Social Justice, Current Events

The Political Failure of Basic Income Guarantee in the United States

In my previous post, I compared the diverging trajectories of the US and Canada. Policymakers in both countries set out to introduce negative income tax (NIT) programs beginning in the 1960s. Whereas Canada had moderate success introducing an NIT through a number of programs, the US has only been unable to guarantee support to the unemployed deemed “employable” and thus transfer programs are limited to the elderly, disabled, and working poor. What does the literature on welfare state development say about this?

One explanation focuses on the role of anti-black racism in stunting US welfare state growth. Martin Gilens finds that stereotypes about the work ethic of poor blacks partially explain popular opposition to welfare. These stereotypes had a profound impact on support for President Nixon’s Family Assistance Plan (FAP) proposal in the south. Opponents feared that a guaranteed income would undermine the south’s low wage labor market by raising the reservation wage of poor black workers. According to one Congressman, “There’s not going to be anyone left to roll these wheelbarrows and press these shirts.”

The other relevant explanation focuses on the isolation of the poor in the policymaking process. The popular mantra is that programs for the poor make for poor programs because they lack the necessary cross-class coalition to protect against retrenchment. Monica Prasad argues that the US has an “adversarial” policy structure which often pits the poor against the middle class and rich through a combination of highly targeted welfare programs and heavy reliance on progressive income taxes. When it comes time for cutbacks, welfare programs are often defenseless relative to universal programs which create powerful cross-class coalitions ready to fight against retrenchment and even for expansion. This is evident in both countries. Historically, Canadian social assistance has been just as susceptible to retrenchment as American welfare for this reason.

Conversely, social programs characterized by universal or near-universal coverage create broad-based constituencies which can be mobilized for policy reform or to block retrenchment. John Myles and Paul Pierson argue that Canada’s universal family allowance acted as a “natural bridge” to its current NIT program. Canada’s child tax benefit traces its policy legacy directly its popular family allowance program. Moreover, Canada income-tested family allowances at the top by excluding upper income families. This allowed them to save money in the face of growing deficits, redistribute some of the saving to poorer families, and still maintaining a strong poor/middle class coalition.

But wait! Shouldn’t the FAP have created its own cross-class coalition which would have built broad support for it? It would have put the poor, working, and parts of the middle class all in the same boat and thus created a unified constituency with a common interest in the program. The problem is that symbolic boundaries matter just as much as material interests. The US, which is the only rich democracy to lack a family allowance, had no such program to build upon which led Nixon to propose an expansion of AFDC into an NIT program. As you can imagine, the proposal to expand “welfare” to the working and middle class did not go over well with policymakers and the public. Further compounding the problem was the entrenchment of the distinction between the deserving and undeserving poor through the subsequent creation of SSI and the EITC in 1974. As Brian Steensland argues, this fragmented any possible coalition by creating separate constituencies for the elderly and disabled (SSI) and the working poor (EITC).

These details have led to a lot of pessimism about the prospects for introducing an NIT program in the US. Gilens is pessimistic because of the continued centrality of race in American welfare politics. Myles and Pierson are pessimistic because of the US’s unique lack of family allowances leaves no policy bridge to an NIT. Steensland is pessimistic because of the symbolic and electoral fragmentation of those most likely to benefit from an NIT.

I’m more optimistic for two reasons. First, arguments which contrast targeting with universalism focus much too narrowly on material and electoral resources. The fact that SSI and EITC are both targeted programs with narrow constituencies but have seen benefits rise faster than inflation in the past thirty years in the face of concerted efforts at retrenchment is evidence that cultural perceptions matters more than material resources in some cases. These two programs are perceived as targeting uniquely deserving beneficiaries but coalition arguments miss this because they are so focused on material resources. The requisite bridge to BIG/NIT could be symbolic rather than material-based. I think we already have such a bridge. This leads me to my second criticism of the pessimists on cultural grounds. Cultural explanations for the US’s lack of NIT focus narrowly on the identity of beneficiaries (i.e. race and gender) and their perceived control over their situation (i.e. work status). This leaves out a third dimension of deservingness which I characterize as reciprocity. In other words, what have beneficiaries done or what are they doing to earn their benefits? The perception of reciprocity is especially important in the US where the most popular social programs such as Social Security and Medicare are based on the idea that beneficiaries are deserving of benefits based on past contributions. Similarly, there is another government check based on the perception of past contributions which many of us receive each year. It carries no stigma. In fact, most of us actually brag about receiving it and may spend it on items that are often expensive or frivolous. I’m talking about tax refunds that we receive when we claim exemptions, deductions, and (most importantly) credits such as the EITC and CTC.

In my final post, I’ll explain why those interested in introducing a BIG/NIT program should pay more attention to the concept of reciprocity and why it’s important that that the most recent social policy innovations have taken the form of tax expenditures.

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Author: Joshua McCabe
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