The financial dislocations of the COVID-19 pandemic and the unprecedented cash benefits that policymakers implemented in response have sparked renewed interest in an old idea: a universal basic income (UBI) for all Americans. Last proposed and debated seriously in the 1970s, UBI would provide every adult in the United States with a cash payment every year with no requirement to work.
Is now the time for UBI? The Inquirer, via InsideSources.com, tapped two writers to debate.
Yes: Pandemic upped urgent need for funds that UBI can provide.
By Darryl Lorenzo Wellington Jr.
It’s too common of an experience in America today to have come a hair’s breadth away from homelessness, rescued at the last minute by enhanced unemployment benefits, or a COVID-19 relief stimulus check. Data suggest that 40 million Americans were laid off during the height of the pandemic.
I certainly won’t forget my own recent economic travails. During the pandemic, so many businesses reigned in the purse strings, cutting down on their expenditures on the kind of writing, proofreading, and advertising assignments that I depend upon for my income. I was fortunate enough to make the rent payment, but utility payments in the winter months can cost just as much as rent, and the bills added up.
By January, I was well over $2,000 in debt. But I received a $1,400 stimulus check payment, which helped pay the gas, electric, and water bills. The relevant word here is helped. I am still paying off the full amount. But at least I don’t expect to be dragged under. For that, I can thank President Joe Biden.
Several months later, I received Biden’s letter congratulating Congress for passing the American Rescue Plan, which, Biden wrote, would “help get millions of Americans through this crisis.”
I agree that the policies enacted under the American Rescue Act spared millions of lives from immediate catastrophe. But I still don’t believe we’re fulfilling the mandate of a nation “where there is nothing we can’t do” with these short-term solutions.
“We can’t rely on solutions that help for just today, only to leave people hanging on a thin thread until the next catastrophe.”
We need to respond in ways that acknowledge that the pandemic has not created catastrophes so much as it revealed that we’re a nation living one step away from massive penury in which the majority of Americans are subject to illness, joblessness, or unexpected expenses on a daily basis.
We can’t rely on solutions that help for just today, only to leave people hanging on a thin thread until the next catastrophe.
An example of shortsightedness would be letting the expanded earned income tax credit and the expanded child tax credit provisions expire after one year.
These payments will potentially lift millions out of poverty and protect the middle class. Funds will be dispersed on a monthly rather than a yearly basis so families can take care of immediate household economic needs and even save some for their future. But under the American Rescue Act, these provisions are only funded through 2021, and they leave out more than a million immigrants without Social Security numbers.
Families with children suffered substantial economic woes long before the pandemic. The proof is that the United States — one of the richest countries in the world — is consistently listed among the nations with the highest child poverty rates in the industrialized world. That’s in part because we spend too little on our social safety net. Some studies say the United States spends proportionately less on public funding than any other country.
Making consistent cash assistance to low-income families permanent and more inclusive will stabilize volatile incomes, ease financial planning, lift up disenfranchised communities, and improve the quality of life and opportunities for millions of people.
All families deserve financial stability that can help them thrive long term. A permanent safety net in the form of guaranteed income could get us there. Thanks to widespread financial malaise and an understanding that too many of us are vulnerable while rich CEOs become richer, this idea is only becoming more politically popular.
The time to push for a permanently expanded child tax credit and a guaranteed income is now. As Biden says, “There is nothing we can’t do as a nation, if we do it together.”
No: UBI is not a realistic solution to social welfare issues.
By Richard Morrison
While universal basic income (UBI) often scores high in polls, it would be a terrible idea for both idealistic and practical reasons.
Perhaps most important, severing the connection between work and income would create the illusion that the benefits received are somehow automatic and natural, rather than financed by working taxpayers. All spending and consumption are financed by someone’s work. When we’re children, it’s our parents. In adulthood, it’s generally ourselves. In the case of income from social welfare programs, it’s other current taxpayers. In the case of deficit spending, it’s future taxpayers.
UBI supporters often argue that its universality produces benefits ranging from administrative cost savings to improved mental health, as current welfare program beneficiaries can feel ashamed to be receiving benefits. But this puts the entire history of social welfare spending on its head. The vast majority of programs target specific groups that have the greatest need. Under the current system, shame felt by an able-bodied adult capable of working is a feature, not a bug.
That commonsense approach to work and responsibility poses a big obstacle for any UBI proposal. Despite the UBI’s approval ratings when Americans are asked about it, actual legislation to implement it would be highly controversial. In the 1970s, Presidents Richard Nixon and Jimmy Carter — who had famously divergent political views — both endorsed UBI proposals that went down to defeat when the public was confronted with the details.
Many recent UBI proposals have called for a new benefit to replace much, if not all, existing social welfare spending. This radical simplification, often called a “grand bargain,” would theoretically ally conservatives, who want to reform the system’s cost and complexity, with progressives, who want to avoid anyone “falling through the cracks” of the many different current programs. But anyone who thinks that such a bargain is likely has spent too much time in political theory seminars and not enough time on Capitol Hill.
“Under the current system, shame felt by an able-bodied adult capable of working is a feature, not a bug.”
In order for such a bipartisan effort to work, policymakers would have to wipe enough current spending off the books to finance a universal benefit. That means that many programs that anti-poverty activists currently cherish would be permanently eliminated. Say goodbye to Temporary Assistance for Needy Families, the Supplemental Nutrition Assistance Program (“food stamps”), and Supplemental Security Income for people with a disability. The version advanced by conservative policy analyst Charles Murray, a frequently cited advocate, would abolish all of Social Security, Medicare, and Medicaid, as well.
There are plenty of reasonable — even radical — arguments for reforming current welfare spending, but any plan to do so must reckon with reality. A plan that would eliminate current anti-poverty programs and replace them with a single UBI is simply not politically feasible. Any attempt to repeal longtime anti-poverty programs would be attacked as an attack on vulnerable people, while any effort to create a UBI system that would maintain current benefits would break the bank and undermine the compromise with those who want a smaller, more affordable plan. We would likely end up with a UBI on top of existing programs, which would be both more complex and more expensive.
Finally, many of the alleged advantages of life under a UBI are at odds with statistical evidence. Proponents would have us imagine a utopia where recipients are free to become artists, community volunteers, and health-care helpers. But as the American Enterprise Institute’s Nicholas Eberstadt finds, most men who are currently neither working nor in school spend the overwhelming majority of their free time on “socializing, relaxing and leisure.” There is little evidence, beyond wishful thinking, to imagine that most of the people “liberated” by a UBI would spend more time on community improvement or anything constructive than on TV, video games, and smartphone apps.
Richard Morrison is a research fellow at the Competitive Enterprise Institute. He wrote this for InsideSources.com.