Editorial | The check's in the mail

Editorial | The check's in the mail

Is a massive new social-spending program the way to solve the poverty problem?

When people dig themselves into a financial hole, it's generally advisable for them to stop — or at least dramatically slow — their spending.

But what if spending is so much fun — or so easy — that just doing more of the same is irresistible.

That's how city council members in Chicago must feel. Even as the city finds itself in a terrible financial predicament, a majority of city council members is urging Mayor Rahm Emanuel to appoint a committee to explore the idea of establishing a Universal Basic Income program for Chicago residents.

The idea is to select 1,000 residents of the city and send them monthly checks of at least $500, costing $500,000 per month.

The idea is the brainchild of Alderman Ameya Pawer, a one-time Democratic candidate for governor who contends the additional money would "help working people families become more resilient to day-to-day financial emergencies" and "put food on the table."

It, no doubt, would do that. But is that a reason to advance such an expensive plan with so many undetermined consequences?

If the idea sounds a little offbeat, it's not as strange — or perhaps as new — as some people might suspect.

Stockton, Calif., a municipality that once filed for bankruptcy, is preparing to embark on just such an experiment. It will give 100 residents $500 a month for 18 months, no strings attached.

The money will be provided by a group of Silicon Valley billionaires who see it as a means of reducing poverty.

Stockton is a community of roughly 300,000, and city officials estimate that one-quarter of the population lives in poverty. Given that estimate — 75,000 people — it's hard to imagine how sending a $500 check each month to 100 of them will make a difference.

But the point of the experiment is to find out.

Ontario, Canada, tried a similar experiment in 2017 and recently ended it.

The Canadian program was very generous.

"Program participants who earned less than $34,000 Canadian annually ($26,000 in U.S. currency) received up to $17,000 Canadian annually. Couples making under $48,000 Canadian received up to $24,000 Canadian, minus 50 percent of earned income," according to news accounts.

The CBC reported the government ended the program, which began in 2017 and was scheduled to last for three years, because it didn't help residents become "independent contributors to the economy," a criticism that makes perfect sense.

This idea has been around for decades. Indeed, during his tenure, President Richard Nixon proposed establishing a Family Assistance Plan similar to the Universal Basic Income.

Congress rejected the measure for a variety of reasons that included its cost and how to pay for it and the threat it posed to people's willingness to work.

Both are serious issues if, as proponents urge, the idea is adopted on a broad scale.

For starters, the government would have to generate substantial additional revenue in the form of tax increases. One can already hear proponents assert that the money to pay for it would be paid by the rich.

But the rich don't have as much to pay as proponents of new social welfare programs wish to spend.

As for another complication — the moral hazard that would be created — why work for a living when the government is willing to pay people to stay home and do nothing?

The intentions behind programs like this are good — the alleviation of poverty. Indeed, that's why federal, state and local governments have established social safety net programs designed to help those who cannot help themselves.

The question, of course, is just how broad and expensive these programs would become.

Here's another hypothetical — would government be better off not levying higher taxes to pay people to do nothing or leave that money in the private sector for job-creating private investments?

The best welfare program ever invented is a good job that allows people to support themselves and their family with the income they earn and the government with the taxes they pay.

Of course, that's another political dispute — a handout or a hand up — that goes way back.

Stockton and perhaps Chicago are examining the other approach.

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