[manfredo]

Near zero. Few are really portraying how expensive this is. $1k a month for every American is just under 4 trillion dollars. For every adult American it would be just under 2.5 trillion. Currently, the entire federal budget is 3.8 trillion dollars. The GDP is 19.5 trillion. We're looking to spend an amount equivalent to the entire federal budget or 10-20% of the whole country's GDP on UBI. Yang's attempt to portraying this as fiscally feasible is based on the assumption that UBI will automagically result in extreme economic growth.

[Reedx]

That's not how he portrays it though:

The means to pay for a Universal Basic Income will come from 4 sources:

1. Current spending. We currently spend between $500 and $600 billion a year on welfare programs, food stamps, disability and the like. This reduces the cost of Universal Basic Income because people already receiving benefits would have a choice but would be ineligible to receive the full $1,000 in addition to current benefits.

2. A VAT. Our economy is now incredibly vast at $19 trillion, up $4 trillion in the last 10 years alone. A VAT at half the European level would generate $800 billion in new revenue. A VAT will become more and more important as technology improves because you cannot collect income tax from robots or software.

3. New revenue. Putting money into the hands of American consumers would grow the economy. The Roosevelt Institute projected that the economy would grow by approximately $2.5 trillion and create 4.6 million new jobs. This would generate approximately $500 – 600 billion in new revenue from economic growth and activity.

4. We currently spend over one trillion dollars on health care, incarceration, homelessness services and the like. We would save $100 – 200 billion as people would take better care of themselves and avoid the emergency room, jail, and the street and would generally be more functional. Universal Basic Income would pay for itself by helping people avoid our institutions, which is when our costs shoot up. Some studies have shown that $1 to a poor parent will result in as much as $7 in cost-savings and economic growth.

From https://www.yang2020.com/what-is-ubi/

[thatfrenchguy]

VAT is one of the most regressive taxes though, I don’t understand how as a progressive one could see this as a benefit.

[nailer]

Essentially Amazon and Google etc pay little corporation tax due to legal avoidance schemes. VAT is one way to make sure they pay their share.

[calecon323]

All these points have serious problems though.

1. The $500 billion spent on welfare and other income support programs is usually significantly more generous than what a recipient would receive through Yang's proposed UBI. The fact you don't have to cover some people who already receive even more generous benefits doesn't "save you money" in any real sense. There is no real reason someone would choose a UBI over these programs except paperwork.

2. A VAT only gets you $800 billon a year when you need at least something like $3 trillion. This policy is also a little hard to understand if you are left leaning; don't you want to spend new tax revenue on something like universal healthcare, reducing the cost of college or renewable energy expansion? If you raise taxes to pay for a UBI it just becomes harder to raise tax revenue for any other priorities.

3. The roosevelt institute study assumed that the economy was almost completely constrained by demand to the point where even if the UBI was funded entirely through debt the net result would be an economy 13% larger after eight years. Leaving aside whether you agree with their simulation(I don't); this is an incredibly risking bet, if you are wrong that the economy is constrained by demand you have dramatically increased the federal deficit and probably caused a fiscal crisis in the process which would, of course, dramatically shrink the economy. It's interesting to note that the Roosevelt study doesn't actually model Yang's proposal of financing essentially the cost of a UBI through taxes/ spending cuts with the rest through deficit spending and it's hard to see how he came up with the numbers here.

4. So assuming you can save $100-200 billion on other government programs and you get everyone who uses welfare assistance to sign up for a UBI instead you aren't even halfway to the $3.6 trillion dollar price tag.

[dragonwriter]

I'm a UBI supporter, and every one of these points has serious problems.

> 1. Current spending. We currently spend between $500 and $600 billion a year on welfare programs, food stamps, disability and the like. This reduces the cost of Universal Basic Income because people already receiving benefits would have a choice but would be ineligible to receive the full $1,000 in addition to current benefits.

Making UBI a choice vs. existing programs is administratively problematic (and, also, makes no sense.) But a lot of current welfare spending is state and local, and some of what he mentions (disability insurance) is not only state/local, but not classic welfare spending, it's insurance against loss of income, which UBI, despite raising the income floor, does not provide or meaningfully substitute for.

> A VAT. Our economy is now incredibly vast at $19 trillion, up $4 trillion in the last 10 years alone. A VAT at half the European level would generate $800 billion in new revenue.

What's the “European Level” referenced here? European VAT levels range between something like 8% and 27%.

> A VAT will become more and more important as technology improves because you cannot collect income tax from robots or software.

Yes, you can collect tax on income gained through capital investments like robots and software. We do that today, just at lower rates than labor income, but there's nothing fundamental that requires such lower rates.

> New revenue. Putting money into the hands of American consumers would grow the economy. The Roosevelt Institute projected that the economy would grow by approximately $2.5 trillion and create 4.6 million new jobs. This would generate approximately $500 – 600 billion in new revenue from economic growth and activity.

At best, the growth and new revenue lags; it helps with the steady state cost, but you still have to deal with getting there.

> We currently spend over one trillion dollars on health care, incarceration, homelessness services and the like.

That's true (talking government spending) even if you cut out everything after health care, but...

> We would save $100 – 200 billion as people would take better care of themselves and avoid the emergency room, jail, and the street and would generally be more functional.

That's... extremely optimistic for a $1K UBI. Especially since much of the government cost of healthcare, which is the bulk of this category, is in means-tested programs, particularly Medicaid, which presumably was already fully counted when you counted the full cost of existing “welfare” programs.

[Isomatik]

Some additional downers: - The Roosevelt Institute growth numbers are based on this initiative being 100% funded by increasing the federal deficit. The same report deduced that if the initiative is paid for by increasing taxes on the remaining population, the net effect on GDP, prices, and wages will be closer to zero, just money changing hands. Yang's proposal will fit somewhere in the middle, with roughly one third to half of the cost coming from VAT. The study's model also relies on the following assumptions, both of which I personally do not believe will hold, especially if the main revenue source will be a VAT: "1. Unconditional cash transfers do not reduce household labor supply. 2. Increasing government revenue by increasing taxes levied on households does not change household behavior." [1, page 5,12]

- Over half of means-tested welfare (including Medicaid) goes to people under the age of 18, so these costs won't be touched. "In an average month during 2012, 39.2% of children received some type of means-tested benefit, compared with 16.6% of people aged 18 to 64 and 12.6% of people 65 years and older." The median monthly benefit for these groups was $447, $393, and $303 respectively. The only means tested program that isn't dominated by minors is SSI, the vast majority of which goes to the elderly and people 18 to 64 with disabilities who would not re-enter the workforce. [2, p16, 24]

[1] http://rooseveltinstitute.org/modeling-macroeconomic-effects... [2] https://www.census.gov/content/dam/Census/library/publicatio...

[manfredo]

I don't see how he's portraying it differently. He's still essentially banking on some utopian vision actually coming true. Replacing welfare? Sure we may be able to decrease it, but what are we gonna do with the minority of people that squander their UBI check? Let them starve? His VAT proposal isn't even on the same order of magnitude of what it would take to pay for the program. Heck, even if you add up the proposed VAT tax and all the purported savings it doesn't even add up to the cost of the UBI checks let alone the administrative overhead:

(5-6bn in welfare cuts) +

(8bn in vat) +

(5-6bn in magic economic growth) +

(1-2bn in cutting stuff he doesn't really elaborate on) =

(1.8-2.1trn).

So even if all his fantastic predictions come true we're still short of the 3.1 trillion to give 1k UBI checks to all ~260m adult Americans.

[nailer]

He broke down the 3tn a year on his Rogan interview. And yes, if you squander your UBI you squander it. Like if your squander your welfare now.

[manfredo]

And you really think society is just going to let people starve in the streets? Yeah, no. We're going to end up paying die both UBI and welfare.

Regardless of his purported numbers he's still banking on massive economic growth happening at the same time as a massive tax increase. This is next-level voodoo economics.

[dragonwriter]

> And you really think society is just going to let people starve in the streets?

We (at least, public direct aid programs; food banks etc., may pick up some of the slack) do now if people squander welfare, why would UBI change that?

[manfredo]

My point exactly. Yang's assumption that we'll be able to scrap welfare program if we give people UBI is a fantasy. Because UBI won't change the fact that many people are still going to need welfare, UBI or not.

[systematical]

He proposes a value-added tax to raise much of the money. Next, you can't receive both social security and the UBI. Other social welfare programs can't be utilized a long with the UBI either. If for instance you're receiving $400 in food stamps, you only get $600 in UBI. With that said, yes, he is relying on this boosting the economy (tax revenue) to pay for the rest.

[manfredo]

The money comes from somewhere. No matter how you slice it, we're going from ~25% government revenue as a percentage of GDP to mid 30s or as high as 45% of GDP sent to the government. Only 3rd world countries and some small European States have that kind of tax/GDP ratio. For reference, Canada is 31%.

So the plan is to pass one of the biggest tax hikes in US history (probably the biggest one during peace time) and then keeping our fingers crossed hoping for rapid, consistent economic growth following said massive tax increase. I think I'll pass.

[rosser]

The money goes somewhere, too, though.

That "tax hike" would almost all get spent, and probably pretty quickly, because the overwhelming majority of it would be going to people who live close enough to hand-to-mouth that the differences are academic.

So is that pulling $3T/year out of the economy or pumping most of $3T/year into it?

[manfredo]

It's both: we're taking 3trn a year out of the economy and putting 3 trillion a year into the hands of Americans. Maybe they'll turn around and spend it. Maybe they won't. Perhaps you're right and every cent of the UBI goes back into the economy - but in that case it's still only neutral in terms of economic impact (and even this scenario is fanciful, there's going to be overhead in terms of administration and not everyone is going to spend their UBI check). It's an even bigger leap to think that siphoning $3T out of the economy somehow puts more than 3T back in - and that's what Yang is counting on.

Step 1. Pass 3T worth of taxes and spending cuts.

Step 2. Give everyone $1k a month.

Step 3. ???

Step 4. Poverty disappears, the economy grows by leaps and bounds.

It's a utopian vision. Tantalizing, yes I can empathize with people who like it. But let's not forget that Utopia comes from the Greek words "not" and "place". A utopia is something we all desire but does not exist. The pursuit of which has led many societies to ruin.

[rosser]

I think the position is that whatever fraction of that $3T that gets spent at the bottom of the economy will contribute more to the economy overall than it would have sitting in the bank accounts of whoever "paid" the tax, simply on the basis that so much more of it will be spent that way. Yes, it's less than $3T. It's still circulating. A moving dollar is more economically useful than one at rest, isn't it?

If we're going to premise the "health" of our economy in no small part on the movement of monkey status points, then move the things.

It's "trickle-up", not "trickle-down"...

[manfredo]

> I think the position is that whatever fraction of that $3T that gets spent at the bottom of the economy will contribute more to the economy overall than it would have sitting in the bank accounts of whoever "paid" the tax

Which is fantasy. It's not people paying the taxes it's a VAT that Yang's advocating for. This is money directly coming out of economic activity.

[bargl]

He actually does a really good job breaking down where he plans for each dollar to come from. For a candidate to have a dollar by dollar break down to account for his plan is something I don't remember seeing. While I can't say his plan is feasible, I can say at least he has one.

[beat]

Median income is currently a bit over $30k. I can't see how you can make the assumption that increasing median income by 30% or so would not result in extreme economic growth.

There's nothing automagical about it. It's plainly obvious, and unreasonable to assume the opposite.

[AnimalMuppet]

Real growth? Or just inflation?

Then there's the little matter that the money comes from somewhere. Moving $3T from one pocket to another may not result in any growth at all. (Ironically, if Yang were irresponsible, and weren't going to pay for this program, then this objection would not apply.)

[beat]

All economic growth comes from money moving somewhere.

It just seems absurd to me to think "may not result in any growth at all". Money in the hands of the poor and middle class moves faster than money in the hands of the rich, and thus creates more actual business. This is a well-understood economic fact.

[AnimalMuppet]

Too late to edit my previous reply, so I'm adding this parallel one.

> All economic growth comes from money moving somewhere.

No. No it doesn't. All real economic growth comes from more things that people want being produced. It results in money moving somewhere, but the money moving isn't the real growth, nor is it the cause. It's the result.

To adapt an explanation from Thomas Sowell, take beach houses. There's more demand for beach houses than there is supply, so they tend to be very expensive. I can't afford one - I can only rent. But if we gave everybody a bunch of money, there still wouldn't be any more beach houses. All that would happen is that beach houses would rise in price, because now there would be more money chasing the same beach houses.

This misunderstanding - thinking about money instead of about producing things - leads to the idea that you can cause growth by moving money around. Sometimes you can - when the demand is actually there, and the economy has the capacity to produce more. Well, in this situation (UBI), the demand is definitely there. The poor genuinely need stuff, lots of it. But even so, adding more money won't cause the economy to produce more unless it has the spare capacity. All it might do is redistribute the things that are already being produced. (And that may be fine. If we want to say that the poor shouldn't starve just because they're poor, and that the rich are going to have to make do with less so that the poor don't starve, there's a case to be made for that. But that's not the same as growth.)

So the question might be, how much spare capacity do you think there is in the economy, and why do you think that?

[beat]

Without money to move, there is no economic growth. There are supply-side problems, and demand-side problems.

Sowell's example is woefully incomplete. He's talking only of limited, unique physical goods. He's not talking about things where production can increase in response to demand. He's not talking about services. And bluntly, UBI isn't there to help people buy beach houses, and won't cause enough inflationary pressure on beach houses to make a damn bit of difference on their price. It's there to help people afford a car, or child care, or medical bills, or any of the countless things that plague the poor rabble in this country.

Spare productive capacity is why UBI is feasible in the first place. The economy is producing more than people can afford to buy, and the machinery that makes it so productive is displacing jobs they need to afford anything at all.

If you're reading Sowell, you should read Yang's book. He addresses this stuff. He's not just treating UBI as a golden hammer. It's a straightforward, workable way to cope with a lot of problems that keep us from coping with other problems.

If technological advances wipe out 10% or more of existing jobs in the next couple of decades with no replacements in sight, what do we do? Blame them for being lazy? Retrain those truck drivers as computer programmers so they can get those hot programming jobs in their population 800 midwestern town? And move those local startups into the strip mall that closed because retail got wiped out by Amazon? If we don't do something about it, there will be blood in the streets, sooner or later. That's a much bigger problem than taxes.

[AnimalMuppet]

> Without money to move, there is no economic growth.

Of course there is. You can have an economy without money. It's barter, but it's still an economy, and it can still have growth.

And, of course UBI isn't for buying beach houses. That was to illustrate the problem in an obvious way, not to be directly relevant.

> The economy is producing more than people can afford to buy

You have also claimed that UBI will grow the economy. If it's already producing more than people can afford to buy, first, why would it grow the economy, and second, why should we regard that as a good thing?

Since you seem to be misreading my position fairly consistently, let me try to be more clear. My claim is not that UBI is necessarily a bad thing. My claim is not that UBI is unneeded. My claim is not that the poor are doing fine. My claim is that your claim that UBI will grow the economy is highly suspect.

[AnimalMuppet]

But it wasn't going to be taken out of the hands of the rich to pay for this. It was going to come from a VAT, and from existing welfare. But existing welfare is taking it from the poor, and the VAT is taking it from businesses and people who buy stuff. It's largely not coming from the rich. So even by your second paragraph, it's unclear that this is going to cause actual growth.

[beat]

Think about the math. Is a VAT actually going to take a third of the income of the average wage earner? No, no it will not.

[AnimalMuppet]

Where did "a third" come from? Why that number? Why do you think that number is relevant?

And why do you think it answers anything I have said?

[SubiculumCode]

I have not seen claims by Yang that this will be paid for by growth. Please cite your reference.

It would be paid for by a value added tax of 10%.

[systematical]

Reference is from interviews, alluded to on his policy page "A Universal Basic Income at this level would permanently grow the economy by 12.56 to 13.10 percent—or about $2.5 trillion by 2025—and it would increase the labor force by 4.5 to 4.7 million people. Putting money into people’s hands and keeping it there would be a perpetual boost and support to job growth and the economy."

[nailer]

Saying UBI would grow the economy is not the same thing as saying that UBI growth would pay for UBI. My understanding is that Yang doesn't include it in the 3tn - most comes from replacing existing welfare programs and VAT.

[manfredo]

He definitely did say that UBI is going to pay for UBI. He factored projected economic growth into the budget.

[CompelTechnic]

Reminds me of Sanders' assumption that his economic policies would result in 5% GDP growth for 10 years straight... whew!