Andrew Yang, an American entrepreneur, announced his candidacy for the Democratic presidential nomination in November of 2017. Yang is the son of Taiwanese immigrants and would be the first Asian-American president if elected.
The odds of his election, however, seem slim to none. Yang, a self-proclaimed capitalist, has many policies that even those in left leaning circles would call borderline socialist. The most prominent of these is his advocacy for universal basic income.
“Universal basic income is totally achievable in the US,” Yang told Verdict in an interview.
Under Yang’s plan, all Americans between the ages of 18 and 64 would receive monthly payments of $1,000. Income level or employment status would have no effect on these payments.
Universal basic income is not a new idea. Democratic party members have been toying with the idea for decades. Hillary Clinton tried to formulate a feasible plan to provide Americans with a basic income but abandoned the plan.
“We decided it was exciting but not realistic, and left it on the shelf,” Clinton said in her memoir “What Happened.” “That was the responsible decision.”
Clinton was right. A universal basic income is not a feasible solution to America’s poverty problem.
The main problem of many problems with the plan is simply the cost. The University of Bath recently released a detailed policy brief that examined the feasibility of universal basic income in the United Kingdom and came to a stark conclusion.
“An affordable UBI would be inadequate, and an adequate UBI would be unaffordable,” the brief concluded.
If Yang got his way and paid every American $12,000 a year it would cost the federal government $3.8 trillion annually, according to a 2018 report by Bridgewater Associates. That is 78 percent of the federal government’s tax revenue.
Raising this enormous fund would involve one of two things. You would either need to levy an enormous sum of new taxes or cannibalize existing social programs. Yang proposes doing both.
“Andrew proposes funding UBI by consolidating some welfare programs and implementing a Value-Added Tax (VAT) of 10 percent,” Yang’s campaign website says.
Yang is undoubtedly short of specifics like what programs would get the axe as well as how much revenue will be generated from a value-added tax. Even if Yang could manage to get the math worked out, the simple fact of the matter is the plan would be dead on arrival in congress, and it should be.
America’s poverty problem is not a social welfare problem. America already has a social safety net in place for those who cannot work due to legitimate disabilities and the elderly, Social Security.
One in nine Americans work for poverty level wages, according to the Economic Policy Institute. This is where our leaders need to focus their attention.
Brining people out of poverty means embracing policies that raise wages. There is no single fix to this, and nothing needs to be taken off the table. Raising minimum wage, providing quality education and decreasing cumbersome business regulations all have the potential to result in increased wages for workers.
Let’s focus on building people up out of poverty through honest work for fair wages not yoking people to the U.S. Treasury for monthly payments.