On Monday, Gov. Gavin Newsom proposed a second round of Golden State Stimulus checks — cash payments that will go to 2 out of 3 Californians to help them make ends meet after a year of tremendous hardship for so many.
Many political analysts raised a collective eyebrow. They pointed out that the cash giveaway would take place while the governor is facing a recall election and looking to shore up his support in the state. The Times’ George Skelton began his column by writing “It’s Christmas in May and Gov. Gavin Newsom is playing Santa Claus.”
According to years of data collected by the Economic Security Project, a nonprofit I co-chair, and other organizations: Giving people cash is both good policy and good politics.
Let’s start with the policy. Put simply: Cash works.
The federal government provided more than $850 billion in direct payments to taxpayers in 2020 and 2021, to help ease the financial pain caused by shutting down the economy to fight the coronavirus. The stimulus checks have helped families pay for food, gas and medicine, kept millions of people from falling into poverty and led to increased consumer spending, boosting businesses.
That’s what is at the core of the governor’s announcement.
California has one of the highest costs of living in the country, with housing and now childcare pushing many over the edge, concluded a report released last week by the Insight Center, an organization that advocates for economic security for all.
The additional money Newsom proposes giving California families — $600 for all households making less than $75,000 a year, and an additional $500 for families with children and for undocumented tax-filers — recognizes the particular hardship faced by low-income and middle-class households in California. This is especially true for Californians of color, and it builds on California’s expanded state Earned Income Tax Credit and Young Child Tax Credit, and the federal expansion of the Child Tax Credit.
Economists across the political spectrum agree that cash policies, just like what Newsom announced, are exactly what’s needed to recover from the economic downturn — and rebuild an equitable economy moving forward.
The announcement of the additional stimulus checks alone was a big deal. But the Golden State Stimulus, alongside Newsom’s commitments to fight homelessness, invest in public schools and fund children’s savings accounts, has the potential to be game-changing for our state.
A demonstration project in Stockton, led by then-Mayor Michael Tubbs, whom the Economic Security Project partnered with to run, showed the cash transfer approach can be effective.
Cities across the nation, including many in California, are demonstrating that monthly cash payments with no strings attached are one of the best policies available to provide stability in an economic crisis. A year of research by the Economic Security Project on the positive benefits of the federal stimulus checks backs up that conclusion.
Cash provides the most help to the most people who need it, stimulating the economy, shortening the recession and spurring an equitable recovery. And it gives each family the ability to try to cope with its needs, whether that’s putting tires on the car or food on the table or paying for child care.
Recent census data show that 7 in 10 Californians earning under $75,000 are still having trouble paying for basic needs. Stimulus checks are helping — half of recipients used them in the last week for household expenses.
Of course, Newsom’s announcements last week didn’t happen in a political vacuum. Since he is facing recall, nearly every move he makes — even sound policy decisions like giving struggling Californians cash — will be looked at through a political prism. I see a governor who’s doing his job to make sure the $75-billion surplus — which reflects a period of great wealth for few and hardship for many — moves us toward a more equitable economy.
But this proposal also makes for good politics. The historic wins of Jon Ossoff and the Rev. Raphael Warnock in the U.S. Senate runoffs in Georgia this year were helped by their support for more stimulus checks for the people of Georgia and the nation. In fact, providing direct cash relief is one of the few issues that receives bipartisan support in Washington and has the support of 76% of voters.
Two-thirds of Californians will benefit from receiving Golden State Stimulus checks, as will the political fortunes of the man who proposed them. For Newsom, the old adage is true: Good policy is good politics.