A proposed "welfare" scheme (from another thread)

Great Debates
1

This was mentioned here:

So I tried to see what it would take to make this work. Rough numbers: 300M citizens, 150M taxpayers. Poverty level income is around 11-12K/year, so let’s make it 10K “distributions” for each citizen above 18. Half that to anyone below 18 (that’s 75M citizens). That makes it about 2.6T distributed yearly.

Some of the following #s are taken from Government Spending Details in $ billion: Federal State Local for 2013 - Charts> For the purposes of estimates, I am adding fed/state/local taxes together since those can be inter-exchanged somehow. The important thing is the total burden on the taxpayer.

With those payments in place, certain things can be removed from the budget. Pensions - SS and disability - $1.1B (fed and state). All kinds of social programs - that’s $570B. That’s about it - all other spending is not replaced by such distributions. So - we need $2.6T. We have about $1.67T. We need that extra $1T or so still.

Now, everyone is getting that $10K. Rich, poor, middle class, etc. So everyone’s income is raised by $10K. It’s hard to find the average top marginal tax rate taxpayers pay today, and it is muddied up by counting payroll taxes, but I think 25% is not an unreasonable estimate. So out of that extra $10K, $2.5K will be on average paid back in taxes (note that the “poor” won’t have to pay any of it back due to the existing tax laws) - that’s about $375B. We’re still short $600B or so.

Total income taxes in 2013 will be around $1.9T - that’s total fed/state/local. Adding $600B to that is a BIG increase that I don’t think can be done. I don’t really see a way to do this, certainly not by “tax[ing] the rich a few dollars more until it is enough”.

I am sure some $ will be saved by reducing the enormous bureaucracy that administers the current US welfare, but I don’t think that would add up to $600B.

Did I miss some other expenditures that would be made unnecessary by that scheme?

2

Did you count the Earned Income Tax Credit? It’s much less than 10K for single people, and families wouldn’t need it since they’d have at least 15K, so it could safely be eliminated. Still wouldn’t be 600B though.

I think that 25% would be reasonable estimate on the marginal rates for the 10K, but disagree that you couldn’t then raise taxes. I think a couple percent would be doable especially since it would leave the rich with almost as much as they had before, the upper middle class with the same, and everyone else with a bit more. Don’t know what that would equal though.

One thing that’s hard to quantify is the increase in productivity due to elimination of the bureaucracy, which is distinct from the money saved. Eliminating those jobs means that some of the former bureaucrats would engage in other jobs that offer useful services and goods to people (since their former “useful” job has been efficiently automated), thus helping the economy.

3

Expenditures are roughly right on, but you are discounting an estimated $1.0T for 2013 that will come from social security/medicare taxes.

Total federal intake is expected to be $2.7T with 1.5T in income and 1.0T in social security/medicare taxes. Technically, you could do it, but I doubt it would be popular.

And, if this were to be passed as law, I would suspect a very large amount of state involvement in funding this. You’d then be able to access almost 5.4 T worth of funds.

But you’d have to rewrite tax law to make the tiers pay out more if you wanted to continue other endeavors. Like education. Or congress.

Also, $10,000 is NOT enough to live on…pretty much everywhere. I’m sure there are a few places that $833 a month would be able to get you an apartment and food, but you’d probably still miss out on electricity and TV (OTA TV in the boonies suck. Definitely no cable TV on that payout).

4

Welfare in scare quotes and the word scheme-Nothing but honest inquiry here, folks. :rolleyes:

5

Just because someone reflexively uses the same language that they do when they are attacking something does not mean that they are not honestly inquiring (although it does raise doubts.) Just like if you supported Obamacare despite disliking most other things he supports and you said “I think the Democrat Party is right to support this.”

6

I took it to mean that it’s not really welfare. And it isn’t. It’s more of a socialist redistribution of wealth.

…Now ignore my negative connotations.

7

TV is not a necessity. Internet, however, might be. I’m not sure on that. Maybe only if there isn’t a public library nearby.

And you’re right $10k sounds low. I was thinking more like $1k/month, but I live near St. Louis, not the boonies, so maybe I’m overestimating minimalist costs of living. Still, it’s not San Fransisco or Manhattan.

But if we’re going to do this, we need to do it. There’s no point half-assing it; that’s what we’re doing now.

I propose getting rid of any and all subsidies. If your business goes bust, or a drought hits your farm, that’s why we have the safety net. So the current agricultural subsidies, subsidies for “job creation”, corporate welfare, etc, could be re-purposed for this safety net, along with the money going towards the bureaucracy that supports these subsidies.

What about law enforcement expenditures? If we stop locking up non-violent criminals/drug users, could we save some money?

How about things like the FDA - if they stop enforcing rules, but still inform the public about foods and drugs? “This product has these negative effects, and may not be effective for its intended purpose, use at your own risk” instead of “You can’t sell this. Period.” Could we save money that way?

Certainly there is enough money in the enormous defense budget that could be diverted to actually defend the freedom of American citizens to quit their job or go to the doctor?

I’m just spit-balling here. If you can’t tell, I’m kind of a libertarian, free market guy, who nevertheless supports a safety net. I think if you can’t quit your job without risking homelessness, starvation, bankruptcy and/or enormous medical bills, you are not free. And I aim to maximize freedom.

8

I think that $10K is very difficult to live on, but is still better than what many people currently receive. However, it will cause a major backlash from people who paid into social security all their lives and will see their benefits reduced by hundreds of dollars a month. While it’s difficult to live comfortably on even $1200 a month in many places, that couple hundred extra can make a difference between just scraping by and not having to worry about when that next check is coming in, and it would be changing the social contract in the middle of the game to deprive workers of this benefit that they’ve worked 30 years for.

9

Why would anyone be deprived of benefits? In fact, SSDI is already a de facto safety net for a lot of blue collar people. When their back goes out and they can’t work anymore, they can go on disability.

I don’t know what SS retirees get these days, but it can’t offer much more than a basic subsistence. I think my grandma got less than $500/month around 10 years ago.

My proposal is basically just an expansion of these programs to everyone, along with elimination of means testing, eligibility requirements, and other costs/hurdles that make it difficult for the very disadvantaged to receive them.

10

This thread is about the financial feasibility of the proposal. If any SS income beyond $10K a year is not to be taken away, can you tell me how this would impact Terr’s analysis of the costs of the program? Because Terr is assuming that we would have zero SS payments. So either this bumps up that part of the equation, or many people would have a much lower SS check every month.

11

Two things: 1) We’re talking about paying everyone, all the time. I believe that supplementing your paycheck throughout your working career will more than make up for making a little less than you expected in the case of retirement or disability. 2) If it becomes a huge political issue, what’s wrong with grandfathering in a slightly larger than planned retirement check for those who worked their whole lives expecting it?

12

Because at the $10,000 level per person per year, you are taking 2.4 TRILLION DOLLARS of the planned 2.7 trillion of revenue for the federal government.

That means the entire federal government would have to operate on 300 billion. So that’s about slightly less than half of the current Defense budget, so you can basically kiss all DARPA projects and research away. But what do we keep?

Congress would keep the three main branches operating (Courts, Congress, and the Presidency) so that’s 3B. Defense? 155B is spent each year just on personnel costs, that’s not including tanks, naval fleets or anything else. Just people. Let’s say they get 160B so they can keep people on and buy replacement parts for their current stuff (don’t want to cause more joblessness, after all). And education (Federally) is another 60B annually.

So…what does that last bit of 77B go to? it won’t go far. The NIH, which is currently unfunded in this model, currently uses 31B a year. Giving everyone cash just isn’t fiscally feasible, even at this minimalist level.

13

Simple answer: The government must become smaller. It’s role, as defined by the constitution, is “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity”. My plan attempts to cover 1, 3, 5, and 6. Which function does pot criminalization cover? The INS, TSA, DHS? How much of our “Defense” budget goes toward any of those governmental functions as laid out in the preamble, as opposed to violently destroying third world nations and their people because we think it might make our businesses a few extra bucks?

And my proposal gets rid of the “jobs” excuse. In fact, that’s the main point. If you aren’t providing actual value to the world, your job should not exist. This includes bureaucrats and most defense employees. Employment should not be a form of welfare. And I think when you get rid of all the unneeded and downright counterproductive jobs we “provide” people, you’ll find that full employment is simply no longer possible. There must be another way to keep people out of dire poverty, and this is my attempt at fleshing out how.

14

Nothing is “wrong” with grandfathering in people, in fact I was going to suggest it as one option myself.

However, Terr proposed actual numbers which differ in implementation from your numbers. While I can’t vouch for their accurate pro or con, at least they are numbers.

What percentage increase in taxes do you think would be needed to pay for this universal subsidy? Do you disagree with Terr’s numbers in other areas of the OP?

15

I think this is more important than almost all other government functions. So if there’s not enough money in the pot, something else should be sacrificed before this.

I suggested defense. I don’t think our military should go away, but I think it can be 10% of what it is now and still be the best in the world, and more than adequately protect us. We may not be able to bully as many countries around, but I believe that’s a sacrifice we must make.

And frankly, Terr’s numbers show a half a trillion dollar shortfall (about our entire defense budget). Since our deficit has been over a trillion for some time now, I’m not as alarmed as some of you. Assuming we’re at the Laffer maximum – which I doubt – and no more revenue can possibly be raised via taxes, I think we should shrink the other parts of the government until the numbers work out. Start by dismantling the surveillance state, then the police state, and then the military-industrial complex.

16

Because this would not be really “welfare”. This would be a payout to everyone. Bill Gates included. It’s a payment to you for being a citizen (doesn’t Alaska have something like that?). Thus no one would be on “welfare”.

17

First, the medicare taxes would still have to be there. And second - I am counting it - it is counted when I eliminate the $1.1T in social security payments.

$11K or so is the poverty level in the US currently. So apparently people do live on it. It is not a luxurious living, you would need to have roommates etc. but what do you expect for not working at all?

18

You would need to keep those taxes, even if you said they weren’t taxes for Social Security anymore, unfortunately.

And “poverty level” sucks. I don’t think it’s enough.

19

The modification I would make to this (which I accept is a pretty big modification) would be to require that some taxes or income is actually paid throughout the year to get it. So, as long as you have a job, some job, any job, you get a benefit. If you just want to freeload off the system, too bad.

I know the immediate response will be “but what about X who can’t get a job for Y reasons”, but my contention would be that outside of the severely disabled, if you drop the minimum wage almost anyone could get a job.

20

It does suck, but that’s the incentive to do better with yourself and get out of poverty. As has been noted, while it does suck some people do live on poverty level wages.