Universal Basic Income (UBI) has, in recent years, been the topic of considerable discussion and some experimentation, primarily in Europe, as the answer to poverty, automation and the drudgery of work. We have previously commented on various proposals and some of the potential benefits and problems. (See blogs dated 2015-12-17, 2016-11-22, 2018-05-02, 2019-02-21, 2019-07-24 and 2020-05-13). UBI has never gained much traction in the United States.
However, something similar in intent and probably cheaper, and perhaps more practical, may be in sight. Both President Biden and Sen. Mitt Romney (R., Utah) have proposed substantially similar expansions of the child tax credit, in effect turning it into a near-universal UBI for children. The primary aim of these proposals is to reduce child poverty.
As noted, UBI has not gotten off the ground in the U.S., but UBI for kids might be easier to sell politically and could have substantial bipartisan support. Liberals would probably be attracted since a high percentage of the benefits are likely to go to those with lower incomes, without reducing other parts of the safety net. Conservatives may be supportive as UBI for kids could be viewed as pro-family.
It is important to remember that the basic logic behind UBI was that it would give individuals more control over their lives, and that the payments contemplated under the plan were to be instead of other safety nets, not an expansion of existing government funded benefits.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®