Funding Universal Basic Income in the United States

Universal Basic Income (UBI) is a proposal gaining traction, especially in a country as economically diverse as the United States. The concept of UBI involves providing every individual with a certain amount of money to cover their basic needs, ensuring a baseline standard of living without the need for means-testing or benefit applications. This article explores how such a system could be funded and the potential savings that can arise from its implementation.

The Funding Mechanism and Federal Spending

UBI, if implemented, would be subject to similar funding mechanisms as other federal spending. Checks would be issued and sent to recipients much like the Social Security system operates today. However, the cost implications of UBI would bring up significant challenges. For a single adult person in the U.S., a typical UBI proposal suggests a financial package of approximately $12,000 per year. This totals around $2.5 trillion annually, a considerable sum.

Current Federal Budget Overview

To put the required funding into perspective, let's look at the current U.S. federal budget. Key areas include:

These figures add up to approximately $3.576 trillion. If we exclude Social Security and Medicare, which already provide benefits, the remaining budget is $2.456 trillion. This still falls short of the required $2.5 trillion by $44 billion. This shortfall would force us to reconsider funding priorities. For instance, the Department of Education, Department of Energy, or Department of Transportation might need to be scaled back or eliminated.

Administrative and Economic Benefits of UBI

One of the significant advantages of UBI is its administrative simplicity. Since everyone receives the same payment, there is no need for complex government bureaucracy. A small staff would be needed to track births and deaths to ensure accurate payments and maintain bank accounts for recipients. This streamlined approach is highly cost-effective and would significantly reduce the paperwork and administrative costs associated with welfare programs.

UBI and Welfare Programs

One of the most substantial advantages of UBI is its ability to obsolesce the entire welfare system. Programs like Social Security pensions, government disability insurance, and various welfare programs currently aimed at supporting those in need would become redundant. Additionally, student loans and other financial assistance could be disbanded, as UBI would effectively replace these support mechanisms. The savings from eliminating these programs can significantly contribute to funding UBI.

Taxation Strategy

The funding for the remaining gap can come from a tax strategy that raises rates on non-UBI income. People currently receiving the UBI would find that the additional taxes on their income don't diminish their overall net income. For example, a household earning a median income of $55,000 would initially pay $8,000 in federal taxes. With a UBI of $20,000, the household would pay about $20,000 more in taxes, totaling $28,000. Before UBI, the net income was $47,000; after UBI, the same income would still yield a net of $47,000.

Impact of UBI on Society and the Economy

Beyond the direct financial benefits, UBI could lead to significant societal and economic improvements. For instance, UBI could help reduce crime rates, as a considerable amount of criminal activity is linked to poverty. Lower crime levels would mean savings on law enforcement, prisons, and related expenses, which can be redirected towards funding UBI. Additionally, a universal healthcare system paired with UBI could further enhance the benefits and reduce overall costs.

Conclusion

While the implementation of UBI in the United States presents significant challenges, the potential benefits are substantial. By reprioritizing federal spending, simplifying administration, and strategically raising tax rates, it is feasible to fund UBI. The long-term savings and social benefits can make UBI a viable solution to ensure a more stable and equitable society.