A theory propagated since the inception of modern democracy, the basic income is a centuries-old political idea that has, since Andrew Yang’s popular stance in the 2020 Democratic Presidential Primary, only been disseminated further. A universal basic income (UBI) is generally considered a liberal or leftist belief, economically speaking. Liberal proponents like Robert Reich and Tulsi Gabbard have only reinforced this association, but the basic income has deep, unbreakable ties to conservatism and fiscal responsibility.
It is easy to call UBI a socialist program, but this has very little backing to it. In fact, it is the antithesis of a leftist economic model. By promoting individual choice, economic stimulus, and more leeway from the federal government, the UBI is a perfect policy for a capitalist society.
UBI in a Welfare State
The U.S. is a bloated welfare state with large domineering forces in the government lauding their failing welfare programs that consistently increase the federal spending by nearly $1.9 trillion per year (nearly ½ of total tax dollars collected in fiscal year 2021). Social Security, in its current state, will run out of the current level of benefits by the 2030s. Reducing benefits or spending in other budget categories is the only way to prevent this shortcoming in finance, further bloating the Social Security Administration. These expensive programs present a dichotomy, however, being that the government has an obligation to provide these programs and services to the people. With a government elected to represent the people, we give Congress the authority to act on our behalf in our best interests. Providing us with programs that will allow us to live comfortably and survive is clearly within our best interests. While these programs pay-off societally, they cannot achieve their long term goal of providing financial stability because they are the exact programs that will drive us into financial ruin.
UBI is based on the idea of providing comfort and stability in life for all. When implemented as policy, this can reflect as either conservative or liberal. Generally, when UBI is proposed, the liberal camp tends to introduce it as a supplement to the already bloated welfare state. Conservatives have generally not come out in support of a basic income, so there aren’t many case studies as to what it would look like in a conservative context. However, the most successful universal basic income program originates from one of the safest Republican states in the U.S. Alaska, a state that voted for Donald Trump by a nearly ten point margin in 2020, currently operates the longest-running UBI program in the world, and has been able to successfully create a positive growth rate for 40 of the 45 years it has operated the Alaskan Permanent Fund program. This fund is a diversified portfolio that is operated by the Alaskan Permanent Fund Corporation, and has only ever seen negative growth rates in years of economic recession, which is entirely expected.
How Would the United States Afford it?
One might wonder how this in itself would not be expensive to maintain – producing the question how this portfolio gets the capital they need to invest? The answer is simple: taxing corporations their fair share. Surplus revenue taxed off of oil and gas industries in Alaska has been set aside in this fund since 1977, and since then the portfolio has grown to $76.3 billion. Many conservatives also worry about the cost being passed down to consumers if their profits are ‘skimmed’ from the top. The Alaskan Permanent Fund Corporation actually funded research in 1984 that addressed this concern, and found that any cost passed down to Alaskans was absorbed by the annual dividends, by an average annual income increase of 6.3%.
If the United States were to eliminate the aforementioned $1.7 trillion figure in the failing Social Security Administration and Medicaid programs, as well as fix tax loopholes in corporate tax law, the U.S. would be taking the appropriate steps towards reallocating tax revenue towards a UBI. If the U.S. had plugged these corporate tax loopholes, the government lost $8.5 billion in tax revenue in fiscal year 2020 after 55 of the most profitable corporations paid zero dollars in corporate tax. As a matter of fact, these loopholes allowed corporations to make money off of the government in the form of $3.5 billion in rebates. By doing away with swollen welfare programs and sealing the cracks in the corporate tax code, the U.S. has the potential to reallocate tax revenue towards a program that could effectively replace 80+ current means tested welfare programs with one UBI. Another solution to the cost of this program, proposed by Andrew Yang in his 2020 run, is a value-added tax (VAT). The VAT is not a new idea–in fact, a majority of economically developed nations have a VAT that is implemented to supplement their budgetary restrictions. This VAT would act similarly to the percent of revenues taken for the Alaskan Permanent Fund, in that, every transaction that a major corporation makes in which revenue is recorded, a flat tax rate would be applied to the profit of this transaction. In fact, many scholars argue that a VAT would not only simplify our tax code, but it may be beneficial to overall gross domestic product (GDP).
This VAT, combined with fewer tax cuts on corporations and the reduction of current welfare programs would allow the government to institute a UBI. One issue arises in the cost, however: it really just varies. Depending on how much is given to Americans per year, quarter, or month, UBI could range anywhere from $205 billion to $2.5 trillion in annual federal costs. In the Mathematica Policy Institute’s New Jersey basic income experiment, they calculated the amount of income to give the participating families based on their income rate for 4 week periods, and thus, their proximity to the poverty line. Though this per month amount shifted, this is an experiment of a relatively rudimentary form of a basic income. Looking at a far more established basic income, we see that Alaska does something similar, though on a per annum basis. Each year, the Alaska Permanent Fund Corporation evaluates how much annual income is given per eligible Alaskan by assessing the net earnings of the index fund over the past 5 fiscal years, and then subtracting obligatory costs such as maintenance and overhead, and then dividing it between Alaskans. As of 2022, this amount was $3,284.
Although the UBI appears costly at face value, the political and social benefits in the aftermath far outweigh the cost.
The UBI is Individualist
Higher taxation is traditionally not a stance that many conservatives would take, at least not openly. This has been shifting in recent years, particularly towards corporations of monstrous size (think Amazon, Disney). In fact, conservatives in 2021 polled at starkly similar numbers to their liberal counterparts on their view on how large financial and business institutions negatively affect the nation as a whole.
This shifting viewpoint on corporations does not necessarily represent the conservative stance on basic income. Recognizing the reasons are important: the United States has a long history of individualism. Since the Cold War, the sentiment against left wing economics has been rocky at best, and hostile at worst. The UBI is not left wing, though. When discussing the benefits of gutting the current welfare system and replacing it with a UBI that is not funded through individual taxpayer dollars, the conservative fundamentals shine through the cracks of a façade of a distributionist ideal.
UBI grants citizens the freedom to spend their additional income how they like, on top of their current incomes. Being able to have a stipend that keeps you afloat also encourages economic activity – the more people are comfortable with their savings and finances, the more they stimulate the current GDP and growth rate of the country. Economic policy is a major player in the U.S.’ current political landscape, and being able to stimulate GDP growth while eliminating one of the biggest governmental spending categories (and having a strong chance of entering a budget surplus for the first time in two decades) is a conservative’s dream.
It’s fair to say that there are fundamental American values, markedly ones foundational to the political objectives of our nation, such as individualism. We can extrapolate from previously mentioned examples that the UBI supports these foundational values, and can be implemented as we’ve seen in conservative states like Alaska, so why do American conservatives not support a Universal Basic Income nation-wide?
Optics of UBI
Research has shown that a majority of conservatives do not support UBI. It also shows the correlation between conservatives in America and similar nations that think differently about the potential effects of UBI. One of the main objections of American conservatives to UBI is that they consider it a deterrent to work, and that essentially “free” income would disparage individuals from working. This is not the case. Going back to Mathematica’s New Jersey Experiment, we see that recipients exhibited little to no withdrawal from the workforce, and in fact, actually benefit their local economies by moving into private housing instead of government assisted, as well as purchasing more goods and services on average.
In the United States, where conservative behemoths like James Baker, Milton Friedman, and Richard Nixon once championed the basic income, modern Republican leaders now fight tooth and nail to kill this policy. But the reality is clear: the waning health of the United States’ welfare system is in dire need of a fix, and the UBI champions the individualist, entrepreneurial, and self-determinist ideals of the quintessential conservative.
Louisville Political Review 