They didn’t quite win the lottery, but thousands of low-income Americans are receiving regular payouts from the government as part of a sweeping social experiment aimed at answering the question: What would happen if you addressed poverty by sweeping aside the programs, regulations, the means-testing and the oversight and just gave people unconditional cash?
It’s a time-honored idea that in its day was offered by figures as unlike as Napoleon, Huey Long and Martin Luther King Jr., and championed in turn by socialists, libertarians, Silicon Valley tycoons and right-wing economists such as Friedrich Hayek and Milton Friedman.
Today, more than 100 mostly left-tilting cities and counties have launched pilot programs on the guaranteed basic income, delivering no-strings-attached payments via debit cards to sample populations with the goal of creating an “income floor” for people living on the edge of solvency.
They include new mother Keisha McCann, one of 800 low-income people randomly selected to participate in the Compton Pledge, the California city’s basic-income pilot that wrapped up this month after a two-year run. Participants received from $300 to $600 per month depending on the number of their dependents.
“What this has allowed me to do, besides giving me the extra funds to buy those diapers or get that formula, it has also helped me with saving money to eventually become a homeowner of my own,” said Ms. McCann at a 2021 community discussion. “It has definitely been such a big help, and I’m just grateful to be a member of this amazing program.”
Backers say the goal is to lay the groundwork for a national guaranteed basic income program, a policy that has long held appeal for free-market fans as a replacement for the $1.1 trillion federal social welfare network and the vast bureaucracy that administers it. For many on the left, however, the idea is not to replace the current system but augment it.
As the Fund for Guaranteed Income puts it: “Our vision of a guaranteed income is to supplement, not replace, the existing social safety net as a tool for protecting livelihoods and enabling economic and racial justice.”
Michael Tanner, senior fellow with the Foundation for Research on Equal Opportunity, said he’s intrigued by the basic-income concept but doesn’t see how to implement it on a federal level without busting the budget.
“I call myself a sympathetic skeptic,” Mr. Tanner told The Washington Times.
“I think that the logic behind it is very good, a very solid theoretical case. I think it has a lot of advantages over the existing social-welfare system. That said, I haven’t yet seen a way that makes the numbers work without a massive increase in spending.”
Indeed, handing out free money isn’t cheap. A universal basic income program that provided all Americans with $1,000 per month would run an annual tab of about $3.6 trillion, more than half the fiscal year 2022 budget of $6.3 trillion.
Most advocates aren’t calling for the classic concept of a universal basic income, meaning checks for everyone no matter their income, wealth or living conditions, but rather a guaranteed or unconditional basic income targeted just to low-income Americans.
Supporting the local campaigns is a national network of private foundations and community organizations, backed by advocacy groups including the U.S. Basic Income Guarantee, Income Movement, and Mayors for a Guaranteed Income.
Monitoring the results are university partners led by the Stanford Basic Income Lab and the University of Pennsylvania Center for Guaranteed Income Research.
Sean Kline, Stanford Basic Income Lab associate director, said that about 50 of the 104 programs being tracked by the university are still active. Most of them will wrap up in the next two years, although new initiatives continue to come online.
Earlier this month, for example, Maryland’s Prince George’s County voted to launch the Guaranteed Basic Income Pilot Program, a two-year experiment to give about 200 people payments ranging from $500 to $800 per month for two years.
Like many of the newer programs, the county’s effort represents a public-private partnership. The $4 million project will be funded jointly by the county, which is chipping in $2 million, and private philanthropies including the Greater Washington Community Foundation, which has pledged $1 million.
“The important thing about all these pilots is they’re signaling a renewed interest in a very, very old idea explored by both conservatives and liberals, and looking for new ways to apply it in a period in which all of us can agree there’s a lot of uncertainty,” Mr. Kline said.
Broad appeal
The universal basic income concept has a long intellectual pedigree and deep roots in American history, with a form of government-guaranteed payment for every adult citizen championed by Revolutionary War radical writer Thomas Paine.
Dr. King advocated for a “guaranteed annual income” as part of the struggle for civil rights in the 1960s. Free-market economist Milton Friedman proposed in 1962 the “negative income tax,” a version of the basic-income idea, as a replacement for public social welfare programs.
Interest in the policy has waxed and waned over the years. Entrepreneur Andrew Yang renewed interest in the UBI by making it a centerpiece of his campaign for the 2020 Democratic presidential nomination.
Also fueling the recent proliferation of pilots is the convergence of three events: the Covid-19 pandemic, the mass Black Lives Matter demonstrations, and the Stockton Economic Experiment Demonstration.
The pandemic stimulus checks of 2020 and 2021 offered a nationwide introduction to the idea of sending government payouts to most Americans — with no expectations other than helping them through difficult times. Some cities have also tapped into the 2021 American Rescue Plan to help fund the pilots.
The 2020 Black Lives Matter protests pushed the well-being of Black Americans to the forefront of the national social agenda. Then came the results of the Stockton experiment, a seminal guaranteed-income initiative launched in 2019 by Michael D. Tubbs, then-mayor of the hard-luck town in California’s Central Valley.
The study’s first-year results released in 2021 found that the 125 low-income participants didn’t quit their jobs or blow the extra $500 per month on partying. Most of the money went toward necessities such as groceries, utilities and auto care. Only about 1% went toward alcohol.
Instead of quitting, the percentage of those working full-time rose from 28% to 40%. The increase was attributed in part to the ability of the participants to work fewer hours, giving them time to complete coursework, finish certifications and apply for better jobs.
“There’s several studies out there that look at how low-income people spend windfalls, or spend cash if they’re given cash instead of benefits,” said Mr. Tanner. “There’s no evidence that they’re more prone to vice goods than the general population. They’re not more likely to use it for liquor or drugs or even frivolities like movies. They spend in about the same proportion on these things as the general population.”
The comment made over and over by program enrollees is that extra cash didn’t reduce their incentive to work but rather gave them “room to breathe.” Los Angeles County even named its guaranteed income program “Breathe.”
“This is an opportunity to give not a handout, but a leg up,” said Los Angeles County supervisor Holly J. Mitchell at last year’s program launch.
Tax the rich
The Los Angeles County program is one of the nation’s largest. with 1,000 participants receiving $1,000 per month for three years. But none of the pilot programs has the scale to predict how a permanent federal program injecting billions into the economy would affect inflation, work incentives and the labor market.
President Biden’s 2021 stimulus payments in particular have been blamed for stoking inflation, and those were just one-time checks.
“People design these small-scale, fairly convoluted temporary programs, and it doesn’t really change people’s work history, and then they say, ‘We could give money to everyone and everything would be great,’” said Allison Schrager, Manhattan Institute senior fellow. “Generally, I’m not a fan.”
She noted that, despite the “universal” name of the concept, some of the programs are designed to favor certain demographic groups. The Denver Basic Income Project is focused on the homeless as well as “transgender, gender non-conforming and gender non-binary” residents.
The Portland Black Resilience Fund gives up to $2,000 per month for three years to 25 Black individuals and families. Georgia’s In Her Hands initiative gives an average of $850 per month for 24 months to 650 Black women.
A Minnesota guaranteed minimum income program gives $500 per month for 18 months to “75 artists, culture bearers, and creative workers” in St. Paul and Otter Tail County.
“They keep calling it universal, but it’s really not,” said Ms. Schrager. “If you decide to give certain people an amount of money based on certain characteristics, then you’re giving people money based on characteristics. That’s not UBI.”
Has there ever been a real UBI? Advocates often cite the Alaska Permanent Fund, which gives all residents an annual payout, although the amount is tied to oil revenues and can swing from a few hundred dollars to as much as $2,000.
Without deep cuts in other social spending, any federal proposal is likely to be dismissed on the right as a massive income-redistribution scheme. Some advocates are already stoking the class-warfare narrative with calls to pay for the program by sharply hiking taxes on high earners.
“The combined wealth of U.S. billionaires increased by $1.6 trillion during the pandemic,” said Income Movement in a Facebook post. “Simply tax the rich and corporations fairly. They will still be filthy, filthy rich.”
On the other hand, the idea of having people make their own spending decisions instead of being told what to do by government bureaucrats, should appeal to conservatives, said Mr. Kline.
“I think there’s convergence in one area in particular, and that is giving people the choice and freedom to make decisions about their own lives because they’re the ones that know their needs best,” he said. “If you had a Venn diagram, that would be a strong point of overlap, this theme of freedom and agency.”
Basic-income fever is spreading to other areas. The San Francisco reparations task force’s draft proposal includes a recommendation for a guaranteed annual income of $97,000 for 250 years for eligible Black residents.
Ms. Schrager said another factor may be driving the payout push: years of low-interest rates that made borrowing money virtually costless.
“Sometimes I wonder if all these years of zero-interest rates created a political class that’s completely disconnected from costs,” said Ms. Schrager. “So I think they’re like, ‘Let’s just firehose money at everyone, or people that we have some sort of political affinity to, and nothing’s going to happen, and we can afford to do this.’ We have a generation of people who just need to sort of wake up.”
