Basic Income and the U.S. Welfare State

Michael Anthony Lewis

Professor, Silberman School of Social Work at Hunter College

and the CUNY Graduate Center

In the introduction to this series, I defined a UBI as an amount of money, “that people would periodically receive, on an individual basis, and without income/asset-test or work requirement.” Nowhere in this definition does it say that the money has to come from government. But I suspect that many U.S. proponents of UBI imagine that it would be implemented by government. This raises the question of how UBI would fit in with what the U.S. government currently does. And from that question arises another one: what does the U.S. government currently do? 

Well the U.S. government actually does quite a bit, around $6.6 Trillion of quite a bit (https://www.cbo.gov/topics/budget). I won’t go into all the things it does, but only those “in the neighborhood” of UBI. These are things which make up what many call the U.S. welfare state. The major categories the U.S. welfare state are income support programs, housing programs, health care programs, and food programs. 

A distinction which is relevant to all of these categories is that between income/asset-tested, also called means-tested, and non-income/asset-tested, also called non-means-tested or universal, programs. Means-tested programs are those which folks can only qualify for if their incomes plus assets are less than a given level. Universal programs are those which folks of any income plus asset level can qualify for, assuming they meet all other eligibility requirements of a given program.

Income support programs, as you might guess, are those which provide income to folks eligible to receive benefits. An example of a universal income support program is Social Security. It provides income to those who’ve reached retirement age but who also, prior to retirement, sold their labor for at least 10 years. Temporary Assistance for Needy Families (TANF) is an example of a means-tested income support program. It provides benefits to poor, primarily young women with young children. 

Housing programs provide benefits to both renters as well as owners. An example of a benefit for renters is Section 8 housing. This is a federal program which provides vouchers to eligible participants; these vouchers are then used to help them pay their rents. That is, if someone’s rent is $X per month, they only pay a fraction of that. The rest is covered by the voucher. The landlord redeems the voucher to the federal government, which then covers the rest of the rent. In essence, Section 8 is just a housing subsidy. It’s also means-tested.

Public housing, more commonly called the Projects, is another means-tested federal housing program. This is government owned, rental housing which is provided to low and moderate-income tenants. There’s another federal housing program which many might not think of as part of the U.S. welfare state: the federal income tax deduction that homeowners can receive. 

Many who own homes had to borrow money to purchase them; this type of loan is also called a mortgage. Of course, whenever a person borrows money from someone else, they typically have to pay that money back with interest. The tax deduction for homeowners, allows them to deduct the interest paid on their mortgages from their taxable incomes. Depending on the level of a homeowners’ taxable income, this deduction could put them in a lower tax bracket, reducing the amount they’d owe in taxes. Since, similar to Section 8 and public housing, the goal of this program is ostensibly to help folks gain access to housing, it’s arguably part of the U.S. welfare state. But, unlike Section 8 and public housing, it’s universal not means-tested. 

Government provided health programs offer insurance to eligible participants. They also provide clinical services to patients seen at government owned clinics or hospitals. Such facilities are also known as public clinics or hospitals. An example of a means-tested health insurance program is Medicaid. Many younger, low-income folks receive benefits through this program. However, a substantial number of older persons residing in nursing homes do as well. Medicare is a universal program which provides benefits to retired persons. It’s sort of the health insurance version of Social Security. The Affordable Care Act, also known as Obama Care, is a means-tested program which subsidizes the cost of health insurance for eligible participants.

Food programs are the government’s way of providing access to food and nutrition. An example of a means-tested food program is the Supplemental Nutrition Assistance Program (SNAP), also known as the Food Stamp program. It provides access to certain types of foods to eligible persons in low-income households. Other examples of mean-tested food programs are free or low-cost school breakfast and lunch programs. 

The programs I’ve covered here are just the tip of the iceberg when it comes to the U.S. welfare state. If you’re familiar with that welfare state, especially how it compares to others, such as those in Continental Europe or the Nordic countries, you might be very critical of much of what I’ve said. That is, you might believe that the U.S. welfare state is so inadequate that it barely is a welfare state, assuming it is one at all. 

All I’ll say in response is that my purpose in this post isn’t to take a position on how well the U.S. welfare state addresses the needs it claims to address. It’s simply to provide an overview of what the U.S. welfare state currently does, adequate or not, in an effort to show how a UBI would fit in. 

If a UBI were introduced, but nothing else about the U.S welfare state were changed, it would fall within the category of income support programs, along with Social Security and TANF. Unlike TANF, it wouldn’t be means-tested. Instead, like Social Security, it would be universal. Hence, the name universal basic income

I said above that, “if a UBI were introduced, but nothing else about the U.S. welfare state were changed, ….” This raises the question of whether, assuming a UBI were introduced, nothing else should be changed. I’ll focus on that question later in the series. The point of this post was to provide some of the background required to better understand it as well as possible answers to it.      

     

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