coronavirus stimulus

Treasury Sent $1.4 Billion in Stimulus Checks to Dead People. That’s Good.

Nothing’s too good for the dead. Photo: Eric Gay/AP/Shutterstock

This year, the federal government sent more than 1 million coronavirus relief checks to dead people. The miserly busybodies at the Government Accountability Office (GAO) released a complaint about this inadvertent “cash for cadavers” program Thursday, and now a bunch of news outlets are stoking outrage over Uncle Sam’s giant handout to Big Dead.

But concerns about this “problem” and its “astonishing scope” are misguided.

Here’s what happened: Back in March, the economy was collapsing, tens of millions of Amerians were in the process of losing their jobs, and Congress passed a giant relief bill to keep households solvent during the hard times to come. The rapid onset of the economic crisis posed a logistical challenge to the IRS. Americans needed cash relief yesterday, but the agency did not have the payment infrastructure in place to immediately deposit $1,200 into every eligible resident’s bank account. Meanwhile, ensuring that no ineligible Americans were mistakenly sent relief would require a time-consuming review process. So the agency opted to err on the side of not letting poor Americans go hungry. In practice, this involved, among other things, sending payments to nearly 1.1 million Americans who had perished between filing a 2018 or 2019 tax return and April 2020.

Such payments were dispersed for two main reasons. First, IRS lawyers initially interpreted the legislation as mandating the delivery of relief payments to Americans who’d paid their 2019 taxes, irrespective of their burial status (eventually, the IRS determined that it did actually have the authority to discriminate on the basis of existence). Second, disqualifying Americans who’d paid taxes in 2018 — but not 2019 — on the grounds that they had since died would have required checking each such individual’s name against the Social Security Administration’s death records, a process that would have delayed the disbursement of aid to the living.

By cutting these corners, the IRS largely accomplished its difficult mission. Within two weeks of the CARES Act’s passage, the agency had delivered 80 million electronic relief payments. By May, stimulus checks had made it into the hands of enough cash-strapped Americans to push U.S. personal income up — and the nation’s poverty rate down — even as the economy hemorrhaged jobs. All together, the IRS sent 160 million coronavirus relief payments totaling $269.3 billion. Of that, 1.1 million payments worth $1.4 billion went to the departed. Which is to say: The program had an error rate of roughly 0.4 percent. That is not a scandal. It is a triumph.

The real scandal here is journalists promoting the idea that it is scandalous for a tiny fraction of Americans to receive public aid that wasn’t intended for them. The harms of dispensing relief to people who don’t “need” it — in this case, the survivors of the recently deceased — are much lower than the harms of denying aid to the impoverished. And yet, because the former is so easy for Republicans to demagogue, or nonpartisan news outlets to wag their fingers at, policymakers end up erring on the side of afflicting the afflicted. In the U.S., nearly 20 percent of people who are eligible for food stamps never receive them. This is in part because the process for securing such means-tested benefits is often onerous for cash-strapped households. America would be much better off if our government erred more on the side of making too many of its citizens more materially comfortable.

Further, concerns about misallocating relief are especially perverse in the CARES Act. In the present moment, consumers are slashing spending and companies are cutting investment. To prevent the economy from slipping into an ever-deeper recession, the public sector needs to juice demand through deficit spending. By appropriating more than $3 trillion in stimulus since March, Congress has ostensibly affirmed its faith in this basic tenet of Keynesian economics. And yet, if we recognize that the economy is hurting for aggregate demand, it’s not clear why sending relief payments to dead people isn’t preferable to not doing so (assuming we face a binary choice between those options). Plenty of living Americans who received stimulus checks spent the bulk of their aid on their next of kin. So what’s wrong with the survivors of a recently deceased person (whose income last year was low enough to qualify them for aid) enjoying a little more disposable income? As a nation, do we really want to prioritize ensuring that the recently bereaved don’t have it too easy over rapidly getting aid into the hands of the needy and accelerating the onset of economic recovery?

The United States spent $1 trillion getting 2,300 Americans killed in Afghanistan for no reason. We spent $1.5 trillion developing a fighter jet that can’t fly during thunderstorms. And the Government Accountability Office has nothing better to do than scold the IRS for not working hard enough to claw back coronavirus relief checks from widows and orphans?

Let’s worry less about how much our government accidentally spent on aiding the bereaved and more about how little it is willing to spend on keeping its most vulnerable people from losing their homes, incomes, and health.

The IRS Sent Stimulus Checks to the Dead. That’s Good.