In order to help Americans affected by the Covid-19 pandemic, self-made billionaire Mark Cuban thinks that the government should send checks directly to Americans in need rather than providing additional funding to financial assistance programs, such as the Supplemental Nutrition Assistance Program, known as SNAP.
“I think government programs designed to meet specific issues are less efficient” than direct payments would be, Cuban tells CNBC Make It when asked to clarify his point of view. “My preference is and has been that we take those funds and others across the spectrum of approved programs and write those checks to the eligible population.”
Cuban believes that direct payments “give people better control of their circumstances and have a multiplier effect to the economy.” He contends that “we historically have not respected the ability of those in need to choose for themselves. We have made the government the arbiter of what they need.”
According to Cuban, “the same amount of money [spent on funding assistance programs] should be given to eligible recipients, along with the stimulus amount, paid monthly.”
Many disagree with Cuban, however. According to economist and University of Maryland professor Melissa Kearney, solely sending direct payments and eliminating assistance programs would be harmful.
Without programs that provide housing, health care and food, there would be a risk that “much less assistance [would] be provided to those in need,” Kearney says.
In 2019, these government “safety net programs” were supported by about 8%, or $361 billion, of the federal budget, according to the Center on Budget and Policy Priorities. This does not include health insurance or Social Security benefits, but does account for SNAP benefits, Supplemental Security Income and other assistance programs.
SNAP in particular is the largest food assistance program for low-income Americans, according to the USDA. The average monthly benefit per household member was $129 in 2019. Between February and May, the number of Americans receiving SNAP benefits grew by 17%, about three times faster than in any of the previous three months, according to The New York Times. As of July, about 43 million Americans received SNAP benefits.
Cuban argues that the first round of stimulus payments “demonstrated that this approach [of direct payments] works,” but Kearney disagrees. Because the previous stimulus checks were only a one-time benefit, they can’t be used as proof that continued payments would be effective, she says.
Additionally, Kearney says there are a few reasons why government programs could be more beneficial than direct payments.
First, some individuals may struggle to decide how to best spend the cash they receive. “They could wind up with insufficient health care, housing or food,” Kearney says.
Specific programs can also benefit children, who typically don’t have any say in how incoming money is spent, by ensuring that resources go directly to food, housing or other basic needs.
Second, benefits programs can help protect recipients against factors outside their control, such as changes in the real estate market. “In some instances, an individual won’t be able to purchase decent housing, health care or child care in the private market, even if they have cash on hand,” Kearney says. “In such instances, government provision or price subsidies might be more helpful.”
Still, parts of Cuban’s idea do offer potential benefits. A combination of government programs and direct payments could be helpful. “Providing a greater amount of cash or near cash assistance to low income individuals and families would alleviate material need and would almost surely reduce stress levels, which would have real benefits in terms of mental health and parenting,” Kearney says.
And it may be difficult for those in need to navigate the requirements and application processes for government programs, especially if “one’s specific need doesn’t fall neatly into a program’s criteria,” Kearney says.
This isn’t the first time Cuban has put forth ideas on additional coronavirus relief to help struggling Americans.
In September, he offered his own stimulus proposal: He believes that all American households, regardless of income level, should receive a $1,000 stimulus check every two weeks for the next two months. The check would have to be spent within 10 days, or families would lose the money.
As of now, it is unclear whether new coronavirus relief legislation will pass before the new year, as negotiations remain gridlocked after provisions including stimulus checks, liability protections and state and local aid have sparked disagreement between Democrats and Republicans.
“We need [the stimulus] as much now as we did back then,” at the start of the pandemic, Cuban said. “Those without [help] are struggling badly. We need to get them help.”