Of course, “long-sought” is another way of saying “never implemented,” notwithstanding its broad appeal. Hidden in that first paragraph are some of the reasons why. Everyone may agree the crisis offers the opportunity for reform, but not everyone welcomes the possibility. And if all sorts of people you wouldn’t think would agree on anything agree on the basic income – it has supporters on both the left and the right – that may be because people have very different ideas of what they mean by it.
That the CERB should be held up as a prototype ought to be a warning sign, as it has none of the features commonly associated with a basic income. It is not universal, for starters, nor is it entirely unconditional: though broader in application than, say, employment insurance – it applies also to the self-employed, for example – it remains limited to those who are out of work for one reason or another and who earned at least $5,000 last year.
At $500 a week for up to 16 weeks – $26,000, annualized – it pays considerably more than most basic-income proposals. (Ontario’s discontinued basic-income pilot program, for comparison, paid recipients less than $17,000 annually.) And yet it pays nothing at all to those who earn more than $1,000 for every four weeks of benefit. Earn one dollar more than $1,000 and you lose, not just a dollar of benefit – the 100-per-cent marginal-tax rate that commonly bedevils social-assistance programs – but the whole thing. The effect on work incentives is obvious.
But then, the CERB was not intended to be a long-term income-support program, where considerations such as costs and incentives come into play. As the name implies, it was designed as a short-term stop-gap, in a period when cost was no object and work was unavailable. Those basic-income enthusiasts who insist the government’s ability to get the CERB up and running in such a short time proves “it can be done,” if only we have the “political will,” are talking through their hats. An actual basic income, built to last, would be a lot more complicated – not impossible, not undesirable, but difficult.
Nevertheless, the possibility that today’s pandemic-induced mass unemployment may continue for longer than anticipated makes reform of income support both more likely and more urgent. And the general idea of a basic income – a single, unconditional transfer, without the intrusive and bewildering eligibility requirements that demean its recipients and leave many others without – remains as valid as ever. If the CERB isn’t it, a broader version of it might be.
But what, exactly? The minute you get into the details, consensus starts to break down. How high (or low) should the base benefit be for those with no income? How steeply (or gently) should it be taxed back as income rises? Higher tax rates would harm work incentives; a gentler clawback, on the other hand, from a given base, implies enormous increases in cost; but a lower base might leave some worse off than they are now.
And we’re just getting started. Should the government mail everyone a cheque for the same amount, then tax it back according to income? Or should the benefit vary depending on how far below a certain threshold a person’s income was – a version of the basic income known as the negative-income tax? Though the overall cost might net out to be the same, the two imply very different amounts of cash flow, in and out.
Last, and critically, what existing programs should the basic income replace? Is it merely intended as a substitute for social assistance, and similar benefits? These are no small things on their own: the Parliamentary Budget Officer has calculated the cost of federal-support programs for those with a low income at $32-billion annually, plus another $20-billion at the provincial level. Or, more ambitiously, would it also take the place of employment insurance, or child benefits, or pensions? What about benefits now delivered in kind, such as free drugs or social housing – could these be replaced by their cash equivalents?
The more existing programs that were melted down into a basic income, the lower the overall cost. But some of these were intended to address real differences in circumstances. A person with children or a disability has greater needs than someone without either, and deserves more in support. Employment insurance and pensions, likewise, are intended as income replacement, not income support: the benefit varies because the contribution rate does. Here, too, it makes little sense to flatten these into the same payment for all.
That’s even if you could. The minute you start talking about what programs you’d replace, you run into trouble. Welfare advocates worry that a basic income is a Trojan horse for gutting social programs. The people delivering those programs object to being made redundant. Provinces – ah yes, the provinces. If there is one thing that has blocked all movement toward a basic income over the years, it is the necessity of provincial participation, since social assistance is broadly a provincial matter. The provinces normally bristle at any suggestion of federal involvement. And yet they seem unable or unwilling to reform their own programs without federal help.
This is where the current crisis opens some intriguing possibilities. The pandemic has hit provincial finances especially hard: They bear responsibility for many of its costs, yet have less ability to borrow than the federal government. Perhaps there is room for Ottawa to make the provinces an offer they can’t refuse: to take responsibility for income support off their hands, as part of a broader reform of fiscal federalism.
The CERB, for all its limitations, has created the precedent for a federal benefit of this kind. Maybe there’s an opening here, after all.
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