A guaranteed annual income is complicated

Richard Nixon and Pat Moynihan had a plan to end poverty. In the end, it was far too complicated, and languished and died

Pat MurphyWhether it’s called a guaranteed annual income or a universal basic income, this currently fashionable idea isn’t new. And the fact that it hasn’t happened yet is a tipoff to the associated complexities.

One of the earliest proponents was an American right-winger. In 1962’s Capitalism and Freedom, libertarian economist Milton Friedman proposed what he called a negative income tax.

Friedman’s concept was simple: Abolish all or most social welfare programs and replace them with payments directly aimed at the poor and administered through the income tax system.

People with incomes below a specified level would receive money rather than paying it. This cash benefit would only taper off gradually as earned income increased. There would thus be a floor under everyone and the gradual tapering would encourage recipients to supplement their income by working.

Friedman liked the idea that giving the poor cash directly would allow them to make their own choices. And he thought it could be paid for by abolishing the bureaucracies that ran the existing maze of social programs.

Meaning no disrespect, the latter was the kind of assumption that only an intellectual could make.

The large numbers of people employed in administering social services constitute an industry in their own right. There’s no way they’d quietly fold their tents.

With good jobs and lifestyle aspirations to protect, they’d fight tooth and nail to maintain their position. And they’d have the political clout to prevail.


More on a Guaranteed Annual Income


In North America, guaranteed annual income came onto the political front-burner in 1969. It was Richard Nixon’s first U.S. presidential term and the idea’s prime mover was a Harvard intellectual named Daniel Patrick (Pat) Moynihan.

Moynihan was an Irish-American who self-described as “Baptized a Catholic and born a Democrat.” He’d supported Bobby Kennedy during the 1968 presidential campaign and switched to Hubert Humphrey following Kennedy’s assassination.

Then – after the election – he decided to go to work for Nixon, which horrified his Harvard colleagues. If serving in a Republican administration wasn’t bad enough, the despised Nixon was beyond the pale.

But Moynihan was a charmer who bonded with Nixon intellectually, sharing things like a mutual admiration for 19th century British statesman Benjamin Disraeli. So he took the opportunity to make a big pitch.

It was time to replace the failed welfare system. In Moynihan’s formulation, “The nation had begun the War on Poverty. Why not win it?”

Moynihan’s idea was a form of guaranteed annual income. After considering various names for the concept, the term Family Assistance Plan (FAP) was chosen and Nixon introduced it in a prime-time television address on Friday, Aug. 8, 1969.

It wasn’t the sort of thing most people anticipated from Nixon, but Moynihan had read his man well.

Nixon was intellectually curious and open to making radical moves. He also relished the prospect of outflanking his political opponents by adopting ideas that would’ve been considered more likely to be theirs.

As initially tabled, the plan would set the floor at 40 per cent of the official poverty line and the fact that benefits would only decrease gradually as people earned money would be an incentive to work their way up from there.

And there’d be a combination of carrot and stick.

The carrot was twofold: benefits only tapered gradually as money was earned such that it always paid to go to work; and daycare would be provided.

The stick was a work requirement for men and mothers with children over six.

Criticism soon came from all sides.

Already worried that federal welfare payments had increased substantially despite the booming 1960s economy, conservatives saw FAP as adding millions more to the dole. And they had no faith in the enforcement of the work requirement.

Liberals thought the benefit was too stingy. Union leader George Meany wanted the floor set at “no less than the poverty level.”

It also transpired that Moynihan’s calculations with respect to benefit tapering hadn’t taken full account of eligibility for non-cash benefits like food stamps, public housing and Medicaid. Add in the interaction between federal and state benefits and there were some scenarios where every extra dollar earned by a FAP beneficiary might entail a 67 cent penalty in terms of higher taxes and lost benefits.

So FAP languished and died.

Doing stuff that actually works is a lot harder than talking about it.

Troy Media columnist Pat Murphy casts a history buff’s eye at the goings-on in our world. Never cynical – well perhaps a little bit.

© Troy Media


Guaranteed annual income

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

You must be logged in to post a comment Login