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Well crap. Apparently I am the only person up this early on a Sunday Morning. Sitting in front of computer in a hotel room for a meeting that isn't happening.

So apparently I have to be the first to tell Marc that he is full of crap.

Just kidding Marc. You are sort of spot on.

I've been learning a lot more about the mechanics of these welfare problems since my oldest daughter got knocked up, had a baby and moved back home to enroll in school full time.

Currently she receives...

- GI Bill (from me) to pay for school.

- Pell Grants.

- Work study job.

- WIC.

- Subsidized child care.

- Medicaid (or is it Medicare) for the baby. She is on my policy.

- Is applying to for a Section 32 low income apartment (fingers crossed... love my daughter and granddaughter, but kids need to go!),

- Working on SNAP.

- Also, she will obviously qualify for the CTC.

Literally an alphabet soup of programs. It is pretty cool... but... you would not believe how much paperwork is involved in each and every one of these steps. All are handled by different people and agencies. All involve tedious forms documenting all sorts of stuff. I can only imagine how much money is wasted on overhead.

Now I understand... people are shady. There are people who would take advantage of the system. (dont deny it... I know them personally). But sheesh. Why have all these programs with slightly different qualifications. Ran by different people. Using different forms.

In some ways I almost view it as a jobs program for social workers. I'm glad they have jobs. And in Boise, they are super competent and very kind. But...

Wow... on a National Level, so much money is wasted.

Lost my train though. Oh yeah... lets fix the damn welfare state.

My daughter is a pretty bright person, and I am a pitbull when it comes to researching and helping her with these things, but I can only imagine how overwhelming all this paperwork is for a single mom without the social capital that we have.

If you made it down to this, my final point to add is that grandchildren are awesome. My little Syble (it was my grandmothers name)... is so frickin cute. Grandchildren are way better than kids. My advice to you young single people out there is to skip kids, and go straight to the grandchildren.

I wish substack let us post photos... but if you care.

https://www.instagram.com/p/CNhxN3kFHQz/?utm_source=ig_web_copy_link

(hopefully that isnt against the rules)

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When I left the state of Indiana a couple of years ago, where I was working in the field of early education, the state had just implemented a system whereby the info from several of the programs shared. So if you were on WIC and were applying for a child care subsidy, you didn't have to fill out more paperwork. I really just said something serious so I could say your granddaughter is adorable

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I’m excited I get to see her tomorrow. Home from for one night. Then off to Palm Beach on Tuesday.

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“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.

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Apr 11, 2021Liked by Marc Novicoff

Also I forgot to add, great post Marc! I’ve been enjoying reading the non-Matt posts more than I expected.

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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)

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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".

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I don't see the word 'Romney' in here, but it sounds like Marc would like Mitt Romney's Family Security Act. https://www.romney.senate.gov/romney-offers-path-provide-greater-financial-security-american-families

It too would transform various tax credits administered by the IRS into direct cash benefits administered by Social Security.

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author

Yep! I thought it was a pretty good plan. I would think he'd be willing to sign on to many if not all of the changes I proposed.

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It's disappointing to me that Democrats didn't just pick this proposal up and run with it - but also worth noting that about zero other Republicans supported it.

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Apr 11, 2021Liked by Marc Novicoff

"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!

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Apr 12, 2021Liked by Marc Novicoff

This is really good Marc! Appreciate the conversational tone!

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Apr 11, 2021Liked by Marc Novicoff

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.

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"Many Republicans are eager to flex their “populism,” so I think it’s possible you could get enough bipartisan support behind simple fixes that do a lot of good."

Ahhhhhhhh... no, they're not. They're pretty clearly going to the same playbook as they did in 2009 (feint toward bipartisanship, drag out the process, make popular sounding ideas less popular with time).

Not really anything I object to with your plans, but you need to convince Joe Manchin, not me.

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author

I made this post open-to-all precisely so Joe Manchin could read it

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I wish substack would allow me to give that comment the LOL emoji.

Seriously though, can we crowdfund a subscription to Slow Boring for Manchin's staffers? I'd kick in $10 for that.

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If Republicans did stonewall, it would be a great election issue.

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“...make popular sounding ideas less popular with time”

Is that a bad thing in your view?

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“ There’s no reason to insist that poor people buy food with their public assistance money (they will remember not to starve),”

You sure about that? It’s fairly common for alcoholics to present to ED with severe malnutrition as they don’t eat and get almost all of their calories from alcohol. A fair number of the very poor are poor due to rather significant mental health issues. It’s not nearly as clear cut as you seem to think.

They aren’t just like you except they didn’t have the opportunity to go to Dalton and Harvard.

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Sorry Marc just noticed this was you and not Matt.

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author

No problem. Harvard-Westlake is close enough to Dalton anyway. I think your inquiry is quantifiable...How many people are on TANF, but not SNAP, and are starving themselves to death? I would suspect not many, since that's exceedingly unpleasant. Poverty certainly does affect behavior negatively, but I don't think it goes that far.

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The issue isn’t so much the adult recipient, it’s their kids. At the margins presumably the difficulty in converting food stamps to cash reduces neglect, at least to some degree.

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All this thought about the child credit and delivery, yet not one comment on the well thought out and compromise enabling Romney plan? Grade Incomplete.

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Let the record show my comment was posted one minute before Larry's (but his is better).

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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)

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What would be the reasoning behind giving 15k to adults and only 4k to kids? This type of split is not uncommon in UBI proposals but I am not sure what the actual logic is. Per dollar getting money to people is more efficient the earlier you can do it.

Is this why we need kids to be able to vote?

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author

Well I guess the theory is that a single person needs shelter and food. A child can use the same shelter as the parent, and consumes far less food. Like I said, poverty is not hard to eradicate since we have poverty lines, and most poverty lines (including America's) work like this. https://aspe.hhs.gov/2021-poverty-guidelines

A household with 1 person --- poverty line of around $13k

A household with 2 people --- poverty line of around $17k

A household with 3 people --- poverty line of around $22k

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The poverty line is per household but a ubi program is per person. Under this program to adults living in the same household would receive more money than a single parent and children. If you could have a ubi program for only children or only adults I think it would be much more correct to have it for only children.

I think the favouring adults pot of these type of programs is a real program design mistake That ubi advocates tend to overlook

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founding

Expenses of being an adult actually are higher, though I don't know if they're 15:4 higher...

If we're assuming you've already taken healthcare into account via a universal program that may no longer be relevant, but on average adult healthcare costs are higher -- people tend to have an initial burst of costs in the first few year and then run very low until they get up into their 40s, when you start to see emergence of various expensive chronic conditions, more cases of cancer, etc.

Commute costs to work average somewhat higher than commute costs for school (because schools tend to be closer to the kid's home, than jobs are to the adult's home).

And generally if you have a 3 or 4 adult household, they're much more likely to be making independent purchases of certain durable goods like computers -- I actually live in a four adult household, and of course each of us has our own personal desktop or laptop, whereas a six year old would probably just be allowed access to a household machine. (I can imagine buying a freshman in high school their own laptop for schoolwork, but probably before that I'd just let them use a desktop in the office / craft-room.)

I have trouble talking myself into the idea that the difference could be as large as 15:4, though. Probably closer to 2:1.

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The earning potential of adults is much higher as well.

The entire basis for it seems to be pretending that UBI is the small as a narrow anti-poverty program.

A 2 adult household getting 30k and a 1 parent 3 child household getting 27k only makes sense if you are imposing some need to get to those poverty line numbers.

Durable goods like laptops aren't really very expensive compared to food and housing.

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founding

Oh, also food costs -- until around onset of puberty, just having a smaller body actually does make a big difference in terms of metabolizing fewer calories than an adult would.

Implicitly education costs would be higher on average for a kid, but the kid's portion is already eligible to be 100% covered by the government, so out-of-pocket expenditures for education are WAY higher for adults (particularly the slice of adults who seek college degrees).

In any case, I imagine some smart research on poverty would be able to come up with a realistic estimate of the differences.

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2 adults*

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Yeah there's a lot of evidence that dollars are most effective at young ages. My colleagues at the UBI Center have also run the numbers on how UBI budgets should be split between kids and adults, and found that to minimize poverty, they should mostly go to kids when you have a small budget, but for large budgets, adults should get about twice as much (https://blog.ubicenter.org/20210120/child-ubi-share.html). This is somewhat circular depending on the Census Bureau's poverty definitions, though.

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Thank you for posting this. The charts you have there with different optimization criteria is interesting as well. (Although I think it should be noted that using "small" to describe some of the budgets seems to be true in a relative sense)

Like you said, optimizing for minimizing "poverty" using definitions we set seems perhaps less interesting than trying to establish a different measure of "welfare" to use but I appreciate that creating new measures is always going to be difficult. Many UBI advocates seem to have a long list of knock-on effects of UBI but it isn't clear how much of those is coming from where on the distribution relative to age.

That said, I think there might be an "over-fitting" issue with many UBI proposals that about 1/2 way into conception decide they are trying to be a "poverty reduction" program by optimizing for lowering the poverty rate. The rub here being that if your goal is to reduce poverty as defined by the Census Bureau there exist programs much better targeted to do so. A UBI proposal that is only(or primarily)measured by poverty reduction seems a bit misguided.

Most of the proposals I have seen seem to be from the Yang model which I found to be particularly bad because it was both 18+ and for citizens which seem to cause a ton of issues unless immigration/naturalization is changed. I see that some of your own work touches on the citizenship limitation as well.

I personally would love to see UBI increase during pregnancy but I imagine that could be a political minefield and a more targeted program on top of UBI might make more sense in that case.

In short, I wish that UBI advocates would spend a bit more time thinking about what measures to optimize for and how to design those programs. I have found that post-Yang some supporters have become "UBI absolutists" and will dismiss other programs that could solve issues more efficiently and also that many UBI supporting candidates have been working from the FD rather than designing their own from scratch which has built-in some of the same issues the FD did.

All that said, do you have a preferred UBI plan?

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I think we'd ideally evaluate and design UBI policy the way economists think about other policies, using a social welfare function that balances equity with efficiency (many optimal tax models literally use UBI as the distributional mechanism). A guaranteed income policy that brings everyone exactly up to the poverty line and then phases out at 100% with income would be cheap, but highly inefficient. A simple way to approach this would be minimizing poverty, inequality, and marginal tax rates, all together (though there's more to it); in particular, I don't think average tax rates or cost are really informative concepts for transformative policies like UBI.

Personally, I'd prefer a UBI plan that removed all means-testing and age-testing, and gave everyone (immigrants too) an identical amount each month. On the funding side I'd start with a full tax on land rent and a steep carbon price, and depending on how far that gets us, otherwise also considering a VAT, and if that still isn't enough then a flat income tax too. We should have some real numbers on these ideas in the coming months.

Another approach we're applying is approximating outcomes from the existing system with UBI policy; e.g., how much do you give kids vs. adults to minimize the sum of all income losses across society? This is sort of the politically-oriented approach, given people who lose out will be more likely to oppose the reform. Here's an example (https://docs.google.com/presentation/d/1cZwBc3dvv5ZXTMArKmwJOuyZeo3VJkMtIhKP_6qHZw0), and we'll have a paper using this in the UK in the next month or so.

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Thank you for this.

I think my preferred plan is similar to yours.

As you mention in the slides, values sometimes compete and how much you weigh each value is very important as is what other policies you are able to change/remove. I tend to weigh child welfare very highly because of its compounding benefits but I wasn't sure how time horizon was playing into your calculations.

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Granting everything you say except this: how much has the political climate on this issue really changed? I would like to see a lot more analysis of why this is true. We live in silos/bubbles so it can feel to us that this is true, but it can be wishful thinking or confirmation bias. There is always a political reaction to these types of proposals and that reaction has to be factored into the decision as to how to proceed. Progressives often cite opinion poll top-line numbers on issue but the numbers shift when details become clear and when the right-wing media propaganda complex starts its work. Opinion numbers can and do change to closer to partisan identification numbers as the issue becomes more salient and also is fuzzed up by propaganda. I think there might be wisdom in trying to pursue these policies in a way that doesn't make it easier to rally the right against them. And yes in a first-best world we would optimize to reduce complexity, but there's a reason this tends not wo work. Maybe I'm wrong but I'm skeptical about the degree of the shift in public opinion over time. And if you combine this type of program with an ongoing perceived immigration problem, and more immigration to come due to climate and other problems, I think there's a lot of potential here for a strong political backlash.

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Also, alarms go off for me when people say the Social Security administration should be involved. Soc Sec has endured over decades in part b/c of the perception that it's an insurance program, funded by worker and employer contributions. If that agency expands its role into an explicitly welfare emphasis, that has the very real potential to give the right an opening to confuse people and undercut the entire Social Security project. Again, it feels to me like the political reality here has to be factored into the overall decision.

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Just tossing in a contrary political judgment: if we do SS4A, people are getting monthly checks from it, it strikes me that it would be bloody hard to kill... Just like SS is!

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I take the point but I worry about cutting funding levels rather than actual termination of the program. I'd rather see a separate UBI system... a clear demarcation in the programs.

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Yes. Crucial to split the discussion: is X politically feasible vs is it economically superior. I think a lot of the Left support for VAT results from judgments about the latter. I'm not saying that makes it invalid, but...

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I would love to see something like cross-eligibility marketed as a simple government efficiency reform. If we have a program, why make people jump through 10,000 hoops? Keep it simple and just give them the money.

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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.

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I think the point is that "deserve" shouldn't be part of the equation

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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.

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“Bill Clinton was a major champion of shrinking budget deficits...”

Your editor missed that misspelling. The name is spelled “Newt Gingrich.”

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author

But Clinton really was a champion of it...he campaigned on it!

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Sure he was.

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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.

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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.

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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.

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