As COVID 19 Spreads, So Does Interest in Guaranteed Income
The idea of government providing all of its citizens with a guaranteed monthly income has been around for centuries. For almost as long, it has struggled to gain much traction in mainstream political thought.
But that might be changing.
As the coronavirus pandemic drags on and more Americans face economic hardship because of it, the idea of providing some or perhaps even all Americans with a guaranteed minimum income has caught the attention of a growing number of lawmakers and local leaders around the nation.
Saying the country needs “a policy solution that is as bold as it is innovative and as simple as it is ambitious,” a group of 17 mayors – including those in Los Angeles, Seattle, Newark, St. Paul, Pittsburgh, Oakland and Atlanta – have formed a new coalition to support bringing such a plan to their communities, an effort they call “our New Deal moment.”
The coalition, Mayors for a Guaranteed Income (MGI), is an outcropping of the Stockton Economic Empowerment Demonstration (SEED), which has been sending $500 monthly checks to 125 residents in low income areas of Stockton, California since February of 2019. The initial program, funded by the Economic Security Project, was set to expire in June. But a large philanthropic donation has allowed the program to be extended to January, 2021.
Both MGI and SEED are the brainchildren of Stockton mayor Michael Tubbs, who has been lobbying other mayors to join him since 2018. He says many of them have been on board in spirit since then, but as the pandemic has cratered the U.S. economy and sent millions of people onto unemployment rolls, they are moving from supporters to practitioners.
“Today, we mayors are uniting to send a clear message: our residents deserve economic security through a guaranteed income,” they collectively wrote in a Time magazine op-ed published in June. “Faced again with the question of chaos or community, we’re choosing the latter – it’s time to invest directly in our communities and our people.”
Their argument is similar to that of former Democratic presidential candidate Andrew Yang, who made a national universal basic income (UBI) plan the cornerstone of his campaign. Yang had been pitching his proposal to distribute $1,000 per month to every American over age 18 long before the pandemic hit, ostensibly to mitigate the impact of automation on the American workforce.
Although Yang bowed out of the race in February, he stayed viable far longer than most observers believed he would, something his supporters often credit to his UBI proposal.
Yang’s UBI proposal called for several funding mechanisms, including taxing capital gains and carried interest at ordinary income rates, a $40 per metric ton carbon tax and a 10 percent value added tax on “companies benefiting most by automation,” i.e. the Googles and Amazons of the world.
Ed Lombard, President and CEO of the California Black Chamber of Commerce, says he supports guaranteed income proposals in concept, and he’s glad to see philanthropists stepping up to fund them.
“The way the U.S. is structured right now, where the 1 percenters pretty much own everything and everyone else is hanging on by a shoestring, is not how it actually was intended to be,” he says. “To me, the concept of those who have giving back to those who don’t is part of the real American way.
But he is also concerned when he hears about plans to raise taxes – any taxes – to pay for them over the long haul.
“California is already a high-tax, high-regulation state,” he says. “These are thing things that will drive businesses elsewhere.”
Yang has continued to promote the concept, mostly through Humanity Forward, a non-profit he formed to assist candidates around the country who support income guarantee programs in their locales. The organization says it is also working to distribute its own one-time and recurring cash payments to needy Americans. In addition to soliciting cash donations – Twitter CEO Jack Dorsey has donated $5 million – it is looking to partner with community banks, credit unions and other financial institutions that “have pre-existing financial relationships with target populations to be able to efficiently identify appropriate recipients and disburse payments.”
In a July 28th interview with CNBC, Yang said Humanity Forward has already distributed $7 million in small increments to people seeking direct economic aid. He called it “just a sliver of the need” people are facing, saying the group has a waiting list of 100,000 applicants for cash assistance.
Twitter’s Dorsey also donated $3 million to the MGI coalition in July. The gift came through #thinksmall, the LLC he started in April to focus philanthropic giving toward COVID-19 relief projects.
Dorsey’s latest influx of cash appears to already be paying dividends. Shreveport Mayor Adrian Perkins said the funds will be used to kickstart a guaranteed income program there, while Pittsburgh Mayor Bill Peduto announced his city will use its portion of the funds to begin a similar program there. Neither provided details for who they will target or when they will actually begin.
Other plans not affiliated with MGI are already in the works as well. Last month, Santa Clara County, California started a program making it the first municipality in the nation to offer a guaranteed minimum income to former foster youth. The yearlong program will provide $1,000 a month to 72 young adults as they transition out of the county’s child welfare system. Another program, Magnolia Mother’s Trust, has been providing $1,000 a month to 20 Black single mothers in Jackson, Mississippi since 2018.
There has been at least one other significant UBI trial in the United States, spearheaded by President Richard Nixon between 1968 and 1974. But while it showed great promise – it was neither too expensive nor did it inspire people to quit working, as most guaranteed income opponents contend will happen – it still proved to be politically unworkable for Republicans.
The Alaska Permanent Fund – a $65 billion state fund created from oil and gas revenues that sends most Alaskans a dividend check of somewhere between $1,000 and $2,000 every year – is the only long-term guaranteed income plan currently operating in the country.
All guaranteed income plans are also not created equal.
Yang’s UBI proposal, for example, would distribute money to everyone, regardless of their current income, while the mayors’ plans are targeted at only a select group of residents. A third possibility would provide a guaranteed minimum to anyone who falls under a certain income level.
Jess Bartholow, a policy advocate at the Western Center on Law and Poverty in Sacramento, questions how a true universal plan like Yang’s would benefit the nation as a whole. She points to this year’s initial federal stimulus package that sent $1,000 to all Americans making up to $200,000 a year, even those who had not lost their jobs.
“Giving everybody $1,000 makes the richest people $1,000 richer and it gives the poorest people $1,000 more in assets, but you haven’t done anything to change the difference between those two groups of people. And that’s what we actually need in regard to wealth redistribution in this country,” she says.
Yang’s proposal would also force recipients who currently receive other government aid for the poor – such as food stamps – to give up those benefits. The current program in Stockton and those proposed in other cities come with no such strings attached.
The “benefits or UBI but not both” concept has become popular with conservatives – and even some progressives - who argue that the social safety net systems so many poor people rely on are outdated, inefficient and too costly.
Research done at the University of Michigan in 2017 contends that replacing them with a national UBI plan that utilizes a negative income tax (NIT) system could conceivably end poverty in America. Other research by the American Enterprise Institute argues that such a plan would help almost all Americans except the elderly, who would instead take a brutal financial hit.
While the bulk of the action right now appears to be at the local level, at least seven states – California, Maine, Maryland, Massachusetts, Michigan, New York and Washington – have also introduced UBI bills this session, though the majority of them have not gone far. In Congress, Reps. Rashida Tlaib of Detroit and Ayanna Pressley of Massachusetts, both Democrats, have introduced legislation that, among several things, would also create more UBI pilot programs.
Where any of these efforts go from here is still to be determined, but Stockton’s Mayor Tubbs says the pandemic should be a screeching wake up call to all levels of government about the fragility of our economic system.
“If it’s not COVID-19 this year, it’ll be an earthquake next year, a hurricane the year after or fire,” he told Forbes in June. “Folks need to build economic resilience in our cities now.”
-- By RICH EHISEN