For the last week or so, I’ve been preparing to speak against a Universal Basic Income (UBI) motion at a debate club. Here’s the Motion:
The Motion: This House Supports a Basic Income for All US Residents
Motion Summary: Basic income recipients would include children and adults; the employed and unemployed; and citizens, permanent residents, and all other residents who could prove a residency duration of at least three years. The amount given would start at $1,000 per person per month and be pegged to GDP growth going forward. No programs in the existing social safety would be replaced by this policy.
This begins a series of posts laying out my case against the above UBI proposal. Without further ado…
First, let's do some math:
327 million US citizens + about 14 million legal residents = 341,000,000
At 12,000/year each, that amounts to: $4,092,000,000 = $4.1 trillion
US Govt. Budget: $7.1 trillion (Federal: $4.1 trillion; State + Local: $3 trillion).
US GDP in 2017: $20 trillion
US Govt. Expenditures are 35.5% of GDP (compare to Denmark: 55%)
A UBI budget of $4.1 trillion would be 20.5% of GDP, so to pay for it plus current government obligations, US government spending would need to increase to about 56% of GDP. How should the US government pay for this added expense?
Not through taking on additional government debt: the US Government Debt/GDP Ratio is already 125%. Compare to Denmark: 54%; Finland 75%, Norway 38%, Sweden 62%, and Netherlands 78%. Given uncertainties about US creditworthiness after taking on such a generous UBI, the government’s “fiscal space” to take on more debt will be limited.
That leaves us with budget cuts and higher taxes, which we’ll consider next.
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* Note, though: US Tax Revenue is just 26% of GDP (compare to Denmark: 46%). How US shortfall made up: mostly through issuing debt.
Links:
http://oe.cd/oecd-revenue-statistics
https://www.thebalance.com/u-s-gdp-5-latest-statistics-and-how-to-use-them-3306041
https://data.oecd.org/gga/general-government-debt.htm
https://www.statista.com/statistics/183635/number-of-households-in-the-us/