From the desk of The Midnight Sun Publisher Jim Lottsfeldt.
This year, Alaska’s winter is even colder and darker than normal. As we trudge through the hardest part of the season, we are facing the twin challenges of the pandemic and its economic fallout compounding a years-long recession.
Many legislators, and the governor himself, have suggested mitigating Alaskans’ financial hardship through a familiar tool we’re all familiar with: the Permanent Fund Dividend. These lawmakers say putting money directly in people’s pockets may keep families, businesses and the state economy afloat until we’ve turned a corner in the pandemic.
The need is real: Unemployment is spiking, and a quarter of residents expect their wages to decline over the next month. One in eight Alaska households don’t have enough to eat, and fully 40 percent fear eviction or foreclosure is likely. Many, many Alaskans are struggling: children forgoing school lunches; working parents trying to balance a job with childcare; small business owners forced to shutter their life’s work; blue-collar workers who have lost good-paying jobs; young people wondering if they’ll have any career prospects; elders enduring months of isolation.
There is no shortage of financial desperation, a reservoir of need that could be lessened by direct dividend payments.
But not just from the state.
Direct payments from the federal government in the form of another stimulus package can do the same work of ameliorating suffering while curbing the worst impacts of the pandemic recession.
Boosted stimulus checks in 2021 will shave years off the recession, bolster the state budget as well as local economies, and complement existing programs like unemployment insurance that fall short of getting help to everyone who needs it. Far too many people experiencing joblessness or financial distress for the first time are falling through the holes in the social safety net. A ‘Federal Dividend’ in the form of higher pandemic relief payments to individuals and families can be a lifeline to get us to the otherside of the current crisis.
The big question is: will Sen. Lisa Murkowski help or hinder that effort?
The case for cash is strong. More than 125 economists urged Washington policymakers to “use all the tools at their disposal to revitalize the economy, including direct cash payments, which are one of the quickest, most equitable, and most effective ways to get families and the economy back on track.”
5,600 small businesses across the country have called for recurring direct checks, not just one-time payments. It makes sense: business owners benefit when their customers have money, especially in rural areas where more of those dollars are spent locally, but they also see checks as providing stability for employees and patrons in the face of continuing uncertainty.
There’s also what economists call the “multiplier effect.” Every $1 the federal government transfers directly to individuals yields $2.10 in spending in the economy, according to researchers. Any small business owner will tell you a return of 210 percent is a sound investment.
Checks reduce red tape. They are one of the simplest, most direct ways to get money back into the economy without creating additional government infrastructure. Direct checks can be deposited into Americans’ bank accounts in a matter of days, minimizing errors and unnecessary bureaucracy, and giving Alaskans the flexibility to prioritize their needs: Food, rent, bills, fuel, equipment or health care. Alaskans know how to solve their own financial problems if we’ll let them. Little wonder that checks are supported by 70 percent of Republican and Independent voters.
For nearly 40 years, we have seen the positive economic impacts of cash through annual dividend payments. It is an overwhelmingly popular use of the state’s wealth, with 85 percent of residents saying it helps the local economy. Significant federal stimulus checks would provide a similarly critical boost to Alaskans, and afford Americans across the country the same stability and local economic boost at a time when it’s never been needed more.
We need both of Alaska’s senators to push for increased direct relief payments. But unfortunately, only one of them has a track record of reaching across the aisle when it’s in the interest of Alaskans instead of party dogma. Sen. Murkowski was part of a bipartisan group in the Senate that paved the way for what became proposed payments of $600 to all Americans after compromise was reached with the House. Most Democrats, as well as a small number of Republicans, including President Trump, have said they want to see more.
Democrats are on track to control all three branches of government. But even after they are relegated to minority status, Alaska’s two senators could be extremely influential, given the miniscule margin with which Democrats control the body. With her history of bipartisanship and moderation, Sen. Murkowski can be an effective voice supporting cash relief for families from Ketchikan to Kaktovik to Kipnuk.
What would another round of CARES-Act-style $1,200 checks mean for Alaska if Congress opted to target payments only to the low- and middle-income households that need it most and are the likeliest to spend it (set aside for a second that many Democrats, as well as Trump, are demanding $2,000)? That would reduce the policy’s cost and increase its chances of making it through Congress.
Such a plan would bring $340 million into Alaska’s economy. Three in five families would get a check–288,000 adults and 150,000 children–with an average payment of $1,570. Low-income families, like those in many rural communities that have been hardest hit by the pandemic and the recession, would get a 14% income boost. Compare that to the fewer than 60,000 people who have successfully received unemployment insurance in the state, only half of all who have applied, and it’s easy to see why direct checks are an essential complement to reach residents who are struggling.
States are scrambling to support those suffering because of the financial calamity wrought by the coronavirus. But the pandemic is a massive health and economic crisis, and it requires a response comparable in scale. Congress and the Biden Administration must pass additional stimulus checks for families in early 2021, and Sen. Murkowski should help lead the way.