I imagine custody battles could become extremely intense and emotionally harmful if not having custody also results in a significant drop in income. UBI payments that go to individuals rather than families have certain benefits: they encourage two-parent families, as each partner brings something to the relationship financially. In conflictual relationships, they provide a means for financially dependent people to leave, with or without the children; possibly with less danger to themselves, and with easy access to their payments if they do take the kids.
Sorry, but I had to zero in on this quote: "The idea here is that nobody in America should suffer in poverty no matter how lazy or able-bodied they are."
I think that even the most cold hearted Ayn Rand disciple will acknowledge that there are people who are poor due to circumstances beyond their control. But progressives need to acknowledge that there are people who are poor because they are lazy and stupid. I personally know people like this; I'm tempted to post their names and phone numbers. Talk to one of them for five minutes and see if you still think they deserve a guaranteed income.
I don't understand the point about consumption taxes being progressive. Taxing value on the way out of a household instead of on the way in, is a huge boon to those households accumulating a lot of savings. Which is who "the rich" are and what "rising wealth inequality" is, right?
It's not an actual consumption tax like a sales tax. Companies pay it, but they could pass on much of the price to consumers. It's not progressive alone; it's only progressive when paired with a universal benefit.
I follow the part where poorer recipients of the benefit are paying less for it (by virtue of spending less overall), so it's progressive in some sense, but isn't an income tax a lot more progressive?
It doesn't seem important to this question whether it's built into the price of goods or added on at checkout, the point is that rich families don't need to use very much of their income on buying stuff.
I found this Cato article arguing for a consumption tax specifically because it would allow savers to accumulate more capital. Which seems directly opposed to the "rich should pay their fair share" or "limit wealth inequality" goals associated with progressive taxation. https://www.cato.org/cato-online-forum/move-progressive-consumption-tax
The Cato system discussed there seems similar to a progressive income tax where savings are fully deductible.
"Households would report their income on annual tax returns, but would then claim a full deduction for all saving and add back in any dissaving. What’s left would be the household’s before‐tax consumption for the year. That consumption amount would be taxed at graduated rates, with higher tax brackets for households with higher consumption. Exemptions and refundable tax credits would be provided to low‐consumption households."
The idea is to pair a VAT with a distribution method that ends up being progressive on net.
There are attempts, which Yang also discussed at times, to make a progressive consumption tax by exempting spending of certain things or just up to a certain amount.
I work as a volunteer, preparing taxes for low-to-moderate income tax-payers, and in that population it isn't true that "The IRS has the brand of an agency that takes your money, not as one that gives you money."
I frequently work with people who have no understanding of taxes and don't understand what's on their W-2, but they'll hand it to me and ask "what can this get me?" Most of these folks don't owe tax when they file, and are filing only to get back withholding or to get earned income and child tax credits.
The one exception would be the low-income self-employed, who don't have the withholding (and don't pay estimates), and often end up owing some self-employment tax. But, these are a minority.
Bill Clinton succeeded at shrinking budget deficits. Maybe Newt was along for the ride at the time, but under a Republican president, there's no doubt Newt would have been happy to explode the deficit with tax cuts for the wealthy and/or corporations.
I was around for that. I just don't believe what someone says about their beliefs, when what they say is contradicted by what they do. What Republican elected officials have been seen doing, time and time again, is using deficit reduction as a cudgel when Democrats have power, and dropping it immediately when Republicans have power. So, how much credit would I give 90's Republican elected officials credit for actual deficit reduction? Only as much as I would give the Democrats in charge at the time of being ready and willing to do the same.
You should rely on facts and the record rather than your biased memory:
"President Clinton cleared the way for a complete lifting of the 22-day partial shutdown Saturday by bowing to a key Republican demand: submitting a seven-year balanced budget plan scored by the Congressional Budget Office."
Marc, once again, great post. I fully support simplification. I actually watched the WIC video you linked (twice, once with me wife) and found myself horrified by the authoritarian nature of the pre/prescriptions. As I read the other comments I'm stuck by what a thoughtful community this is and how poorly our votes are represented in both politics and press. We need a movement.
Excellent ideas well-argued, and very well-written to boot! That first paragraph is an instant classic....your pen to G_d....and Joe Manchin, of course (God II of this fallen world).
Has anyone watched the short film telling people to buy a certain type of milk or egg? Does anyone have any background on where this loony tune (admittedly I don’t have the facts) idea came from?
So I don't know the information on brown vs. white eggs. (I would guess it's a cost issue.) We now recommend using whole milk for children up to 2 years of age and then switching to 1% or skim after that. (Breast milk or formula up to age 1.) This is in part because most children do need the fat content up until age 2, but there is also concern about the obesity epidemic, which is impacting poor (WIC eligible families) more than middle class families. Each of the other food requirements is tied to what is considered best practices (https://www.myplate.gov/) for health and nutrition. You might argue that government funding should not be used to encourage nutritional practices. Having been into too many homes of poor families where children were eating lots of overly processed, fast food, or "junk food", almost exclusively, I guess I think it's fair for tax dollars to be used to encourage the preparation and eating of nutritious food. I would quibble with a couple of the recommendations on here, but they seem pretty doable.
I can accept not letting people buy junk food, but micromanaging the purchases of poor people to this degree seems like paternalistic nonsense. It adds mental overhead and creates opportunities for embarrassing incidents at the checkout lane.
Could we PLEASE fix the UI system, too? Of course this would play off other changes like expanded ACA and refundable EITC/UBI/Child Tax Credit, but let's eliminate the need to legislate expansions/extensions of UI during recessions. Even better if we could fund SS/Medicare with a VAT instead of the wage tax.
“There’s no reason to insist that poor people buy food with their public assistance money (they will remember not to starve)”
I think one reason is to keep such programs in climates 3 and 4 rather than backsliding into climates 1 and 2. There’s an excellent argument for broadening the acceptable uses of SNAP/WIC to include foods intended for eating at the point of sale—back when I was a cashier any kind of hot food or prepared items like sandwiches, sushi, prepacked salads, etc were not SNAP eligible, but you could buy sandwich supplies, heads of lettuce, bags of rice and raw fish, etc, and I never fully understood the rationale for the distinction—and the brown eggs vs white eggs rule you mention is a good example of cruft, but some subset of people, however small, will in fact forget not to starve when they have a fungible resource that could be used on other compulsions.
I remember riding a public bus in San Francisco years ago and sitting next to two guys who seemed to be old friends. One of them was very patiently encouraging the other not to spend his remaining cash on scratchers (scratch off lottery-adjacent games) and arguing that he needed to buy food for the rest of the week, and the scratcher enthusiast was sincerely struggling with the choice. I had never seen that level of gambling addiction in person but it’s out there.
My point is, even if cash programs are more efficient *in aggregate* and better for most beneficiaries than food-only assistance programs, outlier stories (however rare) about heads of households buying scratchers and letting their kids go hungry are going to surface and attract outsize attention, and those are the kinds of things that push climate 3 and 4 people toward climate 1 and 2 mentalities. Hence a benefits-inefficient solution might in fact be more public-opinion-durable in the long run.
This is a good point - if 80% of poor people are financially responsible and care about their children getting adequate nutrition, that still leaves a *lot* of kids who would be worse off under a system of pure cash transfers vs. funds earmarked for food, shelter, etc.
Incidentally, this is why the idea of UBI replacing social insurance programs is not great. There should be some base level of food, shelter, and medical care available to people no matter their skill, luck, or (most contentiously) personal responsibility. Some people are just kind of screwups, and there has to be another option besides the right's "let 'em suffer if they can't stop screwing up" and the left's "every poor person is a pure soul who just needs capital's boot off their neck in order to prosper".
Personally - I'm not even sure how much these types of stories are outliers. That might be closer to 1 in 5 than 1 in 50,000 types of situations. But I don't really know, I only have anecdote to go by. So it would be really nice to see studies and data on how program beneficiaries use their benefits.
Speaking of anecdotes - I like to mention the parable of the 4 blind men and the elephant quite a lot, because it can explain why reasonable people can sometimes disagree very strongly about something like welfare. Marc and Matt both mention growing up in fairly elite high school environments, so I wonder if they are less-exposed to the ways people can be financially irresponsible.
Speaking from my own personal experience, I grew up in a suburb that's at about the average US income, or a little below. Looking back at the people I grew up with, most are doing fine. But nearly all the people who are now poor either got into drugs or petty crime, and usually both. I don't think that means their kids deserve to grow up in poverty. But when I hear "help the poor" it might bring up a different of poor people for me than it does for Matt and Marc. (and i'm not saying my mental image is more correct, that's why I want to see more evidence and analysis)
I'm on board conceptually with this proposal, but I'm skeptical that the political enthusiasm for streamlining administration of the child tax credit--which phases out at 400k for married filers--would carry over to these other more strictly "anti-poverty" programs. You can treat the child tax credit "like Social Security" because it's practically universal. My suspicion is that it will be hard to get moderates on board with a proposal that federalizes programs like SNAP; part of the appeal of state administration for conservatives is that the state can set their own rules about who is "deserving" of benefits.
I know you mention the Pew survey, but the cross tabs show that "dealing with the problems of poor people" is a highly polarized issue: 68% of Democrats like it but only 35% of Republicans support it. (That's exactly as polarized as dealing with coronavirus, which is much more popular overall - 93%/60%, and the only more polarized issues are "addressing race" and climate change.) On the other hand, "strengthening the economy" is really popular overall, and in fact more popular among Republicans.
I think the permanent, monthly child tax credit (administered by SSA) could be a winner because it's (essentially) universal and can be easily framed as a kitchen table issue that appeals to moderates--you're helping out families!--and "strengthening the economy" in a very tangible, evident way. The impact on child poverty is great, too, but I think the rest of your argument relies too much on the premise that the impact on child poverty is the reason CTC expansion is popular in the first place.
I wish it weren't this way, but I'm skeptical that we've completely turned the corner on welfare politics in a way that would make this palatable for a Democratic party centrist.
I get the arguments against it, but man, as an avid cook I miss having a gas stove. Induction burners are *almost* at parity in terms of responsiveness but they don’t work with all pots and pans, and for some applications (e.g. woks) it seems like it will be a while before we will reach a satisfying substitute. I imagine regaling my grandchildren with stories about deglazing a turkey roasting pan on the stovetop with sherry and then a flambé of brandy, and their eyes widening at the alien notion of indoor fire (not to mention consuming turkey protein that wasn’t grown in a bioreactor)
To anyone who's interested, I did a followup interview with Marc here: https://t.co/hgfwyX15MT?amp=1
Because of prevalence of working poor, don’t these programs subsidize low wage employers? How do we claw some of that money back from them?
I imagine custody battles could become extremely intense and emotionally harmful if not having custody also results in a significant drop in income. UBI payments that go to individuals rather than families have certain benefits: they encourage two-parent families, as each partner brings something to the relationship financially. In conflictual relationships, they provide a means for financially dependent people to leave, with or without the children; possibly with less danger to themselves, and with easy access to their payments if they do take the kids.
This is really good Marc! Appreciate the conversational tone!
Sorry, but I had to zero in on this quote: "The idea here is that nobody in America should suffer in poverty no matter how lazy or able-bodied they are."
I think that even the most cold hearted Ayn Rand disciple will acknowledge that there are people who are poor due to circumstances beyond their control. But progressives need to acknowledge that there are people who are poor because they are lazy and stupid. I personally know people like this; I'm tempted to post their names and phone numbers. Talk to one of them for five minutes and see if you still think they deserve a guaranteed income.
I think the point is that "deserve" shouldn't be part of the equation
I don't understand the point about consumption taxes being progressive. Taxing value on the way out of a household instead of on the way in, is a huge boon to those households accumulating a lot of savings. Which is who "the rich" are and what "rising wealth inequality" is, right?
It's not an actual consumption tax like a sales tax. Companies pay it, but they could pass on much of the price to consumers. It's not progressive alone; it's only progressive when paired with a universal benefit.
I follow the part where poorer recipients of the benefit are paying less for it (by virtue of spending less overall), so it's progressive in some sense, but isn't an income tax a lot more progressive?
It doesn't seem important to this question whether it's built into the price of goods or added on at checkout, the point is that rich families don't need to use very much of their income on buying stuff.
I found this Cato article arguing for a consumption tax specifically because it would allow savers to accumulate more capital. Which seems directly opposed to the "rich should pay their fair share" or "limit wealth inequality" goals associated with progressive taxation. https://www.cato.org/cato-online-forum/move-progressive-consumption-tax
The Cato system discussed there seems similar to a progressive income tax where savings are fully deductible.
"Households would report their income on annual tax returns, but would then claim a full deduction for all saving and add back in any dissaving. What’s left would be the household’s before‐tax consumption for the year. That consumption amount would be taxed at graduated rates, with higher tax brackets for households with higher consumption. Exemptions and refundable tax credits would be provided to low‐consumption households."
The idea is to pair a VAT with a distribution method that ends up being progressive on net.
There are attempts, which Yang also discussed at times, to make a progressive consumption tax by exempting spending of certain things or just up to a certain amount.
https://www.cardin.senate.gov/pct-what-is#:~:text=The%20Progressive%20Consumption%20Tax%20(PCT,purchase%20of%20goods%20and%20services.
A VAT is very much a consumption tax like sales tax.
I work as a volunteer, preparing taxes for low-to-moderate income tax-payers, and in that population it isn't true that "The IRS has the brand of an agency that takes your money, not as one that gives you money."
I frequently work with people who have no understanding of taxes and don't understand what's on their W-2, but they'll hand it to me and ask "what can this get me?" Most of these folks don't owe tax when they file, and are filing only to get back withholding or to get earned income and child tax credits.
The one exception would be the low-income self-employed, who don't have the withholding (and don't pay estimates), and often end up owing some self-employment tax. But, these are a minority.
“Bill Clinton was a major champion of shrinking budget deficits...”
Your editor missed that misspelling. The name is spelled “Newt Gingrich.”
But Clinton really was a champion of it...he campaigned on it!
Sure he was.
Bill Clinton succeeded at shrinking budget deficits. Maybe Newt was along for the ride at the time, but under a Republican president, there's no doubt Newt would have been happy to explode the deficit with tax cuts for the wealthy and/or corporations.
You never heard of the Contract With America?
https://www.history.com/news/midterm-elections-1994-republican-revolution-gingrich-contract-with-america
I was around for that. I just don't believe what someone says about their beliefs, when what they say is contradicted by what they do. What Republican elected officials have been seen doing, time and time again, is using deficit reduction as a cudgel when Democrats have power, and dropping it immediately when Republicans have power. So, how much credit would I give 90's Republican elected officials credit for actual deficit reduction? Only as much as I would give the Democrats in charge at the time of being ready and willing to do the same.
You should rely on facts and the record rather than your biased memory:
"President Clinton cleared the way for a complete lifting of the 22-day partial shutdown Saturday by bowing to a key Republican demand: submitting a seven-year balanced budget plan scored by the Congressional Budget Office."
http://www.cnn.com/US/9601/budget/01-06/pm/index.html
I think it's pretty clear that the Republicans pushed Clinton into embracing debt reduction.
"call it infrastructure that we need to build back better"
Seeing the young become cynical pragmatists right before our eyes gives me hope for the future.
PS Great article Marc!
Marc, once again, great post. I fully support simplification. I actually watched the WIC video you linked (twice, once with me wife) and found myself horrified by the authoritarian nature of the pre/prescriptions. As I read the other comments I'm stuck by what a thoughtful community this is and how poorly our votes are represented in both politics and press. We need a movement.
Excellent ideas well-argued, and very well-written to boot! That first paragraph is an instant classic....your pen to G_d....and Joe Manchin, of course (God II of this fallen world).
Has anyone watched the short film telling people to buy a certain type of milk or egg? Does anyone have any background on where this loony tune (admittedly I don’t have the facts) idea came from?
So I don't know the information on brown vs. white eggs. (I would guess it's a cost issue.) We now recommend using whole milk for children up to 2 years of age and then switching to 1% or skim after that. (Breast milk or formula up to age 1.) This is in part because most children do need the fat content up until age 2, but there is also concern about the obesity epidemic, which is impacting poor (WIC eligible families) more than middle class families. Each of the other food requirements is tied to what is considered best practices (https://www.myplate.gov/) for health and nutrition. You might argue that government funding should not be used to encourage nutritional practices. Having been into too many homes of poor families where children were eating lots of overly processed, fast food, or "junk food", almost exclusively, I guess I think it's fair for tax dollars to be used to encourage the preparation and eating of nutritious food. I would quibble with a couple of the recommendations on here, but they seem pretty doable.
I can accept not letting people buy junk food, but micromanaging the purchases of poor people to this degree seems like paternalistic nonsense. It adds mental overhead and creates opportunities for embarrassing incidents at the checkout lane.
Could we PLEASE fix the UI system, too? Of course this would play off other changes like expanded ACA and refundable EITC/UBI/Child Tax Credit, but let's eliminate the need to legislate expansions/extensions of UI during recessions. Even better if we could fund SS/Medicare with a VAT instead of the wage tax.
“There’s no reason to insist that poor people buy food with their public assistance money (they will remember not to starve)”
I think one reason is to keep such programs in climates 3 and 4 rather than backsliding into climates 1 and 2. There’s an excellent argument for broadening the acceptable uses of SNAP/WIC to include foods intended for eating at the point of sale—back when I was a cashier any kind of hot food or prepared items like sandwiches, sushi, prepacked salads, etc were not SNAP eligible, but you could buy sandwich supplies, heads of lettuce, bags of rice and raw fish, etc, and I never fully understood the rationale for the distinction—and the brown eggs vs white eggs rule you mention is a good example of cruft, but some subset of people, however small, will in fact forget not to starve when they have a fungible resource that could be used on other compulsions.
I remember riding a public bus in San Francisco years ago and sitting next to two guys who seemed to be old friends. One of them was very patiently encouraging the other not to spend his remaining cash on scratchers (scratch off lottery-adjacent games) and arguing that he needed to buy food for the rest of the week, and the scratcher enthusiast was sincerely struggling with the choice. I had never seen that level of gambling addiction in person but it’s out there.
My point is, even if cash programs are more efficient *in aggregate* and better for most beneficiaries than food-only assistance programs, outlier stories (however rare) about heads of households buying scratchers and letting their kids go hungry are going to surface and attract outsize attention, and those are the kinds of things that push climate 3 and 4 people toward climate 1 and 2 mentalities. Hence a benefits-inefficient solution might in fact be more public-opinion-durable in the long run.
This is a good point - if 80% of poor people are financially responsible and care about their children getting adequate nutrition, that still leaves a *lot* of kids who would be worse off under a system of pure cash transfers vs. funds earmarked for food, shelter, etc.
Incidentally, this is why the idea of UBI replacing social insurance programs is not great. There should be some base level of food, shelter, and medical care available to people no matter their skill, luck, or (most contentiously) personal responsibility. Some people are just kind of screwups, and there has to be another option besides the right's "let 'em suffer if they can't stop screwing up" and the left's "every poor person is a pure soul who just needs capital's boot off their neck in order to prosper".
Personally - I'm not even sure how much these types of stories are outliers. That might be closer to 1 in 5 than 1 in 50,000 types of situations. But I don't really know, I only have anecdote to go by. So it would be really nice to see studies and data on how program beneficiaries use their benefits.
Speaking of anecdotes - I like to mention the parable of the 4 blind men and the elephant quite a lot, because it can explain why reasonable people can sometimes disagree very strongly about something like welfare. Marc and Matt both mention growing up in fairly elite high school environments, so I wonder if they are less-exposed to the ways people can be financially irresponsible.
Speaking from my own personal experience, I grew up in a suburb that's at about the average US income, or a little below. Looking back at the people I grew up with, most are doing fine. But nearly all the people who are now poor either got into drugs or petty crime, and usually both. I don't think that means their kids deserve to grow up in poverty. But when I hear "help the poor" it might bring up a different of poor people for me than it does for Matt and Marc. (and i'm not saying my mental image is more correct, that's why I want to see more evidence and analysis)
Also I forgot to add, great post Marc! I’ve been enjoying reading the non-Matt posts more than I expected.
I'm on board conceptually with this proposal, but I'm skeptical that the political enthusiasm for streamlining administration of the child tax credit--which phases out at 400k for married filers--would carry over to these other more strictly "anti-poverty" programs. You can treat the child tax credit "like Social Security" because it's practically universal. My suspicion is that it will be hard to get moderates on board with a proposal that federalizes programs like SNAP; part of the appeal of state administration for conservatives is that the state can set their own rules about who is "deserving" of benefits.
I know you mention the Pew survey, but the cross tabs show that "dealing with the problems of poor people" is a highly polarized issue: 68% of Democrats like it but only 35% of Republicans support it. (That's exactly as polarized as dealing with coronavirus, which is much more popular overall - 93%/60%, and the only more polarized issues are "addressing race" and climate change.) On the other hand, "strengthening the economy" is really popular overall, and in fact more popular among Republicans.
I think the permanent, monthly child tax credit (administered by SSA) could be a winner because it's (essentially) universal and can be easily framed as a kitchen table issue that appeals to moderates--you're helping out families!--and "strengthening the economy" in a very tangible, evident way. The impact on child poverty is great, too, but I think the rest of your argument relies too much on the premise that the impact on child poverty is the reason CTC expansion is popular in the first place.
I wish it weren't this way, but I'm skeptical that we've completely turned the corner on welfare politics in a way that would make this palatable for a Democratic party centrist.
I get the arguments against it, but man, as an avid cook I miss having a gas stove. Induction burners are *almost* at parity in terms of responsiveness but they don’t work with all pots and pans, and for some applications (e.g. woks) it seems like it will be a while before we will reach a satisfying substitute. I imagine regaling my grandchildren with stories about deglazing a turkey roasting pan on the stovetop with sherry and then a flambé of brandy, and their eyes widening at the alien notion of indoor fire (not to mention consuming turkey protein that wasn’t grown in a bioreactor)