Even as state and federal governments shy away from further stimulus checks, the idea of a universal basic income is gaining currency in a time of mass unemployment and the pandemic. Guaranteed income programs in American cities have surged in recent times even as inflation continues to plague low and moderate-income households.
The number of American cities that are participating in guaranteed income programs has risen to 82 spread across 29 states. Among the major cities that are piloting basic income programs are Chicago, Denver, Oakland, and Los Angeles.
These guaranteed stimulus checks have been providing some 26 million Americans some form of basic monthly income according to an advocacy group, Mayors for a Guaranteed Income. They and other similar groups are advocating and backing a fund run by institutional investors. They have said that the guaranteed income program can run in a number of ways from shared national resources similar to the Alaska Permanent Fund and sovereign wealth funds.
In its initial avatar guaranteed income programs derived its funding mainly from private initiatives such as philanthropists. There were rare federal initiatives such as the American Rescue Plan Act. The Rescue Plan was signed by President Biden in March 2021, barely weeks after assuming power.
The Rescue Plan was a first in many ways and was way more than the third stimulus check for which it is popularly known. Under the act, millions of dollars were funneled to states, cities, and other local bodies with the freedom to spend it as they saw fit. The only restriction was that it should be in some way linked to pandemic relief measures.
But even that restriction was rarely heeded as Republican states spent the money on causes barely linked to the pandemic. The Alabama Legislature spent $400 million of the American Rescue Plan funds to build two mega-prisons; one in Elmore County and the other in Escambia County. That was 20% of its COVID funding.
Alaska Leads The Way With Permanent Stimulus Checks
The Alaska Permanent Fund was constitutionally established in 1976. It is permanently managed by the Alaska Permanent Fund Corporation, a state-owned corporation. It was established by Article 9, Section 15 of the state constitution of Alaska under Attorney General Avrum Gross and Gov. Jay Hammond. The fund was managed by the Dept. of Revenue Treasury till 1980 before the state legislature of Alaska created the permanent fund corporation.
As of 2019, the fund was approximately $64 billion which is largely funded by oil revenues. The fund has sent out stimulus checks at an average of $1,600 per resident when adjusted to 2019 rates. The fund’s revenues have primarily been used to pay out the dividend and have been portrayed by many experts as the sole instance of a practical basic income stimulus check.
Even since oil from the North Slope of Alaska began reaching markets through the Trans-Alaska pipelines, the fund was created by amending the Alaska Constitution. Through this investment, it was decided that a quarter of the oil revenues would be set aside to be used for a future generation when they would no longer be able to rely on the oil revenues at one stage.
But it is also not true that the fund is solely replenished by oil revenues. The minimum deposit is close to eleven percent of the total resources when considered. The fund sets aside a particular share of the oil revenues for the benefit of present and future Alaskans.
The initial funds that the stage received in 1969 amounted to $900 million. But this money was quickly and inefficiently spent. This spurred the desire to set aside excess oil revenues out of the reach of politicians and instead send out some form of stimulus checks that would directly benefit residents of Alaska.
The permanent fund and various other state investments are totally and independently managed by the Alaska Permanent Fund Corporation. The aim is to manage maximum and prudent returns. The fund has grown admirably from the initial investment of $734,000 in 1977 to over$53 billion by the middle of the last decade.
This has helped in sending out generous stimulus checks during the pandemic. This admirable growth in the fund has been possible thanks to judicial management of funds, inflationary re-investment, and also the wise legislative decision to deposit excess income that was made during boom periods. Every year the funds realized earnings get split between operating expenses, proofing against inflation, and the annual fund.
The Fund is part of the International Forum of Sovereign Wealth Funds and adheres thus to the Santiago Principles that advocate best practices while managing sovereign wealth funds.
Universal Basic Income Stimulus Checks Expected To Spread More
The movement for a guaranteed basic income is gaining popularity. It has been spurred by the situation created by the pandemic and the untimely exit by the federal and state governments. People and experts alike have realized that financial safety nets have to be put in place that will guarantee stimulus checks to citizens without being at the whims of politicians.
The movement at present is largely supported by groups such as Income Movement, a grassroots non-profit. This group interacts with city governments and organizes public marches that demand basic income. Another non-profit Economic Security Project also advocated guaranteed basic income stimulus checks in cities.
Among the earliest of the guaranteed stimulus, check is from Stockton in California. The scheme was released in early 2019 by the then-Mayor of Stockton Michael Tubbs who is also the founder of Mayors for a Guaranteed Income.
The Stockton Economic Empowerment Demonstration provided a $500 stimulus check to residents for two years. The beneficiaries were selected at random and were chosen based on their income. The whole funding was done through $3 million in donations.
The results from the test program in Shave have been encouraging. The stimulus checks have resulted in higher rates of full-time employment among the beneficiaries. It has also had a positive impact on the psychological health of the participants.
The beneficiaries of the stimulus checks said that they were less depressed and anxious and were experiencing improvement in emotional health, a lowering of fatigue levels, and an improvement in overall well-being.