Rep. Paul Ryan Proposes "Universal Credit"

Paul Ryan was out this week with a GOP proposal that could easily be interpreted as a form of a Basic Income Guaranty that Dems should consider as a shot across the bow.  Story at The Fiscal Times here.

Rep. Paul Ryan appeared at the Brookings Institution this week to talk about poverty. 

The Wisconsin Republican and 2012 vice-presidential nominee discussed how the poor could be “reintegrated” into society, and as part of his speech, he proposed that the United States consider adopting a “Universal Credit” scheme that would both streamline the various social safety net payments and tax credits the poor receive and, rather than cutting off abruptly when recipients cross a certain income threshold, would taper off as income rises, thereby reducing the disincentive to finding work .

To be clear, Ryan has not suddenly changed his mind about the need to cut entitlement costs. He firmly believes that the U.S. is spending itself into economic oblivion and that the main drivers of the problem are our healthcare and entitlement programs. What’s happening here is that Ryan, having taken a couple of runs at entitlement reform, with no success, is changing his approach. 

Ryan cited work done by economist Gene Steuerle, who has pointed out that current policies that abruptly strip recipients of their government benefits when they find work or reach a certain level of income, have the same effect as drastically raising their marginal tax rates and create disincentives to work. 

“According to Steuerle’s calculations, if she’s enrolled in programs like food stamps, Medicaid, and SCHIP, her implicit marginal tax rate will be as high as 55 percent,” Ryan said. “And if she’s enrolled in other programs—like housing assistance and welfare—the rate will reach above 80 percent. In other words, go to work, and you’ll keep less than 20 cents of every extra dollar you earn.”

Sort of like a "supply-side" twist to a Basic Income Guaranty with Ryan doing the math to show how small a percentage of the transfers are effectively retained if someone becomes employed; you gotta love it.  I guess this is just the general way these people's brains work.

The key change to the GOP/Ryan approach here is that the Treasury transfer payments don't disappear when the recipients get a job; rather they are reduced as other "earned" so-called income increases; in effect, functioning as a Basic Income Guaranty for the individuals and households.

The article indicates that this part of the GOP leadership still remains stupid and blind and in the dark on fiscal authority; but even so, this is manifestly a change of course towards a more progressive policy taken by the Ryan faction here.

If Ryan has serious desire for national office, this change of course was absolutely necessary for him.

He takes some flack from the GOP crazies faction in the form of Sen. Rubio chronicled in a video embedded in the story; but Rubio has NO CHANCE of obtaining national office without an appeal that is accepted by a significant percentage of Christendom in the U.S. who vote primarily on the issue of social-economic justice.

After the 2012 loss, Ryan perhaps knows he needs significant votes from this cohort of U.S. Christendom (who were run off by Romney's "47%" remarks despite VEEP candidate Ryan's attempt to counter via his soup kitchen high jinks) and has come up with a policy that may appeal enough to these people to get him over the top... and in his moron view it has the added benefit that it "won't cost the taxpayers any more money!".

Win-win for someone like Ryan.