It was nice to see House Speaker Nancy Pelosi admit in an interview yesterday that it might be time to start looking into a minimum basic salary for the American people. Her weighing in at this time tells us we might be ready for a real debate.
I began a discussion last week into what Universal Basic Income (UBI) is and what it could look like in the United States. Again, while there are many variations of such a plan, for the sake of our discussion here, I’d like to stick with the Andrew Yang version, which purports to give every American citizen a $1,000 per month stipend beginning at age 18, regardless of income.
Would such a plan work in America? It depends. UBI would represent a fundamental reshaping of how we deal with income inequality and the social welfare state. It would be a radical shift, and the political debate would likely take months and years to play out. As with any policy debate, though, we need to discuss the pros and cons. Once again, much of the following information is courtesy of Amy Livingston of Money Crashers.
Arguments in favor of UBI
*It would be a useful tool to confront poverty. Everyone, regardless of income, would have a minimum basic salary. If you had a minimum wage job—currently $7.25 per hour, which equates to just over $15,000 per year, UBI kicks your earnings up to $27,000. Is it a lot of money? No, but with the current 100% poverty level in America at $12,760 for an individual, UBI would take that individual’s level to roughly 225% of the federal poverty level.
*It would reduce the bureaucratic red-tape. While we have a ton of anti-poverty programs throughout the United States, it can be a real nightmare to navigate the intricate systems of federal, state, and local agencies. UBI would be a straight-forward—no requirement program. Administrative costs would go down substantially.
*The social stigma of getting handouts from the government would go away. This one is personal for me. I often talk of my Trump-loving friend’s railing about all the lazy people in America living off the government while they bust their ass. If they were receiving the same stipend, it could go a long way towards eliminating some of that hatred. However, that depends on how we structure UBI and whether we keep many of the social welfare programs in place. I’ll address that later.
*It might be an effective way to fight inequality. Many people on the low-income side of things would be free to explore ways to improve their lot in life. Maybe they could work on a college degree or other training programs instead of tackling a low-wage job at an early age. Facebook founder Mark Zuckerberg argues that UBI would give everyone “a cushion to try new things.”
*It addresses the coming automation/robotics takeover of the modern workplace. It was and is Andrew Yang’s main reason for supporting UBI. Displaced workers will need help, and UBI provides at least a minimum social safety net for those individuals. Others, such as economist Paul Krugman, believe that UBI would also give low-skilled workers more choices to leave a bad job, give them more bargaining power for better benefits, and a chance to pursue other opportunities.
*It might improve the overall economy. While there are many opinions on whether this would play out, some studies show that if the government implemented UBI by adding to the federal debt, instead of raising taxes, the economy could expand by nearly 13% within the next 3-5 years, with millions of jobs added.
Arguments against UBI
*It will just make people lazy. Why work? I’ve got my thousand bucks coming in, so I’ll take my money and sit around all day. This, of course, is the mantra of many on the right. And it would be hard to convince them otherwise. But it’s not like $12,000 a year is enough to live on by itself. It’s not a means to an end. But it’s certainly the argument we’ll hear from Republicans. The way to counteract that, in my view, is to make sure we structure UBI in such a way that many of our current social-welfare programs would go away. If you have the proper balance, perhaps the right would come on board.
*It encourages people to spend money on stuff they shouldn’t be spending it on. Again, it’s the same argument that too many people are lazy and irresponsible. Give them a few extra bucks, and they’ll buy it on drugs, liquor, or other wasteful, more luxurious goods. There’s no evidence to suggest a bunch of Americans would behave in this manner. Certainly a few might, but is that enough of an argument to not do it?
*It might reduce wages. Some naysayers believe that UBI might make income inequality worse by enabling employers to get away with paying employees less. In other words, why pay them higher wages when they’re already getting a thousand bucks a month? It seems to me that the opposite would happen. Since people receive that extra money every month, they’d be much more likely to leave a job they didn’t like, which would then create a situation where employers would have to make the job more attractive by offering better wages and benefits.
*It’s an inefficient way to deal with helping people in need. This approach might be the most valid argument in that if we give money to everyone, including the super-rich, it’s simply throwing money at too many people who don’t need it. Current social-welfare programs are more targeted to those who need the money in the first place. I get this argument, and perhaps a UBI targeted at a much smaller population of people might be a better way to do it.
*It’s too damn expensive. Yes, it’s true. If we passed the Yang version of UBI, we’d be looking at approximately $4 trillion in new spending every year. That’s a lot of money no matter how you look at it. And if we paid for it by raising income taxes, we’re talking about significant increases across the board. It would be tough to raise this kind of money by merely increasing taxes on the rich.
But there are other ways we could pay for it. You could eliminate some already in place aid programs. You could certainly increase taxes on the wealthy to help pay for some of it. Yang proposed eliminating the cap on earnings subject to Social Security payroll taxes, raising the capital gains tax, and creating a new tax on financial transactions.
There are several combinations of tax increases and reductions in current programs from which we could choose to explore to fund UBI. However, we could also put much of the cost on the nation’s credit card. Yes, add it to the already exploding debt of the United States, and that could pay for a very robust UBI initiative. Aren’t we doing some of that already with trillions to aid the economy during the current pandemic crisis?
If I remember correctly, the Bush administration conducted the Iraq and Afghanistan wars by charging it to the national debt. We didn’t have a problem paying for wars in this manner, so why can’t we do the same thing to address a disastrous income inequality situation in America?
I’m pretty sure those on the right will yell and scream at such a proposal. We’ll hear about it being just another Democratic socialist idea that will turn our country into Cuba or Venezuela. So be it. Let them protest all they want because I get a sense that the narrative is starting to change in this country.
Sometimes it takes a catastrophe such as the current coronavirus pandemic to make us all take a look at what kind of country we want to be. Stopping the largest economy in the world in its tracks will do that. All the anti-poverty and aid programs in the world weren’t enough to combat what we’re currently experiencing.
I don’t know if UBI is the answer, but I sure as hell hope we take a long hard look at it. Hearing Speaker Pelosi yesterday publicly acknowledging the possibility of such an undertaking makes me think the debate is coming sooner rather than later.
What UBI might look like and how we could pay for it is a debate we need to have once things start to resemble some normalcy again–whenever that may be. The one thing, the only thing I know is that I’m sick of things the way they are. I saw and remember Hurricane Katrina like it was yesterday. People on the rooftops, pleading for help. The abject poverty on display should have been enough to disgust enough Americans into demanding we take action. That was nearly 20 years ago.
Now, here we are again. The poverty is still with us, worsened even more by a virus that doesn’t care who you are or how much money you make. But make no mistake, it’s hurting those who make a lot less. Many of those affected do not have access to the kind of health care many of us do. There’s an old saying that goes something like this: When it’s cold outside, the poor get colder, and when it’s hot outside, the poor get hotter.
And when a nation gets sick, it’s pretty apparent who gets sicker. Drastic times call for drastic measures.