My Proposal for an Emergency UBI That Transitions Into a Permanent UBI
In February of 2020 I joined Mike Broihier's team for his U.S. Senate run in Kentucky as his senior policy advisor and was tasked with the design of his UBI plan. With the economic shutdown that soon followed as a result of the novel coronavirus pandemic, this plan also incorporated an emergency UBI into it as something different than what otherwise would have just been a plan for a permanent UBI. The following is the completed proposal that officially became part of Broihier's platform in April 2020.
In response to the COVID-19 crisis and its economic fallout, this plan proposes an emergency universal basic income of $2,000 for every U.S. resident over 18, plus $1,000 for those under 18, immediately be provided monthly until one month after the U.S. is officially out of recession, at which point the amounts would be lowered to $1,200 for adults and $400 per child as a permanent UBI floor that’s indexed to GDP per capita. In addition to a permanent UBI, this plan also proposes the implementation of Federal Reserve-distributed universal stimulus payments, carbon dividends, patent dividends, and a national dividend-paying wealth fund that would all exist as income additional to UBI. This plan will protect Americans from the economic repercussions of the novel coronavirus, reboot the economy out of the resulting recession, increase America’s resilience to future disasters, and abolish poverty in America once and for all.
The novel coronavirus pandemic has done the impossible and brought the economy of the United States to its knees. To prevent the deaths of millions of Americans, social distancing has been implemented and stay-at-home orders have been given in most states and will more than likely soon be all states. This has shut down most consumer-facing businesses which has in turn resulted in over ten million Americans being thrown out of employment in just two weeks, a number that is expected to potentially exceed over 50 million by the end of the June as estimated by the St. Louis Fed. These numbers exceed the percentage of Americans unemployed even at the height of the Great Depression.
To be anywhere near sufficient, an economic response to a crisis of this magnitude must be swift and massive, and focus on the most important thing of all - the American people. Because nothing is more important than the safety and well-being of every single American, everyone should immediately and directly be provided with a sufficient amount of income to enable every American to weather this storm, employed or unemployed. It is also impossible to know what will happen in the months ahead, so means-testing must be avoided. Someone could be expecting to earn $100,000 and have that drop to $0. For this reason a floor needs to be built underneath everyone, so that regardless of whatever happens, they will not have less than that minimum amount, and that amount will be sufficient to cover the rent or mortgage, food, utilities, and other basic expenses apart from healthcare.
To achieve the payments of monthly bills in order to keep the economy going at a minimal level, and to lift the burden of wages and salaries off of employers to better enable them to cover their own monthly bills without laying off their employees and instead allowing everyone unlimited unpaid leave, $2,000 per adult and $1,000 per kid of Emergency Universal Basic Income (E-UBI) is to be provided each and every month until this crisis has ended and the economy has been revved back up out of recession. For a family of two parents and two kids, this would amount to $6,000 per month.
The E-UBI is to be financed directly by the United States Treasury through the coining of $1 trillion platinum coins, bearing President Trump's face on one side, which the Fed will be required to purchase at face value. This method of funding has also been proposed by Rashida Tlaib in her ABC Act and is made possible under under 31 U.S.C. § 5112(k). This method is preferred over deficit expansion because by not raising the deficit, it is more likely to not result in austerity measures down the road by concerns over a massively-increased national debt that is entirely unnecessary to accomplish the task of monetary expansion to maintain liquidity.
Distribution of E-UBI would be handled by the IRS or SSA, whichever is faster, and people would be provided with the ability to choose direct deposits. Simultaneously, debit cards would be created for everyone, which would be distributed in a second phase as part of the introduction of personal Fed accounts and USPS banking further discussed below.
Unlike any other plan out there, after this crisis is over, instead of ending the E-UBI payments, this plan would lower the emergency amount to a permanent amount, switch from monetary financing to fiscal financing, and would then exist in perpetuity as the largest expansion of Social Security in American history, by creating a permanent floor of economic security under everyone of all ages, eliminating poverty in America by existing as a floor just above the Federal poverty line.
Being that the Federal poverty line is currently defined as $12,760 for a household of one with an additional $4,480 with every additional household member, and being that this universal basic income will be funded by a new 10% flat value-added tax on all goods and services, this plan would raise the Federal poverty line by 10% to account for 100% of the VAT being passed onto consumers, even though only around 55% of it is expected to be passed on. Therefore, the permanent UBI will be set at $1,200 per month so all single adults will start every month above the poverty line, with an additional $400 per child so that households of all sizes also start every month above the poverty line.
The fiscal financing for this permanent UBI floor set above the poverty line, aside from the aforementioned 10% VAT would be primarily the elimination of tax expenditures otherwise known as tax credits, deductions, subsidies, and loopholes. These tax expenditures exceed $1.5 trillion every year, 17% of which flows only to the top 1%. This would include the elimination of the standard deduction, the earned income tax credit, and the home mortgage interest rate deduction among others.
Additional financing would come from treating the UBI as qualifying income for means-tested programs, which would reduce the total number of people qualifying for those programs, just as if they had won a $1,200 a month lottery or inheritance. All safety net programs would continue to exist with fewer people requiring them, save for TANF which would be eliminated as redundant. Instead of issuing $16 billion in block grants to states to provide to only 22% of those they consider “deserving” on average, that money would flow directly to everyone which includes 5 out of 5 of those living in poverty, instead of only 1.1 of 5.
Most importantly, this plan recognizes that all Americans are currently paying a poverty tax that exceeds $1 trillion a year for child poverty alone. Considering the full costs of poverty, and the chronic stress and insecurity that results from the fear of poverty, the United States is presently choosing to spend more to sustain poverty than it would to eliminate it. If seen as a tax on everyone on a daily basis, on just about everything, the elimination of poverty through this UBI plan would actually reduce taxes, not increase them. It would even reduce the taxes necessary to achieve universal healthcare, by creating a healthier population that requires fewer health interventions. 80-90% of all health outcomes are due to the social determinants of health, not medical care, so this plan would function as a vaccine approach to healthcare by immunizing the population from social determinants like poverty, extreme inequality, and insecurity.
A permanent UBI that eliminates poverty will also mean being better prepared for the next disaster. Imagine if we already had this UBI before this pandemic started. More people would have been able to self-quarantine. More people would have more money to be consumers in their local economies, helping to keep local businesses afloat. Fewer people would be unemployed. Fewer people would be unable to pay their bills. Food banks would be less swamped. Less stressed people would also mean stronger immune systems, further flattening the curve. In any disaster scenario, having an economic floor underneath everyone would lead to better outcomes for everyone and for local economies.
In preparation for the next national disaster, this plan also establishes a new ability of the Fed to directly inject liquidity into the economy through people instead of just banks through the establishment of basic personal accounts at the Fed. These accounts would exist as a means of providing a basic bank account to all American citizens and legal residents with a Social Security Number, that they could access online, through their debit card at all ATMs, and in person at post offices through the adoption of USPS Postal Banking. Aside from functioning as a means of direct deposit for UBI, these Fed accounts would also operate as a new means of liquidity injection. If these accounts already existed, the Fed could have provided a $1200 stimulus payment to everyone immediately, weeks before Congress ever even considered $1200 stimulus checks. Fed accounts will supply an important new tool to the Fed to better manage our economy, especially during recessions, or to even avoid them.
Being that one of the most important disasters of all to avoid is climate breakdown, this plan also proposes the implementation of a carbon tax that would rise at a steady rate annually and where the revenue would be distributed on top of the UBI as an additional dividend. No plan in the history of economics has more support from economists than a carbon tax and dividend strategy to combat climate change. Over 3,300 economists have signed a statement in support of this strategy. This plan proposes an immediate carbon tax of $40 per ton followed by annual increases of $15 per ton, and with border carbon adjustments to encourage other nations to do the same. In three years this would mean an additional $100 per month and CO2 levels reduced to half of 2005’s levels by 2026, exceeding the Paris Climate Accord target of a 26%-28% reduction by then.
Using the carbon tax and dividend model, this plan also proposes a patent fee and dividend where the maintenance of patents requires an annually doubling renewal fee. Just as pollution is an externality of fossil fuel use, a smaller public domain and patent trolling are externalities of intellectual property protections. The granting of temporary monopoly protections is recognized as a driver of innovation, but it is also recognized as an inhibitor of competition. These protections are granted by the People, and so the People should benefit from the investment in such protections, just as a stockholder sees a return on their investments.
It is by recognizing the People of the United States as stockholders in the United States that this plan also proposes the creation of a national sovereign wealth fund similar to Alaska’s Permanent Fund. This fund would be created by a one-time market capitalization tax of 3% applied to all public companies to be paid in issuance of new stock. Every year, all public companies would be required to issue another 0.5% of new stock for the fund. All IPOs would be required to issue 3% to be granted an IPO, and all mergers and acquisitions would only be approved by the same 3% of stock for the fund. In times of crises where bailouts are required, public companies will be required to issue 5% of stock into the fund as a condition to receive a bailout. All inheritance taxes would also be shifted to the fund in recognition that as Thomas Paine said, “man is always related to society,” thus some part of all inheritance should fall to every individual in society. This would help make the fund a trust fund for all, instead of only the fortunate few. Just as in Alaska, this fund would pay a dividend, but this dividend would be issued monthly instead of annually as an amount on top of the UBI.
Considering that Social Security was created as a means of providing a form of basic income to seniors, and considering that all seniors receiving UBI have paid into the system to receive it, Social Security will remain untouched and all of Social Security (including SSDI and SSI) will exist on top of the UBI and all dividend payments. However, because there is less need for Social Security going forward, this plan proposes that Social Security taxes be reduced from 6.2% on employees and 6.2% on employers to 4% on employees and 4% on employers. Taxes on the self-employed would be reduced from 12.4% to 8%. This reduction in taxes would also offset any decrease in buying power resulting from the VAT’s impact on prices. It is also proposed that the Social Security cap be lifted so that everyone pays the same into the system, instead of excluding high earners.
This plan also encourages all states and municipalities to follow Alaska’s lead and introduce their own state-wide and city-wide dividends on top of the national UBI utilizing their natural resources as Alaska does, and also ideas like land-value taxation in order to make sure everyone creating the value of land sees their share of that value creation instead of it only going as windfalls to the landowners themselves. This would also serve to decrease land speculation and improve land usage through increased development, which would in turn make housing more affordable.
At a time of great crisis, this is an opportunity to not only do what must be done for the protection of every American by preventing unnecessary deaths and mass suffering of historic proportions, but it’s also an opportunity to help prevent/allay future crises, and to prevent/allay the needless suffering and personal crises that have existed in the lives of every American for centuries. It’s time we abolish poverty and enable mass prosperity. America was founded on the ideals of life, liberty, and the pursuit of happiness. Now is the time to recognize those ideals, and to live up to them. This nation is a great nation, but it has not been great for all. Now, and going forward, this nation shall finally open up the American Dream to everyone, and truly exist as a land of equal opportunity and economic justice for all.
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