Could social security be the foundation for a growing basic income system?

Eillie Anzilotti, Fast Company

Basic Income is everywhere these days. The idea that anyone could receive monthly payments to supplement–or even replace–their regular income has found a foothold at a time when many people have not experienced meaningful growth in their take-home pay in years. Presidential candidate Andrew Yang is running on a platform built around basic income, and trials of the model, in various forms, have taken root everywhere from Stockton, California to Jackson, Mississippi.

Most of the existing basic income test programs in the U.S. are funded by philanthropy or private dollars and operate in small areas. If the policy is ever going to be workable as a state or federal policy, we’ll need to figure out how it might be funded and administered on a larger scale. Yang, for instance, has proposed a simple Value Added Tax that would generate a stream of funding to pay for a basic income program.

If this sounds radical or unprecedented, it’s not. In an effort to advance the practical conversation around basic income and how it might be implemented, the National Academy of Social Insurance, a nonprofit research organization, conducted an exploratory analysis of how the model could be broadly applied in the U.S. NASI found that a basic income program could, fairly easily, be implemented in the U.S. through existing government mechanisms.

First, the historical context: In response to the upheaval of the Great Depression, in which nearly a quarter of Americans found themselves out of work, Roosevelt appointed a Committee on Economic Security to develop a program to help stabilize people’s livelihoods. Labor Secretary Frances Perkins, a member of the committee, defined economic security as “the assurance of an adequate income” to every person throughout their lives (NASI uses the term “assured income” throughout the report to mimic this Roosevelt-era language). That adequate income ended up taking the shape of various programs passed by the Roosevelt administration, including Social Security, Unemployment Insurance, Medicare and Medicaid, and Workers’ Compensation.

But since the concept of this multifaceted societal safety net was first designed, says NASI CEO William Arnone, the terms of financial instability have shifted. “When you look at the risks facing a lot of people today when it comes to income security, there are major gaps that neither social insurance or social assistance, which we’d call welfare, are addressing,” Arnone tells Fast Company. In the 20th century, the biggest threats to people’s livelihoods were old age, unemployment, and illness. Today, unemployment is low and the majority of people have access to healthcare. The major issue now is that financial instability, instead of being concentrated in old age, is spread out across the spectrum of people’s lives. Many people who work, even full-time, do not take home enough income to qualify as economically stable.

To figure out how to address this more contemporary concern, NASI explored the concept of an assured income that Americans would get on a regular basis. In conducting this analysis, NASI wanted to keep the idea of an assured income grounded in the realities of how it might be actually be distributed.

One avenue, Arnone says, could be through the existing social security program. “Social security, in the past, had a minimum benefit for workers with low career earnings that’s been eroded, and there are now proposals to restore and expand it,” Arnone says. That benefit, called the Special Minimum Primary Insurance Amount, is delivered as a monthly payment tied to prices. In the 1970s, when it was introduced, the Special Minimum PIA was $170 per month, and around 200,000 people benefitted from it. The benefit was designed to effectively replace Social Security payments for people whose lifetime earnings were too low to deliver a secure retirement. In 2013, the Special Minimum PIA was set at $804 per month, and fewer than 75,000 people received the payments. Advocates have called for increasing the Special Minimum PIA so it can meaningfully meet the financial needs of recipients with low lifetime earnings. “There would be a natural platform to deliver a minimum level of income that is not related to your earnings to people who would be eligible for Social Security,” Arnone says. Because it would fall under the parameters of Social Security eligibility (being over 66, or meeting other criteria around disability or status), this form of assured income would not be universal. But it would create more of a support system, not attached to lifetime earnings, for people later in life, which is a significant concern as people’s ability to retire with financial stability has grown shaky in the current economy.

But a broader and more universal assured income could be delivered through an offshoot of the Social Security program called Supplemental Security Income, which was created in 1974. To be eligible for SSI, you either have to be over 65 with limited income, or an adult or child with a disability or blindness. Around 7 million receive the benefit now, which pays out around $771 per month. The problem with SSI, Arnone says, “is it’s heavily means-tested–they even want to make sure you’re not receiving in-kind support from a family member. It’s the kind of means test that would be inconsistent with the idea of an assured income.” But, Arnone adds, the means test could be modernized to include a broader set of people—including those outside the traditional age bracket for social security. And the SSI program is funded through general tax revenues, not through Social Security taxes generated from payrolls. Because of that, Arnone says, it could draw from a funding pool created by either a VAT–similar to what Yang has proposed–or another tax, like on wealth or carbon. In that way, the program could reach many more people through a preexisting channel.

Arnone nods to the fact that expanding the Earned Income Tax Credit, which gives a refund to low-income households, could be another potential vehicle for delivering something resembling an assured income. Presidential candidates including Kamala Harris and Cory Booker have called for some version of such a policy.

But Social Security is the most popular government program in the U.S., and has been for a long time. It has a long track record of successfully administering assistance, and the Social Security Administration already has a comprehensive database of everyone who might be eligible for an assured income. The program and its offshoots desperately need to modernize, but Arnone and NASI suggest that an assured income might find a more receptive audience if delivered through this well-known and popular channel.

Ultimately, NASI wants to see the formation of a committee similar to the one Roosevelt convened in the 1930s to examine the state of economic distress and inequality today, and to think comprehensively about practical solutions. “We’ve got to think a little boldly about what the possibilities are,” Arnone says, and NASI’s initial work shows it could be possible to do so while also contending with the practical matter of implementing and delivering a wide-ranging income benefit.

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