Counterplan solves, leads to federal follow-on, and avoids the link to politics

Every person deserves to live with dignity and have their basic needs met. After decades of rollbacks and disinvestment, our current social safety net is insufficient given the economic situation we face. In the United States there is unconscionable and accelerating wealth inequality,1 wages have been stagnant for 40 years2 and, both before3 and throughout4 the coronavirus pandemic, many Americans struggle to meet their basic needs. In the richest country on Earth, elimination of deep poverty is attainable and long overdue. Historically, states have played a critical role in testing concepts to improve the lives of low-income residents and created a blueprint for anti-poverty measures that can be implemented nationwide.5 It is time to boldly reimagine and revitalize an eroded social safety net, and states have an opportunity to lead by example.

The devastation of the COVID-19 pandemic prompted mitigation strategies intended to get cash to people who were impacted. Federal policies such as increased unemployment insurance, an expanded and fully refundable Child Tax Credit (CTC), and stimulus checks have led to burgeoning support for permanent cash transfer programs like a guaranteed income. Additionally, state and local governments added to relief efforts by using federal dollars provided by both the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan Act (ARPA) to fund cash transfer programs of their own.6

At the same time, an increasing number of municipalities and other units of local government across the country are exploring guaranteed income demonstrations in their community, and states should seize this opportunity to build upon this work. Local guaranteed income programs, though limited in scope, produce incredibly valuable data to prove the efficacy of unconditional cash programs, which are critical for states to obtain buy-in from the necessary stakeholders. One limitation of local programs, however, is that they often aren’t scaled to study the potential for community-level change or other broader economic impacts.

At the federal level, the expanded CTC being debated as part of President Biden’s American Families Plan represents a form of guaranteed income for 39 million households.7 Unfortunately, federal conversations around nationwide cash transfer programs – like an expanded CTC – have been underwhelming. As of December 2021, the Build Back Better Act does maintain the fully refundable nature of the expanded-CTC, allowing low- and no-income families excluded pre-pandemic to continue to receive a credit, but only a temporary extension is being considered for the increased amounts families received during the pandemic.

While the Build Back Better Act has not yet passed, the stimulus checks and expanded CTC have moved the needle, breaking down barriers to moving cash policies at any level of government. We now have a much better sense of what is possible when it comes to distributing monthly cash payments, and we have data and stories of the impact these policies have in the lives of low- and middle-income earning families.

In light of the current limits at the local and federal level, there is an opportunity for state governments to explore ambitious, publicly-funded cash transfer policies that:

promote dignity and greatly improve the lives of their low-income residents;

add to a growing body of research with assessments of larger scale positive impacts across geographically and racially diverse areas;

utilize the revenue raising powers of state government; and

could be a model for a permanent federal program.

We need a permanent federal guaranteed income, but political gridlock and polarization threaten to frustrate attempts at a federal program in the immediate term. States have an opportunity to push closer to that ideal with large scale, publicly funded, permanent programs of their own that will provide essential data and experience toward the realization of a federal program. This guide seeks to arm state-level advocates and policymakers with information regarding the choice points in program design, the positive impacts shown by existing research, and special considerations for states including options for guaranteed income implementation, interactions with existing public benefits programs, opportunities for public funding, and promoting racial equity.