Government Gift Cards

Government Gift Card
Rant #22 (Opinion)


April 3, 2020

Automatic stabilizers for recessions makes the most sense as a policy in order to smooth out economic slowdowns. That concept means that basically as soon as the markets show signs of slowing, the federal government automatically disburses checks of a set sum until a recovery begins. It would not replace things like unemployment insurance, but rather serves as a way to put extrra capital in the pockets of Americans. Then, when the economy gets going again, the Federal Reserve would take the training wheels off, so to speak.

Failing that (or even as a way to augment it), I have an idea for future US stimulus checks. We should send people gift cards, essentially, the value of which expires at the end of the fiscal year, or 365 days later or something. Maybe people get one every month and the value goes down by 10% each month it is unused, expiring entirely at the end of one year or 18 months. In a scenario with no automatic triggers, then the Congress could authorize these as single payments when deemed necessary, as the go-to medium for issuing checks to Americans, replacing paper. If the whole point of a standard stimulus check is to encourage spending, why not just give Americans a three cent plastic card with $X on it that they need to spend? No saving it, as many people do when given a one-off sum of cash during a time of economic uncertainty. That way the money must be spent and if you have a thousand dollars that disappears (or maybe depreciates in value) after a fixed period of time, you'll spend it.

You could even put more stringent requirements on it, like you have to buy from American companies to get the full value of it, or perhaps have multipliers depending on what one spends it on: food, fuel and shelter get their cost covered for in full (up to the amount on each card), covering 90% of clothing costs, etc etc--you could play around with it. Although that has 2 problems: 1) you'll have conservatives criticizing it as a glorified EBT card, or calling it socialism, because it prioritizes certain industries (in that example). 2) it might unintentionally exclude people from getting the things they really need.

You'd also have the more minor problems of having these cheap plastic cards intercepted and stolen from the mail, so it would require an activation process--nothing unusual there. Perhaps when the government announces it will send people money, Americans who don't have a card already (maybe left over from before) can go to the store and buy plastic cards themselves to put the value on, being charged 50 cents or something at the store that they purchase the physical card at. Places like Walmart that cash checks for free or for next to nothing might choose to do so for these cards as well, seeing as there is a high chance that the recipient will then go buy items at that store.

 

They could definitely get more creative with targeted fiscal relief though. Don't get me wrong: a thousand-dollar check for straight cash? Can't wait for it. But for future crises (or even this one we're still in), America can come up with and test out some new ways to boost the economy as efficiently as possible. And giving out several hundred million checks worth over $1,000 each, then having many of them go right into a savings account, does not optimize the way in which we put the country back on track. Understandably, this coronavirus crisis differs from normal recessions, during which the goal is to get people back to work and spending money. In this one, we want everybody to stay at home, but also still spend money. Nonetheless, we need to take this opportunity to think about how we will respond swiftly to the next problem when it arises. Automatic stabilizers would work very well, in the style of those suggested by economist and former Federal Reserve Board of Governors Section Chief. In their absence, then sending people a plastic gift card from the Treasury would offer a happy medium between something as bold and sweeping as those measures and doing absolutely nothing new.