How much might a Universal Basic Income cost us?

Over the years, the idea of social insurance has been manipulated to fit a specific need, and as such, every civilized country to date has some sort of social insurance system in place, much like Social Security in the United States. However, some nations as of late are leaning toward a different sort of system where as opposed to only giving assistance to the needy for as long as they are in need, the system would pay everyone, at any income, for as long as they live. This is to be considered a Universal Basic Income, or UBI.

In an article written for the New York Times by Judith Shulevitz titled “It’s Payback Time for Women”, the benefits of implementing such a system in the United States are discussed. Some of those benefits include allowing parents (a majority of which are and would be women) to be “stay-at-home” parents without losing their entire income to do so. In another sense, the UBI could improve the motivation for welfare recipients to find work, whether part or full time, due to the idea that under a UBI, any income earned would be added to what is received through the UBI, whereas with welfare, a “dollar earned is a dollar cut from a welfare check” (Shulevitz, 4). Unfortunately, however, there seems to be some miscalculation within Shulevitz’s piece.

In an estimation of the price tag on a national UBI, Shulevitz stated that at a rate of $12,000 annually to all adults 18 and older and $4,000 per child under 18, the United States would need to spend roughly $3 trillion a year on the UBI. That makes up roughly 80% of the US Federal Budget. This huge chunk of change is said to be offset by the elimination of many of the government assistance programs that would no longer be necessary under the UBI. Unfortunately, this would simply not be enough for those currently using public assistance programs, meaning that many of the government programs could not be eliminated without adversely affecting a number of Americans, which seems fairly counterproductive given the intentions of the UBI.

In a situational analysis conducted by the Wisconsin Legislative Fiscal Bureau in 2014, a single mother with two children would be eligible to receive over $29,000 in government funded assistance on top of her $10,000 annual working salary. This $29,000 does not include any tax benefits (estimated at over $5,000) or potential student financial aid, should she be attending college (estimated at over $6,600). Under the UBI, this family of three would receive only $20,000, leaving over $9,000 left to be desired for basic needs and $11,600 in other benefits that could lead to a higher education. In order to compensate for this gap, many existing programs would continue to be necessary and more than the estimated $3 trillion would be needed, meaning more than 80% of the federal budget that already isn’t available would need to be spent in order to establish a working UBI.

Furthermore, not only would the US be unable to afford such a program in its current state, but it also elicits certain added problems that other government assistance programs have sought solutions to. For example, food stamps are given to needy families instead of cash in order to ensure that the money is being spent on food. In many instances, this may be unnecessary because the recipient can be expected to spend their assistance on needs, however, it is abundantly clear that not all those who receive government assistance are using it properly. This monthly stipend of cash under the UBI would leave children, forced to rely on erratic parents, without food from food stamps, shelter from housing assistance, or heat in the winter from energy assistance.

The concept of a Universal Basic Income, as introduced briefly by Shulevitz in her article, is pleasing. The benefits to stay at home parents, the elimination of some poorly run government programs, and advantage to the economy from higher spending are enticing. However, implementing such a program in a country as populated (and as debt plagued) as the United States seems rather implausible. The percentage of the federal budget that would be needed to keep the program afloat along with the inherent systematic abuse of the UBI leaves the country and its underprivileged children worse off than they already are.

For more information on the study from the WLFB, go to https://www.washingtonpost.com/news/fact-checker/wp/2014/12/05/grothman-single-parents-welfare/

To read Judith Shulevitz’s full article, go to http://www.nytimes.com/2016/01/10/opinion/sunday/payback-time-for-women.html?_r=0

This entry was posted in Uncategorized and tagged , , . Bookmark the permalink.

4 Responses to How much might a Universal Basic Income cost us?

  1. kevyngessner1 says:

    I agree that the initial idea of a UBI is a great one. I think it’s great that stay-at-homes are being recognized that although what they do doesn’t directly contribute to society, they still need that boost to contribute to their family. On the latter, I don’t think this is something that is going to be sustainable in the grand scheme of things. Although, as Shulevitz points out, there are many stay-at-home parents that legitimately need the help to raise a family. But is a UBI the only solution? Surely, it is not. Workplaces can provide a free daycare system, for example.

    I think the idea of a UBI diminishes the impact of working hard, and pursuing the “American dream”. People are bound to take advantage of the system. Not trying to find a job, making the family larger, etc., are just a few examples of how the system can certainly be manipulated. This is not to say that stay-at-home parents don’t deserve a specific crutch, I just don’t believe a UBI is the end all be all solution.

  2. tibblebits says:

    The most interesting challenges civilization faces at this point in time, in my opinion, is automation and AI. If automation and AI continue the way they have for the past decades, then around 47% of current occupations are likely to be gone by 2034. Ask yourself what comes after we have designed a machine that can do whatever we ask it to do without getting tired, talking back, or striking? Ask yourself what will happen to median income and the wealth gap if the 1% and MNCs are allowed to control AI and automation? Even with democratic control over the machines, it is clear, at least to me, that a UBI is absolutely necessary in order to stymie the economic impact of the coming AI revolution. Sure, some new jobs might be created, but the rate of job growth that replaces these AI jobs is fairly low, and is likely to stay low. That’s also not to say that all jobs are going to be replaced. The fact of the matter is that in a few decades the United States should be able to produce much more than it does now with a substantial decrease in the number of labor-hours required to produce that, resulting in much higher quality of life. A UBI is going to be critical in getting the US through this period.

    http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf)

  3. cvazquez131 says:

    You have made a lot of good points in this post. As nice as Universal Basic income may seem, to me it is completely implausible. Even if UBI replaced all Social Security, unemployment and labor spending, the federal budget would not even come close to being able to afford it. Federal spending in 2015 was 3.8 trillion dollars, with Social Security, unemployment and labor spending at 1.28 trillion dollars, or 33.3% of the federal budget. Even if you were to cut all medicaid and health spending, the US federal budget would still be around 670 billion dollars short of being able to afford UBI. The average worker already pays 25% of their income to the US Federal Government, many workers would probably have to pay a larger tax increase than the amount they would receive from UBI.

    https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
    http://money.cnn.com/interactive/pf/taxes/income-tax-rates/?iid=EL

  4. Geoffrey Vassallucci says:

    It’s a very good article, very interesting. Honestly, I am from France so I didn’t know exactly what the Universal Basic Income was, but you explained it very well. Your numbers are very helpful for me.
    Even if the Universal Basic Income appears necessary in the American society today, I think it has to be totally redesigned. We had the same debate with the RSA/RMI in France some years ago. I think such programs appear necessary in our societies today. The state intervention in such domains could represent a pillar in order to build trust between people and government. Nevertheless, this has to be totally redesigned. Spending are sometimes done without step back by governments and represent today an important public waste. Maybe such programs have to be cut in order to be entirely remodelled, while keeping the idea for governments to act in such areas in order to reinforce its power by reinforcing trust with population.

Leave a Reply