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The Reality of Universal Basic Income


Published: October 23, 2019

The Universal Basic Income (UBI) is a proposed government program that would provide an annual cash benefit to all Americans above a certain age. However, any method of implementing a UBI would be prohibitively costly, especially if it were added on top of the existing social safety net. And replacing all other government programs with a UBI would cut benefits for many poor and elderly Americans. Ultimately, the UBI would fail to accomplish its intended outcomes.

Discussion Questions

  1. Can Universal Basic Income reduce inequality?
  2. Can basic income hurt the economy and lead to lower productivity?

Additional Resources

  • Read “The Case Against a Basic Income Guarantee” by David Henderson, available here.
  • Read “Universal Basic Income, In Perspective” by David R. Henderson, available here.
View Transcript

Some people are suggesting that we create a new government program called Universal Basic Income or “UBI” ... 

Which would give an annual cash grant, typically about $10,000, to all American citizens above a certain age. 

The UBI would be designed to help people the same way that other programs in our social safety net do. 

But there’s one crucial question to ask: 

would it be added on top of them? 

or would this new program replace all other federal assistance programs? 

Unfortunately, adding a UBI on top of existing programs is prohibitively costly. 

The only way the U.S. government could implement a significant UBI 

would be to substitute it for all other safety net programs – including Medicare, Medicaid, and Social Security. 

But that would then create huge numbers of big winners and big losers. 

Old and low-income Americans would face sharp cuts in total government assistance. 

Healthy and able-bodied people would receive a notable income jump. 

These distributional consequences would lead to fierce political opposition. 

Universal basic income would either be far too costly 

OR it would produce massive redistributive effects that would hurt the poor and elderly.