Rarely do I enjoy a book by an author with whom I fundamentally disagree on the book’s topic. But Brian Steensland, a sociology professor at Indiana University–Purdue University Indianapolis, has written such a book.

The Failed Welfare Revolution was first published in 2008, but it has now been reissued as a paperback, probably because of renewed interest in a guaranteed annual income (GAI) program. In the book, Steensland traces the development, in the U.S. context, of the idea of a GAI or a negative income tax (NIT) from the 1940s to President Richard Nixon’s serious attempt to implement a version during his first term in office, to later discussions of the idea within Jimmy Carter’s administration.

Steensland would probably dislike the title of this review. He sees the defeat in the U.S. Senate of Nixon’s proposed Family Assistance Plan, which the House of Representatives passed in 1970 by a vote of 243–155, not as dodging a bullet but, on the contrary, as a huge lost opportunity. But one doesn’t have to agree with his perspective to learn from his book.

Steensland gives a detailed account of the various proposals for some version of a GAI, starting with Lyndon Johnson’s administration, through the Nixon, Gerald Ford (briefly, given his two years in office), and Carter administrations. Although Steensland is a sociologist, he exhibits a basic understanding of the effects of economic incentives on work and family dissolution. And refreshingly, his book is relatively free of cheap shots at those with whom he disagrees. He tries hard to understand their views rather than merely dismissing them as unworthy. That makes it relatively easy to judge the arguments of the various players and come to conclusions different from Steensand’s. In particular, I found the arguments against Nixon’s proposal by some of Nixon’s own staff much more convincing than Steensland did.

Early efforts / Most people who know the history of the negative income tax, which is a form of GAI, associate it with the University of Chicago’s Milton Friedman, who proposed such a scheme in his famous 1962 book Capitalism and Freedom. The idea was to have the U.S. Treasury make a payment to people whose incomes were, for whatever reason, below some low level—thus the term “negative income tax.” Then, if their income from sources other than the U.S. Treasury increased, their payment from the Treasury would fall by 50¢ for every additional dollar of income. Steensland gives Friedman due credit but also points out that in 1946 George Stigler, later to be Friedman’s colleague at Chicago, had proposed such a plan as an alternative to the minimum wage, which, as Stigler noted, destroyed jobs for the unskilled.

Nothing much happened on the NIT front for more than a decade after Stigler’s 1946 proposal. But Michael Harrington’s 1962 book about poverty in America, The Other America, helped bring attention to it. In that book, notes Steensland, Harrington “argued that it was worse to be poor in an affluent society than in one in which most of the populace was poor.” Steensland doesn’t comment on that claim but I will. If envy of those around you eats at you then, yes, Harrington probably is right. But if you are poor and can see that many people around you are relatively wealthy, that can spur you to take initiative; if poverty is defined by real income, I would rather be poor in the United States than in, say, Colombia.

In the early 1960s, some liberal/​left economists and others started pushing for an NIT or GAI. Among them were economists Robert Theobald and James Tobin. Theobald proposed a flat income grant that would go to every U.S. (presumably adult) citizen. How left-wing was Theobald? Steensland notes that he described left-wing economist John Kenneth Galbraith’s The Affluent Society as “extraordinarily conservative.”

Around the same time, many people’s view of the GAI changed, partly because of an influential 1964 article in the Yale Law Journal by legal scholar Charles Reich. Friedman and others had argued that government should give money to the poor because that is a way for taxpayers to help them. But Friedman was always clear that the poor didn’t have a right to an income provided by government. Reich, however, “argued that welfare benefits were a statutory right once a recipient had established eligibility.”

During Johnson’s presidency, his newly formed Office of Economic Opportunity (OEO) considered various versions of a GAI or NIT. In 1967, the OEO started a huge, expensive social science experiment to estimate the effect of an NIT on work. The group chosen for the experiment consisted of low-income families with an “employable man” between ages 18 and 58. The reason for the experiment, notes Steensland, is that the OEO and others were concerned about how much an NIT would discourage work effort, especially by men. The experiment ran for many years—the results finally came out in 1978—and yet the people proposing various versions of an NIT did not want to wait for the conclusions.

Partly because of the race riots of the mid-1960s, many advocates—including representatives from big businesses—pushed for some version of a GAI. However, the high budgetary cost of the Vietnam War in the last few years of Johnson’s time in office helped put a halt to such a program.

Steensland notes that a proposed NIT would have added $5 billion to the federal government’s budget, while a program of family allowances (a payment for every child in every family) would have added $6–14 billion.

Steensland doesn’t point out just how high a number this was, so I will. Total federal spending in fiscal year 1967 was $158 billion; that means the cheaper program, the NIT, would have increased government spending by over 3%, and the most expensive version of the family allowance would have increased it by 9%.

Steensland claims that the escalating cost of the war caused domestic spending to contract sharply, but that’s not true: domestic federal spending increased even as the war’s cost rose. He mistakenly uses the fact that Johnson proposed a surtax on corporate and individual taxes as evidence of a shrinking budget for domestic spending: taxes are on the revenue side of the federal budget, not the spending side.

Nixon’s FAP / From the outset, Nixon wanted some kind of major overhaul of what he called “the welfare mess.” He was worried about poverty but also about more racial unrest. He couldn’t know then that the worst of the racial unrest was over.

Within days of being elected in November 1968, Nixon had appointed political scientist Richard Nathan, a researcher at the Brookings Institution, to run a task force to make recommendations about welfare. In its December 1968 report, the task force suggested incremental changes to the existing system. Once Nixon took office, a number of players within the administration, including holdovers from Johnson’s administration, weighed in on the various issues. Steensland does a great job of laying out each major faction’s concerns, viewpoint, and proposed policies.

At least four big issues divided the various advocates. The first was their view about why people were poor. Some believed that poverty was an inevitable result of being unable to find work in an increasingly technological workplace that required more skills. A 1964 report titled “The Triple Revolution” predicted that in the near future, 6 to 8 million jobs would disappear. When the report was published, 69 million Americans were employed in civilian jobs; by 1970 the number was up to 79 million. Oops. Others thought that the labor market would give work to anyone who wanted it, but that even some of those who got jobs would still be poor.

A second issue that divided them was their view of the deserving and undeserving poor. Some of the advocates didn’t think in those terms: if people were poor, whatever the cause, that was justification enough for the federal government to help them. Others saw a strong distinction: the deserving poor were the sick and infirm; the undeserving poor were those able-bodied people who weren’t working.

The third issue concerned rationality and paternalism. Some thought that the poor were capable of making good decisions for themselves; others thought that if the government gave them money, many would make bad decisions on how to spend it and on whether to work.

The fourth issue was dependence. Some advocates worried that an NIT or a GAI would create dependence, while others didn’t worry about that.

You can take one side or the other on each of the above issues. But as one of Nixon’s main advisers on welfare, Daniel Patrick Moynihan, became famous for saying, “Everyone is entitled to his own opinion, but not to his own facts.” I repeat the quote because Moynihan, in pushing for one version of a plan, told Nixon a whopper. In an April 1969 letter to Nixon, Moynihan wrote, “For two weeks’ growth in the Gross National Product you can all but eliminate family poverty in America.” Um, no. The typical annual growth rate in those days was just above 3%, so two weeks of growth was about 0.12% of GNP. Even the cheapest plan would have cost well over half a percent of GNP, which is more than four times Moynihan’s estimate.

One of the most interesting parts of Steensland’s narrative is his discussion of the role of White House staffers Arthur Burns (later chairman of the Federal Reserve Board) and Martin Anderson, a young economist who was instrumental in getting rid of military conscription. They disliked the idea of a GAI and an NIT on the grounds that the programs would lead to the view that welfare is a right. Burns also argued that it would reduce low-skilled workers’ incentive to work. On this issue I found Steensland to be particularly fair. He dismisses the idea that their arguments were “rhetoric cloaking economic interests.” He writes that they “had no contact with business elites” and did not “have any reason to dissemble.”

After listening to the various players, Nixon put together his Family Assistance Plan (FAP) his first summer in office and did a full-court press to get it into law. It was an NIT in which the loss of subsidy for every dollar of income beyond some level was 50¢, an implicit marginal tax rate of 50%. Families of four with earnings up to $3,920 would have been eligible for a government subsidy. The plan was set to begin in 1970 or 1971, when the median family income was just shy of $10,000.

Although Nixon’s proposed law passed overwhelmingly in the House, it died in the Senate Finance Committee, which voted it down 10–6. One reason was that conservative Democrats joined some conservative Republicans in voting against it. Another reason was that the National Welfare Rights Organization, a group supported by people on welfare, saw—correctly—that most of the benefits would go to the working poor, not to those who, like them, were already on welfare. They wanted more for themselves, plain and simple. As a result, three liberal senators voted against it.

In 1972 Nixon, running against George McGovern, wanted to distinguish himself from McGovern on the issue of welfare. McGovern had proposed a “demogrant” of $1,000 per person. It was, in essence, a GAI. Not everyone would get a check: the phaseout of the $1,000 would be complete when a family of four had a total income of $12,000. McGovern’s proposal met with so much flak that he backed down. But Nixon, seeing a chance to distinguish himself from his opponent, attacked the “ ‘welfare ethic’ that could cause the American character to weaken.” Steensland notes the irony: “It was Nixon’s proposal that would expand the provision of benefits to thirteen million additional people, while McGovern’s new plan [in place of the demogrant] would maintain the existing number of people on the rolls.”

Even though the FAP was dropped, it did leave a policy legacy. Nixon introduced Supplemental Security Income (SSI), a special welfare program for people who were elderly, blind, or disabled. And in 1975, President Ford and Congress started the Earned Income Tax Credit (EITC), a kind of negative income tax for people who are employed. The optics on both of these were very different from those on the FAP. SSI was viewed as giving help to some of the most deserving poor. The EITC was viewed as an incentive for people to work more, not less, even though past some income level the EITC would phase out, reducing the incentive to work.

Later efforts / When Carter became president in 1977, he pursued welfare reform. His marching orders to Joseph Califano, his secretary of health, education, and welfare, were to give options for comprehensive reform that would cost no more than the current system. Califano, responding to that directive, counted spending on a number of other government programs as part of his baseline so that he could give himself more running room to propose increased benefits or to extend benefits to a larger group.

With the tax revolt that began with the overwhelming passage of California’s Proposition 13 in June 1978, though, moves toward anything like a GAI or an NIT were dead. But the EITC was expanded in 1978 with little opposition. With the election of Ronald Reagan, the GAI and NIT were both dead.

In 1978, notes Steensland, the results of the NIT experiment came out and showed that the NIT reduced work by employed men by 5–10%, which was less than many people had feared. But the reduction for married mothers was 20–25%. Steensland claims that welfare critic Charles Murray used the results of the NIT experiment “in exaggerated ways,” but he doesn’t say how.

One striking result of the experiment was that marital breakups for participants receiving NIT benefits were 60% higher than for those in the control group. Interestingly, Steensland—who advocates a GAI or an NIT—expresses no concern about this. He devotes not a single word to the effects of marital breakup on children.

Because there is a renewed push today for some form of GAI—even some libertarians advocate it—there’s a lesson to be learned from Steensland’s book. Some libertarians claim that we could have a reasonable GAI by cutting all other means-tested benefits. This turns out to be false, as I showed in “A Philosophical Economist’s Case Against a Government-Guaranteed Basic Income” (Independent Review 19[4], 2015). But even if it were true, the Nixon proposal was for a major expansion of welfare spending with no offsetting cuts in means-tested programs such as housing aid and food stamps. The lesson: libertarians who push for a GAI will end up being in an alliance whose main constituents want more government spending. And that’s what they’ll probably get.