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United States: What are the economic implications of Andrew Yang’s Freedom Dividend?

Image of Andrew Yang

Recent analysis of US proposals for a $1,000 a month basic income show it would have a dramatic effect on poverty and inequality, while also substantially increasing the US budget deficit.

Max Ghenis, a researcher at The UBI Center, explores the financial implications of Andrew Yang’s plans to give all US citizens a Freedom Dividend. Ghenis’ investigation shows that it would cost $2.8tn a year. Tax revenue and related changes to welfare costs would pay for around half of this, leaving a deficit of $1.4tn to make up the difference. This is considerably more than the current US deficit (just over $800bn in 2018).

Despite the lower economic growth caused by a larger deficit, Ghenis calculates significant benefits for nearly all citizens. Only those the wealthiest 10% (in terms of yearly disposable income) would suffer financial loss, and there would be marked increases in disposable income for the poorest 10%. Even median earners would receive over 20% extra disposable income.

Ghenis also discusses the potential economic benefits of Yang’s Freedom Dividend, comparing it with earlier studies on basic income in the US (such as the Penn-Wharton model and Roosevelt Institute study). He is sceptical of Yang’s claims that the Freedom Dividend would stimulate government by up to $900bn – with the implication that alternative strategies would need to be considered. In a related article, Ghenis proposes a deficit-free basic income of $471 a month that would not add to the US budget deficit.

Picture: Photo of Andrew Yang. Attribution: Collision Conf from New Orleans, Louisiana, USA [CC BY 2.0]

About Alastair Dunning

Alastair Dunning has written 2 articles.

The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

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