Armstrong Economics Blog/USA Current Events Re-Posted May 10, 2023 by Martin Armstrong
The “Rise Up Cambridge: Cash Payments for Families with Kids” will provide low-income households with a monthly check for $500 to test guaranteed basic income. Those eligible are families with children who earn under 250% of the federal poverty level ($75K for a family of four). The 18-month program will not be based on a lottery like other guaranteed basic income rollouts, and anyone eligible may apply. The city has allotted $22 million for the initiative and expects around 2,000 families to apply.
The money to fund the program will primarily come from the American Rescue Plan, distributing our Federal tax dollars to others, and some independent donors will pitch in too. This program is only eligible for people with children under 21 and will not make a noticeable dent in the homeless population, nor will it help the elderly who live alone. That said, families with children already receive the most in Federal funds and if they’re living in high-cost Cambridge, chances are they’re receiving income elsewhere. The cost of living in Cambridge is 73% higher than the national average. The median rental price is around $4,277 per month, and the median home price is over $1.4 million.
“We want to stabilize as many households as possible and make sure that they have a chance to continue to stay in our city that, you know, is not easy to stay in,” Cambridge Mayor Sumbul Siddiqui stated. A $500 payment in a high-cost city will never financially stabilize families. Instead, it will increase inflation and bypasses the middle class. Unlike traditional welfare programs, those eligible will receive direct deposit payments that they may spend as they see fit.
The American Rescue plan was not marketed as a guaranteed basic income initiative. Siddiqui is buying votes with Federal funds. The city is pricing out the middle class by providing handouts to those who cannot afford to live in an expensive city. Free money becomes like a drug and the people become hooked on receiving that monthly direct deposit. But, as with all drug, they will become dependent and will need more and more as the cost of living increases. This will only incentivize people to not work and vote for politicians who promise handouts at the expense of responsible taxpayers.