The checks paradox
Or why Milton Friedman and Charles Murray may not be far-reaching defenders of the welfare state
I was originally going to write this email to alert my readers of a an op-ed I wrote for the New York Times about the recently passed stimulus bill. I hope you read it and enjoy it.
To summarize it briefly, I made the argument that the relief bill which had passed the House and Senate was handicapped by an insistence from Republicans in the Senate that it be under $1 trillion.
This meant that two measures which most directly provide cash to people — lengthening and expanding unemployment benefits and $600 checks to most people — were more or less played off each other, when there’s no technical or policy reason for both of these benefits to not be considerably more generous, as they were in the March relief bill. But things have…developed….since then.
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The President seemed to agree with me — sorta. In a videotaped statement he gave last night he criticized the bill, and specifically identified the direct payments as being too small, asking instead that they be $2,000. He also called out a litany of spending measures included in another part of the bill, an omnibus spending package that will keep the government funded for another year.
Trump’s call for $2,000 checks lit up the internet with excitement and puzzlement.
Here it was. Finally the president had rejected the miserliness of the Republicans and the uninspiring interest group bargaining of the Democrats, delivering a refreshing bout of right-wing populism and national conservatism, vigorously using the government to directly help (nearly) all Americans.
But of course he had done nothing of the sort. He had simply said some words on camera, not even committing to vetoing the bill, let alone negotiating a new one. He had been, at best, benignly neglectful of the legislative process as it had worked its way to the current bill. Many of the spending programs in the omnibus he criticized were part of his administration’s budget request.
And it’s not just debating points and political posturing: 12 million people are at risk of losing their unemployment benefits the day after Christmas, not to mention the government needing authorization and money to continue functioning in the first place.
But in Trump’s fixation on the direct benefits, there was a hint of something serious — maybe a welfare state that isn’t a byzantine bureaucracy with strict rules for eligibility and complex calculations for benefits could be more politically sustainable than the mishmash of programs we have today.
While the government has spent more on unemployment than on direct payments since the start of the present crisis, the payments have gone to more people and are not at the mercy of overburdened and under-resourced state agencies. The payments have become, quite literally, a meme.
After all, here’s a Republican president proposing that the government literally give money to a huge chunk of the population. The end of the welfare stigma! The ghost of Reagan expunged from the house of conservatism! It’s a brand new day in American politics as national populism squares off against progressive liberalism, competing to dole out as much money as possible.
Certainly that’s what Congressional Democrats would like to think has happened. They quickly pounced on the President’s comments, with leaders, backbenchers, and Senate candidates all signing on for “the bill we just passed but the checks are $2,000 more and let’s pass it right now”
But is that what the President proposed? Georgia senator Kelly Loeffler said that she would be OK with the checks if “it repurposes wasteful spending toward that.” Lindsey Graham said he’d be OK with the checks if a new bill also reformed, uhh, Section 230 of the Communications Decency Act.
Some progressives have discerned a rat in this herky-jerky embrace of Big Government Check Printer. Literally handing out money to everyone may seem like the height of welfarism, but it could also be its demise. While the idea of checks as a stimulus or relief measure traces its contemporary American origin to work done by the progressive economist Claudia Sahm, many people are interpreting Trump’s proposal as another step forward for the cause of the universal basic income, the idea that the government should send some amount of money to everyone, every month, with no conditions. The libertarian-conservative advocacy group FreedomWorks sees it this way, saying that Trump’s proposal was “surrendering the argument on universal basic income.”
But, at least rhetorically, Trump was doing something different. He was saying, why spend money on all this stuff that does nothing for you, the “hardworking taxpayer” (the Kennedy Center, the Smithsonian, immigrants, “democracy and gender programs in Pakistan”) and only give you $600? Why not more? Who were the people getting the rest of the money? The unemployed pay taxes on their benefits after all.
As always, trying to work out the philosophical underpinning of Trump’s statements is, at best, an inexact science, but there’s something here.
In the 1960s, Milton Friedman proposed what’s known as a “negative income tax,” a redesign of the tax code such that everyone below a certain income threshold would get some payment from the government, but that your total income would be higher if you earned more. This plan would provide cash benefits directly to low-earners and would, importantly, replace existing welfare programs which Friedman saw as costly, bureaucratic, and discouraging of work.
Charles Murray had an even more audacious version of this concept: the government would grant every adult citizen over the age of 21 and not in prison $10,000 a year, mandate that $3,000 be spent on health care, and then otherwise get rid of the whole gamut of welfare state programs (which Murray himself has been instrumental in eviscerating in the case of Aid to Families with Dependent Children).
Putting aside the details of how this would work (the exclusion of children doesn’t really make sense and it puts perhaps excessive faith in the market’s ability to tame health care cost growth), it’s a perfect example of why progressives fear UBI rhetoric.
While Murray’s plan itself would likely not find support among even Republican lawmakers today, especially considering how old their voting base is, it hones in on something intuitively appealing. We have all this money we collect in taxes, we have all this money we spend on government programs, why not just, like, give it to everyone? It’s very easy to find tweets with thousands of likes and retweets that says something like “if we just split the $900 billion stimulus bill among the whole population, that’s $2,700 per person, and yet we only get $600?” so clearly this is an idea that’s out there.
There’s a large amount of mistrust of the government and the sense that money just kinda disappears into bureaucracies or gets hoovered up by the wealthy and well-connected. So the expanded unemployment programs, which has provided several thousands of dollars, if not over $10,000 in some cases, to tens of millions of people whose wages disappeared entirely gets erased under a sea of tweets about how “all we got was a $1,200 check.”
And thanks to the president’s newfound interest in the operations of government, any level of unemployment benefits are at risk of being cut off entirely for over 10 million people, let alone the 11 weeks of a $300 bonus for the 20 million people currently receiving unemployment.
Ultimately, the details matter, and some people are clearly in need of more aid than others and getting it to them will involve some rules, some bureaucracy, and some specificity, and that will always be anathema to a certain kind of conservative skeptic of government, even if they’re comfortable with direct spending in the abstract.
It’s possible to imagine a welfare state that’s more redistributive, less complicated, and covers more people. But a welfare state designed around the lowest possible expectations for what the government is capable of doing is unlikely to be one that will be more generous, or even in the end, more politically sustainable. For some that may be a good thing, but you should ask who you are before you decide what you want.