Central Air - The Time Tax (feat. Annie Lowrey)

Episode Date: September 1, 2026

This week: Annie Lowrey on the time, effort, money, and psychological costs some government policies impose on us. Filling out endless forms, repeatedly proving eligibility, telling the government what we owe in taxes even though it already knows what we owe — we love a conversation about how the government is ineffective and how it could be more effective. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.centralairpodcast.com/subscribe

We at Central Air are taking our little end of summer vacation here, but we have a special episode for you that we recorded before we left. And we'll be back next week with a regular episode. But for right now, I want you to hear this interview that Megan, Ben, and I conducted with Annie Lowry, a journalist at the Atlantic covering the economy. She has a new book out called The Time Tax about the ways that the government imposes time burdens on people who are beneficiaries of government programs, sometimes specifically aimed at low-income people and sometimes aimed at the entire. society, you know, anyone who has to deal with the DMV. She has ideas about how to change that, and we have an interesting conversation with her in part because you may remember eight years ago, Annie wrote a book called Give People Money, Advocating for a policy called Universal Basic Income, where basically the idea was that instead of a lot of granular welfare programs,

the government would send a baseline check amount to everyone that is supposed to meet living requirements broadly. Now, you know, I would note back in 2018, interest rates were a lot lower than they are today. And I think that's a key reason that a lot of people were talking more about UBI back then than they are now. I think people are very acutely aware of how if you send out large checks to lots of people, you get a rise in the price level and people will be very unhappy. And so it sort of makes sense in 2026 to have a turn toward ideas about, well, how do we make the government more efficient and less wasteful, including less wasteful of people's time. But as Annie discusses in her book and as we will discuss in this episode, you know, sometimes the

reason the government imposes this time tax is as a fiscal strategy trying to restrict who receives certain government programs, trying to reduce the number of people who receive government programs. And while that is, you know, often a less than optimal way to do rationing, it remains the fact that if you don't do rationing that way, then you have a rise in the cost of certain government programs and you have to figure out how to pay for that. So we have a very interesting conversation with Annie about a lot of those issues and that gets into specifics of where the time tax shows up in certain government programs. We hope you enjoy the conversation. And if you're interested, you know, her book was released on August 25th and is available to you. Enjoy the episode.

Annie Lowry, thank you. Thank you for being here. Thank you for having me. I'm so excited to be here. Yeah. So this is a fun book for us because, you know, one of the things we talk a lot about here as political centrists on the show is, you know, when government is ineffective and when it can be more effective. Can you describe what is the time tax? What are you writing about here? Yeah, absolutely. So if you were an academic thinking about the subject that I'm writing about, we would be talking about administrative burden, which is not a way of determining whether a given policy is good or bad. It is thinking about policies in terms of the time and effort and sometimes money and psychological costs, emotional costs they impose on recipients. Right. So it's kind of like the recipient side of bureaucracy. So it doesn't really really have anything to do with like big government or small government. I think it has to do with good government a lot. And when we're thinking about time taxes in general, sometimes I think that we are thinking just about policy accretion or the way that, you know, constitutionally

were set up and therefore the way the programs flow from that. And then sometimes we're thinking about total ineptitude. We're thinking about, you know, purposeful imposition of time taxes, to throttle the size of programs or punish people outgroups that we might not want to be treated respectfully, whereas we can think about, you know, also really efficient programs as being programs that are often aimed at the voters that politicians take really seriously, namely the ones who might donate to their campaigns. So that's where we're talking about. And I think it's kind of a subset of broader life, which has become very financialized and bureaucratized. So the term that David Graber uses for this is total bureaucratization.

But nevertheless, I think this is like, you know, the perspective that I have is that the government doesn't need to work like a business, but it shouldn't have a $8 trillion budget and then deliver garbage. Or benefits in a garbage way is maybe a better way to say that. Yeah. So, I mean, one thing that's interesting to me with the book is not all, but a really large fraction of the time taxes that you're talking. about have to do with programs being means tested, which is to say figuring out, you know, we want to target this program at this specific kind of person who has this kind of income level or this specific need. And a lot of the work goes into proving that you're eligible. And there are reasons that we have means tests. They're both political reasons and there are budgetary reasons. But so I guess,

you know, when you think about programs like food stamps, welfare known as temporary assistance needy families, how much of that burden there is necessary because of the fundamental nature of the program, which is to say that, you know, this program is only for some people and figuring out who those people are is going to take a certain amount of work. Yeah, absolutely. I think that this is a really good way to think about it, because I think that Means Tests are actually really important in a high inequality society, especially. And there are some people that we really want to deliver more aid to. But then I think that means tests can kind of get conflated with other forms of testing, right? Drug testing. So like pee in a cup in order to get this benefit. Asset testing,

which is pretty tough and cumbersome because you're kind of trying to prove a negative. And then just all kinds of other sort of bureaucratic requirements. The length of forms, how long you have to re-enroll. And I think the question is kind of how much work is the government taking on itself and how much is it imposing on people who are often in really, really, really, dire straits, though obviously not universally, especially as we have shifted to a system where the government is providing a tremendous amount of support to working families, right, that have income, that often have some real resources. So, like, what do I think of as being sort of justifiable? I think means testing absolutely is. Why the government doesn't do more of

work of figuring out people's incomes is a great question. And then why we have all of these supplementary tests is another really good question. To what extent are those defensible? Things like work requirements, especially when we're thinking about a program where you can't live off the dole if you get it. So Medicaid being the big one, given that roughly 20 million Americans are expected to comply with a work requirement starting in January, three to seven million of boom, are expected to lose benefits, not because they are suddenly ineligible, but simply because the paperwork doesn't really work for them. So yeah, I think that there can be a line there. And I also think it's worth saying that the structure of the government, very often we have big

federal programs that are actually administered by states and localities. They have balanced budget requirements. There's some occlusion for people about who's actually responsible for it. So I do think that that makes it harder, along with things like, you know, we don't have a national ID system in this country, there's almost nothing that I think would be less popular than, you know, or would unite, right? Like you can imagine immigration activists, people who are interested in civil rights and voting, sovereign citizen types, people who are really concerned about privacy. There's a lot of reasons not to have a national ID in this country, but it does make administration a lot harder. And social security numbers would kind of function that way, don't always function

perfectly. And, you know, in some cases, not all benefits are actually tied to socials. One thing you're talking about is federalism, right? Yes, absolutely. You talk about you want to move stuff up to the federal government. That seems like it's fiscally would be challenging to say the least. But is there a space to, like, think about which things the federal government should do and which they shouldn't, right? So my understanding is that back in the Reagan administration, there was an argument that you could do this swap. The states take education and the feds just take health care instead of like, because the way we do this now with Medicaid is really bad. We do this with a bunch of programs, right, is we give states money and then they administer it.

And their incentives are bad. Their incentives are just to funnel as much federal money into the health care system as possible while minimizing them. their own contribution, and that it might be better if the federal government was doing all of that, but maybe then they shouldn't do any education. If we were going to divide stuff and have the federal government pick a few things and do all of them and make those things administratively efficient, then what would be important for the federal government to do and what should the states just take all of? There is a constitutional and legal issue here, right? There's like a set of things the government, federal government, Washington is supposed to be able to do.

And like the rest is supposed to be states. And this has led to the demise of how many policies this was a huge deal in the new deal. This became a big deal during Obamacare, right? So let's like frame that because I do think that you can get around those issues with kind of policy design. So, like, I know that the example that a lot of people think of with this has to do with speed limits on highways that basically the federal government said, if you want this financing, this transit financing, your speed limits will conform with these national standards. And if you don't, great. Like, you don't have to have the highway numbers that we're setting out. And even now, right, SNAP and Medicaid, states aren't obligated to have those programs at all.

Right? We're actually in a situation where due to the changes that HR1 made to snap, some states could end up stopping delivering that benefit, you know? So it is, you know, it's a really legally complicated thing. That said, right, what makes sense to control at the state level? Police, I think that makes a lot of sense, right? Small business regulations probably makes a fair amount of sense. Schools, I think makes a lot of sense, right? Those are community institutions, things having to do with like utilities, a lot of sense. What doesn't make sense to me? You know, workers travel. A lot of people live in one state and work in another. So the portability of health benefits, this has been a big issue, right? Unemployment insurance. We have a national

labor market. It's kind of tough to run UI. at the state level, given that, recessions don't care about state lines, right? You could have a regional recession or even just like a highly localized recession. So the fact that it's kind of controlled at the state level doesn't really make a lot of sense. You know, just as a broad issue, having 56 Medicaid programs strikes me as way less efficient than having one. And there's tons of programs that I think probably operate in that same way. And then as you guys know, for the most part, it depends on the program. But mostly the federal government pays nearly all or all of the benefit cost for something like SNAP or Medicaid. States pay relatively small share. And then the federal government and the states split the administrative cost 50-50. And I think that this means that it prohibits long-range investments. into the administrative facets of those programs.

It also means, like, there isn't a lot of incentive for state houses and governors to invest in, like, oh, we're going to update these digital systems to benefit people who are, to create policies, strengthen policies that might not always be popular, to provide benefits to people who don't always vote at the rates that we want. And, like, are we really going to issue debt or take money away from other programs?

in order to just like get the guts of things working well, Washington has more capacity to do stuff like that, in part because they just don't have a balanced budget requirement and spend a lot more money than they tax. And I think just tend to have more political capacity. So that's how I think about it. I would prefer that a lot of things just get managed in a unitary fashion. I think that if you look at the most administratively elegant programs,

you know, Social Security. And I mean retirement benefits, not like SSI and SSDI. It's contributory, right? So that means that people put money in in order to get money out. I think that that's a really important facet. It goes to seniors who are very politically powerful. It's not means tested, right? It goes to you regardless of income. I think that that also has this kind of positive feedback loop. Also, you know, the SSA is just like a better administrator than virtually any other government agency. And when you look at like the absolute most miserable programs, the one that spend the highest amount on administrative overhead, regardless of how big or small the program is, local housing authorities, right, who are administrating HUD benefits, TANF, which is cash welfare.

But we also use that money for a bunch of other things, including like training programs, child care, it's real clunky for the states to administer and also for people to comply with all of the rules. It's a garbage program. It really is. So like one of the defining characteristics, though, of Social Security is that it's not that complicated to figure out who's eligible for what in terms of old age benefits. Like, you know, the federal government has data on what income you earned over the course of your career. There's a formula and the eligibility is what it is. It looks to me like States are tasked with administering the sorts of programs that require caseworkers, where you have a relatively complicated relationship with the beneficiary who might either be

obligated to do certain things or might have relatively complex qualification requirements or who might need assistance navigating what benefits are available to them in addition to even just figuring out whether they're qualified. And so if you wanted to put that into federal hands, you'd have to create that infrastructure in the federal government, which I suppose you could do. Because, you know, like, some of these programs where the feds pay for almost all of it and the state's administer it, that also creates bad incentives and the states don't necessarily need the money to be spent well. It's that somebody else's money that they're spending. Medicaid, they do have a large fraction of the Medicaid bill, but a lot of these other programs, they're really not paying a large fraction of the bill. But then the other challenge with federalizing it, right, is then you need one policy for the whole country about what kind of program we're going to have. And I think you have different views in a lot of different states about what the, you know, appropriate size of government. government is and what the appropriate generosity level of these programs is. And so I assume you can't then stop the states from doing add-ons. I think that's another reason that you have the federalism so you can have different policies in different places. Yeah, totally. I would note that,

right, like when Social Security was set up in 1935, the models that they were using often were the European stamp book models. So people would get these like little almost passports. And you would have to track your own contributions into a pension system in Europe. And we looked at that, right? And a bunch of the people thinking about this, they were like, oh, okay, that's how this is done. And it was real clunky. And it was quite remarkable that they decided to set up an agency that, you know, FICO would get administered by the IRS, right? But then the government would track all of the money and keep track of it, such that Social Security recipients wouldn't have to do anything. That was like a crazy innovation in design. And it took a lot of work for the government. This is why one of the

reasons that Social Security was much smaller at the beginning, because for, you know, domestic workers, agricultural workers, they're like how we can't actually track. your earnings. So it's only later that those people were added to the program because it just wasn't administratively possible. Now, I think if we were kind of starting de novo and saying, can we, can we distribute SNAP centrally? Can we do UI? You know, it's certainly possible. We know that in part because other countries do it. I think it's really interesting to think about programs that we are distributing as welfare and programs that we are distributing as tax benefits. IRS is a great benefits administrator. It doesn't really think of itself as a benefits administrator,

but it is, obviously. And benefits that, you know, you could call them welfare benefits. They're just going to high-income families. They tend to have, like, virtually no administrative burden. I don't know if any of you have ever contributed or set up a 529 account. This is, like, college savings accounts that parents often set up or grandparents set up for kids. It takes like 30 seconds. I did it for my own kids. I was, like, shocked. I think I needed their social security numbers, and that was it. And that could eventually cost the government thousands of dollars.

There's that whole thing where Mitt Romney had some, like, comically large 529. Because I think he'd put some kind of corporate asset in it. He had basically taken stock from his consulting day, his VC days, and he'd taken it before it appreciated and, like, moved it into his retirement account. And then, like, it was worth, like, $100 million or something crazy. We needed him to be setting things up for all of us, basically. I think that we can make Mitt Romney, the unitary administrator of, like, everything. I'm like, he can do the Olympics.

The best timeline is the one where he won in 2012. But nobody in that timeline knows it. Yeah. I do not have enough brain cells at the moment to even contemplate. But I'm going to think about it. And I'll get back to you in... No, Donald Trump in 2016. if Romney wins in 2012.

Oh, oh, we're going to get signed right here because I can't let that. I just have to say, dear, dear listeners, that isn't an agreed upon thing. No, it's just a true fact. It's just like, it's just a truth doesn't care about your feelings, Ben. I do. I do think it's interesting that you bring up, you know, the IRS, because you're describing this thing about Social Security that is so wonderful about it, you know, that they just, they just do it.

They're just going to track it and they're going to take a look at it and figure it all out. Then, one day, the check comes, or if you live that long. But then we have the IRS, right, which forces us every year to write these absurd tax returns because they won't just, even though they have the data, you can go on the IRS.com and see their side of it. And they won't do it. And so they create this huge problem for everyone every year that creates billions of dollars spent on absurd tax software companies and H-Thr block and all this nonsense and people make mistakes and everything is terrible. Terrible. And it's like, it's one of those things where it would be so easy for them to do it and so popular. But so then it raises like the political question of like, why have we not been able to like cut down the time on just that one huge idiotic thing that they make us do? Oh, man. Personal hobby horse. Yes. Nine and ten American households take the standard deduction. They have really easy taxes for the most part.

They are not Mitt Romneys who have lots of unusual things going on. So, like, why? The IRS wants to do it, right? I know that probably all of you know some of the dorks that work at the IRS. They would love, they would love to do automatic filing. Our peer countries have it, right? Or they do pre-filled forms, right? So they send you what they think it is. And if you want to recalculate it, that's fine. I know in Japan, you can agree to let the tax authority kind of, take a look at your bank accounts. You don't normally have to do anything if you are kind of in the population of people that doesn't have a very unusual tax situation. And I actually think this was one good thing that the tax cuts and jobs acted was really expand the standard deductions that fewer people had to do the really gnarly part. But they're not allowed to. And I think that part of the reason why, and I think there's probably a bunch of them, is that, you know, A, maybe Congress, which would have to make the change is not terribly incentivized to do it. B, I think you have a lot of small tax Republicans that want to make tax filing kind of painful, right, that have not wanted

to spend a lot of money on this agency. Even right now, they're gutting the enforcement budget, which is going to cost a tremendous amount of money. And I do also think that there is this issue where the U.S. tax code is enormously complicated. So the IRS does actually, for that, you know, 10 or 20 percent of taxpayers, they need a lot of information. There's just a lot of provisions. There's a lot of writeoffs. There's a lot of this. There's a lot of that. So complex tax code is going to necessarily require more input from individual tax holders and it's going to be more costly to administer. Could the IRS do it? Yeah, definitely. And I think that there's this, you know, there's been this, right, you know, direct file, which was this great pilot.

that the IRS had for all of two years, which worked really, really well, and now it's dead. You know, there was this argument and that it was socialism, right? That it was somehow taking money away from small business, literally small businesses.

And that it was like making the IRS, like judge, jury and executioner. Nobody had to use direct file. Again, nobody in the government is telling you how to do your tax. It was literally just an option that you could use if you wanted. But nevertheless, you know, the justifications behind it are mysterious to be. It was weirdly undersubscribed, right?

Like, they got like 1% of the population that they expected was eligible. Yeah, do you have a sense of why that happened? My understanding is that you were eligible if you made less than $84,000, which should have included like half of taxpayers. It was only a couple states at first. I don't think it was terribly well advertised. It wasn't like they were just doing it. You had to elect, right?

And so I imagine that that was part of it. I don't know what the outreach budget was like. It was also the fact that you couldn't file your state taxes through it. Yeah, you'd still have to do your state taxes, right? And so I think that if you had just like a big, hey, IRS is going to offer to do your taxes for you. You just have to tell them by February 1st or whatever. and you put it on giant billboards and sent a mailer to everyone, would you get better take up?

Like, I imagine. So the people who used it, like, almost universally liked it, right? It had this crazy approval rating. That's interesting, though, about the state returns, though, because I think it's what I think 41 states have income taxes. So, like, you know, some people, they live in Florida. They don't need the state return. But, like, does direct file save you much trouble if you have to go, like,

fill out your own state return or get turbotax to do your state return? My understanding is that they would then, pass you off to the agency, but I think you probably had to redo, they weren't like data integrated with the agency. So you would then have to input everything again. Again, I think if we were thinking about an integrated holistic system, you can imagine the IRS doing all the work for the state tax authorities also and just sending them the money. That wouldn't be impossible. I don't know about the, you know, whether states would want the IRS to do that. But, you know, it feels like all kinds of things are possible here. I mean, it's also like this again goes back to

our federal system and how much latitude do you want to give state governments. I mean, you know, you have countries like the UK where there are no subnational income taxes. You could imagine a system where states are allowed to levy an income tax, but they have to fix it to the federal rules. They could say, you know, if your federal tax bill is X, then your state tax bill is 0.2x. And then obviously that would be easy to calculate. But that, you know, again, goes back to, we have this system where there's this expectation that states are going to be allowed to customize in all sorts of ways and that is going to end up with some administrative burden. And property taxes are gnarly, right? So a lot of state taxes are property taxes, which means that you need to figure out how to assess properties and then deal with all the complaints about that.

Income is kind of easier to tax than assets, right? And I think it's, you know, we're in the midst then also of this gigantic property tax revolt. And so they think that that's one issue. On income taxes, yeah, I don't see why the federal government couldn't just do it. they have your income, you know, they could figure it out. Let's take a quick break and then I want to come back and talk about a country in the Baltics that has a very low time tax rate. This is Central Air. I wanted to ask you about Estonia, which you write about in the book as a place with very low time taxes. And the government works very efficiently there. And I was wondering if you could talk a little bit about what they do differently in Estonia

that makes this simpler and what some of the tradeoffs are because it sounded like the Estonian system wasn't all a picnic. Yeah, definitely not. So Estonia has this unusual situation in which it sets a government up from scratch when it becomes, again, an independent country claiming its independence from the Soviet Union. And the people who are setting up the government, like, they know that they need trust in government, given the Soviet experience. They desperately want and need Western investment, both in the form of kind of IMF World Bank type stuff, but also just businesses, right? Like they really need it. They are in economic free fall when they are setting this up.

And these people are kind of young. And I think that they are actually just culturally oriented towards making things sort of modern and new. And so they have a national ID system, which they set up. And then very early on, even when they're not like doing any distributing, they have like an almost slightly libertarian bent. there's like a flat tax, right? They kind of say that, you know, they set up these policies. Like if you tell the Estonian government a piece of information once the Estonian government is going to make sure that all agencies are updated so you never have to do it twice, right?

So if you tell your kids' school that your address has changed, that should trigger an address change across the whole system. And so this creates the opportunity for tremendous. tremendous reductions in administrative burdens. Because if you are an Estonian person, you have kind of like a state ID number, which is public. And then they have sort of security keys to make sure it's just you. But you can log into a system. And it's kind of like your own personal government Google drive, right? Like everything is there. Your property records, everything having to do with health insurance, when you claimed jobless benefits. Like truly,

like a million other little things. I was sitting in Estonia like looking at this with this woman who was showing me to it. And I was like, I don't even know that these records are digitized and exist, let alone, like, heard of my being investigated by the FBI or something that the government would have all of this information given data privacy. So I do think that the centralization in some ways poses risks, right? If that information gets out, that's really, really, really bad. I'd also know that it's kind of easier for Estonia to do this just because, like, it's a poor country. they don't have the complexity or the size of social benefits that we have at all. So, you know, and they also just didn't have legacy interest kind of telling them what they should or shouldn't do.

There weren't like a bunch of unions and pension programs. Again, everything was started from scratch. But the overhead, the administrative overhead is just like it's really elegant. And all of the political parties in Estonia, they debate a lot of things, the size of government, you know, immigration policy, everything. else, but they're all kind of all in on this system and they want to make it better and they respond to Estonians when there are problems with the system by promising to make it more elegant, not less, which is really not something you see in the U.S. So we have a budget deficit of, give or take, six percent of GDP right now.

Yeah. And if you made some of the changes of the sort that you're advocating in this book to reduce administrative burdens, part of which you do by reducing the complexity of, of, you know, requirements to be eligible for programs. You would both make more people eligible, and you would also increase the uptake rate among the people who are eligible. Yes. And that would cost more money. Yes. And so the fiscal demand would be really high, right? Like, so do you need, do you need a value added tax? You need some really large tax increase here, right? And then it also competes with, you know, Democrats come into office and typically they have a bunch of new programs they

want to add on top of these, which, as you note, like, these programs are already often too restrictive and people aren't getting the benefits that they're entitled to. The thing that seems to be at the top of the list is let's add a paid leave benefit. Let's add a child care benefit. Let's come up with new things and then maybe put some of these time tax restrictions on them and that'll hold cost down. But all of these things are competing for limited fiscal space at once, right? Do we have to pay for anything anymore, Josh? Well, that's kind of my next question to you. I mean, the bond market is starting to say yes. I know. If you're the bond market up until a couple weeks ago, my understanding is it's all free lunches all the time. Sure. Yes.

I think it is a priori offensive, offensive to cut programs through administrative friction instead of just cutting them. You know, there's an example here with HR1. Republicans repeatedly said that they weren't cutting Medicaid. They were just making administrative changes that everybody who could, you know, needs to comply with will comply with. But, you know, if you go talk to state administrators, I talked to one a couple weeks. ago, who runs a healthcare organization that serves a primarily indigent population, often of people with psychiatric conditions or substance use disorders. And these people, when they get treatment, it's because Medicaid is paying for inpatient, right? And that can help stabilize them,

ideally, such that, you know, they can get in that upward spiral in their life. Now, a lot of folks who are homeless and very, very sick, if they don't have a diagnosis that's going to match the codes that would exempt them from the work requirement, they're going to have to comply with the work requirement, which means, like, you know, nonprofits there are setting up systems to create volunteering opportunities for their own indigent clients so that they will meet this. And they're also having to figure out, okay, are we going to have to train people to help these people get their pay work done, it's very, very burdensome. In my mind, I think it would be more honest. It would be higher integrity to merely say we're cutting people off the program. We're tightening eligibility,

as opposed to just applying a bunch of junk. You know, how many millions of hours of effort are you going to ask of people who are pretty at risk? I like to think of administrative burden as being sort of separate from the size of program. And I know that that doesn't always make a lot of sense, but our most burdens and programs are often our smallest and are stingiest. And so, yeah, by removing burdens in those programs, they would be easier for people to get on and remain on. I think that they would also kind of work better. And I think that it might force the conversation about, like, well, how much do we really want to devote to people? How do we want to administer that? Are we doing too much through the tax code? Too little? What do we want to do? And I think that that's an honest,

but a difficult conversation. As far as the political economy goes, yeah, politicians don't have any incentive to do any of this stuff, I think. It's so unpopular. So unpopular. What politician is going to come out and say, hey, we're going to make TANF, like much easier to qualify for. We're going to make it so that it's actually a child benefit. So even if that at-risk mom is not complying with the work requirement or coming in to meet with her social worker or identifying the non-custodial parent or parents of her children to the state, she's still going to be benefits because we don't really care so much about her. We care about her kid. That's like a really, really hard conversation. And just as a general point, right, like to change any of these programs, you're going to kind of screw them up.

And so I think that there's just a tremendous loss ofversion too because people have what they have. and they don't want to watch it get messed up. This is part of the reason that the ACA was so difficult was there's this problem. If you have your insurance, right? Like Obama kept saying, if you have your insurance, you'll get to keep it. You'll get to, you know, you can have it. And that made things much harder. I don't think the politics of this are great.

I don't think that the feedback loops that generally generate policy change, kind of the gears turn in this way. I think this is the kind of like almost, right, like sewer socialism or, you know, at the other end, we're going to make government really light and we're going to make it work and we're going to help small businesses and all these other things. I think it works at kind of like an executive level for governors and mayors. As you all know, the White House can't just command things to happen. And I don't think that Congress has the incentives here. So I think it's really tough. But I think just like acknowledging it and talking about it, having a way to kind of say, hey,

that's super duper burdensome what's doing, friends, like would be as, step in the right direction. Can I ask you about disability? Because this strikes me as one of the thornyest places to figure out what you're going to do about time taxes. You know, you can, you can change the TANF program to not have a work requirement or something like that. But like any disability program, you're going to have to make determinations about who's disabled. And you're going to make errors in both directions there. And, you know, there's been a lot of coverage in the last couple of years about military disability and the exploding costs of the military disability program. You know, everyone loves veterans, don't want to talk about that, you know, are we giving

out too many disability benefits to veterans? But the Washington Post has had, you know, like hundreds of thousands of veterans, you know, receiving disability benefits for hair loss or eczema or various other things. And so, you know, it seems to me that, you know, if you want to reduce the time tax associated with disability benefits, you're going to, you know, trade one kind of error for another kind of error. How do you figure out when you've, you know, put, you know, too much versus too little screening on something like that? Yeah, I think that disability is challenging. I absolutely acknowledge that, right? Especially because disability is a long-term benefit. It's provided as cash, which has kind of different residences than something like SNAP or

Medicaid. And I think that there are huge errors on both sides. It's also a very expensive program, expensive to administer, the benefits themselves can be expensive. And we know that there's big errors on both sides. We know that thousands of Americans die waiting for a disability determination every year. We know that roughly 5% of applicants to the disability insurance program submit more than 1,000 pages of medical paperwork. We know that there are people who, you know, a significant disability who don't end up with the benefit and end up really, really impoverished. They can't work. We also know that, and I think this is a really big issue, that I think there's this idea in Washington that you're like disabled or not, able to work or not. But life is really

complicated. And I think it's actually kind of reasonable to say that people with disabilities respond to market incentives and are willing to work for a lot of money, whereas it might not be worth it to them personally to work if you're only making like $12 an hour. But the way that we talk about it is really, really, really, really black and white. If you treat people as experts in their own lives and ask people who are disabled and on disability, what changes they would like to see, right? Which I don't think is the way to construct all public policies at all. I just think that it's a way of thinking about things that we don't always do in a productive fashion.

It's the stuff where people are like, yeah, I'm missing a leg and disability will repeatedly ask me, you know, if I can still not operate a motor vehicle. There's like all kinds of questions like that. And I think that there's probably ways to make it procedurally more efficient that would reduce errors of denied benefits and also reduce the number of errors of people who are getting benefits. But don't need that. What I was thinking about it was regarding this question of, you know, how you decide a theory of friction. Didn't we have somewhat like a clear case of this with COVID where like they decided actively to reduce a lot of the friction in the beginning so that like they could get. the money out to people. And they knew perfectly well. They were like, this will lead to more fraud. But we'll catch it. We'll, you know, we'll come in and we'll tweak with it. And then there were all

these investigations to do it. And it's after general reports. And they recaptured some of it and prosecuted some people and people. But the story of it is still the people, a lot of people, look at this and go, oh, my God, there was the top line number that, like, they made it easier. And so everyone came out and did, they took advantage of it. And like, the problem with the people who abuse a lot of these programs is the fair commenting fraud, and that they can go after them in the end and figure it out. But it's a prior restraint to stop it in the beginning. And it creates these problems. Yeah. I mean, look, I think there are a lot of lessons from COVID and we didn't learn any of them or very few of them. We don't have great measures of fraud. We have very troubled measures of what are known as improper payments, right, which can be excessive payments or underwent. shot payments, people who are incorrectly denied benefits are not included in the improper payment rate, which is very interesting to me. And I would note that the complexity of all these systems, all these little paperwork requirements, in and of itself, increases the improper payment rate

because it's harder for people to apply, and it's harder for states to administer when you just have all of these rules. So there was an increase in the improper payment rate, in COVID. It wasn't that big. And when you talk to people in the programs, they're like, yeah, it was because the rules changed so fast, so suddenly. And we were in the midst of this, like, giant sociological medical catastrophe that, yeah, people just kind of got screwed up about things.

Regardless of how you think about fraud and improper payments, we know that the bulk of the problem lies not with recipients, but, like, doctors, hospitals, nursing. homes, criminal organizations, right? When you think about a lot of these benefits, you know, if you've snuck on to Medicaid, you're somewhat limited in how much money you're going to be defrauding the state of because, like, the benefit isn't worth anything to you except for health care and how much is your health care expenditure per year? I'm not saying that it's a giant issue. I'm not saying it isn't something that we shouldn't think about. But, right, whereas if you're running a scam, you're limited to the extent of benefits that you can personally get. And very often

we're just talking about, like, oh, did you get $150 in food stamps instead of 100? I don't get that exercised about it. And I think that you could drive the rates down by just, like, making the systems better. But that's not something that we really talk about. Instead, it's this like, oh, if we increase penalties, if we make everything way harder, but then actually, if you make things way harder, you just drive the impopper payment rate up. So I think it's like a very, very, very tough issue. And I do think that you want to have the broad public believe in the soundness and security of these programs. I'm not sure that I think that administrative burdens is the way to do it, right? After 96 welfare reform, it wasn't like all of a sudden Americans really loved welfare. They didn't. And you can't tell me that next year, after all of the HR1 changes to Medicaid and Snap have come into place, that public approval of those programs is going to go up. I just don't see it. So like the ultimate frictionless system is UBI, right, at which you have been an advocate for. We're now getting studies of UBI that like haven't, I've been surprised by how little benefit.

Right. Like people worked less, which they liked. But there wasn't like the improvements that people were thinking about and all of the other stuff. Like, you know, you're spending more time with your kids or your health or whatever. That stuff. Like there's a temporary boost in psychological. benefit and you work less. But it hasn't been what I think people were hoping is the idea was you take these, like there's a lot of like people, the bleeding heart libertarians were really into

this. I flirted with it. You know, Milton Friedman flirted with it. But it hasn't produced what I think might have been hoped five years ago. Do you think the problem is with the studies or like what's going on here? I don't think the problem is the studies. I think it might have more. limited benefits than some of the cash transfer studies in much more dire economic circumstances have shown. And I think that, yeah, like, I've been pretty convinced that it, like, did a little bit less than I've thought, and I think we should take that really seriously. So when you're thinking about, like, okay, still, why do we want to do UBI? One, it's all-purpose insurance. And I think that if we are thinking about a labor market that isn't delivering for people, where technological change is

happening where a lot of people are still just, you know, kind of victims of circumstances that I think are really tough, but the state doesn't always protect against. I think that there's a pretty good argument there. There's a huge argument in terms of the administrative capacity of the state and the eradication of the kind of, right, like racial inequalities that you can see in program administration, that kind of thing, which I think is a benefit. It's easier for the state to administer. And I know that everybody's like, oh, okay, well, if you're giving Bill Gain, $1,000 a month. Yet you're not giving Bill Gates $1,000 a month. You're giving him $1,000 a month and immediately taxing it right back. So I think that you always need to think of the transfer

and tax system as being kind of unified in this place. But I also think that, you know, there's like, and I wrote this in the book, the first book, there's like no way the U.S. is going to do this. However, I do think that the U.S. might make other programs more UBI-like. So one that I think there's a really good case for is turning TANF into a child benefit, right? You can means test that or just apply it universally and then tax it back if you want to, however you want to. But like, I think we can kind of agree. Like, kids don't choose their parents. It's not their fault if they're in really tough circumstances. We have a really high deep poverty rate among children and child poverty rate. Remarkably, our current TANF program has no effect on the deep child poverty

or child poverty rate, which is really saying something. Whereas the EITC and the CTC and SNAP really, really do help with that. So I like the idea of kind of UBIing what we've got and reaping the benefits thereof. Just because I think it's like interesting to think about UBI, but like, you know, the country is politically where it is. Could you UBI snap? Libertarians hate SNAP, like the in-kind benefits. I think there's an argument for it in health care because the prices vary so widely from person to person, but in general, in kind of benefits bad. So, like, in the fantasy world, which programs would

defriction by UBIing them or, like, quasi-UBIing them? I'm with you that the fact that you cannot buy diapers, sponges, shampoo, soap, dish soap with your staff benefits, I hate that. I really do. And it's demeaning for people who have to like separate their card out or swipe twice, right? So there's that. You could also UBI snap by just kind of like making it a straightforward income support program, which it is. I really think of SNAP as like the tent pole of social assistance aside like along with the EITC, right? And so yeah, just like making it easier and more flexible being like, yeah, you know what? anything you can buy at a grocery store, you can get a rotisserie chicken, you can get laundry

detergent. We're not going to worry about it. Whereas now I think that there's this whole horrible, like, oh, you know, you can't buy a cake with Snap. And it's like, oh, okay. So, like, I don't know, kids have birthday. But I think there's been an even more negative development regarding universal basic income, which is that a problem always with these sorts of studies is, you know, you can give people

a thousand dollars a month and that greatly increases their real income. and that will have like big effects of their life. If you give everybody a thousand dollars a month, that's really inflationary. Yeah. And it doesn't increase the real income or doesn't increase it very much. Or alternatively, you impose big new taxes that are disinflationary, but then that has a whole bunch of knock on effects. Roger. That's what we too. But, well, and then, you know, the more broadly, you know, if you do that, if you know, you have much more universal programs that are more expensive,

and then you have offsetting tax increases that are presumably progressive in some way to offset them, then that's redistributive, which is presumably one of your objectives with that policy. But then you're sort of rerunning something that we went through in the last few years, is if you create a situation of wage compression and you raise the incomes at the bottom of the income spectrum, you end up raising the costs of certain services that rely on the labor of people with relatively lower incomes. And that may be in part because, you know, they receiving those benefits, they are less inclined to work. They need a higher wage offer in order to attract them into the workforce. That means a McDonald's hamburger is more expensive, et cetera. And what we found was when we made

these choices that drove wage compression and that, you know, really focused on keeping unemployment low, keeping the labor market tight, and that was inflationary. People got really upset. It was really politically unpopular. And, you know, even California voted down a minimum wage increase on the ballot in 2024, which I don't know that any state had voted down a minimum wage increase ballot measure in the last several decades before that happened. And I think partly what we saw is that, you know, a lot of the electorate doesn't really want that sort of inequality reduction because it ends up, you know, for certain people who are not necessarily that rich, but toward the middle of the income spectrum, they experience that as getting squeezed. And I think that that's,

it's kind of an unpleasant lesson, but I think it is a politics lesson that we learned in the last decade. Oh, absolutely. I think this is a really good point. I often think of like everything since non-COVID, but like everything since 2020, was this all a grand experiment in showing us in modern terms how much people hate inflation? They really hate it a lot. Way more than just the pen and paper, are you better off calculation, would work out. I think higher income people also really hate it because yeah exactly all those goods and services that they really like that they're benefiting from because these places are really cheap and labor is kind of cheap right like you know it doesn't feel great to them either i think it was like a really really tough lesson that said like

we do have interest rates right like we got a bunch of policy levers we have um you know the relaxation of supply constraints especially in terms of things like housing and And like, we've not wanted to do what other countries have done in terms of controlling medical costs. Even just, like, I think that the most popular bipartisan, like, supported by both sides thing right now is just prescription drug price controls, which is obviously like not a libertarian program. But you poll it and even Republicans really like it, right? obviously it's really hard to squeeze money out of the medical system and you'd be dealing with a lot of tradeoffs that people wouldn't like right like doctors and nurses making less money if we let in way more of them if we admitted vastly more medical students to drive prices down if we went after

pharma and drug device companies and that kind of it's just really tough right And especially I think it's hard because healthcare, it's such a predominant employer in so many communities. I think that what you were describing, and we were thinking about the equilibrium, which is kind of best. Again, just looking at paper, I don't necessarily think that that's an equilibrium that people are happy with. And I don't know what to say except that, like, politics were really hard. And, yeah, that would be tough. I would say that, like, cutting administrative costs out of the health care system. we are just tremendously ineffective at it and we don't even really try.

It's probably at least some, you know, low-hanging fruit to pick up there. And generally, I think that like kind of squeezing unnecessary administrative costs is like one in the few places in American life where I think that there's like a little bit of a free lunch. Annie Lowry, the book is called The Time Tax. I want to thank you for joining us. Thanks for having me. Thanks, Danny. Thank you.

Seth Filler is created by me, Josh Barrow, and Sarah Fay. We're a production of very serious media. Jennifer Swaddick makes this episode. our music is by Joshua Mosher. Thanks for listening and stay cool out there.