A UBI would cause cuts to social programs because it would require a left right coalition to pass and the right would demand a compromise that requires welfare cuts to pay for it – this is called a “UBI Minus.”

At first blush, universal basic income (UBI) seems a very attractive idea, especially to a progressive. Yet it suffers from two serious problems. First, the odds are very high that an effort to secure UBI would prove quixotic. Second, and more disconcerting, any possibility of overcoming the formidable obstacles to UBI will almost certainly require a left-right coalition that has significant conservative support — and conservative support for UBI rests on an approach that would increase poverty, rather than reduce it. The key issues related to UBI include what it would cost, how it would be paid for, and the risks it poses. Let’s take these one at a time. The Cost There are over 300 million Americans today. Suppose UBI provided everyone with $10,000 a year. That would cost more than $3 trillion a year — and $30 trillion to $40 trillion over ten years. This single-year figure equals more than three-fourths of the entire yearly federal budget — and double the entire budget outside Social Security, Medicare, defense, and interest payments. It’s also equal to close to 100 percent of all tax revenue the federal government collects. Or, consider UBI that gives everyone $5,000 a year. That would provide income equal to about two-fifths of the poverty line for an individual (which is a projected $12,700 in 2016) and less than the poverty line for a family of four ($24,800). But it would cost as much as the entire federal budget outside Social Security, Medicare, defense, and interest payments. Some UBI proponents respond that policymakers could make the UBI payments taxable. But the savings from doing so would be relatively modest, because the vast bulk of Americans either owe no federal income tax or are in the 10% or 15% tax brackets. For example, if you gave all 328 million Americans a $10,000 UBI and the cost was $3.28 trillion a year (about $33 trillion over ten years) before taxes, then making the UBI payments taxable would reduce that cost only to something like $2.5 trillion or $2.75 trillion (or $25 trillion to $27.5 trillion over ten years). Paying For It Where would the money to finance such a large expenditure come from? That it would come mainly or entirely from new taxes isn’t plausible. We’ll already need substantial new revenues in the coming decades to help keep Social Security and Medicare solvent and avoid large benefit cuts in them. We’ll need further tax increases to help repair a crumbling infrastructure that will otherwise impede economic growth. And if we want to create more opportunity and reduce racial and other barriers and inequities, we’ll also need to raise new revenues to invest more in areas like pre-school education, child care, college affordability, and revitalizing segregated inner-city communities. A UBI that’s financed primarily by tax increases would require the American people to accept a level of taxation that vastly exceeds anything in U.S. history. It’s hard to imagine that such a UBI would advance very far, especially given the tax increases we’ll already need for Social Security, Medicare, infrastructure, and other needs. The Risk UBI’s daunting financing challenges raise fundamental questions about its political feasibility, both now and in coming decades. Proponents often speak of an emerging left-right coalition to support it. But consider what UBI’s supporters on the right advocate. They generally propose UBI as a replacement for the current “welfare state.” That is, they would finance UBI by eliminating all or most programs for people with low or modest incomes. Consider what that would mean. If you take the dollars targeted on people in the bottom fifth or two-fifths of the population and convert them to universal payments to people all the way up the income scale, you’re redistributing income upward. That would increase poverty and inequality rather than reduce them. Yet that’s the platform on which the (limited) support for UBI on the right largely rests. It entails abolishing programs from SNAP (food stamps) — which largely eliminated the severe child malnutrition found in parts of the Southern “black belt” and Appalachia in the late 1960s — to the Earned Income Tax Credit (EITC), Section 8 rental vouchers, Medicaid, Head Start, child care assistance, and many others. These programs lift tens of millions of people, including millions of children, out of poverty each year and make tens of millions more less poor.