Direct payments from the $2.2 trillion CARES Act passed by Congress should get to roughly 80% of Americans - tax filers and those receiving federal assistance - relatively quickly, about three weeks. The other 20% represent some of the most vulnerable people in the economy - the "underbanked" (19% of Americans), those who don't make enough income to file tax returns (or don't file for other reasons), and those for whom addresses have changed or are not readily available. Many are low-wage workers among the record 30 million who filed for unemployment insurance in the last four weeks. This pandemic and resulting human, economic, and financial crises are unfolding at break-neck speed, and bills were and are still due. These payments of $1,200 per adult will be a critical first lifeline for many households and the economy. To minimize the likelihood that an illiquidity crisis becomes a bankruptcy crisis in the coming weeks and months, Congress and the Treasury (with the Federal Reserve and FDIC) must act with all deliberate speed to get people paid now and not months from now. Ninety-six percent of American adults have cell phones or smartphones that could be used to speed up payments to those who are not on IRS or federal assistance rolls. A substantial share of smartphone users already makes payments using mobile platforms. Both the literature and recent experience of financial institutions suggest that the mobile money infrastructure that already can be leveraged to great effect in this crisis, and, more generally, the digital infrastructure of the federal government must be upgraded before the next crisis.
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Lisa D. Cook is Professor of Economics and International Relations at Michigan State University. She earned a Ph.D. in economics from the University of California, Berkeley with fields in macroeconomics and international economics. Previously, she was on the faculty of Harvard University's Kennedy School of Government. Her current research interests include economic growth and development, innovation, and financial crises. She has been published in the American Economic Review, the Journal of Economic Growth, among other journals, and is an associate editor of the Journal of Economic Literature and the Journal of Economic History. Dr. Cook has been funded by NSF and the National Bureau of Economic Research, among others. She is currently Director of the American Economic Association Summer Program and a Research Associate at the National Bureau of Economic Research. She served in the Obama White House at the Council of Economic Advisers from 2011 to 2012.