one or the other.

“We’re in an unprecedented crisis, so we have to have big thinking,” Tubbs said “This is a New Deal type moment, in terms of the recession that’s bound to come from this public health epidemic, which we haven’t seen in at least a century.”

Tubbs said he was not surprised that direct cash payments were having a national political moment, and he said that work to make the idea mainstream has already been done, including by Andrew Yang, the entrepreneur and Democratic presidential primary candidate, who made UBI his central policy issue in his bid for the White Policy.

“I think folks like myself, and people like the Economic Security Project, people like Mr Yang, have taken the brunt of the criticism,” Tubbs said. “I think now it’s really a safe space, particularly because we’re in a crisis.

“There were a lot of people who were living in an economic pandemic before the corona crisis,” he added.