Saint Paul, MN Mayor on city's guaranteed basic income program: 'We are using the CARES dollars for exactly what they were designed to do”

St. Paul Mayor Melvin Carter joins Yahoo Finance's Zack Guzman to discuss why he is launching a guaranteed income program for low-income families across the city.

Video Transcript

- Welcome back to "The Ticker." As we've been highlighting here, a lot of communities across the US have been dealing with budget constraints, falling tax revenues here, as well as a growing amount of people on welfare programs and then tapping into unemployment benefits here to weather the storm. And some interesting solutions have been put in place here to help on that front.

Case in point, the city of St. Paul here, new plans there tapping the idea of universal basic income to help a bit more. The city voting to approve issuing $500 monthly to 150 low income families impacted by the pandemic. It's an interesting new approach that we've seen spread across the US overall, being led by a group called the Mayors for Guaranteed Income. We've seen cities like Atlanta, Los Angeles, and some 20 others here around the country turning to the idea of universal basic income to help on that front.

Joining us now for more on all of that, as well is what's going on in St. Paul, Minnesota is the mayor of St. Paul, Minnesota, Mayor Melvin Carter joins us now. And Mayor Carter, I mean, it's a growing thing. I mean, you signed onto this pledge I know earlier this year. And now you've got this program coming through here. Talk to me about why you think it's a little bit better than what you could see come through just by boosting welfare programs as they stand now.

MAYOR MELVIN CARTER: Well, that's one of the questions that I get quite a bit is why should we do this. And I oftentimes end up reversing the question. The question I think really should be--

[BABY CRYING]

Sorry, I've got a six-month-old who was quiet just until I went off mute. I think--

- Your voice.

MAYOR MELVIN CARTER: Right, I think that's what it is. I think the real question is what's the case for continuing as we've done it for the past, you know, 60 years, or 60 years almost into a war on poverty in America. And we clearly haven't gotten what we've been after, the results that we've been after. We've built a billion dollar poverty alleviation kind of industry. And for some reason, 60 years later, the notion of providing direct resources directly to low income families still feels new.

This is an opportunity to place an investment in our lowest income families, to place the trust in them that doesn't say here's some, you know, resource that you have to use for this or that in a way that we say from city hall that it has to be used. But here's a resource that says, we trust you to know what's best for your family and to use these dollars in ways that will make your family better.

- And I appreciate you joining us too with all the things you're currently dealing with here too. When you talk about it too, I mean, when we look at it, it's an interesting proposal just because you're taking about $300,000 in CARES Act money, right, when we think about the federal program tied to all this relief trickling in through the states, but also leaning on philanthropic endeavors here as well. You say mostly coming from about $1.5 million from charity here, from philanthropic endeavors to fund it. Talk to me about how that shakes up here and why you'd want to tap CARES money for this program and also take some of those donations as well.

MAYOR MELVIN CARTER: Yeah, the CARES dollars are designed, as I understand it, to help Americans through this crisis, to help Americans through this unprecedented storm. We all know that we're facing just an amazing confluence of unprecedented crises that have got us all at the brink. Literally every business, every family, every worker, if you haven't lost hours yet or if you haven't been laid off yet, everybody knows that there's still one bad news or one step away from that being a possibility for them.

And so the way we see it, we are using the CARES dollars for exactly what they were designed to do, and that's to help people get through this crisis. We are very grateful and appreciative of the folks from around the country, the philanthropic leaders, the private sector leaders who have looked up and said this is something that holds merit. It's something that's worth investing in, at least trying. And that's the point of the 150 families to do a pilot.

We know that this isn't something that we could figure out how to sustain realistically within the limits of our city budgets. All 25 of the mayors involved with Mayors for Guaranteed Income, which you mentioned, we all know that. But our point is to be able to show, to be able to demonstrate what happens when you invest directly in families, so that we can continue to make the case for this policy at the federal level.

- And when we talk about the policy beyond just the city level. I mean, you talk about what St. Paul is dealing with, poverty rate of 20.4% that's well above the Minnesota average here. And you talk about the idea of parents dealing with a lot in this pandemic. I mean, a lot are in your shoes here, having to deal with child care at home, and battle with all this, and, you know, juggle everything that's going on.

But also, even when we talk about what this program is meant to be, because so many people will pit it against, well, why not just boost welfare? Why-- well, why not add a little bit more for those people who need it most? I mean, when you look at it in kind of helping those who need it most here, obviously a lot's been made about reparations. And where this idea of universal basic income stems from in MLK, talk to me about that and how you think it could be an effective politically, I guess, palatable program here to really get through and address the underlying inequality?

MAYOR MELVIN CARTER: Well, one, you're right. It's not a new idea. It's one that Martin Luther King talked about. It's one that, you know, thousands of economists have spoken up for throughout our country's history. It's one that Alaska actually has been doing since I think the '70s through oil dividend that they provide to Alaska residents.

But then, as we move forward, when you say why do it this way? This is Amela. She's my 6-month-old and she's working with me today, because we're all working from home here.

And like I said, she was tot-- she's totally quiet in between my responses. But she wants to parti-- she's a big fan of your show and wanted to participate. Look, when my oldest daughter was born, we were on WIC, right? Nutritional supports for women, infants, and children. And anybody who knows anything about WIC knows, we were a family of three and we'd leave the grocery store every two weeks with more peanut butter, more eggs, more milk, more cheese than we could possibly consume in a couple weeks.

The catch is my daughter was born allergic to dairy, eggs, and peanuts, so we could get all the cow's milk in the world that we could possibly consume, but she couldn't drink it. We could get all the eggs in the world, but she couldn't eat them. We'd get all the peanut butter, but she couldn't eat it.

And we couldn't get the soy milk, or the almond milk, or the types of things that actually would have served our family. It was really offensive. But more so, that's what happens when we create these resources that we say from city hall we know what families need. We pretend it's all the same, one same need across the board.

Right now, our families are struggling. They're in crisis. What one family needs might-- while one family is struggling around food, another family it might be rent. And the truth is, what one family is struggling with in October might be fundamentally different in November.

And so for the first time, this represents us saying not, you know, in the great wisdom of city hall we know what's best for your family. It's saying you know what's best for your family and we want to make sure that you have the opportunity to do that. We're working with national evaluators, same as Stockton did, and we expect to find out the exact same thing that they found out.

When low income families have access to a little bit more cash at the end of the month, they do the kind of stuff you and I would. They buy groceries, they pay the rent, they fix up a car so they can get to work. That's what this is about.

- With a little bit less red tape to do with it, as parents continue to juggle all this. Well, as you juggle your own daughter here, I appreciate you taking the time, Mayor Carter here in the St.-- the mayor of St. Paul, Minnesota here literally juggling your six-month-old here to join us. Appreciate you taking the time. Good luck with everything. We'll see how the program goes.

MAYOR MELVIN CARTER: Thanks for having me on.