April7 MFI

The case for no red tape cash benefits

The struggles way too many Michiganders are going through to get safety net benefits make clear that we need to go to no red tape cash benefits.

The main reason for how difficult it is to get much needed benefits is that the system is designed to catch those who don’t “deserve” public benefits. Think the modern day version of President Reagan’s mythical welfare queen.

So we end up with an application process that takes way too long to help people who need benefits to pay the bills now. Not to mention has long and confusing applications that are difficult for many to complete so that it, almost certainly, keeps benefits from far more who are eligible than screens out those who aren’t.

In an insightful article, entitled Obsession With Fraud Sabotages U.S. Aid to Millions Without Jobs, Bloomberg writes:

For anyone who’s ever had to sign up for food stamps or jobless benefits in the U.S., the onerous enrollment procedures and frequent ID verification checks are a well-known, and often, disheartening reality. Ostensibly, the safeguards are meant to ensure only those who need help get it. But according to Georgetown University’s Pamela Herd, they often end up doing more harm than good.

… Take SNAP, which is better known as the food-stamp program, as an example.

Herd points out that nearly 20% of eligible recipients, or about 10 million people, don’t get benefits because of the hurdles required to register, which can include multiple office visits, fingerprinting and, for those with needs for only part of the year, difficulties in proving seasonal income fluctuations.

Compare that with the amount of fraud in the program, which is routinely measured at only 1 to 2%. And most of that is due to people making mistakes on their applications. Herd says it’s a clear sign of imbalance in policy, which goes overboard to prevent fraud at the expense of the program’s goal of providing food assistance to the needy.

This is not a one-time problem caused by the lockdown. Nor is it just SNAP benefits that are way too hard to obtain. This is a structural problem that requires a complete redesign of our safety net programs. One that results in a no red tape system of cash benefits.

In our last post we explored the need for cash-based benefits for those who are working. Think a greatly expanded Earned Income Tax Credit. The need, first and foremost, for cash is even clearer for those who have lost their jobs.

The pandemic-drvien one-time cash payments and expanded unemployment and food benefits were the right response to the virtual shutdown of the economy. But the difficulty in receiving those benefits diminished their effectiveness in helping households who need cash now.

Governor Whitmer has issued an executive order that allows state Unemployment Insurance Agency workers to only consider a person’s most recent job separation in determining their entitled benefits. This is a important step in the right direction.

We need to build on the bipartisan agreement to provide non-affluent households with cash benefits and Governor Whitmer’s actions to cut red tape in the application process. Cash benefits and no red tape need to be the central features of an ongoing greatly expanded safety net.

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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

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