DOUBLE IT AND GET RID OF THE REST OF WELFARE:

In a promising contribution to the debate over poverty policy, the Institute on Race and Political Economy at the New School has released a major welfare reform proposal that it calls a Guaranteed Income for the 21st Century. Details of the proposal (abbreviated GI21 in what follows) are set out in a report written by Naomi Zewde, Kyle Strickland, Kelly Capatosto, Ari Glogower, and Darrick Hamilton. The proposal makes a full-scale assault on America's social protection gap. It includes several features that the Niskanen Center has long championed, such as an emphasis on cash assistance, broad eligibility, and payment in monthly installments with appropriate provisions for the unbanked. Although the proposal is not budget-neutral, its estimated cost of $876 billion per year is considerably less than that of several other proposals for a universal basic income.

All proposed reforms of the social safety net face a set of tradeoffs among the goals of income security, affordability, and work incentives. This commentary will examine how GI21 deals with those tradeoffs, beginning with the areas where it is strongest and then turning to aspects of the plan that could benefit from some further thought.

The first priority of Guaranteed Income for the 21st Century, clearly, is income security. "Our goal here," Zewde et al. write, "cannot be to simply reduce poverty, but instead must be to abolish absolute poverty as we know it." To that end, GI21 calls for a cash grant of $12,500 per year for each adult in a household and $4,500 for each child, payable in monthly installments. For single-parent families, that schedule of payments approximates the 2021 poverty guidelines from the Department of Health and Human Services ($12,880 for a single adult with an allowance of $4,540 for each additional family member, whether child or adult). For two-parent households with children, the GI21 schedule comes in well above the official poverty level.

Not surprisingly, the goal of completely eliminating poverty is costly. The CBO projects that the federal government will spend a total of $812 billion on means-tested poverty programs in 2021, of which about two-thirds will go to healthcare programs and one-third to income support. The $876 billion estimated cost of GI21 would more than double that. However, as Zewde et al. point out, the cost of GI21 is modest compared to that of other basic income proposals, such as that of Andrew Yang ($2.8 to $3 billion) or one discussed by The Architecture of a Basic Income Miranda Perry Fleischer and Daniel Hemel ($1.8 billion).

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