4 ms·

"As of 2014, the annual cost of a UBI would have been about $200 billion cheaper than the current system. By 2020, it would be nearly a trillion dollars cheaper

by arcanus 10y ago

"As of 2014, the annual cost of a UBI would have been about $200 billion cheaper than the current system. By 2020, it would be nearly a trillion dollars cheaper." Remarkable how much entitlement spending is booked in the near future.

toomuchtodo 10y ago
Why is that remarkable? We make promises to people in the past and then we're shocked when the bill comes due? No one is ever shocked about all of the SS trust fund cash put into US treasuries (general fund deficit spending), but always shocked that "thats going to need to be paid back one day." https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.htm https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.ht... > The Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, invest it in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them. Trust fund stats: https://www.ssa.gov/oact/STATS/table4a3.html https://www.ssa.gov/oact/STATS/table4a3.html The mind boggles. We've been living like a college student on credit cards, and the bill is coming due.
- drawkbox 10y ago
  Social Security trust funds have been used to keep our dollar/treasuries inflated and are one of the biggest customers of those bonds. They will always have a buyer and part of the reason they are in demand since the mid 1930s. When people talk about removing SS they don't realize what it would do to treasuries as a product, demand would be much lower and so would the value of the dollar. Social Security is the largest owner of US Debt: http://www.forbes.com/sites/mikepatton/2014/10/28/who-owns-the-most-u-s-debt/#34ed09131907 http://www.forbes.com/sites/mikepatton/2014/10/28/who-owns-t...
  - toomuchtodo 10y ago
    We should probably not position ourselves where we require an inflated dollar then, since those trust fund dollars are going to be drawn down as everyone ages onto Social Security.
    - drawkbox 10y ago
      I agree, it is a bit of a house of cards as they say. From the article: The largest owner of U.S. debt is Social Security. Since the Social Security system is a government entity, how can the government own its own debt? Good question. This is where the “house of cards” theory resides. Some believe the federal government is merely moving the IOUs from one shell to another, hoping to escape the watchful eye of its citizens. In any event, Social Security owns about 16% of the debt followed by other federal government entities (13%), and the Federal Reserve (12%. My guess is when it is time to pay or the money dries up, they are going to just disregard the Social Security debt owed or stretch it way out so the house of cards stays up a bit longer.
      - toomuchtodo 10y ago
        > they are going to just disregard the Social Security debt owed or stretch it way out so the house of cards stays up a bit longer. I disagree. Taxes with simply rise (as they should've long ago).
mac01021 10y ago
I don't think this adds up. Here (https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/ https://www.nationalpriorities.org/budget-basics/federal-bud...) is federal spending for 2015. It shows a total federal spending of 3.8 trillion dollars. This is all spending, including 0.5 trillion on the military, 0.2 trillion in interest on debt, and tons of other spending on things that are not welfare or social-safety-net programs. Meanwhile, $13k * 300m people, results in an expense of 3.9 trillion. Greater than the entire federal budget. EDIT: I AM WRONG. The spending proposal from the article does not exceed the entire federal budget, because people who earn more than 30k of income get payed a smaller UBI. I did a rough calculation using the best numbers I could easily find describing the USA's income distribution (good numbers are hard to find). The result was that this proposal would likely cost just short of 3 trillion dollars. Significantly less than the entire 3.8 trillion dollar budget, but still more than we currently spend on entitlements.
- trishume 10y ago
  Indeed, he's probably subtracting the revenue from the tax from the "cost", which is misleading.
- danjoc 10y ago
  There's another source of money not included here. The Fed creates money from nothing. That has to go somewhere. On top of the usual inflationary dollar creation of the Fed, they were doing "Quantitative Easing" for years to the tune of about $85-100 Billion per month given to banks in exchange for known worthless mortgages. So a good quarter of that $3.9 trillion could have been covered just by some "Quantitative Easing" programs for the poor. Since the Fed stopped publishing M2, we don't know how much money is really being created. But it seems to me the logic of "Let's give money to the banks and they will loan it to the people" doesn't work. Here, the argument seems to be: Instead of giving money to the banks with expectations, we just give it directly to the people, cutting out the inefficient middle men entirely.
  - notahacker 10y ago
    I'm more sympathetic to innovative monetary policies than most people that have studied the topic, but the monetary base isn't a money tree and unfortunately virtually every claim you've made is false. The M2 growth figures are available and published by Fed sources. They're nowhere near enough to underwrite a basic income, even if none of that newly created credit was being directed towards useful economic activity https://research.stlouisfed.org/fred2/series/M2 https://research.stlouisfed.org/fred2/series/M2 M2 isn't created by the Fed anyway, it's created by private banks choosing to extend credit to entities they believe are on average productive enough to repay them at prevailing interest rates. It's possible to deter banks from making future loans of course, but I can't imagine doing that to make room for untargeted handouts being a good idea The monetary base the Fed actually is responsible for issuing is much smaller and has actually shrunk since 2014. https://research.stlouisfed.org/fred2/series/BASE https://research.stlouisfed.org/fred2/series/BASE QE was a temporary large-scale response to financial shocks which is designed in principle to be reversible so it's about the worst way of funding the steady stream of expenditure required for BI imaginable. It also consisted of the Fed buying up swapping the cash for existing financial assets in the form of government debt. If they're giving away the newly minted money instead, the amount the Fed can inject into the economy without generating unwanted inflation is much smaller. That might be desirable for a well targeted short term stimulus programme, but a BI certainly doesn't fall into that category (plus you don't get the fringe QE benefit of shrinking the govt debt/interest burden)

by arcanus 10y ago

toomuchtodo 10y ago

Why is that remarkable? We make promises to people in the past and then we're shocked when the bill comes due? No one is ever shocked about all of the SS trust fund cash put into US treasuries (general fund deficit spending), but always shocked that "thats going to need to be paid back one day." https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.htm https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.ht... > The Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, invest it in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them. Trust fund stats: https://www.ssa.gov/oact/STATS/table4a3.html https://www.ssa.gov/oact/STATS/table4a3.html The mind boggles. We've been living like a college student on credit cards, and the bill is coming due.

drawkbox 10y ago
Social Security trust funds have been used to keep our dollar/treasuries inflated and are one of the biggest customers of those bonds. They will always have a buyer and part of the reason they are in demand since the mid 1930s. When people talk about removing SS they don't realize what it would do to treasuries as a product, demand would be much lower and so would the value of the dollar. Social Security is the largest owner of US Debt: http://www.forbes.com/sites/mikepatton/2014/10/28/who-owns-the-most-u-s-debt/#34ed09131907 http://www.forbes.com/sites/mikepatton/2014/10/28/who-owns-t...
- toomuchtodo 10y ago
  We should probably not position ourselves where we require an inflated dollar then, since those trust fund dollars are going to be drawn down as everyone ages onto Social Security.
  - drawkbox 10y ago
    I agree, it is a bit of a house of cards as they say. From the article: The largest owner of U.S. debt is Social Security. Since the Social Security system is a government entity, how can the government own its own debt? Good question. This is where the “house of cards” theory resides. Some believe the federal government is merely moving the IOUs from one shell to another, hoping to escape the watchful eye of its citizens. In any event, Social Security owns about 16% of the debt followed by other federal government entities (13%), and the Federal Reserve (12%. My guess is when it is time to pay or the money dries up, they are going to just disregard the Social Security debt owed or stretch it way out so the house of cards stays up a bit longer.
    - toomuchtodo 10y ago
      > they are going to just disregard the Social Security debt owed or stretch it way out so the house of cards stays up a bit longer. I disagree. Taxes with simply rise (as they should've long ago).

mac01021 10y ago

I don't think this adds up. Here (https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/ https://www.nationalpriorities.org/budget-basics/federal-bud...) is federal spending for 2015. It shows a total federal spending of 3.8 trillion dollars. This is all spending, including 0.5 trillion on the military, 0.2 trillion in interest on debt, and tons of other spending on things that are not welfare or social-safety-net programs. Meanwhile, $13k * 300m people, results in an expense of 3.9 trillion. Greater than the entire federal budget. EDIT: I AM WRONG. The spending proposal from the article does not exceed the entire federal budget, because people who earn more than 30k of income get payed a smaller UBI. I did a rough calculation using the best numbers I could easily find describing the USA's income distribution (good numbers are hard to find). The result was that this proposal would likely cost just short of 3 trillion dollars. Significantly less than the entire 3.8 trillion dollar budget, but still more than we currently spend on entitlements.

trishume 10y ago
Indeed, he's probably subtracting the revenue from the tax from the "cost", which is misleading.
danjoc 10y ago
There's another source of money not included here. The Fed creates money from nothing. That has to go somewhere. On top of the usual inflationary dollar creation of the Fed, they were doing "Quantitative Easing" for years to the tune of about $85-100 Billion per month given to banks in exchange for known worthless mortgages. So a good quarter of that $3.9 trillion could have been covered just by some "Quantitative Easing" programs for the poor. Since the Fed stopped publishing M2, we don't know how much money is really being created. But it seems to me the logic of "Let's give money to the banks and they will loan it to the people" doesn't work. Here, the argument seems to be: Instead of giving money to the banks with expectations, we just give it directly to the people, cutting out the inefficient middle men entirely.
- notahacker 10y ago
  I'm more sympathetic to innovative monetary policies than most people that have studied the topic, but the monetary base isn't a money tree and unfortunately virtually every claim you've made is false. The M2 growth figures are available and published by Fed sources. They're nowhere near enough to underwrite a basic income, even if none of that newly created credit was being directed towards useful economic activity https://research.stlouisfed.org/fred2/series/M2 https://research.stlouisfed.org/fred2/series/M2 M2 isn't created by the Fed anyway, it's created by private banks choosing to extend credit to entities they believe are on average productive enough to repay them at prevailing interest rates. It's possible to deter banks from making future loans of course, but I can't imagine doing that to make room for untargeted handouts being a good idea The monetary base the Fed actually is responsible for issuing is much smaller and has actually shrunk since 2014. https://research.stlouisfed.org/fred2/series/BASE https://research.stlouisfed.org/fred2/series/BASE QE was a temporary large-scale response to financial shocks which is designed in principle to be reversible so it's about the worst way of funding the steady stream of expenditure required for BI imaginable. It also consisted of the Fed buying up swapping the cash for existing financial assets in the form of government debt. If they're giving away the newly minted money instead, the amount the Fed can inject into the economy without generating unwanted inflation is much smaller. That might be desirable for a well targeted short term stimulus programme, but a BI certainly doesn't fall into that category (plus you don't get the fringe QE benefit of shrinking the govt debt/interest burden)