In the months and years leading up to the next U.S. presidential election, it’s commonplace for the political party not in power to casually introduce concepts that it believes its candidates could use to gain favor with the American people.
Leading up to the 2012 and even the 2016 Presidential election, Republican candidates largely ran on a platform of repealing and replacing the Affordable Care Act, better known as Obamacare. And in the months leading up to the 2020 election, Democrats are running on a variety of platforms. Gun control measures, Medicare for all, and climate change action are just a few of these platforms. But one that’s not getting the traction it probably deserves is that of universal basic income.
One of the big talking points of Democrat Andrew Yang, such a policy would guarantee a monthly income for all U.S. adults. Yang looks to be a long-shot for the Democratic nomination, but that doesn’t mean that this idea will die with his presidential chances. On that note, let’s take a look at what a universal guaranteed income would mean.
Yang sees his universal income policy as a way to help offset poverty in the U.S. as well as factory jobs that have been eliminated due to automation. Under his plan, all U.S. adults would be given $1,000 a month, and those on other federal welfare programs would be able to choose between receiving the $1,000 per month or continuing with the current food stamps and welfare programs that they’re currently on. That’s the good of this program. Who wouldn’t want an additional $1,000 each month in addition to other income? We could think of a lot of things we could do with a extra no-strings-attached $12,000 each year. Couldn’t you?
Paying for the program is where things get dicey. Yang proposes issuing a value-added tax on companies for the products that they produce. Still, some economists say that the program could still cost some $3 trillion each year to implement. Being that the current national debt is currently more than $22.5 trillion, this could be a tough pill to swallow. Throw in the fact that it would call for a tax on businesses, and there’s no way that this bill would pass a Republican-controlled Congress. Yang argues that increased economic activity from people having more money and lesser spending on government services would largely pay for this.
Though a universal basic income concept does have its supporters, such policies haven’t fared well in other countries where it has been implemented. A two-year study in Finland showed that conditions improved and people felt less stressed and had fewer health problems with such a policy, however there was no overall impact on employment. That’s the worry — that such a program will cause American workers to work less. Or, it may even cause employers to slash salaries to help make up for the additional value-added tax they’d be paying.
Critics say that a policy such as this should complement the working American, not displace it. Furthermore, it could lead to inflation because there would be an increase in demand for goods and services. Finally, many opponents would just argue that this is another socialist policy that would do nothing more than give free handouts to the unemployed, rather than encourage participation in the workforce. The big difference is that it wouldn’t just be the homeless and unemployed getting it, it would be all adult Americans.
While free money is always nice, there are certainly disadvantages that would come with such a policy. It’s part of the reason why we’re covering the concept in this space right now, as it’s important to get the whole story on some of these proposed policies. Even if it’s not Yang himself trying to pass it through Congress, it could very well be someone else in the years ahead.