Would universal basic income help or hurt Americans?

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Speed read

What: Universal basic income is an income model that proposes a specific amount of government funding be provided to citizens — regardless of their income or employment status — and would not impose restrictions on how the money is spent. Supporters see it as a solution to poverty. Critics say the program amounts to socialism and would create a “welfare state.”

Why it’s in the news: The concept is gaining momentum as a way to address wealth inequality. The rise of automation (i.e. humans losing their jobs to robots) and wages that don’t keep up with inflation rates have spurred a slate of proposals to navigate the changing workforce and workplace landscape.

A handful of Democratic presidential candidates have made mention of universal basic income or something like it (notably tech entrepreneur Andrew Yang) — and more concretely, Newark Mayor Ras Baraka announced plans for a pilot program to test whether a universal basic income plan is feasible for New Jersey’s largest city. Newark has 285,000 residents, and Baraka said one-third live in poverty. Stockton, Calif., a city hard-hit by the financial crisis, is experimenting by sending monthly $500 debit cards to a select group for 18 months, and researchers will study how the funds affect the habits and quality of life of these 130 residents.

What’s next: Baraka’s plan for Newark is still in early stages and details have not yet been revealed. The experiment in Stockton will be done in August 2020.

Universal basic income could emerge as a progressive litmus test for Democratic candidates in the 2020 presidential campaign. Yang, who has made universal basic income part of his platform, says his “Freedom Dividend” plan would give every American $1,000 a month starting at age 18. California Sen. Kamala Harris has proposed giving cash payments to lower-income families. New Jersey Sen. Cory Booker wants to give kids, especially in low-income families, money that could be used for future purchases like college tuition or toward a home.


Handing out money is government interference that promotes a welfare state.

“It is all too easy to imagine, even now, how public policy experts would talk themselves — and us — into accepting such an invasive kind of governance in exchange for “free” money. … All this said, the temptation to assume that the answer to economic upheaval and the challenges of a high cost of living is “free money” is likely as illusory as any other top-down, paternalistic welfare state idea.” — Editorial board, Orange County Register

Getting paid to not work? Hello socialism.

“This is not a new idea. UBI has been tested in other countries and has always failed. Because struggles and poverty or not, the nature of human beings is they need motivation and goals to be successful in life. And a paycheck for doing nothing saps you of that motivation. You want to create a nation of lazy, spoiled, entitled residents who are chronically disillusioned? Give ’em a paycheck for doing nothing.” — Judi Franco, New Jersey 101.5

Financing universal basic income is a huge economic burden.

“The most quoted schemes today would, according to calculations from Commerce Department data, cost the federal government between $2 and 4 trillion a year, amounting to a 50% increase in current federal outlays or more than 10% of last year’s gross domestic product (GDP). Such a draw on the economy would markedly burden taxpayers and increase government debt with all the associated economic ills. At the same time, such a huge draw on federal financial resources would also preclude other government priorities, such as infrastructure refurbishment, including the building of hospitals and the construction of affordable housing.” — Milton Ezrati, Forbes

The idea has been intriguing throughout history, but can it work today?

“Since the late 18th century, UBI hasn’t been seen as a form of welfare so much as a way to get rid of welfare entirely. That may explain why it has attracted such an eclectic group of supporters over the centuries — and may account for its renaissance today. … Perhaps there’s room for a grand compromise of the kind envisioned by Mill, Friedman, Galbraith and others: a universal basic income that brings the end of traditional welfare programs. But if UBI becomes yet another hybrid of welfare and workfare, history suggests it’s doomed to fail.” — Stephen Mihm, Bloomberg

“So far, [Andrew] Yang is doing a lot better than anyone had any reason to expect from an obscure businessman with no political experience, and his championship of UBI certainly has a lot to do with it. But there’s a reason no other candidate in a left-leaning presidential field has gone there so far. It’s an idea that has already helped kill one presidential nominee’s candidacy, and others are reluctant to test whether it might kill again. — Ed Kilgore, Intelligencer, New York Magazine

The concept is ethically unsound.

“Though I find it economically at odds with market forces, particularly reallocating money from producers to consumers of scarce resources without creating any value, I can’t help but find it repugnant ethically. It is one thing to force people to help those in need; however, the UBI proposes to have a portion of my income go to those who don’t need it, hence the word ‘universal’. I do not see the UBI bringing about any effective results to combat poverty nor unemployment. Rather the contrary.” — Logan Davies, Being Libertarian

Universal basic income should be extended to children too.

“A basic income, no matter what the target population, has enormous benefits for children. … And the good that comes out of universal child benefits — like improved grades, higher earnings, and reduced crime — last for the entire lives of the children.” — Christine Ro, Forbes

A better solution is an earned income tax credit.

“Eligible EITC recipients receive government assistance to supplement their wages. As their income from work rises, their government assistance declines until it is no longer needed. However, the decline is never so steep that it reduces their total income. The more you work, the more you make.”
— Andy Puzder, Fox News

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