Sunday, June 23, 2024

Economists: Guaranteed Income Programs Should Replace, not Supplement, Other Welfare

'While expanding these programs is a step in the right direction, we have more work to do to end poverty...'

(In Hudson, New York, participants in the city’s guaranteed income program that started in 2020 were counseled on how the $500 a month they were set to receive over a 5-year-period would impact other government subsidies for which they are eligible.

“Will participants lose other public benefits that they might currently be receiving?” the program’s website asked on the Frequently Asked Question section.

“This question can only be answered on a case-by-case basis,” it continued. “Prior to committing to participating, all recipients will be offered benefits’ counseling to decide if participation is best for their specific situation.”

Universal basic income programs provide recurring, direct payments to qualified (generally, lower-income) individuals with no strings attached. They are usually paid for by taxpayers, but some private foundations also provide funding.

The concern among many participants in guaranteed income programs is that the new revenue could cancel out other social subsidy programs, such as food stamps.

But many economists say the best way for guaranteed income programs to work is if they consolidate all government aid programs, creating one subsidy with less bureaucracy and thereby reducing administrative expenses paid for by taxpayers.

According to USGovernmentSpending.com, the cost of the 13 largest federal safety net programs that include Medicaid, Supplemental Security Income, Supplemental Nutritional Assistance Program (SNAP), Earned Income Tax Credits, U.S. Department of Housing and Urban Development subsidies, job training and school lunch programs increased from $772 billion in 2019 to $1.06 trillion in 2021.

Antony Davies, an associate professor of economics at Duquesne University, said universal income programs that consolidate the more than 100 taxpayer-funded federal welfare programs would be welcomed.

Davies said the administrative costs of all those welfare programs could be consolidated into a universal basic income program and it could be beneficial.

Hudson’s program is open to “20 randomly-selected” residents “who are above the age of 18 and earn less than $35,153 each year,” according to the city.

“Participants may be single, married, with children or without,” it said. “Selection will be conducted via a random lottery weighted by equity factors and overseen by independent researchers at the University of Pennsylvania and the University of Tennessee Knoxville.”

Cities, states and private foundations across the country have launched similar pilot guaranteed income programs.

For example, the city of Los Angeles started its own guaranteed income program and Los Angeles County has launched two in 2022. San Francisco launched one specifically for the transgender community.

Chicago also launched a guaranteed income program in 2022. Its pilot program provides 5,000 households in Chicago $500 a month in taxpayer money for 12 months.

Denver, Shreveport (La.), Durham (N.C.), Gainesville (Fla.) and the state of Georgia all announced universal basic income types of programs in 2022. Minneapolis, Ann Arbor and Grand Rapids tapped into COVID-19 tax dollars to start their own pilot programs.

The Shriver Center on Poverty Law released a report in April that stated that the current social safety net is insufficient “given the economic situation we face.”

The COVID-19 pandemic has led to support for policies that give additional cash to struggling Americans, the report stated.

“Federal policies such as increased unemployment insurance, an expanded and fully refundable Child Tax Credit (CTC), and stimulus checks have led to burgeoning support for permanent cash transfer programs like a guaranteed income,” the report concluded.

“Guaranteed income helps families by giving them direct cash to meet their needs—whether for housing, childcare or other household essentials,” Audra Wilson, CEO and president of the Shriver Center on Poverty Law, said in a statement to The Center Square.

“While expanding these programs is a step in the right direction, we have more work to do to end poverty,” she added. “We must continue to fight for paying living wages to reduce inequity and improve quality of life for everyone.”

Veronique de Rugy, the George Gibbs chair in political economy and a senior research fellow at the Mercatus Center at George Mason University, agrees with Davies.

“While cash programs are better than paternalistic welfare programs, cash programs shouldn’t be implemented unless they replace current welfare programs,” de Rugy said in an email to The Center Square.

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