UBI grows in popularity among local governments
When the northern California city of Stockton, a relatively poor industrial city in the agriculturally rich San Joaquin Valley, started its Universal Basic Income program in 2018, its backers were forthright about their goals. They hoped that the plan to provide residents with no-strings-attached payments every month would spread across the country.
Touted by the city’s young progressive mayor, Michael Tubbs, the plan provides $500 a month for two years to a handful of residents, selected randomly. Officials then extended it in the midst of the COVID-19 shutdowns. The Bay Area foundation that funded the program has publicized the positive stories of those struggling Stockton residents who now have extra money for groceries and rent.
Private foundations can give money to whomever they choose, but supporters clearly believe in using public funds. “This country has a history of finding ways to pay for things that we say matter,” Tubbs told a New Yorker reporter in July. A University of California, Berkeley, economist told the magazine that a federal Universal Basic Income program would cost $3 trillion annually – “approximately three-fifths of current total federal expenditures.”
Sure enough, Tubbs now is leading Mayors for a Guaranteed Income, which has 25 members. The influential National League of Cities has produced a report to guide cities in that direction. Expect “basic income” to become the newest “easy button” policy to deal with poverty and inequality. The coronavirus stimulus packages have renewed interest in the long-controversial idea of providing Americans with direct payments.
Unfortunately, few of its supporters – at either the local or federal level – acknowledge the degree to which this would exacerbate the nation’s debt crisis. The Congressional Budget Office reported this month that by the end of the year federal debt will reach 98 percent of the gross domestic product, which is the measure of the nation’s entire economic output. The annual deficit is $3.3 trillion – and the national debt is pushing $23 trillion.
The federal government simply cannot afford this kind of new spending. City governments can’t afford it, either, as they already are cutting services to deal with existing pension payments, infrastructure backlogs and COVID costs. Meanwhile, Americans have little appetite for tax hikes – and it’s a bizarre idea to raise taxes and then return some of that money through direct cash payments.
Even if U.S. governments could afford it, Universal Basic Income remains a foolhardy idea. Its supporters, including some conservatives, have argued that giving direct payments is more efficient than operating social-welfare agencies. Yet that mayor’s group notes, “A guaranteed income is meant to supplement, rather than replace, the existing social safety net.” In other words, don’t expect those bureaucracies to go anywhere.
More fundamentally, these programs discourage work and enterprise. Sloth is not good for society nor for individuals. Some advocates for basic income programs are concerned that our increasingly tech-savvy economy is leaving low-skilled people behind. But the right solution is to train them for the new economy – not provide cash so that people don’t have to participate in the economy.
Local governments need to get their budgets in order, improve their business climate and upgrade their public infrastructure. Those ideas should spread across the country, rather than a free-money scheme that will leave cities more impoverished.