Part 1: The Framework

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A Basic Deal addresses the most fundamental of economic concerns: many Americans are just scraping by, struggling to keep a roof over their heads and manage life's daily necessities.

The idea that all of us should be able to meet our basic needs is not a complicated proposition. But in meeting that goal, how far should society’s collective responsibility extend, where does personal responsibility come into play, and how does this translate into effective policy?

A Basic Deal suggests a new framework for confronting this problem. It provides an alternative to the assortment of independent, bureaucratically burdened programs, which fall short of the mark. It turns the solution on its head, offering a coherent, integrated approach, driven not by the ever-changing pressures within the walls of government, but by the need to accommodate the practical realities of a household budget.

The Challenge

Sadly, we are inundated with stories about homelessness, long lines at food banks, unaffordable health care, burdensome student loan debt, and other descriptions of life that don't square with our image of America as a rich country with opportunities for all. For sure, the good things in life shouldn't come easy. But the struggle should start from a reasonably secure place and with a genuine sense of future possibilities.

Unfortunately, however, our hodge-podge of policies and programs doesn't create the firm foundation each of us should be able to stand on to build our lives.

What follows is the outline of A Basic Deal, a proposal for how to set things right.

A Basic Deal is about ensuring everyone can meet their immediate needs and also pursue their dreams. It’s about giving people a leg up, not just for getting by, but also for developing the skills that will help restore the “hollowed out” middle class. It's about balancing near-term wants with the benefits of delayed gratification, and it's about enhancing people’s resilience and capacity to adapt to changing circumstances (the importance of which COVID-19 served as a stark reminder). It's about progressing toward a vision where every American has a decent shot at a good life.

But we live in a divided land, and reaching consensus has become exceedingly difficult for our society. An “us versus them” mentality prevails. So the structure of this proposal is important. Its design as a square deal for all, playing no favorites, could produce a secondary, unifying benefit. The plan minimizes the use of separate demographic categories and removes in most cases the demarcation of individuals and households by income level. It brings all Americans under the same tent, a feature that might foster a degree of solidarity, while enhancing efficiency and equity.

A Basic Deal also confronts the failing patterns of government. Programs tend to be locked in their own silos, targeting their own defined populations, and operated in accordance with their own regulatory schemes. Whether program funding levels correlate well with people’s own priorities is uncertain; and we often waste Americans' time and the government’s resources, that is, our taxpayer dollars, sending the intended beneficiaries jumping through bureaucratic hoops. Also, in the interest of preventing fraud and waste, government programs sometimes oversee people’s lives in an intensive, demeaning way.

Let's take the 1996 Welfare Reform Act, the most significant piece of anti-poverty legislation since the Great Society programs of the 1960s. By linking cash and other forms of support to work requirements, this law has, in the minds of many Americans, satisfactorily resolved the “welfare issue.” But it hasn’t.

By incorporating personal responsibility into the equation, the welfare reform law was a move in the right direction. But it also stepped into every one of the above mine fields. In addition, its emphasis on meeting short-term work requirements left behind the complementary goal of long-term skill development. And like many programs, its eligibility lines punished those whose income lies just above, rather than below, a certain level. That’s wrong, too, as it ironically also creates a work disincentive.

So we should not be surprised that according to the Center on Budget and Policy Priorities, the program that arose out of this legislation, Temporary Assistance for Needy Families (TANF), benefited only 21% of impoverished American families in 2020.

Or let's look at the popular Earned Income Tax Credit (EITC). It's been lauded as a mechanism that rewards and motivates employment. But the program discourages participation due to its complexity, requires significant bureaucratic involvement, and leaves itself open to fraudulent conduct. As of 2019, the Internal Revenue Service estimates that 21% of those qualifying for the tax credit don't claim it and between 21 and 26% of EITC payments are for the wrong amounts.

It doesn't have to be this way. We could employ a simple, unified model.

But change, almost any change, can be costly and cumbersome. So wherever possible, A Basic Deal also builds on existing structures and practices.

The plan includes the following elements: Basic Need Accounts, a Public Jobs Program, a new form of subsidized housing called Community Housing, and universal basic health insurance guided by complementary standards – each critical on its own, but also linked in ways that strengthen each person's economic foundation. As the reader will see, the linkage is essential, because this proposal connects all its components to a “worst-case scenario” household budget.

Guiding Principles

Too often as a society, we discuss the merits of competing public policies without first articulating the goals we are trying to achieve. So let me suggest a few principles that underlie A Basic Deal. I believe they represent a reasonable, attainable set of standards.

1. No one should be without access to basic necessities, such as adequate food, clothing, and shelter, regardless of whether or not the individual is thought to be “deserving.” This is an argument for simple decency. To meet those critical human survival needs, a person shouldn't have to be deserving.
   

2. Permanent housing should be within reach for any household where at least one person is willing to hold down a full-time job. This means three things. The supply of permanent housing needs to be adequate. A reasonable share of that supply needs to be accessible for households of modest means. And we need to ensure an opportunity for people to earn an income sufficient for such housing (as well as other basic needs) to be within financial reach.
   

3. Personal development opportunities from quality child care to college education and job training, to personal counseling and support should be available and affordable. This involves judgment calls. Public elementary and secondary schools are free for all children, and for good reason. We owe all kids a chance to get educated and to begin realizing their potential, regardless of their parents' means. We also recognize that uneducated children will likely become a costly burden on society. A similar argument can be made in favor of fully subsidizing pre-school education for 3- and 4-year olds. It gets more complicated, though, when considering child care in the earlier years, as well as post-secondary education and job training. To what extent should those households that will directly benefit contribute, and how much should taxpayers pitch in? There is no obvious place to draw this line, but what is clear is that these opportunities for personal growth and skill development should, to a large extent, be accessible without imposing an excessive financial burden on the beneficiaries. Still, there are limits to how far our public resources can be stretched, and people should be expected to make prudent choices to improve their lives.
   

4. Every American has the right to receive good quality health care and should be able to acquire it as needed. The argument is simple. For all of us, life is full of uncertainties, including the state of our health – which, in turn, can have the most profound impact on the quality of our lives. So we owe it to ourselves to ensure all Americans can address these needs as they arise. This principle shouldn't be construed to mean health care should be free, but it does suggest one's financial responsibility should be manageable and not stand in the way of receiving the appropriate services when needed.

Basic Need Accounts

A Basic Deal primarily rests on a simple mechanism called Basic Need Accounts (BNAs). It takes an increasingly popular idea that has been around a long time, a universal basic income, and re-shapes it to be more purposeful than the way it is usually structured, as an unconditional cash payment.

Under this variation, all citizens, regardless of their circumstances, would automatically receive a supplement to their income in the form of an untaxed, monthly allocation of public funds deposited into three personal debit accounts. These accounts would help people meet their short-term needs, long-term needs, and health care needs.

The division into three separate accounts does not merely bring some focus to the use of these funds; it also acknowledges that while personal spending freedom and flexibility is critical, it's also true that budgetary discipline is hard for many people. So why set them up for failure? And shouldn't such public funds be distributed with care, in a way that will maximize their impact?

The short-term account would help individuals and households address their immediate needs, like housing, food, clothing, transportation, and phone service. But there would be no restrictions on how these funds were spent, as monitoring such expenditures to ensure they conform to an ideal would not warrant the cost of doing so.

The long-term account would focus on personal development needs. Eligible expenditures would be limited to licensed and certified activities consisting of early childhood programs, post-secondary education, vocational training, and social services that strengthen the capacity of individuals and families to manage life’s demands.

The health care account would help pay for health insurance deductibles, co-insurance, and co-payments, as well as service charges and prescription drug costs not covered by a health plan. No one will need to pay a health insurance premium and there will be an annual out-of-pocket spending limit. (This is explained in Part 3 of this series.)

Here’s how the program would work: A fixed sum of money would be electronically deposited every month into each adult's three accounts: say, $350 into the short-term account, $150 into the long-term account, and $100 into the health care account. (Whatever the starting point, these are figures that would need to be adjusted going forward, consistent with the changing cost of living.)

In households where there are minors or other dependents, additional dollars in the same amounts would be added to the accounts of one of the parents or guardians, or split between them.

Funds from the accounts of any household member could also be used in support of any other member's needs.

Both the long-term and health care account funds would accumulate, with interest, and be accessible over a person’s lifetime.

Access to BNA dollars would come from an electronic benefits card (or via a smart phone). Upon the purchase of a qualifying good or service, the account holder’s applicable short-term, long-term, or health care account would be charged and the service provider’s account would be credited. The card would not provide the account holder with cash.

BNA dollars would be accessible in a flexible manner. They would not need to be spent in the month they’re allocated. Any short-term funds remaining at the end of that month would no longer be available for short-term purposes, but they would be added automatically to the long-term account. Dollars from the long-term account would also be available to help pay for health care needs in case an individual’s health care account funds and other personal resources were insufficient. (The reverse would not be permitted, though, as we are all susceptible to unforeseen health care expenses, so this account should not be unnecessarily depleted.)

What about senior citizens and disabled individuals? For them, there would be no changes in the payment of their Social Security retirement and disability benefits. Those funds would continue to be accessible along with the accumulation of BNA dollars.

And what about those who choose not to, or simply fail to, sign up for Basic Need Accounts? Anyone who doesn't sign up simply would forfeit their BNA benefits – with one exception. Their health insurance coverage could be accessed at any time.

Let’s now take a look at how Basic Need Accounts might be put to use under differing circumstances.

Take the case of a single man with no dependents, working full time for a small business with only a handful of employees, and making $13.00/hour. That’s not a lot of income, but under current guidelines, it would still be too much for him to receive an Earned Income Tax Credit or to qualify for Medicaid, even in a state that participates in the Medicaid expansion program. Furthermore, there is no assurance meeting his health care needs would be fully within his financial reach if he benefits from an employer-based policy (which would unlikely be available at such a business) or secures a plan with premium and cost-sharing subsidies under the Affordable Care Act.

If, however, we bring Basic Need Accounts into play, the picture improves and also simplifies. Funds from the short-term account could help with such necessities as paying his monthly rent or putting food on the table. The long-term account could be accessed to pay tuition for a job training program that would increase his earning capacity. And as the reader will see, in conjunction with the out-of-pocket spending limit that would be established, his health care would be fully affordable.

For those households that are better off economically, the BNA funds would provide multiple options -- and decisions to be made. For example, should the short-term dollars remain unspent and carry over as an addition to the long-term account? Or should they be spent on groceries and the like, freeing up more of the household’s own funds to save for a down payment on a home purchase or pay down the mortgage more quickly, or make future move-in costs or rent hikes more manageable, or contribute to a rainy day or retirement fund? Should dollars from the long-term account be applied sometime soon, for, say, child care or a parent’s job training? Or should those funds accumulate over many years as savings for the children’s college tuition? The choices are many and could be adapted to serve a given household’s needs and priorities.

We may ask why BNA dollars aren’t only for the needy. Are we not making this task harder by also making these dollars available to those on solid financial footing? I think the answer is no. It would be less bureaucratic and less costly to let everyone in the door and pay for this program by maintaining a progressive tax structure. Those who are financially well off will effectively be paying for their own BNA allocations, as well as subsidizing those with low or modest incomes.

Basic Need Accounts would represent a core, universal benefit, comparable to free public schools for all children regardless of family income. Their primary goal would not be to prevent or alleviate poverty. Rather, they should be thought of as part of a foundation upon which all Americans can build their lives. And no stigma would be attached to using a BNA debit card, because all adults would qualify to have one.

The potential impact of Basic Need Accounts could be significant, helping meet needs and create future possibilities with great flexibility. But there is one basic need the accounts don’t address directly -- and that’s the need to work. Both as a means of making ends meet and as an essential element of human dignity, there is nothing more important than providing opportunities for people to go to work, earn a living, and provide for themselves and their families.

In fact, Basic Need Accounts will not, on their own, be sufficient for people to get by. And that's as it should be. Except for those lacking the capacity, we all need to earn our keep. But if that’s the expectation, then the earning opportunity must also be present.

A Public Jobs Program

Unfortunately, we can't guarantee people jobs that are private market-based or derived from the public sector's usual activities. The economy's vitality will vary, and the match between a local labor market's specific demands and the skill set of its population will always be imperfect. But those who want a job should be able to obtain a job -- and there is nothing that stops us from guaranteeing a chance for people to engage in paid productive work.

So how should we create such opportunities? And how can we do it in a way that is constructive and fiscally responsible?

In the 1930s the New Deal showed the beginnings of what is possible, and we can build on that experience. Certainly, its alphabet soup of subsidized employment programs had its limitations, creating jobs that were temporary, that were open to only certain segments of the unemployed, and that in some cases consisted of mere make-work. But its contributions to the economic well-being and spirit of the poor were real. The Works Progress Administration (WPA), Civilian Conservation Corps (CCC), and other such programs provided value for that time and lessons for the present time.

So let us imagine the creation of a new Public Jobs Program (PJP), consisting of guaranteed full-time and part-time work opportunities for adults. These jobs would come with baseline wages and benefits, but without time limits, and with the following as their principal elements:

1. “Guaranteed” means eligibility extends to all adults. It would not even be conditioned on current employment status. It's not worth the bureaucratic effort and expense to disqualify people who are already working -- especially since under such circumstances, few individuals would be interested in an additional, low-wage job with a marginal tax rate tied to their total income. (Along similar lines, those receiving unemployment benefits should be able to simultaneously, and without penalty, work at a public job. Only in rare cases, depending on state benefit levels, might their total income now be at a level that disincentivizes, for a brief period, a vigorous search for a job in the regular marketplace.)
   

2. Workers would be assigned to responsibilities not otherwise being undertaken by the private or public sectors. The program would not be used to create a competitive wage squeeze on people already employed.
   

3. Workers would be assigned to projects and hired for jobs that were of legitimate value to society, not make-work.
   

4. To ensure assignments are a good fit with the range of participants’ work backgrounds and abilities (including those who have physical or mental limitations, but desire an alternative to reliance on disability benefits), the program’s projects and job opportunities would encompass a wide variety of demands.
   

Public jobs, in essence, would serve as a fallback. But they would be a meaningful fallback in terms of the contribution of the work product, the opportunity to maintain skills and develop new ones, and the value of the paycheck.

The jobs should pay a wage that, when combined with an individual's short-term Basic Need Account dollars, would allow for a decent standard of living.

One approach for determining that wage would be to track the federal poverty level or a comparable measure. If, hypothetically, we were to take 200% of the 2024 federal poverty level for a single adult as the basis for setting the wage, one of these Public Jobs, full-time (2,000 hours/year), would provide additional pre-tax income of $30,120/year, equal to $15.06/hour. Assuming the jobs were federally funded, in high cost-of-living areas, localities might wish to add their own funds to bump up that wage rate to a higher level. For analytical purposes, let's assume the $15.06 rate is where the Public Job wage is set.

One can easily imagine people engaged in a broad range of activities that contribute to a community's physical, social, and economic development, including tutoring, park maintenance, artistic projects, and even technology-related services.

Clearly, the program would need to be crafted carefully to conform to the above guidelines and prevent waste and fraud. But with sufficient experimentation at the local level, there is no reason why an effective program of this nature could not be created – identifying unsatisfied needs, developing labor-intensive projects and suitable jobs (perhaps with input from the workers themselves), making sure workers earn their pay, and minimizing administrative and supervisory expenses. And as a result, workers would always have a job if they wanted one.

Scrapping Minimum Wage Laws

As the concern for people making enough to get by has gained prominence, increased attention has been paid to the minimum wage for adults. (An entry-level or training wage for minors represents a separate issue.) As a matter of morality as much as economics, everyone should be entitled to a decent wage for a day’s work -- regardless of labor market conditions. Any employer who requires a worker's services but is unable to pay a decent wage is not operating a viable business. But how does that translate into dollars and cents?

In 2014 the City of Seattle adopted an ordinance that lifted the minimum wage mandate for employers to at least $15.00/hour over a period of 3 to 7 years. The wage requirement scaled up in accordance with the size of the business and whether it offered additional compensation in the form of medical benefits and tips. (For employers with over 500 employees, the minimum wage has reached $19.97/hour in 2024.) It is a thoughtful piece of legislation, which, while driven by public pressure to hit the $15.00/hour target, was developed with near-consensus by a mayoral task force comprised of business, labor, political, and activist interests. Other local and state governments have taken comparable steps.

But even when designed in a sensible fashion, the minimum wage remains a blunt instrument, ultimately imposing a one-size-fits-all solution on a complex problem.

The very act of establishing a minimum wage raises certain questions. How much of the increase above the applicable market rate will be absorbed by the employer, how much by the consumer, how much by employees in the form of reduced hours, layoffs, and hirings that never take place, and how much by the community in the form of businesses that don’t expand or never start up? And how should tips and benefits be accounted for? These are trade-offs and practical problems that call for an alternative approach that is fair, efficient, and able to accommodate a wide variety of employer and employee circumstances.

The introduction of a Public Jobs Program in conjunction with Basic Need Accounts offers a solution. A by-product of the fixed wage for Public Job workers is that it would simultaneously serve as a comparative benchmark for employers. If employers were not constrained by a mandated minimum wage, but needed to be cognizant of a competing Public Job standard, they would still have to decide what they wished to do to recruit and retain employees.

This would be a flexible standard, as they would not necessarily need to match our hypothetical $15.06/hour, for they could also attract employees with benefits (ample vacation, retirement plan, etc.), tips (where applicable), job training, and promotion opportunities.

Likewise, prospective employees could consider their own circumstances and priorities. They'd be able to decide whether there were private employers offering a compensation package that was attractive enough or whether they’d prefer the fallback, working, at least for a while, in a Public Job.

The result of these dynamics is there would no longer be a need for a mandated minimum wage. 

Part 2 will address the issue of housing affordability, offering an alternative model of subsidized housing linked to the Basic Need Accounts – Public Jobs Program framework.