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Pro / con on universal basic incomes: It'd be wildly unaffordable at $3 trillion a year

The latest liberal fad for reducing poverty and income inequality is called a "universal basic income." Unfortunately, the idea is both unaffordable and won't fix the low-income problem.

Under universal basic income, everyone from the poorest to the richest — that's why it's called "universal" — would receive a taxpayer-provided monthly income, perhaps $1,000 per month, or $12,000 per year.

On the positive side, that level would bring a non-working single individual up to near the current federal poverty level, which is $12,140. And since the universal basic income goes to each person in a family, a family of two would have a guaranteed annual income of $24,000, well above the $16,460 federal poverty level for two people.

Wealthy liberals love the idea and a few are funding some limited programs, including in Stockton, Calif. Supporters say the concept has been proven successful. The Alaska Permanent Fund is a state-owned investment fund that gives state citizens a check every year. But the amount can vary significantly — it was $1,100 per person in 2017 — because the fund is dependent on fossil-fuel revenues.

Even with that annual windfall, Alaska had the 22nd-highest poverty rate among the states in 2016. So universal basic income certainly may have helped Alaskans pay some bills, but it didn't come close to eliminating poverty.

Several other countries have considered some version of this. In 2016, Swiss voters rejected it because it would cost too much. The government of Finland provided some 2,000 Finns with a monthly allotment of about $650. But the country recently abandoned its effort, realizing it would cost the government more revenue than it receives.

And the U.S. would face a similar dilemma. Robert Greenstein, president of the left-leaning Center for Budget and Policy Priorities, concedes that providing every American with $10,000 a year would cost more than $3 trillion annually. Total U.S. government revenue for 2018 will only be about $3.4 trillion.

To be sure, some means-tested welfare programs might be reduced or eliminated if universal basic income became law, but it's a pittance compared to the cost of the program.

Of course, it would cost the government less if the wealthy were excluded. I mean, should billionaires like Bill Gates or Mark Zuckerberg receive a monthly basic income check from the government? But once we start excluding some people based on their income, the program becomes little more than a means-tested welfare check with no work requirement — with the only real question being where to draw the income line.

Wealthy liberals have generously funded some very limited basic-income programs both here and abroad. But the problem with turning basic income into a universal program is the amount the government could actually pay would be too small to lift everyone — or even most people — out of poverty. Or it would become another means-tested welfare program. And since the U.S. already has about 80 means-tested welfare programs, yet another one is the last thing we need.

Merrill Matthews

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas.

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