Why doesn’t the government just give everybody money?
Figure out a reasonable amount — the official poverty line amounts to about $25,000 for a family of four; a full-time job at $15 an hour would provide about $30,000 a year — and hand every adult a monthly check. The minimum-wage worker stretching to make it to payday, the single mother balancing child care and a job — everybody would get the same thing.
Poverty would be over, at a stroke.
Being universal — that is, for the homeless and the masters of the universe alike — the program would be free of the cumbersome assessments required to determine eligibility. It would also escape the stigma typically attached to programs for the poor.
And it would be politically secure. Programs for the poor are often maligned as poor programs. Indeed, defunding antipoverty programs rarely carries political consequences because the poor rarely vote. It’s another story entirely when everybody benefits.
The idea of universal basic income sounds extravagant, right? Well, the Finns and even the Swiss are thinking about it. On Sunday, Swiss citizens will vote in a referendum on whether to hand out 30,000 francs a year — just over $30,000 — to every citizen, regardless of wealth, work status or whatever.
In the United States, the idea has the support of thinkers on the left like Andrew Stern, former president of the Service Employees International Union. Some thinkers on the right, too, have managed to overcome their general distaste for government welfare to support the idea. This month, Charles Murray of the American Enterprise Institute will publish an updated version of his plan to replace welfare as we know it with a dollop of $10,000 in after-tax income for every American above the age of 21.
Readers of my conversation with a fellow Times columnist, Farhad Manjoo, a few weeks ago know that I think the idea is, let’s say, poorly thought out. Given its resilience, however, it is worth taking apart more methodically.
Its first hurdle is arithmetic. As Robert Greenstein of the left-leaning Center on Budget and Policy Priorities put it, a check of $10,000 to each of 300 million Americans would cost more than $3 trillion a year.
Where would that money come from? It amounts to nearly all the tax revenue collected by the federal government. Nothing in the history of this country suggests Americans are ready to add that kind of burden to their current taxes. Cut it by half to $5,000? That wouldn’t even clear the poverty line. And it would still cost as much as the entire federal budget except for Social Security, Medicare, defense and interest payments.
Thinkers on the right solve the how-to-pay-for-it problem simply by defunding everything else the government provides, programs as varied as food stamps and Social Security. That, Mr. Greenstein observes, would actually increase poverty. It would redistribute wealth upward, taking money targeted to the poor and sharing it with everybody, including you and me.
As Lawrence H. Summers, the former Treasury secretary and onetime top economic adviser to President Obama, told me, paying a $5,000 universal basic income to the 250 million nonpoor Americans would cost about $1.3 trillion a year. “It would be hard to finance that in a way that wouldn’t burden the programs that help the poor,” he said.
The popularity of the universal basic income stems from a fanciful diagnosis born in Silicon Valley of the challenges faced by the working class across industrialized nations: one that sees declining employment rates and stagnant wages and concludes that robots are about to take over all the jobs in the world.
That might lie in our future — I will devote my next column to discussion of such a universe. But it’s certainly not our present. Men at their prime working ages, 25 to 54, have been falling out of the labor force since the 1960s. Still, today more than eight out of every 10 Americans in their prime are working.
Work, as Lawrence Katz of Harvard once pointed out, is not just what people do for a living. It is a source of status. It organizes people’s lives. It offers an opportunity for progress. None of this can be replaced by a check.
A universal basic income has many undesirable features, starting with its non-negligible disincentive to work. Almost a quarter of American households make less than $25,000. It would be hardly surprising if a $10,000 check each for mom and dad sapped their desire to work.
A universal income divorces assistance from need. Aid is fixed, regardless of whatever else is going on. If our experience with block grants serves as precedent, it is most likely to become less generous over time.
To libertarians this will sound more like a feature than a flaw, but replacing everything in the safety net with a check would limit the scope of government assistance in damaging ways. Say we know the choice of neighborhood makes a difference to the development of poor children. Housing vouchers might lead them to move into a better one. A monthly check would probably not.
And those who think a universal benefit would be more politically resilient than a means-tested one might stop to ponder the unceasing chatter about trimming Social Security.
It is undoubtedly true that the American safety net needs fixing. Fifty million Americans live in poverty. Sixteen million live on the equivalent of $8.60 a day. Providing more income security for the struggling working class would not only produce a more equitable society, it would also increase spending and improve economic growth.
In this world, though, where work remains an important social, psychological and economic anchor, there are better tools to help than giving every American a monthly check.
How about subsidized employment? The government could subsidize jobs as varied as school repairs and fixing potholes. “This would provide employment while doing things that improve productivity and improve people’s lives,” Mr. Greenstein said.
Perhaps we could expand the earned-income tax credit, the country’s most successful antipoverty tool, which increases the earnings of low-income workers. Or take the idea pushed for years by Edmund Phelps from Columbia University: Instead of providing a subsidy to workers that phases out as their income rises, why not subsidize workers’ wages instead?
As Mr. Summers told a gathering last week at the Brookings Institution, “a universal basic income is one of those ideas that the longer you look at it, the less enthusiastic you become.”