It’s cheaper and simpler than our current welfare system and would make more sense than you think.
One of the most interesting ideas in public policy today is that of a Universal Basic Income, for short, I’ll refer to it as a UBI. Policy wonks (think the D&D nerds of political science) on the both sides of the political spectrum like to talk about this as either an alternative or supplement to the current system of programs available to the poorest citizens today. There are many names for the UBI like a negative income tax, conditional guaranteed income, citizen’s dividend, but all are basically the same — they give people money for existing.
I look at the idea of unconditional cash payments as a good alternative to the current welfare system for several reasons, but mostly because the current system that we have to help the poor is extremely complicated and self defeating. Politicians like to add different forms of red tape to programs meant to help the poor as measures to get them to re-enter the workforce, make welfare a less appealing option than employment, and to prevent cheaters from abusing the system. They see this as compassionate because people that use welfare need to learn about the dignity and emotional benefits of having a job, even if they themselves might consider them crappy jobs. I see these rules as self-defeating because the more work you put into anything, the more attached you are to it. Whether it be a relationship, a crappy job, getting into a fraternity, etc, work creates emotional attachment. We rely much more on our emotions rather than rational decision making so adding paperwork, phone calls, blood pricks on children to test their nutrition levels,and income verification requirements only make the “poverty trap” even worse. Also, these rules and requirements don’t prevent cheaters from abusing the system, they just lie anyway.
Adding to the complications, there are seven different federal/state programs that I consider to be “welfare”, meaning there is a direct financial benefit if you are poor and qualify for the program. They include:
“Ahem” *cracks knuckles*
- TANF — Temporary Assistance for Needy Families: This is the closest thing we have to traditional welfare. It’s a state/federal program with the goal of giving small cash payments to needy families on a monthly basis, but most states use the federal monies for other purposes such as scholarships for rich kids in the name of pregnancy prevention (I’m not kidding). They have leeway because the program is funded by a block grant and states have a lot of leeway with how they spend their block grant monies.
- LIHEAP — Low Income Heating and Energy Assistance Program: This is a cash benefit for poor people with high heat and energy bills. It can either go against your electric bill or be received in cash.
- Earned Income Tax Credit — This is a cash program through the tax code specifically for low income parents with jobs.
- Child Tax Credit — essentially the same thing as above but with a different name.
- SNAP — Supplemental Nutrition Assistance Program: This program used to be called food stamps, but the cash benefit now goes on a debit card issued by the states and lets beneficiaries buy food at grocery stores.
- Child Care — the federal government does subsidize child care if you’re low income, but there are so many restrictions that it is difficult to use and few people benefit.
- Section 8 — this is another program that lowers rent for individuals with low income, therefore saving them money on a monthly basis.
Each of the above programs requires a different form with slightly different information be filled out, sent in, be approved, and if it’s not approved then the applicant has to petition the decision. All seven of these programs require more bureaucrats, they all essentially transfer or save a poor person money, and annually cost ~$330 billion dollars per year. There are also stigma’s attached to using welfare benefits from people in the community and there are steep drop offs if someone accidentally or purposefully earns more money than they are allowed. This makes a raise actually lower their standard of living. Another issue is that most of the people using these programs are not deadbeats trying to live off of the system, they are disabled with poor mental or physical capabilities, children who are poor through no fault of their own, or the elderly who may also have mental or physical problems.
I think the stigma of being on welfare programs is a bigger issue than we think. A coworker of mine once told me that she didn’t want to sign up for Medicaid out of pride and then ended up with thousands of dollars in medical debt for an emergency. Medicaid doesn’t even provide people with cash or monthly savings so it’s not really welfare, but it’s still seen as something immoral because we like to punish those who are poor because they are bad. There is a strong revulsion to the idea of giving poor people money because some of them are cheaters, but I argue that a majority of people on welfare are not cheating the system. The system ends up hurting people who are honest, but were given a bad break in life more so than it prevents cheaters from abusing public assistance programs. Groups of working class white people in America overwhelmingly voted for Trump out of spite because if you’re working, you still can’t get ahead, but poor people get everything for free. This spite is a powerful force in American politics.
Another issue is that the welfare system does nothing for single adults with no children. There are plenty of people out there who can’t find full time work that pays a living wage and also can’t get help from the government.
A UBI would solve all of these problems. If there was a cash based system where everyone received a check just for being a citizen. The government could phase the program in/out where for every dollar you earned, you lost one dollar in benefits. That means that if you earned nothing then you would receive $12,000 in benefits and if you earned over 300% of the federal poverty then you would receive nothing, but the phase out would be so gradual that there would be no disincentive to take raises. You would be guaranteed a floor of income regardless of what happened to you. The total cost of this idea would be $336 billion, just slightly over the entire cost of the seven welfare programs mentioned above.