Universal Basic Income For Children

The Wall Street Journal has an article about the possibility of a Universal Basic Income (UBI) for children. At the moment, there are two basic ideas. One is proposed by President Biden. The other is proposed by Senator Mitt Romney. Both plans propose to provide families with anywhere between $3000 to $4200 in tax credits per child, which would replace some of the existing programs that often disqualify recipients for any number of reasons.

Federal assistance programs often come with criteria that qualify people to receive them, such as being poor, unemployed, or disabled. This also disqualifies many who may be in need but do not meet the criteria. Existing child tax credits also require that parents owe tax in order to qualify. The new proposals would only disqualify families earning high incomes. Furthermore, payments would be received monthly rather than annually, even for parents who do not have any other income whatsoever, meaning they would not have paid any federal taxes for the year.

Current assistance programs are as much of a hindrance as they are a help to recipients. If you are low income and qualify for benefits, you regularly need to recertify that your are in need, which often entails lengthy applications and submissions of documents. Benefits programs are also extremely intolerant of recipients getting ahead. Earning any amount above a threshold results in losing most or all benefits. There is no taper. Recipients are also not permitted to own any assets above certain values.

In principle, a child UBI seems like it would be more equitable and helpful to struggling families than existing benefits programs. The plans also seem simpler in execution.

There is no conclusive data to support or discredit the idea of a Universal Basic Income. Studies can't seem to conclusively prove that UBI works or does not work.

I find myself uncertain about how to look at UBI. Economist, Milton Friedman, was known to support the idea of a Universal Basic Income. He thought that if you were going to give people assistance, you ought to let them spend that money as they see fit, which is not the way benefits work today. Friedman's thinking was that UBI would enable work and increase equality.

With regards to enabling work, current welfare programs, as mentioned earlier, tend to punish recipients for working and bettering themselves by cutting off all benefits. A UBI, in Friedman's opinion, would be a boost for people to lift themselves out of poverty by being rewarded rather than punished for earning more.

In terms of equality, a UBI would not take into account race, class, or religion. Universal would mean universal, almost. Again, high income individuals or families would be excluded.

By making UBI focused on children, it solves some of the inefficiencies of the welfare system and targets the majority of people who would likely need federal benefits. Parents are mostly young. You have to be of child bearing age to have children. However, even if you are of retirement age and have to adopt your grandchildren, UBI would offset some of the added burden of raising children on a fixed income.

Even if a family can get by without a child UBI, it couldn't hurt to put away the UBI payments in savings to pay for college or a first home for their child. Or, even if the money is comingled as family money, it can raise the standard of living for families.

One side effect may be that we see an increase in how many children couples have. This is an advantage in ensuring that we have a growing workforce for the future rather than have to import workers through immigration.

It would be easy to oppose a Universal Basic Income for adults. I think it would be challenging to be in opposition to a UBI for children. The idea is pro-family and would cut out a great deal of government bureaucracy. And, it also plays to the populist sentiment on immigration. It is going to be difficult to oppose the idea of a child UBI with any conviction. Of course, once the data comes in on the efficacy of at least this UBI, it may be enough to bring in the same program for adults.

One can only speculate on what the economic effects a UBI would have on a nation. We would never truly know until it happens. Obviously, markets would shift to account for UBI. But, which ones? Would people spend it? Save it? Buy crypto?

Posted Using LeoFinance ^Beta