Guaranteed Minimum Income: The Most Conservative Way To Fight Poverty

We see your block grants, Paul Ryan, and raise you a guaranteed universal income.

"Nixon's Guaranteed Minimum Income Proposal Gets New Traction"

http://paxonbothhouses.blogspot.com/2014/05/nixons-guaranteed-minimum-income.html

Another idea: Why not a guaranteed income for everyone? "Eliminating poverty seems like an impossibly utopian goal, but it's actually pretty easy: we can just give people enough money that they're above the poverty line. That idea, known as a basic income, has been around forever, but it's made a comeback in recent years. And it's a sign of how far it's come that opponents of the idea are beginning to feel the need to make arguments against it....The experiments raise valid worries, but they hardly herald doom, and still suggest that a negative income tax could eliminate poverty at a manageable cost." 

Dylan Matthews in Vox.
The most conservative way to fight poverty is to send everyone a government check

Max Ehrenfreund

Rep. Paul Ryan's new plan to reduce poverty is based on conservative principles: taking control away from Washington, encouraging the poor to work and rewarding success. But if the goal is to solve poverty with conservative policies, Ryan's plan may not be conservative enough. And there is another, older idea that would, one that has been endorsed by thinkers on both sides of the political divide.

Ryan's basic idea is to consolidate the federal government's antipoverty programs into a single check that the federal government would cut to each state. State officials would then be responsible for determining how best to use the money. A couple people have noted problems with this idea. There is no reason to assume that state governments will use the money effectively, as Emily Badger and Paul Waldman have already explained. Also, it would be hard to know in advance whether the yearly grants would be enough to keep people (and the economy) on their feet in a recession, writes Robert Greenstein of the Center on Budget and Policy Priorities.

But wouldn't it be even more amenable to conservative principles to eliminate government interference altogether, whether federal or state? Couldn't Uncle Sam simply write checks directly to everyone? After all, aren't we the people best equipped to make decisions about how to use our money?

These are arguments for what's known as a universal basic income -- a check that everyone, regardless of income, would receive from the federal government on a regular basis. Economist Milton Friedman, a pioneer of contemporary conservatism, was probably the best-known proponent of the idea, which has recently been implemented with good results so far in Brazil. Instead of filtering through layers of bureaucracy and charitable groups, the money goes directly to the people who have the most reason to use it well, because it's theirs.

Here's how it would work.

Another reason to see why a universal basic income is more conservative than Ryan's block grant proposal is to compare it to other aspects of his plan. The tax code offers a yearly bonus to poor people who work, called the earned-income tax credit. It is another one of Friedman's good ideas, andliberals should support it as well because it helps the poor get by, as Matt O'Brien argues. Ryan, like President Obama, wants to expand the earned-income tax credit for adults without children.

Yet if the goal is really to reward the poor and out of work for finding jobs, then this tax credit isn't a perfect solution. The bonus is not available for those who earn a little more money, so the working poor have less of a financial reason to aim for a raise. They'll pay a larger share of their income in taxes when they do. A universal basic income would solve this problem. Your payment from the government doesn't get smaller if you start making more money.

In the language of the tax code, the earned-income tax credit is less progressive. The marginal tax rate would be zero on universal basic income. At a maximum of 36 percent, the effective marginal tax rate on the money from the earned-income tax credit is quite high.

Ryan also suggests that poor people who receive money through this block-grant program should be required to agree to a system of rewards and penalties based on certain objectives, such as finding work. "Each beneficiary will sign a contract with consequences for failing to meet the agreed-upon benchmarks," the plan states. "Under each life plan, if the individual meets the benchmarks ahead of schedule, then he or she could be rewarded."

Not only do advocates for the poor find this idea demeaning to those in poverty, it is not especially conservative either. It suggests that bureaucrats in Albany, Sacramento, Olympia and Cheyenne will be responsible for determining people's basic goals in life and laying out a schedule for achieving them. Yes, providers of services to the poor will be able to tailor the "life plans" for individual cases, but government will set the mandatory elements.

A much better approach would be to simply write everyone a check. If the poor misuse the money, then they'll incur the consequences of poverty. If they live within their means or whatever it is exactly that conservatives expect them to do, they'll get ahead.

These are the reasons why a number of conservatives in addition to Friedman have endorsed a universal basic income, Charles Murray among them. (Other conservatives worry that people would stop working and live idly off their checks, and while this is a legitimate concern, it seemssomewhat overstated.)

Of course, a universal basic income isn't only a conservative idea. It would accomplish major liberal goals as well: giving the poor what they need to get by without the insulting suggestion that their poverty is due to laziness or some other moral failing.

Further reading:

• Philippe van Parijs, an advocate of a universal basic income, debated opponents of the idea at length in the Boston Review in 2000.
• A universal basic income might sound like a utopian project, but it's still worth discussing, writes Mike Konczal.
• Reihan Salam addresses some of the arguments made here for a universal basic income, concluding that Ryan's approach is the right one.

Max Ehrenfreund is a blogger on the Financial desk and writes for Know More and Wonkblog.