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Chicago Poised to Create One of the Largest 'Guaranteed Basic Income’ Programs

Chicago is about to embark on another meaningless 'Guaranteed Basic Income’ trial.
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Universal Basic Income3

Please consider Chicago poised to create one of the nation’s largest ‘guaranteed basic income’ programs.

The Chicago City Council is poised to vote this week on what would be one of the nation’s largest basic income programs, giving 5,000 low-income households $500 per month each using federal funding from the pandemic stimulus package.

Mayor Lori Lightfoot (D) has proposed the more than $31 million program as part of her 2022 budget, which the city council is scheduled to consider on Wednesday. The one-year pilot, funded by the nearly $2 billion Chicago received from the Biden administration’s American Rescue Plan, is supported by most of city’s 50 aldermen. But it has received pushback from the 20-member Black Caucus, which has urged Lightfoot to redirect the money to violence prevention programs.

The inequalities in Chicago are particularly stark. A 2019 report by an economic inequality task force created by the mayor’s office found that 500,000 Chicagoans — about 18 percent of the population — are living below or at the poverty level. Nearly half the city’s households do not have a basic safety net to help in emergencies or to prepare for future needs, such as homeownership or higher education. A quarter of households have more debt than income.

Study Says Guaranteed Income Pays Off

The Washington Post reports Stockton gave people $500 a month, no strings attached, to fight poverty and it paid off.

Starting in February 2019, the Stockton program has provided monthly payments for two years to 125 people living in neighborhoods with a median income below $46,034. Participants can use the money as they see fit, without work requirements or other restrictions.

Dozens of mayors have joined an initiative to advocate for guaranteed income, and several pilots in cities including St. Paul, Minn., and Compton, Calif., have already begun.

“The study shows what mayors know: People are working, but the economy isn’t,” St. Paul Mayor Melvin Carter said.

Idiotic Plans and Idiotic Assumptions

500,000 Chicagoans live below the poverty line. Chicago will give 5,000 lucky lottery winners $500 a month. 

What about the other 495,000?

And what about the allegation that "Nearly half the city’s households do not have a basic safety net to help in emergencies or to prepare for future needs."

The 2015-2019 number of households was 1,066,829 with an average of 2.48 persons per household.

The Math

Chicago's total city budget for 2021  is $12.8 billion. Property taxes in Illinois are already outrageous. Sales taxes in Chicago are a whopping 10.25%.

The 10.25% sales tax rate in Chicago consists of 6.25% Illinois state sales tax, 1.75% Cook County sales tax, 1.25% Chicago tax and a 1% Special tax.

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Where in the hell is Chicago going to come up with taxes to hand out billions in "free" money".

Mayor Lori Lightfoot's 2022 Budget

As city council gets First Look At Proposed Budget, some balk at property tax hikes.

Some alderpeople want to avoid a property tax increase in next year’s city budget, saying too many Chicagoans can’t afford any more strain on their finances in the ongoing pandemic.

The City Council launched its 11-day, marathon budget hearings Friday to dissect Mayor Lori Lightfoot’s budget proposal for 2022. The mayor’s $16.7 billion spending plan is aimed at powering the city’s economic recovery from the coronavirus crisis.

In 2021, City Council approved a $94 million property tax increase that included a provision annually raising taxes at a rate tied to the Consumer Price Index. This year’s hike would be 1.4 percent, determined by the increase from December 2019 to December 2020.

The plan to spend liberally on social programs received little push back Friday, but aldermen were concerned that once the city opens up the spigot of the spending, it would be hard to rein in and the city wouldn’t have the federal money to fall back on.

“What are we going to do in 18 months, in 24 months when those federal dollars aren’t there? How do we make sure…that they will be able to sustain themselves down the road,” O’Shea said. 

$100,000 ‘slush fund’ is ‘ripe for abuse’

City officials had no firm answers for how aldermen should spend the $100,000 Lightfoot wants to give each alderperson to provide “microgrants” in their wards.

“It’s ripe for abuse,” Vasquez said. “If we’re getting that kind of fund in each ward, I could see people interpreting that as some sort of slush fund, which could lead to potential problems.”

Pays Off?

The idea these programs are winners is sheer lunacy. They appear to work because the trial sizes are exceptionally tiny.

In the case of Stockton, California the trial size was a mere 125 people.

I do not doubt for one second that these people chosen at random had improved lifestyles.

But until someone can say how they are going to pay for these programs it's clear they don't work.

Imagine the backlash and result if Chicago (which has home rule on sales taxes) doubled the sales tax to 20.5%. And I suspect that would not even cover the shortfall.

Chicago property taxes have grown 90% since 2010. Every bit of that went to teachers', police, and fire unions. 

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