After a boom in cash aid to tackle poverty, some states are now banning it

Dozens of cities and counties around the U.S. have been trying to tackle poverty by giving people no-strings cash aid, an idea that gained traction after the success of stimulus checks and other federal relief during the pandemic. But advocates say over the past year, a backlash fueled by a conservative think tank has gained steam.

Iowa is the latest Republican-led state to prohibit the use of public money for so-called guaranteed income. The final vote last month wasn't close, but the debate was heated. Senators who support such programs said it was undemocratic to undermine local governments. One suggested colleagues were being hypocritical, since their own families have received federal farm subsidies for generations.

But state Sen. Brad Zaun, who represents an area that's currently testing a basic income pilot, said he was shocked when the program was approved. He slammed the notion of giving people free money without requiring them to work.

"Where before, neighbors and churches and nonprofits really stepped up, and helped out people," he said, "now it's becoming more dependent on government, and government tax dollars."

In Texas a similar bill to ban these programs didn't get far, so state Sen. Paul Bettencourt took a different tack. He persuaded the state attorney general to file suit against a basic income program in Harris County, which includes Houston.

"You just can't give out money on the street like popcorn, you have to have a governmental reason," he says, citing a gift clause in the state's constitution.

Harris County attorney Christian Menefee disputes that, arguing the program serves a public purpose of reducing poverty and increasing economic opportunity.

The Harris County pilot targets people who live in certain high-poverty ZIP codes, a population that's disproportionally Black and Hispanic. More than 82,000 people applied, then 1,900 were randomly selected to receive monthly payments.

Beyond the constitutional question, Bettencourt says this method of picking a lucky few winners by lottery is bad policy. He also concedes it wouldn't be possible to pay everyone who met the requirement, saying, "Even if you believed in the public policy, you just simply run out of money."

The backlash is a sign of how popular basic income programs have become

Basic income pilots have exploded since the pandemic. In part, that's because cities are using federal pandemic relief money to fund them, along with philanthropy, other private donors and tax dollars. They usually pay low-income people $500 or $1,000 a month, for a year or so.

These pilots are "helpful and effective for the families who need them" says Aditi Shrivastava, deputy director for Income Security at the Center on Budget and Policy Priorities. Research finds participants are more financially secure and less stressed out and that the monthly payments have no impact on employment.

The lack of a work requirement is a selling point for supporters, who say the extra cash can create the time and space to find a better job or perhaps a new direction. Most people are employed, though, often holding two jobs. Shrivastava says those who don't work generally have good reason.

"They may be taking care of family members. They may be dealing with disabilities," she says. "What we do know is the people who can work are already working."

A conservative think tank has ramped up lobbying for bans on cash aid

In addition to Iowa, three other states — Arkansas, Idaho and South Dakota — have banned no-strings cash aid. Lawmakers in Wisconsin and Arizona did too, but Democratic governors vetoed those bills.

Some states that banned basic income don't actually have such programs.

All of this is part of a coordinated push, says Harish Patel, a vice president with the Economic Security Project, which advocates for guaranteed income. He says the backlash is spearheaded by the lobbying arm of a conservative think tank, the Foundation for Government Accountability.

"They helicopter in, hire lobbyists in a bunch of states, and then they provide these copycat bills to undo this very popular program," Patel says.

The FGA did not make someone available for an interview, but — among other issues – it promotes work requirements for federal safety net programs and opposes expanding Medicaid. During last year's congressional debt-ceiling negotiations, its CEO suggested that new work requirements would ease worker shortages and decrease federal spending.

The FGA is also among the many conservative groups that have contributed to Project 2025, which aims to set the agenda for a second Trump presidential term.

Over the past year, a total of 10 states have introduced bills to ban basic income. "We think that in the next year they're probably going to go to 25 to 30 states, because they tested it out," Patel says. "People are going to stand up and fight back."

Patel says his group's not-yet-published polling finds majority support for basic income among not just Democrats, but also independents and younger Republicans. Democratic pollster Celinda Lake has found broad support for the idea of a federal guaranteed income program, something many advocates say is their ultimate goal.

The Texas legal challenge has had immediate consequences

Iowa's cash aid pilot has said it should be able to continue through its final payment in April 2025, since much of its funding is from private groups. But the lawsuit in Harris County, Texas, has had immediate consequences.

Last month, the Texas Supreme Court temporarily blocked the program a day before the first $500 payments were supposed to go out. That's left 56-year-old Carmela Valdez Nunez anxious and desperate.

"I just got to pay my rent and my bills," she says. "That's the thing I need, because I don't want to be under the freeway."

She thanks God she's never been homeless, but is behind on bills and worries about it a lot. Valdez Nunez used to clean offices and care for seniors. But she's disabled now and says she barely gets by on Social Security, a housing voucher and $23 a month in food aid.

"I just buy eggs, like tomato, onions, bread, bologna and cheese. That's all I have enough to buy," she says, and it only lasts a week.

Valdez Nunez says she's gotten used to enduring hunger for long stretches. If the basic income program is allowed to go through, the first thing she'll buy is food.