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Minneapolis’ guaranteed basic income program pilot sparks responses from economists

(The Center Square) – Applicants will find out soon whether they’re among 200 families to win the chance to participate in Minneapolis’ Guaranteed Basic Income Program pilot.

The city will provide $500 monthly for two years to enrolled families who live in certain zip codes and receive no more than half Minneapolis’ Area Median Income. Participants must also have been hurt by the pandemic.

“You use the extra money in a way that makes sense for you,” the program webpage said.

Program goals are to provide families flexibility to balance immediate needs such as rent and food with long-term investments, including college tuition and vehicle repairs to help families become financially secure.

American Enterprise Institute Senior Fellow in Poverty Studies Matt Weidinger called the program another welfare benefit, citing the limited number of projected recipients, the area in which the program would operate, and the family income requirement.

“[That’s] added on top of food stamps, subsidized housing, and other means-tested benefits such families may already receive,” Weidinger told The Center Square. “And for those who experienced job loss in the pandemic, it may also function like a new two-year unemployment benefit, without that program’s requirement to search for work and also without recognition of the over $40,000 some recipients already collected in unemployment benefits in the wake of the pandemic.”

He said these programs “are clearly designed” to promote these models at the state and national level, which would require higher taxes.

“Meanwhile, Congress is already wrestling with a de facto national Universal Basic Income program for children, the costs of which are so great that proponents have hidden over $1 trillion in costs from providing those benefits over the coming decade. If such programs are expanded nationally to include adults as under the Minneapolis program, they will be even more ruinously expensive for taxpayers.”

The funds for the program came through the March 2021 American Rescue Plan Act, Minneapolis Star Tribune reported.

Weidinger said the funds would be better used in helping people find work.

“Especially coupled with longstanding work support benefits like the EITC [Earned Income Tax Credit] and CTC [Child Tax Credits], that reinforces that work, and not work-free benefit collection, is the best path forward for low-income adults and their families,” he said.

Expecting and promoting work combined with benefit collection would improve recipients’ incomes and public support for these policies, he said.

He said program promoters should explain why to the public the reason to add the benefits to already existing benefits for low-income families, why benefits should be paid to adults who are not working and don’t have children, and how much benefits would cost if they were expanded to everyone, and how taxpayers would pay for that.

Center for American Experiment Economist John Phelan told The Center Square that – while some free market economists propose universal benefit incomes should substitute existing welfare systems, akin to Milton Friedman’s negative income tax proposal – those proposals included replacing existing welfare, not allowing welfare and universal basic income simultaneously.

“[The Minneapolis program] is just more welfare given a buzzy new name,” he said.

Economic Security Project Director of Guaranteed Income Madeline Neighly told The Center Square that the dozens of guaranteed income demonstrations around the country have various eligibility requirements but target low- and moderate-income earners. She said Magnolia Mother’s Trust guaranteed income initiatives’ accomplishments and the Child Tax Credit indicate guaranteed income programs are successful.

“[Direct cash programs] increase financial security, reduce anxiety and depression, and make it easier for families to find stable housing, and jobs they will keep,” she said.

She said the country’s current social safety net system is insufficient. Public investments in the safety net, especially direct cash programs that target lower-income earners, provide reliably high returns for community members, she said.

“And, of course, the recipients of the guaranteed income are taxpayers,” she said. “They are residents of Minneapolis who work, live, and shop in the City.”

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