On Consumerism: Savings bonds and lottery tickets

By ARTHUR VIDRO
By Arthur Vidro

Quick, which would you rather receive – a $100 savings bond or an entry in a million-dollar lottery?

The answer reveals much. Those who prefer the bond are more likely to manage their money better. There is no easy secret to building a nest egg. Just toss into it one hard-earned dollar at a time. If the money doesn’t have to be earned, so much the better.

Those who prefer the lottery chance are more likely to end up living paycheck to paycheck. They seek a quick and easy fortune. I suspect they’re more prone to unwise investments and falling victim to the latest schemes and scams.

Lotteries are in the news because many states are using pandemic relief money to encourage vaccinations. Ohio started a trend with its “Vax-a-Million” drawing, with a million-dollar prize earmarked to each of five select adults. Those age 12-17 can win a free college education – four years of tuition, books, room and board at any state college in Ohio. (The individual still needs to gain admission to the school, which is not guaranteed.) Only those getting vaccinated may enter.

Over in West Virginia, the state has handed out $100 federal savings bonds to residents ages 16 to 35 who get a vaccine. The state purchases the bonds for $50 apiece but over time they grow in value to $100 or more.

To me, a $100 savings bond in the hand is worth far more than an entry in a million-dollar vaccine lottery.

I’m not a fan of encouraging lotteries, which is just a form of gambling. One can quibble that Ohio and other states are not asking participants to plunk down money, so they’re not truly lotteries. But they still rely on the lottery mind-set.

Vaccination bribery is not limited to entering lotteries. Over in Detroit, the city has handed out $50 prepaid debit cards to people who transport a resident to get a vaccine shot. This addresses the need of those who desire vaccination but can’t get themselves to the sites. This form of bribery is commendable.

Also thinking about making transportation easier – for everyone, not just vaccine seekers – is Virginia. The influx of federal dollars will allow both the Petersburg Area Transit and the Greater Richmond Transit Company to maintain free rides through the end of June 2022.

Where does the money for savings bonds giveaways and vaccine lottery payouts come from? The American Rescue Plan approved in March by Congress and President Joe Biden is providing an unprecedented $350 billion for state and local governments, a windfall to help them recover after COVID-19 shuttered businesses and stalled the economy for months.

Some recipients spend quickly, while others thoughtfully plan what to do.

At a budget hearing back in Louisiana, state senators voiced concerns about using short-term federal coronavirus aid to pay for ongoing services and programs, because the federal cash will disappear in later years. It’s as if they were listening to Thomas DiNapoli of New York. Though not famous, DiNapoli is a rare example of an honest politician who truly wishes to serve the people.

I’m aware of DiNapoli because I once lived in Mineola (in New York state), where DiNapoli – while still a teenager – ran for and won a seat on the local board of education. He wasn’t seeking headlines; he was seeking to serve the community. Nearly 50 years later, DiNapoli now is comptroller of New York State.

Part of his job is to give advice and warnings to the state’s budget makers.

“Federal support is finite,” DiNapoli cautioned in a statement earlier this year, “and there were missed opportunities in this budget to ensure the state is well-positioned to weather future emergencies and recessions.” New York’s new revenue won’t address long-standing fiscal problems, DiNapoli warned.

In my words, he was saying the state should not count on today’s federal support to continue; nor should the state commit now to pay for something new, even with free money, if it means having to pay in the future with not-free money.

I once witnessed a small city accept “free” federal money to hire an additional firefighter. When this temporary funding ran out, city officials bemoaned “losing” a fire department position. Some officials mulled taking budgeted money away from the library to pay for the firefighting position they said was being lost. But to me, the city was not losing a firefighting position; instead, a temporary federally-financed position was reaching its expiration date.

If you can’t deal with the temporariness of a gift, then don’t accept it in the first place. Would you accept a “free” down payment on a house or car if deep down you knew you couldn’t keep up the payments and it would be repossessed?

If one thinks of pandemic relief as temporary, then it makes sense to use it for one-shot deals. Such as in Georgia, where the state Board of Education approved a plan to pay $1,000 bonuses to teachers and most other education employees, using $240 million in federal relief money. Or in Omaha, Nebraska, where Metropolitan Community College is using COVID-19 relief funds to pay for tuition and books for high schoolers in the state to take summer courses.

Iowa is working on a state budget that does not include any stimulus funds. State House Speaker Pat Grassley said Iowans don’t want to end up in a situation like last year – when the federal government told Governor Kim Reynolds she had improperly used $21 million from the Coronavirus Aid, Relief and Economic Security Act to pay for a cloud-based human resources system.

Arthur Vidro’s “EQMM Goes to College” appeared in the May/June 2021 issue of Ellery Queen’s Mystery Magazine.