History, Current Status and Future of Basic Income Discussions in the USA

Notes for a Video Presentation for the Second Global Virtual Basic Income March

September 25, 2021

Peter T. Knight

​Thomas Paine, a British citizen, moved to the colonies in 1774. He was a Founding Father, the philosopher of the American War for Independence, and a true revolutionary. His essays and pamphlets, especially Common Sense, noted for its plain language, resonated with the common people of America and roused them to rally behind the movement for independence. He fought in the Revolutionary War under General George Washington. Paine was also politically active in France and England. In the winter of 1795-96 Paine, while in France during the French Revolution, wrote a pamphlet entitled Agrarian Justice. It was published in 1797 in English and French. Paine argued that those who possess cultivated land owe the community a ground rent, which justifies an estate tax to fund universal old-age and disability pensions, and also a fixed sum to be paid to all citizens upon reaching maturity. In Paine’s words, he proposed “To create a national fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property.”

165 years later, Milton Friedman, a free-market economist at the University of Chicago, proposed, in his 1962 book Capitalism and Freedom, to abolish welfare programs and substitute them with a negative income tax (NIT), a close relative of Universal Basic Income (UBI). Friedman argued that the negative income tax would help poor people, by giving them money, which is what they need. This would be better than requiring them to come before a government official, detail all their assets and liabilities, and be told that you may spend X dollars on rent, Y dollars on food, etc. and then be given a handout. Friedman argued that “The idea of a negative income tax is to treat people who are poor the same way as we treat people who are rich. Both groups would have to file income tax returns and both groups would be treated in a parallel way.”

Then, In a 1966 Senate hearing, Martin Luther King, the great civil rights leader, testified on the moral need to abolish poverty: keeping people in destitution, King argued, was “asocial, cruel, and blind as the practice of cannibalism.” King then made the case for a solution. “I am now convinced that the simplest approach will prove to be the most revolutionary—the guaranteed annual income.” King’s testimony was part of a growing general debate on poverty and how to deal with it in the context of President Lyndon Johnson’s War on Poverty, announced in his first State of the Union address, in January 1964. Johnson considered the depth and extent of poverty in the country (nearly 20 percent of Americans at the time were poor) to be a national disgrace that merited a national response.

 

In 1968, James Tobin, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce a system of income guarantees and supplements.

In August 1969 President Richard Nixon put forward his Family Assistance Plan (FAP), a Guaranteed Income proposal for poor. The FAP aimed to implement a negative income tax for households with working parents. Like Friedman, Nixon intended for the FAP to replace existing welfare programs. Nixon saw the FAP as a way to attract conservative voters that were beginning to become wary of welfare while maintaining middle-class constituencies. The FAP specifically provided aid assistance to working-class Americans, with benefits varying based on age, the number of children, family income, and eligibility. 

But, even after many revisions, twice passing in the House, and attempts to appease conservatives under a “family values” guise, the FAP failed in the Senate in 1972. On October 5 of that year, a revised version of the last House version passed the Senate with a vote of 68-5 that only authorized funding for FAP testing before its implementation. During House-Senate reconciliation, before Nixon signed the bill on October 15, 1972, the FAP was dropped despite the broad support it enjoyed from Americans across different regions.

But the debate over the FAP did result in several extensive tests in several US cities and rural areas in the late 1960s and the 1970s.

The New Jersey Graduated Work Incentive Experiment was conducted from 1968 to 1972. Treatment group recipients received a guaranteed income for three years.

The Rural Income Maintenance Experiment was conducted in rural parts of Iowa and North Carolina from 1970 to 1972.

The largest NIT experiment was the Seattle/Denver Income Maintenance Experiment. It began in 1970 and was to be completed within six years, though it was extended until 1980 for one group of beneficiaries.

The Gary Income Maintenance Experiment was conducted between 1971 and 1974. Subjects were mostly black, single-parent families living in Gary, Indiana. The experimental group received a guaranteed income for three years.

Most of the researchers conducting these studies considered the results extremely promising overall. Comparisons of the control and experimental group indicated that the NIT was capable of significantly reducing the material effects of poverty, and the relative reductions in labor effort it occasioned were probably acceptable.

What did evolve from the debates of the 1960s and early 1970s was The Earned Income Tax Credit or EITC, first enacted in 1975 at the federal level. Substantial expansions were adopted in 1986, 1990, and 1993. The credit goes only to households with earnings, with the size of the credit initially rising as earnings increase. EITC benefits both offset taxes and, frequently, provide a wage supplement. Many states have also enacted their own versions. In 2021, the earned income credit ranges from $1,502 to $6,728 depending on tax-filing status, income, and number of children. People without children can qualify.

Alaska is the only state currently having a UBI, paid as a dividend from The Alaska Permanent Fund, a constitutionally established fund managed by a state-owned corporation, the Alaska Permanent Fund Corporation. The Alaska Permanent Fund was established in 1976 under a Republcan Governor and designed to invest at least 25% of oil revenues in a diversified portfolio for future generations, who would no longer have oil as a resource.

The Permanent Fund Dividend (PFD) is an annual dividend paid to Alaska residents that have lived within the state for a full calendar year. The PFD has been paid since 1982 and has varied between a high of $2631 in the year 2000 and a low of $530 in 1984, measured in 2020 dollars. Its value in 2020 was $992, or $3,968 for a family of four.

US Basic Income Guarantee (USBIG) is an informal network of UBI advocates established in December 1999. The goal of USBIG is to increase discussion of BIG in the United States. Its activities include annual conferences, a monthly newsflash, a blog series, and a discussion paper series. 

Andrew Yang’s Campaign for President launched a renewed interest in UBI in the US. In November 2017 Yang filed his papers to be a candidate in the Democratic Party primary elections. He publicly launched his candidacy in February 2018. In April that year, he published his second book, The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future setting forth his arguments for a $1,000 a month UBI, that he called a “Freedom Dividend”. Yang qualified for and participated in all six nationally televised Democratic primary debates held in 2019. In 2020, Yang did not meet the polling requirement for the seventh debate, but he later qualified for and participated in the eighth debate. Yang suspended his campaign on February 11, 2020, the night of the New Hampshire primary, when he decided he no longer had a viable candidacy.

Yang's campaign focused on the displacement of American workers through automation, a problem Yang stated was a major reason Donald Trump won the 2016 presidential election. Yang was extremely successful in mobilizing an enthusiastic legion of supporters, known as the Yang Gang, or Yangsters, and in raising campaign funds almost $42 million, mostly from small contributors.

Many members of the Yang Gang, including myself, continue to be active in US UBI support movements, most prominently in Humanity First, Humanity Forward, and the Income Movement.

The Income Movement is an umbrella organization supporting grassroots organizing and other movements with the objective of establishing a federal UBI by 2030. The Basic Income March was originated by the Income Movement.

Mayors for a Guaranteed Income was founded by the then Mayor of Stockton, California, Michael Stubbs. As of September 2021, 25 cities and towns in the United States are planning or already carrying out guaranteed income pilot programs, and the number is expected to continue increasing in the context of the 100 Mayors for Guaranteed Income campaign being conducted by Mayors for a Guaranteed Income and the Income Movement. Another 31 cities and towns have mayors who have joined Mayors for a Guaranteed Income, but do not yet have plans for a pilot. But there are also some important state-level initiatives under way further reinforcing the growing movement toward establishing a federal basic income policy.

The Covid-19 Pandemic has resulted in cash payments to most Americans by both the Trump and Biden administrations, greatly increasing the support for UBI. The latest and most extensive step is the Biden administration’s American Rescue Plan that increased the federal Child Tax Credit from $2,000 per child to $3,000 per child for children over the age of six and from $2,000 to $3,600 for children under the age of six and raised the age limit from 16 to 17. All working families get the full credit if they make up to $150,000 for a couple or $112,500 for a family with a single parent. As of July 15th, most families are automatically receiving monthly payments of $250 or $300 per child without having to take any action. House Democrats propose extending expanded child tax credit through 2025, and 450 economists have written an open letter calling on Congress to make the 2021 expansion of the Child Tax Credit permanent, a position also taken by the Income Movement and several other UBI-supporting organizations.

In summary, the concept of a basic income has a long history in the United States, starting with one of founding fathers, Thomas Paine. It has found support across the political spectrum from Martin Luther King and Andrew Yang to Milton Friedman and Richard Nixon. Public awareness and support have been greatly enhanced by Andrew Yang’s campaign for the Presidency and cash support from both the Trump and Biden Administrations in the context of the Covid-19 pandemic. There are now multiple activist organizations as well as USBIG working to support guaranteed income and UBI policies in the US.