Monthly Direct Payments Banned in Four States

While the COVID-era stimulus payments were a lifeline to many Americans who found themselves laid off and facing widespread economic uncertainty, some economists have blamed the direct money for the country's lingering inflation problems.

And while some states have taken the stimulus checks as a playbook on how to help residents in times of financial need, other states are looking to or have banned stimulus-type payments altogether.

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Rebates and guaranteed income programs have been popping up across the country in the years following the federal government's stimulus package, which saw three rounds of checks ranging from $600 to $1,400 go out to qualifying taxpayers.

In total, the government issued $814 billion in financial relief, and several states added their own rebates to the mix to help residents navigate economic uncertainty.

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said research consistently shows that families receiving these types of payments aren't getting rich off them or spending the cash on non-essential items.

"Instead, the additional income is being used to keep them above the poverty line," Beene told Newsweek. "There is undoubtedly more security in terms of keeping a roof over their heads, clothes on their backs, and food on the table."

But some are taking a hard stance against using public government money for any guaranteed income or stimulus-type payments.

Last month, Iowa voted against using these funds to provide similar types of subsidies to residents in financial need. Some areas of the state had been testing out a basic income program that was available to residents, regardless of whether they had a job or not.

"Where before, neighbors and churches and nonprofits really stepped up, and helped out people," state Senator Brad Zaun said, according to North Country Public Radio. "Now it's becoming more dependent on government, and government tax dollars."

Already, Arkansas, Idaho and South Dakota had banned no-strings-attached financial aid, and Wisconsin and Arizona attempted their own bans before getting vetoed by a Democratic governor.

Texas has also floated its own law that would make guaranteed income pilots illegal, and lawmakers have been pushing to end a new program in Harris County.

The program that selected 1,900 people living in poverty to receive the monthly payments is now in jeopardy as the state evaluates its legality.

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The Harris County program's lawyers say it seeks to reduce poverty and give residents more economic opportunity, but those in opposition have questioned its legality as well as how recipients are randomly selected. The Texas Supreme Court has temporarily stopped the program from sending its first $500 payments to recipients.

While many guaranteed income programs were initially funded by federal pandemic relief money, the cash is running out, and states are looking for a way to fund them without derailing their budgets.

Beene said the lack of a job requirement is increasingly an issue for some naysayers of the basic income programs, and some worry about how the money will be used with no stipulations.

"While the intentions are to lift families out of poverty, the funding can be seen as a blank check of sorts that some individuals and families are receiving," Beene said. "Ultimately, it's up to voters and their legislators to decide whether the research presented is positive enough to enact such programs."

Still, universal income has been proved in other countries to reduce poverty and government spending in the long run, said Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group.

"I believe the main question is, does paying a basic income today actually offset the overall cost of government programs such as homelessness and health care over longer periods of time?" Thompson said to Newsweek.

If more states are successful in banning the no-strings-attached aid programs, Thompson said residents will inevitably see increased poverty and homelessness, which often leads to government spending on shelters and hospital stays.

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Thompson added that Americans pay more in health insurance premiums to offset the costs of those unable to afford their own insurance. They'll also see lower property values in areas where homeless encampments are set up due to skyrocketing homeless rates.

"There are people who cannot work or have fallen on hard times for legitimate reasons, and just need a little support to get them by, and unfortunately governments like to see things through a lens of abuse," Thompson said.