Universal programs like BIs result in legislative trade-offs with more redistributive welfare--- turns case

The primary answer is that universal programs cost considerably more than targeted programs, and strong political opposition to raising taxes makes it extremely difficult to generate the federal taxes needed to support a mostly or fully universal strategy. As a result, were policymakers to pursue a largely or entirely universal approach to social programs, they could risk squeezing the funding available for people in greater need, as well as funding for other essential government endeavors outside of benefit programs (e.g., addressing climate change and expanding the stock of affordable housing).

Proposals to create a Universal Basic Income (UBI) help illustrate some of these trade-offs. Economists Hilary Hoynes and Jesse Rothstein (2019) note that a “truly universal UBI would be enormously expensive,” with the mostdiscussed kinds of UBIs costing “nearly double current total spending on the ‘big three’ programs (Social Security, Medicare, and Medicaid)” (2). A CRS analysis of two prominent UBI proposals found they would cost $2 trillion to $3 trillion a year, or $20 trillion to $30 trillion over a decade (CRS 2018),72 representing roughly half of all current federal noninterest spending. Nor would taxing UBI benefits reduce the cost to manageable levels; according to the Tax Policy Center (2022), in 2019 nearly three-quarters (72 percent) of Americans were in the 0 percent, 10 percent, or 12 percent income tax brackets, so taxing UBI payments would lower UBI’s cost only modestly. Hoynes and Rothstein also note that “replacing existing anti-poverty programs with a UBI would be highly regressive unless substantial additional funds were put in (24), because policymakers would be redistributing—to higher-income households—some income and other benefits that social programs now provide to people with low or modest incomes.

Some UBI proponents and others who favor a largely or entirely universal approach to social programs may respond that policymakers should not worry about the much higher costs, reflecting a view that the economy can tolerate considerably higher deficits and debt than previously thought, largely because real interest rates have been significantly lower in recent years than economists had projected. But policymakers cannot ignore cost considerations—and interest rates now are rising as the Federal Reserve moves to lower inflation.

In a 2021 paper, Peter Orszag, Robert Rubin, and Joseph Stiglitz discuss whether there are limits, or what they call fiscal anchors, on the amounts of deficits and debt the federal government can safely incur. “We are skeptical,” they write, “that we can define a top-down fiscal anchor that is sensible and can be implemented in the face of substantial uncertainty over budget forecasts. But we believe it is prudent to assume there is a fiscal limit somewhere even if we do not know where it is” (18). Economists generally agree there are fiscal limits even though they disagree on what those limits may be.

Political economy issues also are important. “Even if there were not such a [fiscal] limit,” Orszag, Rubin, and Stiglitz (2021) note, “if large parts of the population believe there is, it is prudent to be mindful of such in the budget” (18). In other words, if a large share of policymakers and the public believe there are such limits, that will likely constrain the options in crafting legislation. If so, overreliance on universality could squeeze funds for other vital needs, and people of lesser means could fare less well than they would under a mix of universal and targeted programs (Greenstein 2019). For any given amount of funding that policymakers elect to provide, targeted programs can deliver more-substantial benefits to people of lesser means than universal programs would.