NCPA - National Center for Policy Analysis


March 22, 2006

Instead of sending taxes to Washington, straining them through bureaucracies and converting what remains into a muddle of services, subsidies, in-kind support and cash hedged with restrictions and exceptions, just collect the taxes, divide them up, and send the money back in cash grants to all American adults, says Charles Murray of the American Enterprise Institute.

We could make the grant large enough so that the poor won't be poor, everyone will have enough for a comfortable retirement, and everyone will be able to afford health care. We're rich enough to do it, explains Murray.

Murray's plan would make a $10,000 annual grant to all American citizens who are not incarcerated, beginning at age 21, of which $3,000 a year must be used for health care. Everyone would get a monthly check, deposited electronically to a bank account, says Murray.

  • If we implemented the Plan tomorrow, it would cost about $355 billion more than the current system.
  • The projected costs of the Plan cross the projected costs of the current system in 2011.
  • By 2020, the Plan would cost about half a trillion dollars less per year than conservative projections of the cost of the current system.
  • By 2028, that difference would be a trillion dollars per year.

Many questions must be asked of a system that substitutes a direct cash grant for the current welfare state. Work disincentives, the comparative risks of market-based solutions versus government guarantees, transition costs, tradeoffs in health coverage, implications for the tax system, and effects on people too young to qualify for the grant, all require attention in deciding whether the Plan is feasible and desirable, says Murray.

Source: Charles Murray, "A Plan to Replace the Welfare State," Wall Street Journal, March 22, 2006.

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