A universal basic income is a proposal to replace most or all current social spending with a single cash payment to every adult, regardless of income level. There are two main benefits to such a program. First of all, the administrative cost of it would be quite low since it is only one single program and there is no need to verify income. Secondly, it would eliminate welfare traps for people with low incomes.
A welfare trap is a situation in which one can actually be worse off by working more. Obviously, welfare benefits decrease as one works more and therefore gains a higher income. However, if the benefits decrease nearly as fast as one’s income rises, one is essentially working more hours for no immediate net financial benefit. Taxes can also influence the welfare trap by decreasing the actual financial benefit of working more. Some programs, such as disability insurance, go so far as to be eliminated entirely if one is employed.
For these reasons, a universal basic income actually has some support on the right. It would certainly be less bureaucratic than the current hodgepodge of programs and would eliminate the welfare trap since taking on more hours would always yield more income.
The most prominent advocate of a basic income on the right is probably Charles Murray, a political scientist, author and fellow at the American Enterprise Institute. I’ll use his proposals as an example of a basic income, but of course there could be other versions. He’s proposed that every American citizen over 21 receive a monthly payment of $13,000. $3,000 of that would have to go to health insurance, but the remaining $10,000 would have no strings attached.
His plan is not completely universal, though, since there is a small phase-out. After making $30,000 in income, not including the basic income, basic income would slowly decrease until an individual makes $60,000, at which point the basic income would be $6,500.
The program would be paid for by eliminating “Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare.”
To be clear, eliminating these programs is a fiscal necessity under Murray’s plan. It’s difficult to calculate an exact cost, but Michael Tanner of the Cato Institute estimated that a plan such as Murray’s would cost about $2.25 trillion, which would indeed have a surplus if Tanner’s estimate of $2.5 trillion in annual savings is correct. However, that number is disputed. The Atlantic published an article in April that put Murray’s specific plan as having a shortfall of $355 billion.
Even if a basic income would result in a surplus, though, there would still be problems. Mainly, the idea of eliminating all of those programs in the short term is not feasible. Let’s assume that social security, which is both one of the government’s largest programs by far and one of the hardest programs to reform, is somehow allowed to be eliminated. Even with a basic income, some people would still see a decrease in benefits since social security currently spends about $16,000 per recipient. Cutting that over a short period of time could cause severe financial strain for current social security recipients, which is why most plans to reduce social security expenditures only affect younger generations who presumably have time to save more.
Also, a basic income would be inadequate for replacing certain types of social programs. For one thing, there is no increased benefit for raising children. Whether one is childless or a single mother of several children, one’s benefit is exactly the same. For another thing, even if a basic income eliminated the welfare trap, some people are on public assistance because they are not capable of working. $13,000 would not cover their expenses. Even if one concedes that a basic income would work well for working adults, it would leave holes in the social safety net for the most vulnerable.
If America’s welfare system were aligned with some of the goals of the basic income the country would be better for it. For instance, programs could be reformed so that one does not have a net financial loss because of work. Some programs could also be consolidated in order to reduce bureaucracy. Some specific programs could even be replaced with more generalized small cash payments. However, a full-scale replacement of the system with a basic income is not workable.