The progressive case against a universal basic income

There’s a big downside to cutting everyone a flat check.
There’s a big downside to cutting everyone a flat check.
Image: AP Photo/Hussein Malla
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Today, it’s rare for progressives and conservatives in the US to agree on much of anything. But the idea of a universal basic income (UBI) has historically resonated across the political spectrum.  On the right, UBI has been endorsed by the likes of economist Milton Friedman, former president Richard Nixon, and libertarian pundit Charles Murray. On the left, Martin Luther King, Jr., former Democratic politician George McGovern, and the Green Party have all championed the idea of the government giving each citizen a certain amount of money on a regular basis—no strings attached.

Yet while UBI boasts cross-ideological appeal, conservatives and progressives tend to have very different ideas about how a basic income would work. That’s why some of today’s leading liberal economists and public policy analysts are turning against the idea of UBI—and their concerns are well justified.

Conservatives tend to see UBI as a strategy to replace most of the existing welfare state wholesale. Nixon, for instance, proposed a basic income for needy families as part of a plan to overhaul the New Deal-era welfare state.

Advocates on the left, however, typically promote a UBI as a supplement to the existing suite of welfare state programs, not a substitute.  The left’s UBI would provide an income security grant in addition to existing safety-net programs that provide healthcare, disability insurance, early education, unemployment compensation, and other benefits.

The problem, of course, is that a UBI would be incredibly expensive. Robert Greenstein, founder and president of the Washington, D.C., thinktank Center for Budget and Policy Priorities, estimates that a $10,000 annual basic income would cost more than $3 trillion per year, consuming nearly all of the tax revenue that the government currently raises. A UBI of this scale would either crowd out most other social programs—the conservative wish—or would require ratcheting up the federal government’s tax collection.

Given the sheer political unlikelihood of massively increased taxation, many liberals fear that a basic income would inevitably come at the expense of the safety net programs they have spent generations defending. Greenstein argues that a basic income would leave low-income families worse off because federal dollars that are currently targeted toward the poor would be transferred to a universal program shared by the middle class and wealthy, too.

Jason Furman, President Obama’s chief economic adviser, recently seconded Greenstein’s argument, pointing out that many of our current social programs are associated with important long-term benefits for children. So did former Treasury secretary Larry Summers, who observed“[i]t would be hard to finance [a basic income] in a way that wouldn’t burden the programs that help the poor.”

recent discussion at the American Enterprise Institute distilled the emerging liberal discomfort with basic income.  The talk featured Charles Murray, a prominent conservative social scientist, and Jared Bernstein, a liberal economist and former adviser to US vice president Joe Biden. Murray endorsed a basic income in a 2006 book, which proposed to scrap all existing safety-net programs in favor of a $10,000 yearly grant to each American adult. Bernstein objected, anticipating that the poor would be made worse off, and defending the safety net’s gains in fighting poverty.

Murray’s basic income looks a lot like a $10,000 Trojan horse. He explicitly rejects any additional government support for families with children, and would refuse any further public aid to those who fall in need after exhausting their income grant. Those with such misfortune, Murray says, must depend on charity.

Liberals like Bernstein are right to resist this sort of basic income. Murray’s plan would voucherize the entire welfare state—a buyout in exchange for unwinding the federal government’s social-insurance obligations.

It may be tempting to think that a complex safety net that’s “full of holes must be replaced by a floor free of holes” in the form of a basic income, as UBI advocate Scott Santens argues. But it’s not so simple in practice.  Some households have particular needs involving child assistance, disabilities, and chronic illness, and aren’t made whole by a share in an equal universal income.

In fact, getting government out of the business of providing beneficial services and instead cutting a flat check would mimic the corporate cost-control tactic of moving workers from defined benefit packages to defined contributions.  This would complete the decades-long conservative push to reform our social insurance institutions by shifting risk on to individuals in order to promote personal responsibility, as Murray aspires to do with a UBI.

Still, there are some safety net programs that would benefit from basic income-type features.  Take our refundable tax credits, which began as watered-down versions of a UBI in the first place. We could simply convert the Earned Income Tax Credit into a periodic work subsidy, sending a regular bonus check to low-wage workers to reward each month’s work. So too could we transition the Child Tax Credit into a child allowance, sending families periodic payments to help with costs year-round and to compensate the work of raising kids.

These reforms would be piecemeal steps toward a basic income, helping millions of Americans while letting upcoming UBI experiments play out. The gulf between the left and right on basic income is greater than it appears.  So let’s start small before going big.