Peduto perpetuates the welfare state

Peduto perpetuates the welfare state

Not only in theory but in practical terms, there’s plenty wrong with Pittsburgh Mayor Bill Peduto’s proposal to start a “guaranteed income program” for select city residents.

More on those specifics in just a bit.

But the more immediate problem for the lame duck self-styled “progressive” mayor is that he intends to use one-time federal Covid-19 relief dollars – borrowed money, of course — for something never intended by congressional almsgivers.

That is, funding new items that, if continued, have no dedicated funding source and, if made permanent, would require either more federal transfers (more borrowed money) and/or tax hikes.

In one of several spending resolutions introduced last month in City Council, Peduto seeks approval to use $2.5 million in federal pandemic money.

Though details remain sketchy, the money, funneled (laundered?) through Peduto’s grand “progressive” OnePGH initiative, would provide no-strings payments of $500 monthly to 200 low-income people, 100 of which would be black women, for two years.

Program organizers say they are working with the state Department of Human Services, among others, to allow those participating in the program to keep their existing, means-tested welfare benefits, reports the Tribune-Review.

But that clearly defeats the still-dubious purpose of legions of supporters who contend such programs could end welfare as we’ve known it.

Spending will be tracked for study purposes but there will be no restrictions. A similarly composed, but not subsidized, control group also will be studied.

Peduto is a member of “Mayors for a Guaranteed Income.”  Said hizzoner when he signed up for the group last year, as the Trib noted:

“Covid-19 has shaken the very foundations of American life and laid bare the economic inequity that especially affects our communities of color.

“In committing to policies around guaranteed income, we are proud to join groundbreaking leaders from cities across the country in fundamentally rethinking our economic structures to support and uplift the residents of Pittsburgh,” Peduto said.

But as more and more research shows, such programs – whether called “guaranteed basic income” (GBI) or “universal basic income” (UBI), among others – simply are not sustainable, economically or morally.

As the Orange County Register noted not long ago in a commentary (by business owner and Indian State College adjunct finance professor Joseph Semprevivo), such programs – in various forms – have been tested elsewhere:

“In Canada, Ontario had a UBI pilot program in 2017, but decided to abruptly end the experiment — two years ahead of schedule. A Canadian official commented that the UBI program was expensive and pointed out that it was ‘certainly not going to be sustainable.’

“Finland is yet another example. In 2017, Finland randomly selected 2,000 unemployed Finns who would receive a monthly check of 560 euros. The program, which was meant to boost the economy, was scheduled to last three years. But after just one, the government decided not to extend it.”

Recipients might have been happy, the Register noted, “but the effect on employment was negligible because participants reported being hesitant to take on full-time employment as they would fall below the income threshold and lose the benefit.”

Do remember, one claim of such programs has been that they give recipients the financial cushion to look for and secure jobs.

Gee, sounds familiar, doesn’t it – subsidized idleness begets idleness. Think of the damage pandemic-spawned extended unemployment benefits caused.

(As a side note, a local editorial recently, and hilariously, opined it was the marketplace speaking that was leading to private companies raising starting wages.

Sorry, but it was government repeatedly extending and raising unemployment benefits that forced private businesses to raise wages to get those people off the expanded dole.

And that will come at great expense to all.)

Oh, by the way, Semprevivo, the finance professor, also noted that if Finland were to extend its guaranteed income program nationwide, “an analysis from the Organization for Economic Cooperation and Development estimates that the country’s income tax would need to rise by nearly 30 percent.”

“Since Finland’s income tax rate currently maxes out at 50 percent, a substantial increase would almost certainly be untenable” the professor noted.

Yet pols filled with the hubris of “knowing better” believe their welfare program will work.

But it won’t. What it will do is further deepen the welfare state and its cycle of poverty by further disincentivizing work and turning, perhaps permanently, more citizens into wards of “The State.”

That’s certainly not “progress.” But it certainly is ignorance incarnate.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).