Thanks to the pandemic, Joe Biden and the Democrats have stumbled on the best income-equality reform in decades: Give working people money. The Democrats are topping up the previously approved $600 per person to $2,000. (A friend proposes calling this the Biden-Trump Bill—that would sure jam the Republicans.) Indeed, nothing is quite so pleasurable as watching Republicans agonize over whether to oppose sending out $2,000 checks to constituents. Next up is a child tax credit of up to $3,600 per child. This is a tax credit in name only. It is basically a check. Direct payment to families saves all kinds of bureaucratic hassles; it’s efficient; and it sure as hell is popular. Just ask anyone who receives a Social Security check. One criticism is that this money is not perfectly targeted. Some of it goes to people who maybe don’t need it, or won’t spend it. But not perfectly targeted compared to what? The private sector? Spare me. The supposed efficiency of markets has been blown away by the 2008 financial collapse and the existential catastrophe of climate change. Both reflect the fact that markets price things wrong. Hugely concentrated wealth suggests how its owners are often paid far more than they are "worth," measured in terms of their actual contributions to the larger economic well-being. If direct payments to the non-rich are not targeted with absolute
precision, it’s no big deal in an economy rife with far more serious market inefficiencies. Also, sending checks sure beats the hassle and indignity of means tests and welfare offices, which causes people to hate government. Basically, thanks to the urgent needs of the pandemic, the Democrats are backing into supporting a universal basic income. Means testing does come into play in one respect. Biden proposes to phase out these benefits at levels of $75,000 for an individual and $150,000 for a family. That in turn creates the problem of an income trap, where your benefits go down as your income goes up. But there is an easy remedy for that. Raise the cap, make the benefits taxable. That’s what Social Security does, and it has no income cap at all. While we’re at it, reform the tax code to restore some real progressivity. For those who don’t like public deficits, that could pay for the benefits.
