An Expanded “Dave’s Plan” Could Help

Our government fumbled the lockdown leading to depression. Its actions have resulted in over 40 million jobs lost, and many businesses gone forever. Even after spending trillions, we have uneven results. We see long lines at food banks. Some are receiving aid, and some are still waiting. Many people receiving assistance are getting more than if they returned to work. Many people are losing or endangered of losing their health insurance along with their jobs. In a word, we have a mess.

It got me to thinking how much better off so many would benefit from a Personal Benefits Account (PBA). The bedrock of “Dave’s Plan” (Series on this site), the PBA combines your tax-favored savings plans with catastrophic health insurance. Each and everyone would be enrolled. By eliminating the paperwork associated with most medical claims, it would be cheaper and more efficient. It further lowers cost by virtually banishing credit risk. The very idea “pre-existing conditions would ultimately cease to exist. Big health problems are covered. It makes tax-favored savings available to every person. Everyone would have formed a connection to a financial institution. Run through the Internal Revenue System; it pulls existing programs into something workable and easy to use.

Most Americans have direct- deposit. The government already uses it to send people their social security, tax refunds, and EITC checks. Wouldn’t it be easier to combine all our safety-net programs into a single cash deposit? Under Dave’s Plan, everyone must file an income tax form. Once net income is determined, we can compute a safety net support payment. Just using a non-tax-sheltered account. Call it, “The Expanded Dave’s Plan.”

If we totaled all of our existing programs designed to help those down on their luck and the poor, it comes to a tidy sum. Food stamps(Snap), housing, EITC, job retraining, Tanf, and unemployment insurance are just some of the programs. What if we get rid of all of them and combine the money into a cash payment.s In the August 22, 2016 post “A Strong People” in my series on “The Long Journey to More” (Available on this Site), I noted the Cato Institute computed the programs a single mother qualified for would equal $2,000 a month cash payment in 2013. It’s ,of course more now. If your income falls below a certain point say through job loss or reduced hours it starts to kick in. You file an amendment to your return online. We should structure in a way they are high enough to sustain people bur low enough so as not to discourage anyone from working. The existence of so many income levels for different support programs means earning a few extra dollars may cost a recipient thousands. The is known as “the Poverty Trap.” Consolidating into one cash payment would avoid this disincentive.

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