Universal Basic Income-Let’s Have a Conversation-Part two

Posted by

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.

36 comments

  1. Interesting arguments. I especially like the argument that it could eliminate some other programs and reduce the expensive bureaucracy required to administer them.
    Seems to me like we already have a cousin of the UBI, with the Earned Income Credit (EIC). Perhaps when people file their income taxes, they could receive something like the EIC in the form of a tax refund, if their adjusted gross income is below a certain level.

    Liked by 2 people

    1. Thanks Tippy. Yes, the EIC is kind of close to what UBI is. Perhaps an expanded version of that would garner some bi-partisan support. I’d like to think so.

      Liked by 1 person

  2. *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 was roughly what was said in one reply to your earlier post. So I thought about it.

    My first thought was that some tweaking of incentives could probably help here. Your idea of cutting back on other support programs is along that line.

    My second thought was that I pretty much enjoyed my work as a mathematician and computer scientist. And many people do enjoy their work. Perhaps what’s needed is a change in pay scales, so that there are higher salaries for the jobs that people do not enjoy. And maybe that would be a good thing.

    Liked by 2 people

    1. Yeah, it’s worth looking into Neil. Problem is, you know what’s going to control the narrative after all of this, right? The Republicans will yell and scream about the debt and deficit and demand that all entitlements be cut, especially if Biden wins That’s always the case. But, if Dems take back Senate, and keep the House, maybe we can get something done. That’s a big if, though.

      Liked by 2 people

      1. Funny, isn’t it, how the republicans didn’t yell and scream about the debt and deficit when they gave all those rich folks and corporations big tax cuts in 2017? They cherry-pick their issues … hypocrisy reigns in the GOP.

        Liked by 4 people

      2. I think that those who are duped are willing to overlook the hypocrisy, as long as they are promised what they want … more guns, a white and Christian society, laws that are favourable to their religion (the one they call Christianity, but it really isn’t), etc. It’s tit-for-tat, and as long as they are promised their desires, they can look the other way and tune out the hypocrisy and corruption.

        Liked by 2 people

  3. I rather like the concept in general, but a few specifics bother me. First, I don’t see why millionaires, or even those who have income in excess of $100,000 per year should be eligible. Second, “if the government implemented UBI by adding to the federal debt, instead of raising taxes …” bothers me … the national debt is already well over $25 trillion and growing, since we have little revenue coming in at the moment, and there are dangers to a runaway debt. I’d much rather see the wealthy taxed at a much higher rate — or even paying taxes at all!!! Third, while cutting other safety net programs might make it more palatable to the right, we must tread carefully here. $1,000 is about enough to pay the rent and electric bill, but isn’t going to also cover food, medical care, etc. So, we cannot cut out programs like food stamps, Medicaid, etc. Fourth, if the cap is removed for the amount on which Social Security taxes are withheld, that money would, by law, have to go to fund Social Security. As I said, I do rather like the idea … but I think much tweaking and consideration will need to go into it to make it fair and equitable. Good post … thanks Jeff!!!

    Liked by 3 people

    1. Thanks Jill. Yes, the concept is definitely good. It’s how we get there. That’s the problem. I totally agree that millionaires shouldn’t be part of getting the money and should be taxed more if we ever did go to something like this. We should not, in any way get rid of Social Security, Medicare, Medicaid. Now, there are other areas of the budget we could maybe compromise on….food stamps? certain welfare programs? I don’t know. It’s certainly a slippery slope. We’d certainly have to tread carefully, as you said. All I know is, this is the United States of America and I cannot stomach seeing what I’m seeing out there. We are the richest damn country in the world. And this is the best we can do? People can’t even make it a week or two, through no fault of their own. While not perfect, it certainly seems that much of Europe has it about right. Their safety net is much more robust. The ways they deal with recessionary periods seem much better and easier to navigate than ours. Germany does a real good job with this. As far as I know, they send money directly to the companies who keep the people on their payrolls. They get up to 80% of their paychecks. But what do we do? Leave it to the banks to get it out. Of course, so they can take their 3-5% transaction fees. Once again, we’re behind other democracies it appears. How did this happen? You and I both know. It’s our corrupt political system. It’s Citizens United. These one percenters and corporations run the place Jill, and I’m so tired of it. Now, an incompetent businessman is president. How’s that working out? UGHHHHH.
      So much to do. So little time to do it. I fear so much for this country. And I know you do to.

      Liked by 1 person

  4. For starters, anyone who can live on $1200 a month is a very good economist.
    But really what I want to mention is the “clawback.” In Canada if someone is helped out by a social program, then later in the same year earns a certain level of income or higher, the money from the social program is clawed back depending on their final income.
    In your UBI system, everyone could take the money or refuse it. Those who don’t need it but take the money would pay it back at tax time. Personally, I think not sending it to them in the first place without proof that their income fell drastically would be the cheaper way, but I really don’t know.
    As for the Repuglycan theory that millions of Americans are lazy, I doubt the numbers would be that high. But so what if some are lazy. If they are happy to live on a minimum income, who are they hurting? And how long are they going to want to merely exist?
    Crime rates would fall with UBI, meaning smaller police and legal systems, and especially lesser prison populations. But maybe that’s the problem, lawyers would be out of jobs, and god forbid lawyers should be unemployed. And who would all the redneck prison guards have to bully around without retaliation?
    Whatever you call it or how you do it, Guaranteed Annual Income is a big step forward towards social justice.

    Liked by 2 people

    1. I agree with you rawgod. They’re obsessed with so-called ‘lazy’ Americans living off Uncle Sam. Yet, they never seem too upset when the corporatists head to Capitol Hill with their hats in hand. Corporate malfeasance? No biggie. People on welfare? Screw them!! I’m so sick of it.
      But UBI, I think, has a chance to really transform our society. It really comes down to implementation and cost. I’m ready for the debate. It’s way past time.

      Like

  5. I’m intrigued as to why no-one has mentioned the possible role of sales taxes. You want to prevent people using their UBI on luxuries? Increase sales taxes on those luxuries. An efficient way to pay for it, and ensuring the wealthy pay it back in spades through their purchases. I’ve always believed that creating a higher level of sales tax on luxury goods is a better way of taxing the wealthy than a direct wealth tax or higher rates of income tax. Those are too easily avoided/evaded. But taxing it when they spend it is unavoidable. And it’s no good to you unless you do spend it!

    Liked by 2 people

    1. Not a bad idea Frank. I think it’s certainly exploring. There are lots of proposals out there on how we could pay for this. Your idea is certainly doable. It comes down to, do we have the will to get it done? Certainly not during a pandemic. But, this will be over at some point in the future. No time like the present to start formulating solutions.

      Like

  6. I remember what Welfare was like before Clinton ruined it. You could go to college while on Welfare. There wasn’t an imperative to “work” or “look for work” while on welfare. There was also free child care if you had children! & there were programs like CETA, which then helped you move into the real work force. That was ended by Reagan but still, it was there back in the day. I think it’s amazing that we are talking about how “people can go to college” or “work on something meaningful” or “take care of their kids” when WE USED TO HAVE A PROGRAM LIKE THIS … the OLD WELFARE SYSTEM. I remember! I was ON IT. Until Clinton RUINED IT.

    Liked by 1 person

    1. Yeah, I remember the ‘we will end welfare as we know it’ campaign in the Clinton era. Again, it goes to the same BS that Reagan used to talk about…the ‘welfare queens’ etc…They’ve been scapegoating and blaming the poor forever. It seems worse now more than ever. We have to do better. We just have to.

      Like

  7. This is a critically important conversation to have as we navigate our way through the current pandemic. If UBI is done properly, it would be a boon to the economy and help level the financial disparity in the US and my country, Canada. Our previous Ontario Liberal government had a pilot project underway when the Conservatives swept them out of power. The new government promised to let the project run its course – then within a couple of months, they trashed it. UBI combined with government health insurance would be a great boon to our societies. We in Canada have half of that proposition already – since the 1960s, now we need to wipe out welfare, unemployment insurance, Old age pensions, etc. and save billions on administrative costs – that’s SMALLER GOVERNMENT!!

    Liked by 1 person

    1. It’s very important John. You guys seem to have it together up there in the Great White North! We could take a few lessons down here. We used to do big things. We’re told we can’t do it anymore. It’s too expensive. It’s wasteful. Blah blah blah. We’ve really fallen behind in so many areas. And now we have an administration that’s taking a sledgehammer to our democracy. The quicker we get ride of it(HIM), the quicker we can begin to heal. It won’t be easy. UBI must be in the conversation.

      Liked by 1 person

      1. Up here, social welfare programs are under the legislative authority of our federal government. The provinces administer said programs under federal rules and regulations. Could UBI be put in place by Congress or is that a state power?

        Liked by 1 person

      2. Actually, an individual state could try and do their own, although I don’t know how feasible that would be economically. The state can do many things but if we want it to be a national program, Congress would have to pass it and president would have to sign. Actually, the city of Stockton, Ca tried a pilot program recently where they randomly selected a few hundred lower income residents to receive $500 per month for about a year I think. They haven’t released any studies on the results of that yet-at least not that I know of. I’ll be interested to see how it went.

        Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s