Mark Cuban has proposed that the government issue a “use it or lose it” debit card to U.S. households to help spark consumer demand for struggling businesses hit by the coronavirus crisis.
As states and businesses begin to reopen following widespread COVID-19 shutdowns, Congress is currently debating a new round of stimulus for consumers, and aid to states and localities.
Along those lines, the billionaire entrepreneur on Wednesday made a case for a “perfectly timed stimulus program” — in the form of a debit card for households to patronize businesses that are currently in a “state of suspended animation.”
During a Verizon Media special event, RESET YOUR MINDSET AT WORK, Cuban explained that “the primary reality is no business can survive without sales. And two-thirds of the economy is consumer-generated demand” — which is not functioning with many out of work and stuck at home.
The “Shark Tank” investor and Dallas Mavericks added that “we’ve got to get to a scenario where consumers have enough confidence to go out there and spend money.”
For many businesses, the future is uncertain. Some can’t afford to bring back laid-off employees because they can only operate at partial capacity.
The other challenge they face is that 68% of people on unemployment are currently making more than they did in their previous job. In the past 10 weeks, more than 40 million Americans filed for unemployment insurance.
With much of the economy still shut down, “employers can’t afford to bring them back. So they’re stuck in never Never-never land,” Cuban said. “That’s a huge problem.”
The $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March, expanded existing unemployment benefits by adding an extra $600 weekly payment on top of the amount someone receives under state law through. However, Cuban pointed out that those extended benefits are expected to run out before August.
“And so I think we need to do a debit card program where we give money literally to each household and make it ‘use it or lose it,’ whether it’s $1,000, or $1,200, or whatever that number is, every couple of weeks and say, ‘You have X number of days to use this debit card, or you lose the money that’s been deposited on there,’” said the wealthy investor, who is mulling a presidential run.
“Because by doing that, and timing it, right, that’s going to create demand for these companies so they can afford to bring their employees back after they’re off of all that unemployment CARES enhancement,” Cuban added.
Cuban has also called for the implementation of a transitional federally-guaranteed jobs program to jumpstart a recovery giving people “confidence in their jobs.”
“We’re going to have to have a transitional, not permanent transitional federal jobs program,” he said, linking such efforts to the massive COVID-19 testing regime that’s been touted as a linchpin of getting the economy restarted.
“And so we’re going to need to hire people, millions of people, you know, preferably for testing, tracing, tracking, supporting vulnerable populations, long-term care, you know, giving people jobs that they know, are stable, because that gives them the impetus to spend money,” Cuban added.
Julia La Roche is a Correspondent at Yahoo Finance. Follow her on Twitter.