As regular readers of this blog know, I support a UBI–a universal basic income–rather than the current patchwork of social programs that are socially divisive and fiscally inadequate. That support rests on three convictions: first, that no one is truly free who must face a daily struggle just to survive; second, our current government safety-net policies are dividing, rather than unifying, our diverse population; and third, market economies work best when buttressed by a strong safety net.
As I’ve argued before, public policies can either increase or reduce polarization and tensions between groups. Policies intended to help less fortunate citizens can be delivered in ways that stoke resentments, or in ways that encourage national cohesion. Think about widespread public attitudes about welfare programs aimed at poor people, and contrast those attitudes with the overwhelming majorities that approve of Social Security and Medicare. Polling data since 1938 shows growing numbers of Americans who believe poor people are lazy, and that government assistance—what we usually refer to as welfare—breeds dependence. These attitudes about poverty and welfare have remained largely unchanged despite overwhelming evidence that they are untrue.
Social Security and Medicare send a very different message. They are universal programs; virtually everyone contributes to them and everyone who lives long enough participates in their benefits. Just as we don’t generally hear accusations that “those people are driving on roads paid for by my taxes,” or sentiments begrudging a poor neighbor’s garbage pickup, beneficiaries of programs that include everyone are much more likely to escape stigma. In addition to the usual questions of efficacy and cost-effectiveness, policymakers should evaluate proposed programs by considering whether they are likely to unify or further divide Americans. Universal policies are far more likely to unify, an important and often overlooked argument favoring a Universal Basic Income.
There is a growing body of research favoring the approach, and I was interested to read a New York Times column that traced growing support for the proposition that–duh– the best way to combat poverty is with money.
For the past three decades, federal aid for lower-income families has largely consisted of handing out coupons: housing vouchers for families that need housing; food stamps for families that need food; Medicaid cards for health care.
Sometimes, however, what families need most is a little extra money they can spend as they see fit. Researchers have found that even small amounts of cash can make a big difference in the lives of children from lower-income households, improving their grades, their chances of graduating from high school and their income as adults.
In an important shift in poverty policy, some states are starting to provide that kind of financial aid. During the recently concluded spring legislative season, states including Minnesota, Colorado and Connecticut created programs to give people money.
The increased interest in such programs was sparked by the temporary expansion of the federal child tax credit during the pandemic. The credit reduces the amount of federal tax that families with children owe, and in 2021, Congress raised the maximum credit per child to $3,600 from $2,000. Importantly, it also authorized payment of the entire amount in cash to households that didn’t owe enough in taxes to fully benefit. Until then, families that earned less money had received less help.
Unsurprisingly,Republicans refused to extend the program, and their refusal prevailed thanks to Senator Joe Manchin, who agreed with Senate Republicans that only people who work should qualify for help.
But for that one year, the government offered the same assistance for every eligible child.
Since then, Democratic majorities in seven states — often with support from Republican legislators — have created their own “refundable” child tax credits, the technical term for the policy of paying benefits in cash to families that can’t use the full value of a credit because they owe less than that amount in taxes. The only two states that had created refundable child tax credits before the pandemic, New York and California, both significantly increased eligibility.
The states hand out less money than did the federal government. The largest credit, which Minnesota created in May, offers up to $1,750 per child for households with incomes below $35,000 per year — roughly half the lapsed federal credit. But unlike the federal expansion, the state credits are meant to be permanent.
There is now a significant body of research supporting not only cash payments, but also the importance of a robust social safety net to market economies. Will Wilkinson, vice-president of the libertarian Niskanen Center, argues that the Left fails to appreciate the important role of markets in producing abundance, and the Right refuses to acknowledge the indispensable role safety nets play in buffering the socially destructive consequences of insecurity.
It’s slow, but perhaps we’re learning…
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