So how are we going to pay for my Basic Income Guarantee (BIG) – enough to meet basic housing, transportation and clothing needs of the resourceful and capable, allowing that some people (the less resourceful and capable or the just plain unlucky) will still need help and for whom other services and benefits will still be available. As discussed in the previous post, SNAP and Medicaid would continue taking care of food and healthcare for the poor. According to the Center on Budget and Policy Priorities, in fiscal year 2014, the federal government spent $3.5 trillion, of which over $3.0 trillion was financed by federal revenues and the remaining financed by borrowing. BIG would be funded through the portion of government budgets devoted to safety net programs (about 11% of the federal budget, with states contributing matching funds). Let’s see if we can cobble together a decent BIG budget through the elimination of the programs that BIG would replace, plus selective reductions in other programs.

BIG would replace many of the big ticket programs, including the Earned Income Tax Credit, Temporary Assistance for Needy Families, and Supplemental Security Income. Per Federal Safety Net, TANF, EITC, and SSI cost about $150 billion annually. Move $150 billion to the BIG budget.

Social Security Disability Benefits are financed primarily by a portion of the Social Security payroll tax and totaled about $141 billion in 2014 (about 4% of the federal budget- SS Survivors and Old Age benefits are another 20% of the budget). We’re going to half the SSDI budget and payments, because SSDI recipients would also receive a BIG. That provides another $70 billion for the BIG budget. [For now I’m leaving the rest of Social Security alone].

In the last decade, the combined federal/state budget for unemployment benefits has ranged from $50-$150 billion a year, depending on the unemployment rate and allowed duration of the benefit. We’ll assume an annual average of $100 billion and move it to the BIG budget.

The Housing and Urban Development budget is about $50 billion. I’m going to take half of that and give it to BIG, The balance could go to rental assistance to the neediest families. (Note: as it is, almost all rental assistance goes to households with children or elderly residents).

Most other means-tested safety net programs would stay in place, such as SNAP (food stamps), Pell grants, child tax credit, school lunches, and childcare assistance. I’m leaving in SNAP because it is an efficiently managed program with already low overhead and is especially important to child nutrition. However, because BIG counts as income, the budget for some of these other programs will go down if a substantial number of people receive BIG (because they will qualify for lower/fewer benefits due to higher income). I’ll estimate these programs will get about 10% smaller, freeing up another $25 billion for the BIG budget.

In addition, some federal programs would be eliminated to reduce agency overlap and duplication of services, a pervasive problem according to the US Government Accountability Office. Let’s say elimination of these unneeded programs saves $25 billion. Those funds can be applied to BIG.

The states also contribute matching funds to many of the federal welfare programs. A portion of these funds – $150 billion – will go into the BIG budget.

Ok, based on the above, this is what we have to pay for the BIG:

$150b – existing safety net programs that will be replaced by BIG

$150b – state matching funds related to the above

$ 70 b – half of SSDI funds

$ 25b – half of the HUD budget

$ 25b – budget reductions in some remaining programs

$ 25b – elimination of redundant programs

$100b – unemployment compensation, to be replaced by BIG

So we have about $545 billion to pay for a BIG. It’s a start.