Political leaders have been scrambling to address the economic fallout of the coronavirus crisis by providing direct cash assistance to American families. Conservatives, who’d until now dismissed the idea of a Universal Basic Income as a dramatic expansion of the welfare state, have been forced to recognize that market solutions won’t suffice as a global pandemic K.O.’s the national and world economy.
It's a simple math problem: Almost overnight, many types of work effectively became a public health hazard, putting millions out of work with no real path to new income for the foreseeable future, even as the bills keep coming.
Yet the cruel irony of a cash-assistance program is that, for the populations that are excluded, it would have the complete opposite of its intended effect: they’ll get dragged down by a cratering economy with the added anchor of suddenly reduced spending power as compared to their peers. And the text of the bill Mitch McConnell unveiled this week makes clear at least one group whose members wouldn’t be getting any checks in the mail: “any nonresident alien individual.”
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Broadly speaking, McConnell’s proposed measure would send U.S. taxpayers $1,200 per adult and $500 per child in assistance, decreasing proportionally with income above $75,000 and ceasing with income above $99,000. Whatever your opinion of a UBI as a concept, it’s hard to argue against cash assistance right now as necessary to head off the ruination of countless lives and a total economic meltdown, even if it is a one-time emergency infusion.
UBI as a concept was brought to more widespread recognition in the United States last year by the Democratic primary campaign of entrepreneur Andrew Yang, whose signature issue was providing $1,000 per month to every adult American. Along with the recognition has come scrutiny, including the all-important question of eligibility, and the unforeseen consequences of setting criteria.
Max Ghenis, a graduate econ student at MIT and founder of the UBI Center, estimated that Yang’s flagship plan would actually leave some low-income households worse off than they were before. The majority of these losers would be households with adult non-citizens, who would be paying into the program with their taxes but would not receive any income from it.
The Senate bill as written includes resident aliens, which under the IRS has a slightly different definition than under the rest of U.S. law. Undocumented immigrants can qualify as residents if they fulfill the requirements of the “substantial presence test,” and could be included in the pandemic aid. However, the language is still being negotiated, and some lawmakers have called on those without legal status to be excluded, with Sen. Rand Paul memorably saying “taxpayer money shouldn’t go to non-people,” on a speech on the Senate floor this past week. Treasury Secretary Steven Mnuchin has repeatedly described the intended target of the direct aid as “Americans.”
Undocumented workers number around 8 million and make up about 5 percent of the nation’s civilian workforce.The era of the prototypical undocumented worker being a single man who moves back and forth for work is long over. Most of the country’s undocumented people are long-term, firmly-rooted men, women and families who more or less participate in the economy in the same way as everyone else. In fact, they tend to heavily occupy some of the industries hardest hit by the pandemic, including food processing, manufacturing, and the service sector. They have limited access to credit that they can rely on for short-term relief, and, contrary to an easily debunked but persistent myth, they pay billions of dollars in state and federal taxes, including Social Security taxes many will never see a penny of.
An exclusion of undocumented workers also doesn’t just affected undocumented people. Almost 17 million people in the U.S. live with at least one undocumened family member, including about 6 million native-born U.S. citizen children. With the proposal as written, undocumented parents would be unable to receive even the aid specifically designated for qualifying children.
Setting aside the moral argument about leaving millions of particularly high-risk people in the dust during what we all hope will be a once-in-a-lifetime health and economic catastrophe that will play out over months, if not longer, this exclusion would be a huge practical mistake.
If the point is to shore up the nation’s economic infrastructure and preserve some semblance of a normal commercial interchange, taking what is already a vast American worker underclass and making their financial footing markedly worse is going to be a significant counterweight, not just for them but for the system as a whole.
It’s difficult to establish an approximate figure, especially given uncertainties about where most nonresident tax filers fall in terms of tax liability (which the proposed legislation ties to the amount of aid families will receive), but there’s no way to slice it where billions of dollars that could be going back to families to reinvest in local economic systems wouldn’t be left on the table.
If the administration is truly worried about the “self-sufficiency” of immigrants, as it has claimed through policy actions like the new public charge rule, it should understand that this moment threatens to drop millions into a hole that will be hard to claw out of. The cash-payments system will not be enough on its own to stabilize many families, but it’s an important start, and the criteria used now could well form the basis for future aid.
To leave millions out would be to look in that financial hole and shovel dirt in after them, to the detriment of our shared economy.
