During last week’s Vice Presidential debate, one key topic – Senator Kamala Harris’s May 2020 pandemic universal basic income (UBI) proposal – went curiously unmentioned. That’s surprising since her legislation could be the most expensive bill ever introduced in Congress, offering ample fodder for Republicans looking to define Senator Harris’s liberal record.
Harris’s bill (S. 3784, the “Monthly Economic Crisis Support Act”) proposes monthly payments of $2,000 for most Americans through the pandemic and beyond. UBI plans typically call for government payments to everyone (the “universal” part), sufficient to cover basic needs (the “basic income” part). To be fair, Harris’s legislation falls short of universal, since payments would phase out for some higher income households. Nonetheless, the vast majority of Americans would qualify for monthly checks, and for them Harris’s bill amounts to the most generous UBI proposal ever introduced in Congress.
It also far outstrips UBI proposals by other former Democratic presidential candidates, both in the size of payments and number of recipients. For example, Andrew Yang touted monthly $1,000 per adult “freedom dividends,” which he argued were needed to replace earnings lost due to the supposed “robot apocalypse” of automation ahead. Senator Bernie Sanders (I-VT) in March proposed $2,000 monthly payments “to every household in America” for “the duration of the crisis.” Harris ups the ante to $2,000 per month per adult, plus adds $2,000 monthly payments to as many as three children. That means a household of five (mom, dad and three children) would receive an astonishing $10,000 per month under her legislation.
Payments would flow regardless of whether adults and naturally children were working. The only exceptions would be households with adjusted gross income above $100,000 as a single individual, $150,000 as a head of household, and $200,000 as a married couple, for whom payments would rapidly phase out. But since people in those households, along with children in families of six or more, make up fewer than one in five US residents, the vast majority of US residents would receive $2,000 payments each month.
Unsurprisingly, Harris’s legislation doesn’t include offsets, so its cost would be added to already massive deficits. There also is no official score. But if we conservatively assume 75 percent of 330 million US residents would be eligible for $2,000 payments, the cost would be a staggering $500 billion per month, or $6 trillion per year — far exceeding the current cost of all federal programs as well as any prior relief proposal. For comparison, the March 2020 CARES Act cost $1.7 trillion. Even House Democrats’ May 2020 “Heroes Act,” estimated to cost $3.5 trillion, falls short of the likely cost of Harris’s legislation.
What is unknown about Harris’s bill could be even more important. It calls for payments until three months after the health emergency ends. There’s no telling when that would be, but starting such massive payments to most US households would create enormous political pressure for extending the health emergency — or continuing payments beyond its end. Once started, payments might be politically impossible to shut down, especially in a Democrat-led administration and Congress.
It’s also unknown what effect such payments would have on employment. The now-expired $600-per-week unemployment bonuses raised average unemployment benefits above prior earnings for most recipients, discouraging returns to work. Harris’s legislation offers some households almost four times as much – $10,000 per month or over $2,300 per week. That’s double the median earnings of full-time workers. Incredibly, Harris argues those payments should be on top of unemployment and other government benefits. As she said in August: “I won’t stop fighting for $2,000 monthly payments and extending unemployment benefits,” in reference to the $600 bonuses.
Could such legislation actually be enacted? It certainly would require Democratic majorities in the House and Senate, and a Democratic President. All seem within reach this fall, and Senator Harris could soon be Vice President alongside the oldest President ever. Her colleagues in Congress are also thinking big. As Senate Democratic leader Chuck Schumer (D-NY) said in August, “we have a moral imperative to the people of America to get a whole lot done if we get the majority…and Biden becomes president, and nothing is off the table.”
Reprinted with Permission from - AEI by - Matt Weidinger