(Note: The writers are answering the question: “Are universal basic incomes an idea whose time has come?”)
WASHINGTON — The latest liberal fad for reducing poverty and income inequality is called a “universal basic income” or UBI for short.
California Democrats have included a UBI provision in their state Democratic platform. And two California cities are implementing limited UBI pilot projects. Unfortunately, the idea is both unaffordable and won’t fix the low-income problem.
Under universal basic income, everyone from the poorest to the richest — that’s why it’s called “universal” — would receive a taxpayer-provided monthly income, perhaps $1,000 per month, or $12,000 per year.
On the positive side, that level would bring a non-working single individual up to near the current federal poverty level (FPL), which is $12,140. And since the UBI goes to each person in a family, a family of two would have a guaranteed annual income of $24,000, well above the $16,460 FPL for two people.
Wealthy liberals love the idea and a few are funding some limited UBI programs.
Facebook co-founder Chris Hughes is giving the city of Stockton, California, funding to provide roughly 100 poor families with $500 a month for 18 months.
Y Combinator Research, an organization that provides seed funding for start-up companies, plans to back several limited programs, with the goal of handing out $1,000 a month for several years; Oakland is one of the participating cities.
UBI defenders say the concept has been proven successful.
The Alaska Permanent Fund is a state-owned investment fund that gives state citizens a check every year. But the amount can vary significantly — it was $1,100 per person in 2017 — because the fund is dependent on fossil fuel revenues. Left-leaning Vox calls the Permanent Fund a “socialist miracle.”
But even with that annual windfall, Alaska had the 22nd highest poverty rate among the states in 2016. So UBI certainly may have helped Alaskans pay some bills, but it didn’t come close to eliminating poverty.
Several other countries have considered some version of UBI. In 2016 Swiss voters rejected UBI because it would cost too much.
The government of Finland provided some 2,000 Finns with a monthly allotment of about $650 in American currency. But the country recently abandoned its effort.
Initially, the Finland subsidy was going to be about $920 a month. But that level of subsidy given to every citizen reportedly would cost the government more revenue than it receives.
And the U.S. would face a similar dilemma. Robert Greenstein, president of the left-leaning Center for Budget and Policy Priorities, admires the “commitment of UBI supporters who see it as a way to end poverty in America.” But he concedes providing every American with $10,000 a year would cost more than $3 trillion a year.
Total U.S. government revenue for 2018 will only be about $3.4 trillion.
To be sure, some means-tested welfare programs might be reduced or eliminated if UBI became law, but it’s a pittance compared to the cost of the program.
Of course, UBI would cost the government less if the wealthy were excluded. I mean, should billionaires like Bill Gates or Mark Zuckerberg receive a monthly basic income check from the government?
But once we start excluding some people based on their income, then it’s no longer universal. The program becomes little more than a means-tested welfare check with no work requirement, with the only real question being where to draw the income line.
Wealthy liberals have generously funded some very limited basic income programs both here and abroad. But the problem with turning basic income into a universal program is the amount the government could actually pay would be too small to lift everyone, or even most people, out of poverty.
Or it would become another means-tested welfare program. And since the U.S. already has about 80 means-tested welfare programs, yet another one is the last thing we need.
Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas. He received a Ph.d in Humanities from The University of Texas. Readers may write him at IPI, 1320 Greenway Drive, Suite 820, Irving, TX 75038.