Universal Basic Income

Universal Basic Income

      "The new leftist ploy to move our country one step closer to socialism" 

    Universal basic income, also known as social dividend, basic income guarantee, or unconditional basic income, is a cash benefit payable by the federal government, on a regular basis, to every man, woman, and child who is a citizen of the United States.This benefit would be tax free and unconditional. The idea behind this concept is to ensure that every citizen has the means to cover the cost of the basic necessities of existence. My understanding of the basic  necessities of existence is rent , food and utilities.

     UBI is not a new concept.I first heard about it while I was in college .It was my 2nd semester of Western Civilization. The professor who was teaching this course was a self proclaimed communist and thought that the idea had merit. He was giving a lecture on the Renaissance period and went off on a tangent. He mentioned that Thomas Moore had written about a similar idea in his book “Utopia.” I was a little more liberal minded back then and the idea stuck in my mind. The idea reemerged during the FDR years ( there’s a shocker) with all the other socialist nonsense of that period.

      The idea of UBI is currently experiencing a rebirth with the progressive left who believe that everyone should live at a minimum level of comfort. This strikes me as a little out of character for the left because every citizen , whether your income is $20K or $20M per year, would be entitled to this cash benefit. My thinking is that if it ever got to the point where it was being seriously considered, the plan would be modified in such a way as to either make it taxable or have it be completely  phased  out at a certain level of income.

      UBI would be a new government entitlement. It is intended that the benefit would be large enough  to cover the basic needs of existence. The numbers which seem to have the most support are $1000 per month per adult citizen and $250 per month for each child that is a citizen. Thus, a family of 4 would  receive $30K per year. I don’t know if $30K per year would cover the basic needs of a family of 4, especially in the more expensive urban centers like New York City or San Francisco. It would,  however, cover a significant portion of them.

      Proponents of UBI have put forth several arguments in favor of this plan. One argument is that it would eliminate welfare. If this ever became a reality the government could save  hundreds of billions of dollars in benefits. In addition, all the bureaucrats, case workers, and office staff who administer this program could be eliminated saving billions more. These savings, according to those who favor UBI, could be used  to help ( the key word here is “help,”) cover the cost of the entitlement.

      Another argument touted by advocates of UBI is that being gainfully employed would not make a person ineligible to receive this benefit. I actually agree with this. In my opinion, it would be better to have people working for at least part of their living, then to just be on the public dole. Further, having a job gives people a reason to get up in the morning and would give them a better sense of responsibility. Also, people who work gain valuable work experience that would make them better equipped to move on to a position with more responsibility and hopefully higher compensation and benefits. Working for a living, gaining work experience, and being a more responsible individual are all good things. The more people we have in this country that have these attributes, the better off the country will be.

      Those in favor of UBI say that it could be administered like Social Security. Every man, woman, and child, who is a citizen, would simply either receive a check  once a month, or have the benefit direct deposited. I don’t know how many people it would take to administer a program such as this, but I’m sure it would be significantly less than the number currently needed to administer the welfare program.

       I just want to make one comment before I move on to the arguments against implementing UBI. In my opinion, it is no accident that proponents have invoked the term Social Security in this discussion. They are, in a clever and subtle way, by association, trying to imply that the UBI and the Social Security program are in some way similar. This could not be further from the truth. We all know that Social Security is an insurance program that we all pay into during our entire working life and upon retirement we receive a monthly check for the rest of our lives. There are other benefits that the plan pays out as well, but I’m not going to go into all that for the purpose of this discussion. UBI, on the other hand, is a massive government redistribution of wealth that will be financed through equally massive tax increases on just about everyone in this country. Any shortfall would need to be financed by additional deficit spending.

       There are numerous and compelling reasons for not adding UBI to our nation’s long list of entitlements.The first one that comes to mind is that once a new entitlement is implemented, especially a program that gives free cash to every man, woman, and child that is a citizen of the US, it would be impossible to end it. Do you remember the riots in Greece when their government ran out of money? It would be ten times worse here. It wouldn’t matter what the reason was. Our government could be flat broke. Once people get used to receiving free money, they would be very unwilling to give it up for any reason.

       Another reason, a very large reason, that I’m not in favor of UBI is the cost. Given the number of citizens in our country, I estimate the cost to be between $2.5T and $3T per year. To put this in perspective our current budget is $3.7T. This means we would be almost doubling the  current federal budget.

       To be fair, the economic growth generated by injecting $3T a year into our economy would be significant. I estimate that the additional  GNP resulting from the $3T increase in government spending would be in the range $4T to $4.5T. This increase in government spending would result in an estimated increase in tax revenue to the government of roughly $750B to $1T per year. Even with the cost savings from the welfare program we would still have only about half of the funds needed to pay for UBI. As I mentioned above the balance would have to funded by tax increases and deficit spending. For those of you who have read my other blogs, you know that I have very serious concerns regarding our national debt.

        The next reason I have for not being in favor of UBI is that this money would be given with no strings attached. It other words it would be given unconditionally. The recipients could spend this money any way they see fit. It could be spent on alcohol, drugs,or gambling. It could be spent in brothels, on child porn or it could be used to put a contract out on someone. There would be no restrictions. I don’t think that the American public is quite ready to see their hard earned tax dollars used in this manner.  

        I have one other issue related to the unconditional aspect of this entitlement. Suppose a recipient of UBI spends his monthly check on one or more of the vices mentioned above and is then unable to pay his rent or feed his family for the month. Would he and his family then be eligible for welfare benefits. If it was then determined that they were eligible for benefits, what reason would there be for everyone not to do the same thing? Food for thought.

        I’ve done quite a bit of reading on this subject and I’ve come to the conclusion that I could never be in favor of a program such as UBI. It’s just the latest left wing ploy to redistribute wealth from one economic class to another. I’m not just talking about the “one percenter’s.” I’m talking people whose incomes are between $75K and $250K. This is the middle class. These are people that work to pay their mortgages, pay their car loans, and  to give their families a comfortable life. Why would anyone want to take money from people like this and give to the government?

         The next reason for not wanting this program is funding. How do you fund a $3T entitlement? According to proponents, you double the income tax, initiate a carbon tax, add a wealth tax and a toilet paper tax (just kidding, maybe). And after you’re done devastating the economy again, you borrow the rest.

          I am sometimes amazed at the level of ignorance displayed by those on the left. I think they believe that the main reason people should work is not for personal gain but to fund the government and let it decide how the money should be spent. They also believe that the government has access to unlimited resources and that it has the ability to pay for anything and everything that it’s citizens need. Let me set everyone straight. There is not one entity on this planet, including the government of these United States, that has unlimited resources. If it were true we wouldn’t be $20T in debt. End of story!