The New Yorker Radio Hour - The Child Tax Credit: One Small Step Toward Universal Basic Income?

Episode Date: September 7, 2021

David Remnick talks with Senator Michael Bennet, of Colorado, who campaigned for the Presidency in 2020 advocating for the child tax credit, which is now a centerpiece of the Democratic agenda. Bennet describes why direct cash payments make such a big difference. Our economics correspondent Sheelah Kolhatkar describes the policy as a scale model of universal basic income. She moderates a conversation between two academics on different sides of the issue: Michael Strain, a senior fellow and the director of economic-policy studies at the American Enterprise Institute, and Amy Castro, an assistant professor at the University of Pennsylvania. Plus, Radio Hour listeners go toe to toe in a round of The New Yorker’s Name Drop, a new quiz. New Yorker Radio Hour listeners, we want to hear from you.  We have a few questions about the show and how you listen to it. The survey takes about twenty minutes, and your feedback will help us make our podcast better.  Take the survey here.

This is The New Yorker Radio Hour, a co-production of WNYC Studios and The New Yorker. This is the New Yorker Radio Hour. I'm David Remnick. Over the last couple of months, more than 35 million American families received checks in the mail from the federal government, payments for the child tax credit. The idea of a family tax credit is not new. What's new is this. The money doesn't show up once a year at tax time. Instead, the government gives some of it. in advance in predictable monthly payments.

And this can make a very big difference in people's lives. The shift in policy owes a great deal to Senator Michael Bennett, a Democrat from Colorado. Bennett is now pushing to make the changes become permanent. Senator, you ran for president in 2020 largely on this issue, and let's just say that it didn't propel you to the top of the heap, and now here we are, here we are, and it's this issue, not me, Medicare for all, which has become one of the huge signature issues on which Joe Biden really is

trying to project himself as the second coming of FDR. It's surprising. Well, what's surprising is that you notice that I ran for president. Almost nobody did. But you're right. I ran for president on the idea that we could cut childhood poverty nearly and a half with some changes to the child tax credit and and I believed that I actually believed during that campaign that I was right where the American people were on a number of issues, including this issue, and that, and that this issue, for example, would be transformational and also politically doable in a way that Medicare for all, just to take that as an example, would not be. And here we are fighting to try to make it permanent or extended. The payments are expected to have child poverty.

this year, in what ways? Well, that's just the number of kids that are going to be lifted out of poverty. I was with the two tribes in Colorado this weekend, and the percentage of Native American kids that are going to be lifted out of poverty is roughly 60%. So a little additional support of $250 or $300 a month is going to mean people are going to be able to afford a few hours of child care that they can't afford now.

They're going to be able to fix a car when it breaks, so they're going to be able to get to their second job. I mean, this is going to be really useful to the 90% of American children whose families are receiving this tax credit. But here's what one Democrat said in the mid-90s about this entire situation. The culture of dependence must be replaced

with the culture of self-sufficiency and personal responsibility. That's Senator Joe Biden of Delaware, where, speaking in the mid-90s. What happened? Well, I think he probably still believes in self-sufficiency. I do. And the countries that have the child, you know, something like the child tax credit, child allowance, as it's called, in many countries around the world, actually have higher workforce participation rates than the United States of America. We have made it extremely hard for people to be poor and to work

and to hold on to jobs, whether because, you know, because we don't have something like the child allowance, because we don't have paid family leave. And I think there's a sort of a dawning realization that having a decent safety net is important if you want people to be able to work and stay at work. So I'm not sure there is a conflict. But why say that you're for self-sufficiency? Not everybody can depend on themselves and their own capabilities. Some people are sick. Some people are poorly educated and can't get a leg up in a new kind of economy. What's so hard about saying for the Democratic Party or anybody that what the shift is is toward a more, a social democracy more and more like we see in Europe. I'm not saying it's necessarily going to be achieved. We know the political

dynamics. But do the politics demand that you say, I'm for self-sufficiency and at the same time work for the kind of programs that you are? No, I don't think the politics demanded. I think that it's a reality. In my state, people that want to work, have a hard time working because they don't have child care. They don't have health care. They don't have a reliable place to put their kid.

And these are the challenges that they're confronting. I think they want to work. I think they want to provide for their family. And I take your point. There's some people that can't work. and we need to make sure that we're doing what we can to keep them out of poverty. But, Senator, we hear from economists that automation and artificial intelligence will lead to millions of job losses in the coming years.

In factories, construction, transportation, service industries, all over the place. And unlike the pandemic, those losses are probably going to be permanent. So let's talk about the idea of universal basic income, UBI. The child tax credit you've championed is not UBI, but isn't UBI a logical next step if you want to build a more secure safety net in this country? Well, my focus today, David, is very much on extending the child tax credit. I think that's what's in front of us right now. It would be terrible if this thing comes to an end at the end of this year. And so we're fighting to make sure that we extend it.

And then I think there'll be opportunity to look at other things. There's no question that our economy is transformed. And so the question for us is how do we put in place a robust safety net that allows people to contribute to the economy? Just to be clear, is a UBI universal basic income proposal just too radical somehow for this open discussion in the Senate as it stands now? I think it would roughly cost $4 trillion a year, which is what we're spending today, you know, in our entire federal. government and I think it's it when you start to do that math it becomes very hard to get your head around that kind of transformation I don't think it's because it's radical I think it's because you know it hasn't been socialized to use that word with the American people so

there's a lot of stuff kind of in between that I think we we ought to be I think we should be pursuing as an agenda that's more likely to get across the finish line and I'm interested and getting stuff done before I'm dead. That's sort of my policy. And that's why I've been working on the child tax credit. Senator Bennett, thank you so much. Thanks for having me. I appreciate it.

Michael Bennett of Colorado. He's been in the Senate since 2009. Congressional Democrats are looking to pass the child tax credit extension through reconciliation. Now, the child tax credit, as Senator Bennett is quick to note, is not universal basic income. But our economics correspondent, Sheila Cole Hatcar, sees it as a sort of UBI test drive. Well, anytime you have people receiving cash from the government on a regular basis,

it starts to feel a little bit like a UBI payment. Sheila has been covering the debate on UBI for years, particularly in regards to job losses through automation. And up until recently, UBI felt pretty theoretical. But once the pandemic, hit and the economy essentially collapsed, the government passed a series of rescue bills and ended up sending out stimulus checks to people and they expanded unemployment benefits. So suddenly you had millions of people getting money every month and they weren't even working. All those federal measures did something remarkable. We just had the biggest reduction in poverty

in our history. The assistants cut poverty in the U.S. by 45% across all racial and ethnic lines. That's 20 million people who were lifted out of poverty during a pandemic. It was one of the greatest reductions in poverty we've ever seen in the United States. It's astonishing. Sheila Cole Hatcar sat down recently with two thinkers who have very different views on universal basic income. Michael Strain is the director of economic policy studies at the American Enterprise Institute, and Amy Castro is a professor at the University of Pennsylvania. Castro is head up the Stockton experiment, which is a very small-scale UBI project that gives 125 randomly chosen people in Stockton, California, $500 every month. I wanted to ask you, Amy, quickly about, you know, you've had some preliminary results come in from that experiment.

What has been the most surprising thing that you have learned from that project? Only one. I only get one. or three three three things I'll say you know the first the first thing that I think is probably you know most of interest to people is the changes that we saw

on anxiety and depression so at the beginning of the experiment those who are in the treatment group and those who are in the comparison of the control group are all given repeated measures something called the Kessler 10 this is a standard scale that we use most people have probably taken it at the doctor's office and it you know measures essentially

your likelihood of whether or not your well. And what we saw was after one year of payments, those who are in the treatment group moved from likely to have a mental health disorder to likely to be well. That's both compared to themselves and compared to the comparison group. We did not see the same changes in the control group. And so we saw that simply by giving people cash and stabilizing their incomes, and it wasn't a lot of money, it was only $500 a month, not enough to live off of per se. We saw drastic changes in health and well-being that were really quite extraordinary. The second thing was we saw an increase in full-time employment. So among those who were receiving the money, the treatment group, only 28% could claim

full-time employment at the start of the experiment. Fast forward one year later, and that amount actually jumped up. And it's interesting because we went back and we followed people to figure out how did those changes take place? And it really was the fact that people could use that $500 as a floor, right, to jump off of and take a risk and look for another job. So I wasn't necessarily surprised by that. You know, we kind of expected to see something along those lines. What I was surprised by was how quickly they were able to do so. Michael, you wrote a couple of years ago in an op-ed about how you were, you know, you weren't crazy about the universal basic income idea because people,

might make irresponsible decisions with that money and still not have enough to eat or buy their prescription drugs at the end of the month. And you wrote that a little paternalism in how government aid is distributed is a good thing. So could you just talk a bit about what that means? What did you mean by paternalism being good? Well, briefly, let me just say that I think Amy's work on this has been so important and really groundbreaking and she's really a leader in in helping to understand the answers to many of these questions. I think, you know, one reason to have a food stamp program or a Section 8 housing program and not just cash is to make sure that parents are spending the government aid on food and housing

rather than on vacations. And so, you know, as a taxpayer, I am eager to pay income taxes to make sure that, hungry people have enough food to eat and to make sure that people who need shelter have adequate shelter. I am not eager to pay taxes so that somebody can, you know, buy drugs or buy alcohol or, you know, go to Vegas and... So I just have to ask, though, what evidence is there that that actually occurs, like actual empirical data? That... I mean, I'm sure there's a few, but like...

Yeah, there's evidence from the supplemental... security income from the SSI program for sure. But, you know, this is kind of an evidence-free topic. We, you know, we have done, you know, some relatively small dollar universal income programs, and there are things that we can learn from those. But, you know, if you're talking about giving households thousands of dollars with no strings attached over a prolonged period of time, that's not something we have a lot of evidence on, you know, because that's so far outside the base of policy experience. Yeah, I totally agree with you. There's so much that we don't know in terms of the data.

But, you know, what we do know, you know, based on the data, is that the way that we've been doing things, you know, is not working, right? It's that it's simply not. And so for me, the idea of taking unconditional cash off the table, off of fear, that people are going to suddenly become a drug addict seems kind of ridiculous. But it's sort of like which do we want to risk? Do we want to risk locking people out of financial stability, economic mobility, and locking them out of being able to be independent with their own funds, you know, at the expense of making sure that someone doesn't spend cash on cigarettes?

Like that just to me feels like a risk I'm willing to take, right? It makes far more sense to make sure that we're stabilizing U.S. health. households with the understanding that, like, will some people spend it in a way that we'd rather than not? Yeah, sure, of course they will. But by the same token, it's interesting to me that we apply different rules to different sectors of the economy, right? So we think about sort of a little paternalism, I think was the phrase, will go a long way. It's interesting because we don't tend to apply, we meaning, you know, us as a country, not you specifically, Michael. We don't tend to apply that logic to the wealthy, right? So we don't say a little paternalism

would go a long way if we would tell Jeff Bezos what to do with his windfell. fall. Right, right? We don't do that. We apply rules of how people can and cannot spend cash and use resources at the bottom end of the income ladder, not the top. Yeah, I mean, the obvious difference, of course, is that people who have very high incomes aren't receiving other people's money through the tax and transfer system to finance aspects of their lives. And that's not true at the bottom end. I'm not opposed to... We're going to have another show to discuss that question as whether the wealthy receive taxpayer benefits. But let's assume that they don't for the rest of your answer. Well, certainly Jeff Bezos is contributing much more.

Jeff Bezos takes a lot from the state as well. I'm not opposed to cash. I think we have some really excellent programs that do offer cash to low-eastern. income households. The earned income tax credit, for example, is an earning subsidy. But I think we have to be very thoughtful about the amount of cash and about the kind of balance in the system between in-kind transfers like Section 8 housing vouchers, like food stamps, like Medicaid, and simply writing people checks. Amy, how do you think about the challenge of financing a national program like this? You know, this is why, you know, I have the, like, I can say this because I'm not stuck in politics.

I'm a scientist, right? Is that this is why we need data, right? It's sort of actually figuring out how much it really would cost and where that money would come from and making sure that we're designing smart proposals. And so to me, probably there's two things, there's two leading ways that have been proposed, you know, for my perspective as to how we'd actually fund this. You know, one would be a carbon tax. You know, I'd point to my colleague, Dr. Ioana Marnescu's work on that. she really has done, you know, the lion's share for search on that topic. And the second would be a data tax. So not meaning taxing Americans for their data and their use of the

internet, but really taxing companies that benefit right now tax free from all the cookies that we leave all over the web. So we all use things like Facebook, Snapchat, Instagram, choose your thing, right, for free, you know, in air quotes for free. But in reality, that data that you're spreading all over the internet is being sold back to you in the form of ad revenue. Right? So that's another way that we can think about funding these sorts of things. Michael, how do you think about this question of the cost of such a program if we were to expand it to apply to, you know, the entire country or a larger segment of the population? Is it just too expensive to even consider? Yes. I think it's too expensive to even consider.

Now, if you wanted to adopt, you know, kind of a more libertarian. approach to this. And you wanted to say, okay, well, you know, we should have a universal basic income, but we should phase out some existing safety net programs and replace it with cash. You know, then, you know, I think the financial aspect of this becomes much more viable politically. But I think you run into, you know, quite a bit of opposition, you know, because you're proposing eliminating big, big portions of the safety net. Amy, I'm going to call on you since you're moving your head. Yeah, so I mean, to me, you know, as somebody who works with this data

and is running a lot of these experiments, the big con with the approach of UBI as it was laid out in the Yang plan was that it advocated for eliminating the safety net. And the math just doesn't work, right? So if you get $1,000 a month, it's not going to make up for the fact that you may or may not have a Section 8 voucher. It's not going to cover Medicaid. It's not going to cover all those other things. Now, does that mean that the safety net as it is is working well?

No, it doesn't. It needs to be reformed. There's inefficiencies all over the place that unconditional cash can help us address. But simply giving people $1,000 a month is going to introduce new forms of inequality, not erase old ones. The Biden administration's child tax credit changes, which now is going to guarantee many families $300 per month per child. for a number of months. So this is obviously not the same. Well, it has some similarities to universal cash payments

because, yes, it's going to many, many people, maybe not everyone, but almost everyone, including people who may not need it. Do you think that this is something that the policymakers should consider continuing and in which case it would become a bit more similar to a universal sort of regular cash transfer? system? Well, I think we, you know, we have it for the year. And the question is whether or not

Congress is going to extend it for five more years, which is what the president wants. But I would not continue the program as it's designed for households that really are upper income. I think, I think there are a lot better uses of billions and billions and billions of dollars than writing checks to households that have incomes above a quarter of a million dollars. And one of those better uses is doing more to fight poverty among kids. So you'd take the universal out of universal basic income. I would. Sounds like.

I would actually, I would take the universal and the basic out of universal basic. Oh, okay. Just income. I like it. Kind of snappy. The New Yorker's Sheila Cole Hatcar. She spoke with Michael Strain of the American Enterprise Institute and Amy Castro of the University of Pennsylvania.

This is the New Yorker Radio Hour. Stick around. This is the New Yorker Radio Hour. I'm David Remick. As we continue looking at the American withdrawal from Afghanistan and the long shadow of a 20-year war, the New Yorker's longtime contributor, Robin Wright, joins us on our podcast, Politics and More.

She'll join editor Dorothy Wickenden to talk about the reemergence of ISIS. That's on Politics and More, a podcast from The New Yorker. Now, to wrap things up this week, I'm joined now by my friend and colleague Liz Mainz Amenzade, the New Yorker's Puzzles and Games editor. Hey, Liz. Hey, David. A couple of weeks ago, you may well remember, we played a round of name drop, our new quiz, and I frankly had a humiliating loss to our colleague, No.

from. Not that I'm going to hold his grudge, but I'm out of the hot seat now because two of our listeners are joining us to play name drop today, Steve Westoff and Leonise Moses. So welcome and thanks for coming to you both. Thank you for having us. Thank you. Thanks for doing this. You guys are courageous. David kind of helped us out with the Janet Jackson. Yeah, very low bar. You know, it's, I won't be so embarrassed. Exactly. I'm still having post-traumatic stress syndrome from the last time we played this game, but we're going to go forward. Liz is going to read out a series of clues describing a notable personality in either history or in contemporary times. And when you know it, you're going to say, I got it. Don't say your answer. Say, I got it and write it down on a piece of paper, then put your pen down to your pencil, whatever you're writing with. Liz, are you ready? Okay, should we do this? Ready.

Yes. Round one. This is for six points. As part of a 1998 April Fool's Day segment on NPR, I announced my plan to become an accordion player. It's a terrible trick to play on anyone. Five points. I can be heard on the soundtracks of Crouching Tiger Hidden Dragon and Master and Commander the Far Side of the World. Yep, keep going.

Since 2006, I've served as a United Nations Messenger of Peace, a title I currently share with Jane Goodall, Stevie Wonder, and ten others. You're killing me here, Liz. You're killing me. I think I picked exceptionally hard quizzes. You did. Just wanted to make it dramatic. Three points. In 1999, after playing at Carnegie Hall, I accidentally left my 2.5 million. million dollar instrument in the trunk of a cab.

David is pantomiming a clue here. I think I know who it is. I can give it a guess. Leonis, are you committing? Not committing. No. Go ahead. Keep going. Okay, for two. At age seven, on the recommendation of Pablo Casals, a virtuoso of my instrument,

I performed at a televised benefit attended by Presidents Kennedy and Eisenhower. Okay, and here's the last clue. I've recorded more than 100 albums, received 18 Grammy Awards, and recently toured the world performing Bach's six solo cello suites on six continents. Go ahead, Steve. Yeah. I'll guess Yo-Yo Ma. You got it.

You guessed right. All right. I feel like I should be a little older to play this. Oh, ooh. Oh, a shot. A shot. That's a shot across the battleers. Okay.

You know, as somebody who failed miserably, not that I bring it up very often in conversation, only once every five minutes, who failed miserably at this game with my colleague last week. How are you guys feeling? You doing all right? No. No, I feel like I need a rematch.

You need a rematch? I don't lose. I think this is, This is luck as much as anything else right now, really. All right, here we go. So the next one, go ahead, Liz. Round two for six points. Though I'm not primarily known as an actor, my screen credits include a troubled teen on As the World Turns

and an elevator operator in the Steven Soderberg film, King of the Hill. For five, my debut solo album, which opens with a ringing school bell, features interludes in which an educator, Raz Baraka, who later became the mayor of Newark, talks with students about the nature of love. All right, for four points. That 1998 album, much of which was recorded at Bob Marley's Tough Gong studio in Kingston, Jamaica,

was the first hip-hop record to win the Grammy for Album of the Year. I can tell you're getting the it. I can see. She's closing in on it. I can see it. Okay. I sampled the Wutan Clan. can it all be so simple in my song X Factor,

which in turn was sampled in both Drake's Nice for What, and Cardi B'iardis, be careful. I got it. I got it. I got it. And he's has it for three. A giant smile is cutting across the face of ladies, thank God. And how about you, Steve? Are you in yet?

I thought I had it with the 98 album, and no, I may not. All right, keep going. Okay, here's for two. I was a founding member of the Fugis, along with Wyclef, Jean, and Prazmichelle, and I sang lead vocals on Killing Me Softly, our cover of a Roberta Flack hit. Okay, I did have it.

Okay, Steve's got it for two. And here's for one. My only solo studio album to date, which is titled The Miseducation of Me has sold more than 10 million copies and features the number one single, Doop, that thing. Lina, do us the honors. Lauren Hill.

There it is. You got it. Lauren Hill. Steve, did you get Lauren Hill? Yes. Okay. So looking at the scorecard, Liz, what have we got? It's a close one, but Steve eked it out, five to three. Congratulations, Steve. Now, Leonis, you're okay? You're hanging in there? It's fine.

I wanted to come out on top far beyond, Steve, like way higher. Yeah, and Steve, how about you? I feel great about it. I was worried about getting shut out. I did not come here to win necessarily. I did. Exactly. A different view to competition.

Fair enough. Thank you both. Thank you. Thank you. You can play name drop at New Yorker.com. There's a new quiz every weekday. And if you want to play on the air with us, send an email to New Yorker Radio at WNYC.org. Make your subject line name drop.

Thank you, Leonese Moses, and Steve Westhoff. And thanks to Liz Miner, Amenzade, our Puzzles editor. That's The New Yorker Radio Hour for now. Thanks for listening. See you next time. The New Yorker Radio Hour is a co-production of WNYC Studios and The New Yorker. Our theme music was composed and performed by Merrill Garbus of Tune Yards,

with additional music by Alexis Quadrado. This episode was produced by Alex Barron, Emily Boutin, Avae Carrillo, Riannon-Corbi, Cala Leah, David Krasnow, Gauphin and Putubuele, Louis Mitchell, Michelle, Moses and Stephen Valentino. And we had additional help from Harrison Keithline. The New Yorker Radio Hour is supported in part by the Cherina Endowment Fund.