Basic Income Could Be Substance for Federal "Grand Bargain"

By Rob Moore

Last month, Finland’s center-right national government put forth a bold plan to pilot a basic minimum income plan in 2017 with the goal of eventually using it to replace the majority of state benefits in the country.

The plan would work by paying each Finn throughout the country 800 euros a month (about $865), regardless of income, wealth, or employment status. Supporters of the plan claim that it will cut much of the current administration budget currently used for means testing and would ultimately save the state money while allowing for more flexibility in spending for citizens.

While the plan sounds wild, another major country very nearly passed a similar plan in the late 1960s: the United States of America. President Nixon’s Family Assistance Plan was a proposal with bare bones that resembled that of Milton Friedman’s negative income tax proposal, which paid an increasing credit to individuals with incomes that fell below a certain threshold.

Nixon’s Family Assistance Plan passed the House of Representatives 243 to 155, but failed in the senate. While the Family Assistance Plan never came so close to passage again, the discussion did spur the 1975 passage of the Earned Income Tax Credit, a poverty assistance program that is built on similar philosophical foundations.

The advancement of a basic minimum income plan by a center-right government in Europe provides the blueprint for a possible “grand bargain” on the horizon. Paul Ryan’s ascendance to Speaker of the House has put a new leader in charge of the conservative fiscal movement in DC, a leader who is not afraid to think big on the issue of reforming poverty, is in agreement with Democratic leaders on the importance of the Earned Income Tax Credit, and who has already pushed through a major budget deal in his first two months in office.

On the other side of the aisle is current 2016 presidential race frontrunner Hillary Clinton, a self-described “pragmatic progressive” whose husband was the 1990s champion of the most ambitious welfare reform plan since the Great Society: a bipartisan plan that attached work requirements to many of the programs in our current social safety net. Clinton also will enter the presidency with much more political experience than Barack Obama did in 2008.

If Finland’s experiment is a success, basic annual income could well reemerge as a serious proposal in the United States, a proposal that could potentially bring Democrats and Republicans together to reform the US welfare system in a serious way. While a number of events would need to fall into place for this to happen, such a grand bargain would be a win not only for anti-poverty efforts in the United States, but also could be a big step towards returning D.C. to functionality after years of deep partisan gridlock.

Rob Moore is a Master of Public Policy student at the Goldman School of Public Policy. He writes on state policy and the politics of public policy.