Funding Direct Payments to Americans through Social Security Deferral

We analyze in this whitepaper a way of addressing both targeting and financing in a direct payment (or "stimulus check") program to provide households with additional liquidity during the economic downturn associated with the COVID-19 virus: by allowing voluntary loans to individuals in which the proceeds would be paid back through deferral of Social Security retirement benefits at the time when the individual claims Social Security. Specifically, those individuals that choose to receive a check would have the balance carried forward at a pre-specified, favorable government interest rate until the time that they choose to claim Social Security. At that time, the loan would be repaid out of the very first Social Security checks the individual would otherwise receive. Those who choose to receive no check would keep their Social Security retirement benefits unchanged. For most individuals, the delay that could be expected to repay a $5,000 check would be at most 3 months in order to make the program budget neutral.