Senate Candidates Declare Support For Universal Basic Income... But What Is It?

Mar 4, 2020 at 12:03 pm
State Rep. Attica Scott's bill would give $1,000 to Kentuckians who make less than the median per capita income of their county.
State Rep. Attica Scott's bill would give $1,000 to Kentuckians who make less than the median per capita income of their county.

Progressive candidates running in the Democratic primary to defeat U.S. Sen. Mitch McConnell have embraced a newly popular plan to lessen poverty: a universal basic income.

In its purest form, a universal basic income is money that a government gives to all of its citizens no matter who they are or how much money they make.

Kentucky farmer and veteran Mike Broihier, state Rep. Charles Booker and little-known Louisville candidate Eric Rothmuller have each publicly expressed support for UBI, a once obscure concept that Democrat Andrew Yang ran on in his bid for president.

Amy McGrath, also a Democratic candidate, told LEO she supports other income inequality solutions, not a UBI. McConnell hasn’t publicly commented on the idea.

Booker and Broihier explained their support for UBI in op-eds. Broihier supports giving $1,000 a month to every American over 18 — the same as Yang’s plan. Booker did not provide details of his plan, and his campaign did not respond to an email seeking more information.

Broihier wrote in a piece posted to Medium on Feb. 26: “It is better to inject wealth at the bottom and let it filter up, than supplement industries making record profits off taxpayers’ dollars and, year after year, consolidating wealth and power at the top of the economic ladder.”

Booker, in a Courier Journal op-ed in January, tied the modern push for a UBI to Martin Luther King Jr., a proponent for a guaranteed income, another name for universal basic income.

“The only way we can give people true pathways to make decisions in their lives is by ensuring them more disposable income so they have freedom to invent, start a business, or advance their education,” wrote Booker.

Rothmuller told LEO he supports a UBI funded by a tax on automation and companies profiting off public research and product development.“Everyone gets a slice and everyone feels invested,” he said in a statement.

McGrath said, “There are so many people that struggle to make ends meet. Instead of giving everyone a thousand dollars a month — even a millionaire like Sen. McConnell — we need to raise the minium wage and bring high-quality jobs to Kentucky. We do that by investing in workforce development, education, health care, and infrastructure.”

The idea of UBI has been at the peripheries of American policy for a long time. Former president Richard Nixon once toyed with giving $1,600 per year to every family of four without an income. Worries that it would discourage people from working led him to pass an anti-poverty plan with a work requirement.

There have been several UBI pilot programs around the world, including in Kenya, Finland and California.

UBI has been championed by economists and politicians on the left and the right. Some conservatives see it as a way to streamline the myriad of public benefits that go to those in need such as food stamps (SNAP benefits), Medicaid and Social Security. Yang proposed UBI as a reaction to wealth inequality and the possibility of fewer jobs as automation and artificial intelligence encroach on our economy.

In his Medium post, Brohier said that his son’s support of Yang introduced him to the idea and inspired him to adopt it as part of his campaign platform. Broihier also said that he had hired Scott Santens, a vociferous Yang supporter, as a senior policy advisor.

UBI plans vary by the amount they promise, the way they’re paid for and what they do to the social services that citizens currently receive.

“The devil is in the detail, and any scheme is going to face some trade-off, some cost and benefits, and it all depends on the priority,” said Ioana Marinescu, an assistant professor and economist at the University of Pennsylvania who has studied UBI. “So, when you’re making policy, what are the groups that you’re most concerned about affecting positively?”

A UBI plan that also preserves all current social services would give the poor the most but cost more, she said.

Yang’s plan was to give low-income recipients the option to continue current benefits or accept the $1,000 a month. The money to pay for it would come from a 10% tax on goods or services that businesses produce, called a value-added tax. Yang also predicted cost savings because most people would choose his “freedom dividend” over government benefit programs.

Economists and politicians are split on whether a UBI works.

Opponents say a danger of UBI is that if the amounts are too large, it would be prohibitively expensive, in the trillions of dollars. And the taxes needed to finance such a program could hurt those it is meant to help. If a UBI is too limited, however, it could leave its neediest recipients, now with no or fewer benefits, in “abject poverty.” Some worry a UBI would discourage people from working.

Supporters say UBI would do the opposite: It would encourage people to take more job-related risk because they would no longer fear having their benefits yanked for making too much money, and it would allow recipients to quit bad jobs or go to school to begin another career path. Plus, UBI would free people to choose how to spend their government benefits.

Marinescu studied Alaska’s UBI program: Since the 1980s, Alaskans have received $1,000 to $2,000 per year from oil revenues. She found that, as a result, some didn’t work as much, but that was offset by businesses hiring more people to meet needs of customers with more disposable income.

Alaska’s system is less ambitious than Yang’s and Broihier’s plans, which Marinescu said might be best.

“I think that it’s easier, probably, to pass something a little more modest to start with, especially if we weren’t going to replace other benefits,” she said. “But, obviously, the whole goal of a campaign is partly to show what the idea could be down the road.”