July 9, 2020; Forbes
On the heels of an announcement that 15 mayors of mid-sized communities will promote universal basic income (UBI) for their low-income residents, Twitter founder Jack Dorsey announced he is “donating $3 million to help fund Mayors for a Guaranteed Income (MGI), a new coalition of 15 mayors across the country who want to explore the idea of universal basic income—a recurring payment to residents—in their cities.”
First, we need to do some math again to acknowledge that Dorsey’s net worth is estimated at $7.5 billion, and overall he has pledged to donate a total of $1 billion to coronavirus relief efforts. We do not know if this pledge counts towards that, but if it does, it is a relatively modest investment in one of a number of strategies he is currently backing.
MGI is built on the model project started in 2018 by Mayor Michael Tubbs of Stockton, California, to provide $500 per month to 125 randomly selected households. When asked if this relatively small amount was building wealth, Mayor Tubbs told Here and Now (interview starts at 26.12) that the success stories were building stability: an opportunity for new employment, a set of dentures, and paid off debts. Tubbs says, “It’s a real New Deal moment.”
The idea of a universal basic income seems to attract tech entrepreneurs who express concern about the impact of automation on future of employment. Libertarians at heart, these newbie philanthropists argue that basic cash grants provide income stability as jobs are lost to automation. Automation that is created by their innovations. NPQ has chronicled UBI experiments going back as far as 2016. But Andrew Yang’s presidential campaign and the Coronavirus Recession have pushed this multiple-city experimentation. NPQ’s editor in chief Ruth McCambridge writes, considering the expansion of the Stockton model:
This may fly in the face of many neoliberal policies based on assumptions about the “damaged poor” who cannot make decisions for themselves and so need to be “served” by others who mete out a few dollars for housing here or a food box there. This charitable framework is unsurprisingly experienced by many as humiliating, and indeed much of the nonprofit sector has been built around such models rather than advocating for living wages in the midst of plenty.
Cash benefits are not exactly new in the US. In 1968, Presidential candidate Richard M. Nixon proposed a Family Assistance Program that passed the House but failed in the Senate. In response, George McGovern, Nixon’s opponent in the 1972 campaign, proposed a $1,000 cash grant for every American. After McGovern’s defeat and Nixon’s resignation, the Congress crafted the Earned Income Tax Credit (EITC) in 1975 as a refundable tax credit for low income workers. EITC was designed to put an income floor under low wage workers, as an alternative to increasing “welfare” or the minimum wage. EITC rewarded work, was easy to administer through IRS, and was funded by taxpayers, not employers. But that’s where the idea stalled until the 2020 CARES Act created cash payments for every citizen ($1,200 for adults, $600 per child). The theory is that UBI recipients will spend the money on goods and services and help maintain economic activity that underlies the overall economy.
There’s no secret that expansion of the Stockton plan is an effort to push elected officials to adopt a new welfare model for the 21st century. Mayor Tubbs tells Forbes, “Raising taxes on individuals like Mr. Dorsey could pay for this. Repealing the 2017 Trump tax cuts could provide $500 for every American family that makes $125,000 or less. Appropriating some of the money from our bloated Pentagon or war budget could help pay for this.”
“There are a lot of scenarios to get us to a regular cash disbursement,” says Tubbs. “The issue is just [marshaling] the political will to do it.”
Dorsey’s gift underscores the reality that cities have replaced states as the new “laboratories of democracy” in the federal system. Decades of gerrymandering have left Congress and state legislatures in the hands of rural and suburban reps committed to blocking progressive change. Tubbs calls mayors “the moral leaders of the country,” even if corporate philanthropists are funding this movement.—Spencer Wells