Democrats Go All-In on Universal Basic Income

In a piece at Market Watch, House Appropriations Committee member Tim Ryan (D-OH) writes about his plan to “fire up the economy” by introducing “the Emergency Money for the People Act, which will provide almost every American $2,000 a month until employment levels reach pre-coronavirus levels.  Every American age 16 and older who earns less $130,000 per year will receive this money tax-free.” [sic] 

Married couples, he writes, “can earn up to $260,000 per year and receive $4,000 per month,” along with an additional $500 a month for up to three children, capped at a whopping $5,500 per month for a family of five.

Ryan’s article is heavy on the selling points, but omits quite a bit of material information, not least of which is the gargantuan cost to taxpayers.  But what’s most interesting may be his omission of the fact that the actual bill would allow these payments for at least six, but for no longer than twelve months.  

From the text of the proposed legislation:

The term ‘‘payment period’’ means the 12-month period beginning with the first month in which the Secretary makes a payment under paragraph (1), unless as of the end of the sixth month of such period the employment-to-population ratio for people ages 16 and over is greater than 60 percent.

Ryan seems to deliberately avoid clarifying the 12-month limitation on the payments. “This is not a one-time payment,” he doubles down later in the article. “These payments will be guaranteed for a minimum of six months, continuing until the U.S. employment rate reaches pre-coronavirus levels.”  Either intentionally misleading or simply projecting his goals, these payments are presented, in his article, as perpetual until employment rates meet or exceed the pre-pandemic level.

To be sure, no serious person truly believes that this country could ever reach “pre-coronavirus employment levels” while paying the vast majority of Americans substantial sums of money for not producing anything of value.  The unemployment rate in 2019 (3.5%) was the lowest it had been since 1969, and anyone paying the slightest bit of attention could tell you that it was accomplished via tax cuts to individuals and businesses, along with dramatically decreased regulation during the Trump administration.  The freight train that was our economy, prior to its having shut down over coronavirus fears, existed only due to fewer and less intrusive government impositions in the American economy than existed during the Obama years, not more.

In an ironic twist that’s far too strange to be fictional, Tim Ryan uses some of the space he’s given at Market Watch to recount anecdotes about how ineffective and inefficient the federal government is at redistributing other people’s money to the people who actually need it.  He writes that he recently spoke to a “low-income” woman who is receiving Supplemental Security Income (SSI), but was not eligible for a $1,200 stimulus check.  Another woman was on disability with children, only to have the government check go to her former spouse, while yet another college student who lived “independent of his parents” did not “qualify for any assistance.”

Ryan laments these stories about a few of his constituents not getting a stimulus check when they certainly could have used one.  Let’s flip the lens on that, for a moment.  Personally, I know at least two dozen people whose income has been relatively uninterrupted, but nevertheless received stimulus checks that they didn’t need. 

For any reasonable person, this should be the umpteenth lesson that proves, beyond a shadow of doubt that the government is the worst vehicle imaginable to distribute its confiscated assets according to its citizens’ individual needs, so we should certainly limit its ability to continue doing so.   No acceptable “solution” should involve giving the government trillions more dollars to redistribute even more broadly than it was capable of before, but that’s precisely what Democrats are offering today.

And this proposal, even for just one year, would certainly have a price tag in the trillions.  Let’s take a closer look at these numbers being offered by House Democrats, because they’re anything but arbitrary.

First, Ryan is right when he says that “almost every American” will get a check in this new proposal.  According to the Social Security Administration data, to have been considered in the top 10 percent of individual wage earners in 2018, you would have needed to earn $100K, and to be in the top five percent, you would have had to earn $140K.  This means that the vast majority of Americans would be collecting $24K in the coming year if this legislation is passed, regardless of whether their income was impacted by coronavirus or not.

These numbers also correlate at the household level.  For example, the top five percent of households in 2019 reported incomes just shy of $250K, and households earning less than $260K could collect up to an additional $66K if the bill is passed. 

Once again, we will find that government is a cumbersome mechanism for wealth distribution, as there appears to be no oversight beyond a broad assessment of one’s previous income.  Did the couple who made $259K in the taxable year of 2019 retain their jobs and their full incomes throughout this pandemic?  If so, they would get a substantial raise at taxpayer expense if this bill is passed.  Did a similar couple who made $261K in 2019 both lose their jobs, only to be facing foreclosure because the government is keeping the economy shut down, their business closed, and yet they would they be arbitrarily ineligible for this potential stimulus income?  If so, they could be financially crushed, despite being precisely the Americans that the stimulus was ostensibly meant to support.

This is all bad enough.  But worse than all else is that legislation appears to be targeting young people, as young as 16.  Young Americans are, even if they are dependents, in some cases, eligible for this stimulus income.

Consider that the median income of a 20-year-old in 2019 was $12K.  Of course, there’s nothing new about young people earning low levels of income.  In fact, with more and more young people occupying their time at universities, lower relative incomes among young people should be more understandable today than ever before in our nation’s history. 

“Income is positively correlated with age,” writes Nick Routley of the Visual Capitalist.  As should be obvious to everyone, young Americans do grow older, they become more skilled, and only an extreme few among them will remain among the lowest of income earners over their lifetimes. 

But the average 20-year-old today, if this legislation is passed, would have his current income doubled for having done nothing at all.  So, he’d be faced with a choice.  Does he get up and dressed early, listen to his boss, smile at the sometimes-annoying customers at the drive-through, and generally learn all of the skills and virtues that would make him more successful one day, as so many generations of young people have learned before?  Or does he decide, instead, to collect twice as much money for not doing any of those things, in hopes that the government will give him more free stuff when he needs or desires it? 

And when that incentive naturally results in fewer young Americans desiring employment, how can anyone expect employment rates among them to increase?

Frederick Douglass once observed that “it is easier to build strong children than to repair broken men.”  I can think of no better way to build a generation of broken men than to have the government provide for their basest needs and desires without having done anything at all to earn it.

But that is precisely what a universal basic income portends.  It is the future that Democrats, in their current slide leftward, envision for America.  Practically speaking, we can expect this particular bill, like the Green New Deal, to go down in flames.  But the longer we allow this economy to be shut down due to an invisible threat (which has proven much less deadly than it was originally believed), leaving millions of Americans unable to provide for themselves and instead relying upon government checks, we are inching nearer to their goal.