Economic expert: Guaranteed income programs “either very expensive or very stingy”

Ellenberg and Cortese's basic income pilot program for unhoused high school students will launch next summer. Many advocates against homelessness are cheering, but Third Way's Rachel Minogue says to hold our horses—and actually look at the numbers. Considering the wads of cash needed to sustain these programs to make an impact (SCC's shelling out $3 mil), other important targeted county interventions are cut.

UBI is incredibly expensive

The numbers speak for themselves: UBI is either very expensive or very stingy. The progressive version of UBI is expensive to the point of impossibility, while the conservative version is penny-pinching and punitive. Looking first at the former, consider an annual grant of $12,000 for all American adults aged 18 to 64, like Stern proposes. Stern estimates his plan would cost between $1.75 trillion and $2.5 trillion. The high end of this range seems realistic. Almost two-thirds of the population, or 200 million people, would receive a monthly UBI check for $1,000, with a cost of approximately $2.4 trillion every year, or one-eighth of GDP.9 Social Security beneficiaries currently receiving less than $1,000 a month would also get a supplement, adding an estimated $52 billion a year.10 By comparison, our entire existing social safety net costs $2.6 trillion. That includes Social Security, Medicare, Medicaid, Unemployment Insurance, and veterans’ benefits.11

Unless these critically important programs are eliminated, a UBI program would need to be paid for with higher taxes. It’s not clear whether it’s even possible to raise enough revenue for this initiative. The federal government took in approximately $3.3 trillion in 2017, so a taxes-only approach to funding Stern’s UBI would require an unheard-of 73% increase in federal revenue.12 Even if defense spending was slashed by one-third, for example, a 52% tax increase would still be required.13 Funneling all of a tax increase into UBI would also neglect our existing programs, like Social Security, which needs financial support to remain solvent past 2034.14

Poor families could be left more vulnerable

If significant tax hikes aren’t viable, then the question remains: what gets cut in order to fund UBI? Under this scenario, UBI becomes stingy and punitive, as a vast amount of important government programs would be on the chopping block.

This article originally appeared in Third Way. Read the whole thing here.

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