Two major US presidential candidates’ basic income proposals fall short in the battle against poverty, technological job loss, and income inequality.
Importantly, two contenders for the 2020 Democratic presidential nominees are pushing basic-income schemes. However, I think both proposals are deeply flawed and do not go far enough.
The most important basic income plan comes from US Senator Kamala Harris (D-California). Harris’s proposal; the LIFT Act, is notable, because it is the first basic income proposal from a major mainstream American political figure since 1972. To explain, US Senator George McGovern (D-South Dakota) had a basic income proposal in his 1972 presidential platform.
Moreover, some observers think Harris is the strongest contender for the Democratic nomination. In fact, some bettors believe she is the probable victor in 2020. Thus, Harris’s embrace of basic income could be a game changer.
What’s Wrong with Kamala Harris’s Basic Income Scheme?
Harris’s LIFT the Middle Class Act will pay all Americans who make less than $50,000 a year a basic income via an income tax refund, Vox reports. Effectively, Harris proposes an automatic tax refund for the middle class.
However, I think Harris’s basic income is too small. Under the LIFT; or Livable Incomes for Families Today Act, singles will receive $250 a month or $3,000 a year. In addition, couples will receive $500 a month or $6,000 year if they make less than $100,000 a year.
Moreover, many Americans who need extra income will not qualify for the LIFT payments. For instance, a single mother who makes $52,000 a year but lives in a high-rent city like Denver.
Finally, Harris will not pay a basic income to people under 18, which discriminates against families with kids. In reality, an extra $3,000 or $6,000 a year will do little to help a working mother with two kids who loses her job to technological unemployment.
On the other hand, using tax refunds to distribute basic income is a smart idea. Notably, tax refunds bypass the social services bureaucracy and people are less likely to view refunds as welfare or free money.
What’s wrong with Andrew Yang’s Basic Income Scheme
Interestingly, bettors at the PredictIt probability market like Yang’s odds more than Beto O’Rourke, or U.S. Senators Liz Warren (D-Massachusetts) and Cory Booker (D-New Jersey). Notably, the bettors at Predict favor Yang over most mainstream Democrats. Plus, Yang is attracting a lot of media attention and generating lots of social media chatter.
In a nutshell, Yang proposes a $12,000 a year basic income for all Americans over 18 regardless of income. I think the $1,000 a month will help ease poverty and income inequality for some families. More importantly, Yang offers a realistic funding mechanism for the Freedom Dividend in the form of a Value Added Tax (VAT).
However, there are three serious flaws in Yang’s Freedom Dividend. First, it begins at 18 which puts families with children at a terrible disadvantage. For instance, a single-mother could have just $1,000 a month to cover two kids’ expenses.
Yang’s Basic Income Does not help the Poor
Second, Yang will subtract other benefits like Food Stamps from the Freedom Dividend. Hence, it discriminates against the poor and others who use government benefits. For example, a single mother who receives $700 in food stamps will receive just $300 in basic income.
Finally, there is no income limit on the Freedom Dividend, hence the world’s richest man; Jeff Bezos, could receive a $1,000 a month basic income. Therefore, Yang proposes a scheme in which Bezos will receive $1,000 a month, but a single mother on food stamps will not.
Thus, Yang’s Freedom Dividend will boost the middle-and upper class but not help those who need it most. In particular, the Freedom Dividend will not benefit the 15 million American children living in poverty. To elaborate, the National Center for Children in Poverty estimates 21% of American kids; or one in five, are growing up poor.
Presidential Candidates’ Basic Income Proposals are a Good Start
I think Harris’s and Yang’s basic income proposals are a good start but both plans need work.
Specifically, I think Harris’s plan is half there; she gets the basic policy right, but the numbers wrong. To clarify, the LIFT Act does not offer enough money to enough people to make a real difference.
Meanwhile, Yang’s scheme is two-thirds there, he gets the numbers and the policy right but fails in the execution. In particular, the Freedom Dividend will not help families with children and people who rely on government benefits.
However, it is gratifying to see Presidential candidates discussing basic income. Hopefully, more Democratic contenders for the White House and some Republicans will get on the basic income bandwagon.
In the final analysis, America needs major economic reforms and a basic income is one of those reforms The right person using the White House’s Bully Pulpit could make a basic income for most Americans a reality. In addition, that person will join Abraham Lincoln, Theodore & Franklin D. Roosevelt, and Ronald Reagan in the pantheon of great presidents.