Poverty Amid Plenty: A 1969 Basic Income Proposal

Previously, I wrote about a 1967 job guarantee proposal put forward by the President's National Advisory Commission on Rural Poverty. As that was a fairly popular post, I figured I should share another old 1960s government proposal, this time a proposal for a universal basic income (UBI).

In November of 1969, the President's Commission on Income Maintenance Programs issued a report titled "Poverty Amid Plenty: the American Paradox." The purpose of the report was to assess the current slate of anti-poverty programs and make recommendations for how to make more headway on poverty reduction.

The Poor want to be unpoor.

The report begins by finding that poor people would rather not be poor and finding that having insufficient money is a big impediment to them becoming not poor.

The poor are living poorly and are aware of it. They are generally unhappy with their circumstances and would like to be unpoor. [...]
 
The barren life styles of the poor are not primarily the result of ignorance or indifference but rather the result of insufficient money with which to purchase proper food, housing, medical attention, and other basic amenities of contemporary life.
 

Poverty is a structural problem in the economy.

The report goes on to note that poverty is essentially endemic to our economic system. Many people find themselves poor at one time or another and there is no way the economic system, as constructed, is capable of eliminating poverty because it is not capable of eradicating the economic insecurity that generates so much of it:

Our economic and social structure virtually guarantees poverty for millions of Americans. Unemployment and underemployment are basic facts of American life. The risks of poverty are common to millions more who depend on earnings for their income. We all grow old. We all can fall victim to unemployment caused by technological change or industrial relocation. Any of us could become sick or disabled.
 
We need a basic income to begin to truly eradicate poverty.
 
After noting that the existing programs do not and cannot eradicate poverty, the commission provides their recommended solution:
 
The Commission's main recommendation is for the development of a universal income supplement program to be administered by the Federal Government, making payments to all members of the population with income needs.
 
Specifically, the Committee proposes providing a basic income of around $4,700 per adult and around $2,900 per child. So, for a family of four, it would be around $15,200 per year (all figures adjusted for inflation). This basic income program would be coupled with a 50% marginal tax rate for a family's market income up to double the basic income amount, after which point the tax rate would fall down. So, in essence, each family would receive the $15,200 income floor, and then they would make 50 cents on the dollar for their market incomes until the basic income amount was "paid back." Those who did not make double the income floor or more (i.e. the poor) would wind up as net beneficiaries, and no family would make less than $15,200 per year.
 

Though the report makes no mention of him, this recommendation is almost identical to the Negative Income Tax proposal Milton Friedman put forward.

A UBI neatly complements other anti-poverty programs.
 
In addition to arguing that non-transfer programs are inadequate to the task of eliminating poverty, the Committee argues that a UBI would actually complement them:
 
Men and women without income cannot afford to take risks even for a day; they cannot take advantage of opportunities for future improvement which require a current investment of time and money. We believe that only when the poor are assured a minimum stable income can the other mechanisms in our fight against poverty -- education, training, health, and employment -- begin to function adequately.
 

Providing basic economic stability and well-being is sure to make it easier for poor people to concentrate and put their efforts towards training and education, something they cannot do when they are desperately fixated on day-to-day survival. When we discuss poverty reduction proposals, the way we put education/training in competition with cash transfers makes no sense. The latter greatly enhances the former and so those genuinely interested in effective education and training should also support substantial cash transfers.

Conclusion

Like the Job Guarantee idea that has been kicking around lately, the idea of a Universal Basic Income is not totally foreign and exotic. It has a meaningful pedigree in the history of U.S. policy-making even if it has never been implemented.

 

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