Mark Cuban’s Stimulus Idea: Biweekly $1,000 on Direct Express Cards?!

So for a little while now, billionaire shark Mark Cuban has been talking about his own stimulus idea, and people have been talking about it, and for the past few days people have been asking me for my quick take.

So in this video I will give you my quick take, he’s talked about it before, but yesterday he tweeted some nice little summary tweets about it that I will show you.

But just for background, Cuban is a billionaire, but he’s not in Congress, he’s not any of that, though AOC did retweet him for his tweet about this job program he was talking about.

And you know Mark has been frustrated about perceived inaction on Capitol Hill and the White House, he tweeted on May 4, “Our Senators, members of Congress and President ain’t doing shit, that I can tell, other than looking for someone to blame. The reality is that we don’t know what the right answers are, but it sure would be nice to be able to have a civil discussion about the options.”

Look, he’s an entrepreneur, he has many businesses that are contingent on consumer demand, not the least of which is owning a professional sports team, the NBA’s Dallas Mavericks.

So yesterday, to kind of summarize ideas he’s put out there previously, Mark tweeted, “It’s time to face the fact that PPP [that’s the Paycheck Protection Program loans, forgivable loans for small businesses] didn’t work. Great plan, difficult execution. No one’s fault. The only thing that will save businesses is consumer demand. No amount of loans to businesses will save them or jobs if their customers aren’t buying.”

“It’s time for trickle up economics. We need a transitional fed jobs program that trains and hires millions for a federal tracking/tracing/testing program as well as for support for at risk populations including long term care. We need to dent unemployment with stable jobs.”

“In addition, because this will take time, we need to consider an interim spending stimulus program. All 128,000,000 households could get a $1,000 check every 2 weeks for the next 2 months that MUST BE SPENT WITHIN 10 DAYS OF RECEIPT OR IT EXPIRES. This ‘use it or lose it’ program will cost about $500 billion, but it will allow for demand for non essential products and services to increase, hopefully keeping most businesses alive, as we learn what the impact of re-opening is on the spread and whether or not employment grows organically.”

“There is certainly a lot of risk in this use it or lose it approach. A lot to be considered. But it could be patterned after Direct Express. Let me know your thoughts.”

I’ve seen this bandied around as $1,000 every two weeks, but what Mark actually said is $1,000 every two weeks for the next two months.

So let’s say this magically started at the beginning of June and lasted through the end of July. So you’d get a $1,000 check on Monday June 1, another one on the 15th, another one on the 29th, another one on July 13, and your last one on July 27.

So that’s $5,000 in total, spread out over two months essentially for every household, so that’s not a per-person, per dependent, any of that, it sounds like Mark is talking about per household.

So even using his 128 million household figure, $5,000 times 128 million is $640 billion. So he was obviously rounding there with his $500 billion, or maybe he was just assuming twice a week for two months is only four payments, so a total of $4,000, whatever, he’s close enough, and this is his idea.

And why he brings up Direct Express is he’s saying, look, if you just give everybody money in their bank accounts, yes, a lot of people will spend it because they have to, they’re desperate, but on the other hand, a lot of people who may already have a financial cushion are just going to save it or pay down debt with it or maybe throw it into their Webull account and get free stock, I don’t know, but point is a large portion of that money will not be spent if you just give it to people in their bank accounts, as we’ve done, facts are it will not be put into the economy immediately to stimulate anything for a lot of that money that goes out.

You spend money at your local restaurant owner, he’s going to use that to pay his employees, who are going to go consume elsewhere in the local economy, and it’s beautiful.

But the devil’s in the details.

So Mark’s saying, well, look, if we load up this prepaid debit card and essentially we give one to every household, and you can only spend the money, you can’t take any of it out in an ATM, you can’t save it, you can’t invest it, and the money expires in 10 days, what are you going to do? You’re gonna spend it. But on what is the kicker.

So just real quick, here are my thoughts.

The biggest pro of this is obviously it would force people to spend money, and that is what stimulates the economy. How much more and in what way this money would actually be spent, I don’t know for sure, and I think that’s where the issues are.

First of all, what are people who are the problem — and I’m going to tell you who the problem is — what are the problem people really going to spend money on right now?

Who are the problem people? Well, first let’s talk about who aren’t the problem people.

A lot of people, and I know a lot of you watching this really need money right now to pay for necessities, and you’re going to spend any extra money you get on groceries and essentials anyway.

You are not the problem. You would be pumping money you get back into the economy either way, you’re going to spend it, whether you get a stimulus in your bank account, as a check, or whether you get one on a prepaid debit card like Mark’s talking about.

So you’re not the problem here from a pumping money back into the economy standpoint.

Who is the problem when it comes to hoarding stimulus and not pumping it back into the economy?

It’s Mr. and Mrs. comfortably working from home right now low six figure income with three kids who got $3,900 last round of stimulus and probably just dumped it into their 401(k) or something like that.

They didn’t pump that money back into the economy.

Those folks are the problem when it comes to stimulus hoarding because they’re not using it as the government intends. Now at a micro level, I have no problem with people saving their stimulus money; at a personal level, they have no moral obligation to spend it; I’m just pointing out that saving it or investing it is not the goal of stimulus.

So realistically, if we gave a couple like this $1,000 on June 1, what are they going to spend it on in ten freaking days, like realistically? 10 days is what Cuban tweeted.

I mean, yeah, they could spend it on things that they would buy anyway just so it doesn’t expire, but that’s defeating the purpose, so what additional things beyond their normal consumption would they possibly spend $1,000 on in 10 days?

Because look, in much of the country, it’s not like they can go anywhere or take a little weekend getaway or treat themselves to a nice dinner or get a fancy haircut, so what are they gonna do?

If you tell them you have to spend this money, they’re not going to pump it back into the local economy via local service businesses, nope.

What they’re going to do is they’re going to buy crap, and where’s the easiest place to buy crap, especially if you aren’t too thrilled about leaving your home during an airborne pandemic?

Amazon.

Amazon, which reported in Q1 $75 billion in revenue, who people are buying from when they don’t want to go to the store right now with a virus going around, yes, Amazon has COVID-related expenses and all that, but my point is, Amazon is going to come out just fine from corona, OK, so Mr. and Mrs. low six figures with three kids, they’re not going to be pumping the money back into the local economy, back into small business, they’re just going to receive their debit card and they will essentially present it bowing down like this to Bezos, I mean, do we really need to funnel government money essentially into Bezos’ pocket right now?

I think not, if this were to ever happen, I wouldn’t spend a dime on Bezos, I would do my best to spend it in my local economy, supporting small businesses, or maybe splurging a little on CHEEZ-ITS or something, but that’s not the reality of what the majority of the problem people will do, government may as well write a big fat stimulus check payable to Jeffrey Preston Bezos.

And even after the country reopens more, if that happens soon, I think a lot of people will still be hesitant to leave their homes and go back to consumption as usual to the point where they can spend an extra $1,000 in 10 days in their local economy.

And another thing, this is just asking for mail theft, sending out checks with someone else’s name on it is one thing, sending out prepaid debit cards — unless they really get the logistics right here and have some kind of security measures in place, which would in itself probably be costly and time-consuming — I can just imagine the number of mail thieves with a bunch of prepaid debit cards going around.

So, anyway, those are just a couple quick thoughts on Cuban’s proposal, there is a link in the description to a credit card, it’s really to build your credit, it’s a secured card, so you do have to put up a refundable security deposit equal to your credit line as low as $200, but there is no credit check on the card, so it doesn’t matter if you have no credit or bad credit because they don’t check it, and, why I’m telling you about this, is this card currently has a 0% introductory offer on purchases for the first three months for new accounts, it does have an annual fee of $35, so please keep that in mind, but a secured card can be a great way to build your credit if you have the money for that security deposit and are willing to put up with that annual fee, there are other good secured credit cards out there for people with not so great credit that don’t have an annual fee, but typically with these they do check your credit and they don’t have the introductory 0% APR offer for three months, so pros and cons to both kinds, feel free to check out the link below for the card I mentioned, also check out the other free stuff in the links below, and I will see you next time.