What would you do if you were guaranteed $1,000 dollars a month? You don’t have to work for it; you’ve earned it just by being a citizen. For a lot of Americans this $1,000 dollars would give them much needed breathing room. Living paycheck to paycheck has become more American than Big Macs.
I know what I would do if I was getting $1,000 dollars from the Government. I would take more risks. I would start that risky business. I might invest a little riskier hoping for higher returns. I might splurge at the grocery store or decide it’s time to start saving for retirement. Whichever route I chose, I would be contributing new money to the economy.
What if everyone in the country was getting a $1000 a month payment? A massive influx of consumer spending would stimulate the economy like never before. There are many proposals out there to create programs like this, called universal basic income. The issue is how to fund them. The Roosevelt Institute found that a program fully funded through taxes would have a 0% return on GDP, labor force, and wage growth. Tax funding is not the only way though.
The program is also fundable through deficit spending, which just means the federal budget will be higher than the revenue they receive from taxes. It’s not a foreign concept; the US has had an annual deficit for almost 40 years. Some economist argue that the deficit is not a bad thing, if controlled. Others argue the deficit will be the end of the economy.
Many new presidential candidates are proposing increases in taxes to pay for new programs. Andrew Yang, a Democratic candidate, plans to implement a value add tax if elected[currently implanted in the E.U.]. This addition tax would alleviate the burden from both the federal government and the people.
Universal basic income will not be financeable through current income taxes. It would hurt the very people it is trying to help. Meanwhile deficit spending on the other hand was estimated to increase GDP by %12.56 within six years. Yet deficit spending is also not a long term answer. Studies on the US deficit found that a higher deficit will result in lower amount of private investment and employment. The U.S. needs to find a way to finance this program, one being most beneficial to the majority of people.
Universal basic income will also be combating the looming problem of automation. According to the Brookings institute we will see the automation of over half of US jobs that don’t require a degree. Huge amounts of people will soon be forced to retrain and change industries. These same people will lose benefits, savings, insurance, and housing.
Without the introduction of UBI we are dooming millions to this fate. We are also setting up America to lag behind as other economies begin to combat the future threats to the labor force. We also cannot race into massive policy change without being concerned of the repercussions.
We as a country need to look at the future and begin to implement changes that will support the citizens of tomorrow.