5 ms·

How much would it cost to provide universal basic income to the US?

by nxzero 10y ago

adventured 10y ago
Short answer: several trillion dollars. 242 million adults in the US. Just $10,000 per adult is $2.4 trillion. That of course wouldn't come close to being enough. Even if you assume tax redistribution of the money (rich people getting UBI, and then having it taxed away), for $2.4 trillion you probably would only manage to get the poorest 1/4 up to something like $15,000. Today the poorest 1/4 are receiving a net of more than twice that sum between Federal and State benefits. Federal budget ($3.9 to $4.1 trillion or so depending on which year we're talking about) minus dozens of things that won't be replaced by UBI and won't go away (eg NASA, military, agriculture subsidies, budgets for countless agencies like HSA or FBI, transportation, justice and so on) = you might be lucky to break even or bleed just a few hundred billion on the budget if you allocate $2.4 trillion to UBI. That's assuming Social Security, all housing subsidy programs, all welfare programs, half of all social services programs, Medicare, Medicaid, Obamacare etc etc are all ended. The equation at the state level is a whole 'nother calculation, and would be a very significant factor given the states budget is another ~$1.7 trillion and represents all sorts of welfare programs and healthcare spending. Personally I favor Warren Buffett's premise of significantly boosting the earned income tax credit, and freezing or lowering the minimum wage. The UBI is dramatically regressive, there's no reason to be giving the top 50% in the US a UBI.
- Yhippa 10y ago
  This is what I was wondering. The top 50% certainly don't need UBI. If everyone got it wouldn't sellers immediately increase prices and we'd be right where we started? A loaf of bread for $50.
  - omegaham 10y ago
    This is where I'm confused about the benefits of UBI. So, say that we institute UBI, and people no longer have to work. That increases the cost of labor - you can't attract a cashier for $9.30 an hour, so you have to pay $15 an hour or whatever. This has to be passed right back to the consumer, so prices go up. Rent goes up as well - maintaining property takes labor as well. Now, the UBI is no longer sufficient to sustain a decent life, and the poor are right back to where they started.
    - learc83 10y ago
      This argument is also used against increases in the minimum wage. Now almost everything in economics is up for debate, but very few economists agree that raising the minimum wage by X dollars will result in prices rising by X dollars so that the effect is non-existent. There are several reasons for this, the biggest is that cost of labor isn't the only input in pricing. Basically the cost of supply constrained goods will go up, but not enough to outweigh the increased purchasing power for lower income earners.
      - getgoingnow 10y ago
        very few economists agree that raising the minimum wage by X dollars will result in prices rising by X dollars so that the effect is non-existent You are looking for obvious increase in prices, but raising prices is unpopular with consumers. Instead, companies will move the production offshore, lay people off, make smaller packages [2], use machines, use cheaper ingredients etc. and those things create the illusion that the price is not rising. Price is the same, but the quality (of goods/services & of life in communities) is going down. cost of labor isn't the only input in pricing It's the main one, since the biggest cost to most companies are employees + suppliers (that also have their own employees). Increase in the price of labor will certainly have an effect - if not directly on higher prices, then on quality. [2] https://en.wikipedia.org/wiki/Shrinkflation
        learc83 10y ago
        Of course it will affect price, I never said that it wouldn't. The argument is that it doesn't have an effect large enough to negate the extra income.
    - deleted 10y ago
      [deleted]
  - learc83 10y ago
    >A loaf of bread for $50. Only if a loaf of bread is supply constrained or there are no competing bread suppliers or alternate goods. >The top 50% certainly don't need UBI The top 50% get a UBI, but most plans would pay for it by increasing taxes on the wealthy. There would be a cutoff, so that above a certain point you'd be paying more in extra taxes than you'd receive in UBI. The vast majority of UBI plans definitely aren't regressive.
- learc83 10y ago
  The top 50% get a UBI, but most plans would pay for it by increasing taxes on the wealthy. There would be a cutoff, so that above a certain point you'd be paying more in extra taxes than you'd receive in UBI. I can't remember seeing a single UBI plan that is regressive. The goal of almost all of them is increased income equality. There's not really a difference in this and increasing the EITC except in perception--eliminating means testing so that everyone gets the UBI, which many people think is important.

How much would it cost to provide universal basic income to the US?

by nxzero 10y ago

How much would it cost to provide universal basic income to the US?

Short answer: several trillion dollars. 242 million adults in the US. Just $10,000 per adult is $2.4 trillion. That of course wouldn't come close to being enough. Even if you assume tax redistribution of the money (rich people getting UBI, and then having it taxed away), for $2.4 trillion you probably would only manage to get the poorest 1/4 up to something like $15,000. Today the poorest 1/4 are receiving a net of more than twice that sum between Federal and State benefits. Federal budget ($3.9 to $4.1 trillion or so depending on which year we're talking about) minus dozens of things that won't be replaced by UBI and won't go away (eg NASA, military, agriculture subsidies, budgets for countless agencies like HSA or FBI, transportation, justice and so on) = you might be lucky to break even or bleed just a few hundred billion on the budget if you allocate $2.4 trillion to UBI. That's assuming Social Security, all housing subsidy programs, all welfare programs, half of all social services programs, Medicare, Medicaid, Obamacare etc etc are all ended. The equation at the state level is a whole 'nother calculation, and would be a very significant factor given the states budget is another ~$1.7 trillion and represents all sorts of welfare programs and healthcare spending. Personally I favor Warren Buffett's premise of significantly boosting the earned income tax credit, and freezing or lowering the minimum wage. The UBI is dramatically regressive, there's no reason to be giving the top 50% in the US a UBI.

Yhippa 10y ago
This is what I was wondering. The top 50% certainly don't need UBI. If everyone got it wouldn't sellers immediately increase prices and we'd be right where we started? A loaf of bread for $50.
- omegaham 10y ago
  This is where I'm confused about the benefits of UBI. So, say that we institute UBI, and people no longer have to work. That increases the cost of labor - you can't attract a cashier for $9.30 an hour, so you have to pay $15 an hour or whatever. This has to be passed right back to the consumer, so prices go up. Rent goes up as well - maintaining property takes labor as well. Now, the UBI is no longer sufficient to sustain a decent life, and the poor are right back to where they started.
  - learc83 10y ago
    This argument is also used against increases in the minimum wage. Now almost everything in economics is up for debate, but very few economists agree that raising the minimum wage by X dollars will result in prices rising by X dollars so that the effect is non-existent. There are several reasons for this, the biggest is that cost of labor isn't the only input in pricing. Basically the cost of supply constrained goods will go up, but not enough to outweigh the increased purchasing power for lower income earners.
    - getgoingnow 10y ago
      very few economists agree that raising the minimum wage by X dollars will result in prices rising by X dollars so that the effect is non-existent You are looking for obvious increase in prices, but raising prices is unpopular with consumers. Instead, companies will move the production offshore, lay people off, make smaller packages [2], use machines, use cheaper ingredients etc. and those things create the illusion that the price is not rising. Price is the same, but the quality (of goods/services & of life in communities) is going down. cost of labor isn't the only input in pricing It's the main one, since the biggest cost to most companies are employees + suppliers (that also have their own employees). Increase in the price of labor will certainly have an effect - if not directly on higher prices, then on quality. [2] https://en.wikipedia.org/wiki/Shrinkflation
      - learc83 10y ago
        Of course it will affect price, I never said that it wouldn't. The argument is that it doesn't have an effect large enough to negate the extra income.
  - deleted 10y ago
    [deleted]
- learc83 10y ago
  >A loaf of bread for $50. Only if a loaf of bread is supply constrained or there are no competing bread suppliers or alternate goods. >The top 50% certainly don't need UBI The top 50% get a UBI, but most plans would pay for it by increasing taxes on the wealthy. There would be a cutoff, so that above a certain point you'd be paying more in extra taxes than you'd receive in UBI. The vast majority of UBI plans definitely aren't regressive.
learc83 10y ago
The top 50% get a UBI, but most plans would pay for it by increasing taxes on the wealthy. There would be a cutoff, so that above a certain point you'd be paying more in extra taxes than you'd receive in UBI. I can't remember seeing a single UBI plan that is regressive. The goal of almost all of them is increased income equality. There's not really a difference in this and increasing the EITC except in perception--eliminating means testing so that everyone gets the UBI, which many people think is important.