By Steven Shafarman
Median U.S. household cash income fell by 1.1 percent in 2002, to $42,409. The decline since 1999, when median income was $43,915, has been 3.4 percent, $1,506.
When the Census Bureau announced these income numbers on September 26, 2003, it confirmed something most of us already know: money is tight; times are tough; we are struggling to get by; we have less money to spend than last year. And it affirmed to those of us who are struggling that we are not alone.
Half of all households earn $42,409 or less. That amount defines the middle of the middle-class. Many working people are living with credit card debt, no health insurance, and a real fear of unemployment, bankruptcy, and poverty.
Declining income for middle-class Americans is bad news for incumbent politicians - if their opponents campaign for policies that can make a real difference.
What government should do, according to Republicans, is cut taxes, and the Bush administration has enacted several large tax cuts. They tell us “the economy” is growing, but what does that really mean when so many of us are struggling? Democrats say government has to invest more money in education, health care, job training, and building roads, schools, and other infrastructure. But that won’t help anyone pay the rent next month or feed children who are hungry today.
Republicans and Democrats routinely promise to create jobs, but invariably fail to present adequate details. How, specifically, will they create the jobs? Who, specifically, will get them? How much will the jobs pay? Will the workers have job security? Opportunities for promotion? Retirement, health care, and other benefits? Before voting for any politician who campaigns on the issue of jobs, we have to demand answers to these questions. Without satisfactory details, “jobs” is just rhetoric.
We also have to hold elected officials accountable whenever their efforts fail to produce demonstrable benefits for us and our communities. “Creating jobs” often means giving tax breaks, loans, and other subsidies to private companies that say they’re going to hire people. When our government uses our money that way, for corporate welfare, we have to demand that our elected officials hold those companies accountable, with real penalties if they fail to deliver.
Can current practices create good jobs for everyone who wants one? Can current practices provide economic security for all Americans? There is no evidence or logic to indicate that they can.
Instead of current practices, our government could give every adult citizen a “basic income.” It should be enough to ensure that the unemployed can afford basic food and shelter - but just enough, so it does not undermine people’s incentives to work, earn, and save. Where the cost of living is high, cities or states can provide supplements from local revenues. The amount should be adjusted when necessary to relieve or prevent difficulties associated with inflation or recession.
This is not an entirely new idea. Residents of Alaska already get a small basic income, the Permanent Fund Dividend. A percentage of oil royalties is paid into the fund and every resident receives a check each year. In 2003, that was $1,108. The Alaska Permanent Fund was created by an amendment to the state constitution in 1980, and annual dividends have been paid since 1982. Over the past two decades, Alaska is the only state where income inequality did not increase.
In the 1960s, a majority of Americans favored plans to give cash payments to the poor, a “negative income tax” or “guaranteed income.” Lyndon Johnson appointed a commission of prominent business leaders, academics, and union officials to study the idea; their report unanimously recommended “a new program of income supplementation for all Americans in need,” without any work requirement. Martin Luther King Jr. called for guaranteed income as a necessary step toward solving problems of housing, education, and racial injustice. Other advocates included more than 1,200 economists, from John Kenneth Galbraith and James Tobin on the left to Milton Friedman on the right.
Richard Nixon presented a guaranteed income plan in 1969, and it passed in the House of Representatives with two-thirds of the vote. In the Senate, however, moderate supporters - Democrats and Republicans - were defeated by the combined votes of extreme conservatives who opposed any aid to the poor and extreme liberals who wanted more generous benefits. (Daniel Patrick Moynihan, the plan’s author, described it, its popular support, and the congressional debates and votes in a 1973 book, The Politics of a Guaranteed Income.)
With regard to helping the poor, many people think government should not provide income but only food, shelter, and services. But such programs require large bureaucracies that own and maintain housing; buy, store, and transport food; and monitor recipients’ income, family size, and other eligibility criteria. It’s much easier, more efficient, and more respectful to give people a basic income and let them decide where and how to live, work, and so on. If someone wastes or misuses the money, there will always be the opportunity to make better decisions next month.
Including everyone - unlike Nixon’s plan, which was only for the poor - means greater economic security for everyone. Even so, basic income is not socialism. On the contrary: It will preserve markets, private property, and free enterprise. And increase individual freedom. And strengthen democracy, because it will be easier for everyone to afford the time to participate in political decision-making. Everyone will have the means to participate fully - and more equally - in the market.
The purpose of government, according to the Constitution itself, is to “promote the general welfare.” Basic income will do just that, directly and efficiently. Most government programs do not promote the general welfare but only the special welfare of specific individuals, groups, businesses, or industries. We can cut or eliminate those programs. Because many programs rely on tax credits and deductions, eliminating them will simplify the tax code and facilitate tax cuts.
The Constitution does not say anything about creating jobs. When everyone has the security of a basic income, our government can focus on its proper and intended roles: protecting individual freedom and national security.
We can afford a basic income of $600 a month for every adult without raising taxes, simply by cutting the government programs it makes superfluous, welfare and corporate welfare and associated bureaucracies. That would reduce poverty by half, at least, according to analyses by Professor Irwin Garfinkle at Columbia University. Reducing poverty means quick and dramatic effects on hunger, homelessness, and associated problems like crime, illegal drugs, and HIV/AIDS.
Most versions of a basic income include only adult citizens; some add a smaller amount for children; and the Alaska Permanent Fund Dividend goes to everyone age six months or older. One plan, Citizen Policies, would have everyone give something back to the community through some type of service, eight hours a month; that service would replace some government programs and help pay for the basic income. We can debate those details after the main idea is generally known.
American history offers additional support for this idea: Thomas Jefferson called on the Virginia legislature to give homesteads to people without property, declaring that owning property is essential for full citizenship. Tom Paine sought a national fund that would make a cash payment to everyone at the age of 21, and yearly starting at age 50, as “a right, and not a charity.” Abraham Lincoln proposed and Congress passed the National Homestead Act, which provided land to more than 700,000 families over four decades. The Populists and Progressives of the 1880s and ‘90s sought universal economic security and won many other reforms, like the antitrust laws. Millions of Americans joined a 1934 movement that demanded extra income for seniors, and we got Social Security. Franklin Roosevelt asserted that “true individual freedom cannot exist without economic security and independence.”
Basic income could be a defining issue for the Green Party, Libertarian Party, another “third” party, or any independent candidate. Some Democrats and Republicans might also call for it, although doing so may mean defying their party leaders. Campaigns and candidates can cite the history of popular support for related ideas, while criticizing the Democratic and Republican Party establishments for abandoning guaranteed income after 1972.
A third party that calls for basic income could soon become the second party or even the first. The Homestead Act was “the reason the Republicans remained the majority party for more than half a century,” according to William Greider. Even though the only direct beneficiaries were the poor families who got land to farm, it was “probably the nation’s single greatest stroke of economic development channeled directly through people.” Basic income would channel more money more directly through more people.
Moreover, every adult American will benefit equally and unconditionally, without prejudice, uniting us regardless of class, race, gender, ethnic background, sexual orientation, and physical ability. As Martin Luther King Jr. wrote, “a host of positive psychological changes inevitably will result from widespread economic security. The dignity of the individual will flourish.”
Basic income will also provide everyone with monthly reminders that we are all stakeholders, with a direct and immediate interest in making our government more just, efficient, responsible, and democratic. People who know themselves to be stakeholders are more likely to be voters. We need more people to be voters if we’re going to take our government back from the special interests that are exploiting it and our taxpayer dollars.
When politicians promise to create jobs, it’s time for us to say, “No thanks. Give everyone a basic income and we can find or create our own jobs.”
When politicians talk about the economy, when they promise to produce faster economic growth, it’s time for us to tell them, “I’ve heard enough about ‘the economy.’ Give everyone a basic income and I’ll take care of my economy.”
It’s time for a basic income to guarantee economic security for all.
© 2004 Steven Shafarman. Reprinted from Green Horizon Quarterly, Vol. 1, No. 3.
Steven Shafarman is the president of the Citizen Policies Institute, which is nonprofit and nonpartisan. His most recent book is We the People: Healing Our Democracy and Saving Our World. He lives in Washington, D.C.