Guest Post: Max Sawicky on the Liberal Case Against a Universal Basic Income

By Mike Konczal |

Earlier this month, I was on a Wonkblog live event panel discussing a Universal Basic Income (some video clips here), a topic I wrote about at Wonkblog earlier in the year. There was two people for and two people against, one from the left and one from the right. The person who represented the liberal side who was against a Universal Basic Income was Max Sawicky, formerly of EPI and the blog Maxspeak. He had prepared remarks for his introduction. I asked him if I could post them here and he agreed, and here it is:

With the coming referendum in Switzerland has come a flurry of commentary about a “Universal Basic Income” (UBI). There are some strange bedfellows from left and right are saying nice things about it. I suggest that it can be a distraction from more important things.

If you don’t have time to read this, just consider that a payment of $10,000 to every U.S. adult, a pretty basic basic income, would cost $2.5 trillion. Game over.

That aside, first off we need to distinguish between the objective of ensuring a minimum standard of consumption for all persons and the specifics of a UBI. You can support the first without the baggage of the second. More plausible ways to pursue the objective include: promote full employment, raise the minimum wage, rationalize and expand our system of refundable tax credits in the Federal individual income tax, federalize the Temporary Assistance for Needy Families program (reversing the welfare reform of 1996), establish the Federal government as an employer of last resort, support trade unions, and establish pay for caregivers. All of these in some combination are worth more of our time than a UBI. They are all more in keeping with our current system and our political culture.

What’s wrong with the UBI? It is not the utopianism. The measures I note, if you scale them up, are pretty ambitious. Nor do I see incentive problems with a UBI or similar measures. I do not believe that the availability of a UBI would spawn an army of slackers and moochers.

Let’s start with the rationale for the UBI, which I would summarize as eliminating poverty with a low overhead cost. That still leaves a lot to the imagination. UBI proposals tend not to be fully baked. Presumably you reduce overhead by eliminating existing programs, but which ones? Are you willing to ding people at 105% of the poverty line to help others below it? Note you would still need eligibility determination and verification with a universal program. And how universal would it be? Immigrants? The aged? Children? Prisoners? Ex-convicts?

Like good fiction, the way to read the UBI is not as a real proposal, but as a message about something else: our existing system. But the implicit critique of the existing system underlying UBI advocacy is not well-founded.

Overhead cost is typically exaggerated in conservative discussions. Conservatives present comparisons of spending under a long list of Federal programs, many of which have broader or entirely different objectives than reducing poverty. The costs of programs that try to do things requiring public employees are not the same as ‘overhead,’ nor are these employees necessarily a bureaucracy. Even the programs explicitly aimed at reducing poverty are designed to cover more than just those under the poverty line. Moreover, the overhead costs of the main programs noted below are low, for the most part.

We also see exaggerations of the number of programs that are dedicated to reducing poverty. The fact is that most anti-poverty spending is concentrated in relatively few places: Medicaid, food stamps, the Earned Income Tax Credit, Supplemental Security Income, Temporary Assistance for Needy Families, unemployment compensation, and housing subsidies. Coverage in most of these programs goes well above the official poverty line.

In the current system, there is plenty to criticize. Eligibility could be simplified and broadened. Assistance could be increased. The main gap in coverage where a UBI would have the most impact is on able-bodied adults without children, who currently get the least from the current system as far as cash transfers are concerned. I’ve already mentioned easier ways to remedy that deficiency.

So why are we talking about the UBI? Dissatisfaction with the current system feeds a dream of wiping the slate clean, but motivations for a clean slate vary drastically.

Some on the right would like to replace existing programs because they disapprove of what those programs do, not because they fail to erase poverty. What the programs do is masked with the epithet of “bureaucracy.” Or they imagine a scenario where Federal spending decreases, and the remaining UBI programs can then be further whittled down over time. In effect, conservative supporters of the UBI concede their major, historic critique of anti-poverty benefits – the moocher issue. One naturally wonders how deeply felt this conversion really is.

Some on the left would like more ample, broader, simpler provision of benefits. This critique actually goes back to the 60s, when the principal anti-poverty program – Aid to Families with Dependent Children – was viewed as intrusive and demeaning.

If you like the transfer of cold cash, your chief target ought to be Temporary Assistance for Needy Families, the fruits of the Clinton/Gingrich welfare reform of 1996. The Feds provide a grant to state governments, who busy themselves with helping people to help themselves. In the actual event, states helped a lot of people off the welfare rolls and into poverty. The national poverty rate, notwithstanding this reform, steadily went up after 2000. So if you want to strike a blow for reduced overhead, simplicity, and adequacy – if you’re serious – go ahead and make my day: Federalize TANF and establish it as an individual, adequate cash payment to which every resident has a legal right. To constrain its cost, limit eligibility to families with dependent children and phase it out as other income grows.

We do have a mix of programs – what’s been called a “mish-mosh” — aimed at poverty reduction, among other objectives. Why this complexity?

1.  No surprise, poor people don’t have much political power. They are obliged to seek alliances with provider interests – most famously with agriculture behind the food stamp program (an alliance that may be ending).

2.  The disorganization of Congress and associated interest groups encourages fragmentation. Every member wants something specific to attach his or her name to. (In recent decades, instead of spending programs, we have tax breaks named after Members of Congress).

3.  Federalism, hard-wired into our constitution.

4.  Public opinion, a Tower of Babel.

In light of these constraints, why dwell on a proposal founded on the mirage of wiping the slate clean to start from scratch that presumes a completely fantastical political environment? The answer is, to avoid devices that have been used successfully in the past, that exist at some level and actually work, that stand better than a ghost of a chance at being enacted, and importantly, surviving.

People need a basic income, so they need us to talk about the best ways to get it.

Max Sawicky is employed with the Federal government. His views here do not represent those of his employer.

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Mike Konczal is a Fellow with the Roosevelt Institute, where he works on financial reform, unemployment, inequality, and a progressive vision of the economy. His blog, Rortybomb, was named one of the 25 Best Financial Blogs by Time magazine. Follow him on Twitter @rortybomb.