Monday, September 7, 2020

Tuesday Money rules condensed (1 of 3) - Model UBI

Tuesday Money rules - Model UBI

UBI Stipend Rules - post 1 of 3 

In this post (1st of 3) we condense description of main rules and parameters proposed in:
Tuesday Money - full description (PDF, 7 pages).
Here we address the Tuesday Money stipend itself.

For purposes of this model, each person in the US is either adult (18+) or child (< 18).
All persons lawfully present in the US are entitled to a certain share amount, which
is a fraction of the "full" UBI share accorded to all resident citizen adults.  
In this model, all payments are made by a hypothetical banking entity called CMB,
which offers recipients a choice of either weekly direct bank transfer, or low fee debit/ATM card.
In either case we say the eligible recipient has a CMB account.  Eligible recipients must register 
to create this account, and no retroactive payments will be credited for the payment prior
to registration.  In our model, payments are made weekly, on Tuesday, unless it is a banking holiday in which case payment is made the next banking day.    In our model, we expect the UBI payments
to be entirely equal for all persons within a limited number of  legislated categories. 
The categories are determined entirely by age and US residency + citizenship status. 
For more information see Condensed Rules on Eligibility 3-of-3.

 100%  TM citizen adult share - adult citizen resident, while in US. (See "resident absences", page ___).
 70%  TM resident adult share - adult legal resident, noncitizen, while in US.
TM resident child shares - based on #children in household, residing with guardian receiving UBI.
    60%  - 1st child in household,  55%  - 2nd child,  51%  3rd,  48%  4th,  46%  5th,  45%  6th+

Retirement status is not used in this level; see page _____  for relationship to FICA program

 25%   TM visitor adult share - small allocation to documented adult visitors staying more than  91  days in the US.  Allows legal enrollment for small benefit to guest workers, students
and other longer term visitors. 
 12%   TM visitor child share - modest allocation to documented long term child visitors.

4) No Taxation or Garnishing of UBI stipends
a) Tuesday Money UBI stipend payments are generally not taxable by federal, state, or local governments.
b) Stipend payments are reported as a separate line item of income on IRS form 1040, but this income is not subject to any federal taxes.
c) Tuesday Money stipend payments made to a CMB account are not subject to withholding or garnishment by any authority. 

III) Stipend Budgeting Rules of US CMB 

1) UBI 100% weekly stipend amount is determined by an appointed CMB oversight board, subject to the general rules in this section. 

2) By law, weekly stipend rates may never be decreased.
a) Weekly stipend rates may be held constant by CMB for any number of quarters or years, depending upon overall economic conditions. 

3) By law, CMB is not permitted to make temporary increases in UBI rate.
a) If the U.S. congress and president create laws and appropriations authorizing additional payments to particular US residents, they may use CMB as a vehicle for such payments, but this payment may not be defined as or commingled with Tuesday Money UBI. Preferably, any such payment should be made on a different banking day (not on Tuesday). 

4) Announced quarterly increases in UBI 100% weekly payment rate take effect on the first Tuesday payments in February, May, August, and November.
a) The rate increase (possibly 0) for following quarter is announced on a Wednesday exactly 41 days before the increase becomes effective (i.e. in mid-Dec, Mar, June, Sept). 

5) CMB cooperates with Federal Reserve governors in pursuing targeted rates of money supply growth, real GDP growth and related inflation metrics. 

6) While maintaining currently presumed inflation targets at about 2% annual (~= 0.5% per quarter), it is expected that the Tuesday Money weekly UBI rate may (at CMB’s policy discretion) initially grow by up to 1.5% in a quarter, up to 5% total in a year, and up to 18% total over 5 years.
a) In a period where measured inflation is above targets, UBI increases will be smaller, possibly 0%, but never negative.
b) In a period where measured inflation is below targets, UBI increases will be higher, but usually not more than 2% in a quarter and no more than 5% annually. 

7) It is proposed that the initial 100% UBI rate beginning on Tuesday May 4, 2021 be set at a payment of   $175   per week, based on guesstimated calculations of expected aggregate and household impacts discussed in sections III and IV. 

8) CMB is funded as a legally mandatory spending obligation of the US Federal Treasury, not subject to congressional appropriations process. 

9) UBI spending by CMB is treated as an ordinary budgetary expense of the U.S. federal government, and thus contributes to federal budgetary “deficits” under federal budget accounting rules as of 2019-Q1.

IV) Offsetting Monetary Accommodation and Fiscal Budgeting

1) Generally sovereign money (i.e. federal only) spending on UBI is modeled as supportive of individuals, economy and society, with real support increasing with stipend size, up to an equilibrium region of economic dynamics.
a) Once stipend levels reach this zone, then UBI should increase only slowly, in real terms, at roughly the same rate as growth in productivity of the total economy

2)  Each of the following actions can serve such an inflation-reducing offset to UBI. 
In our model both these elements may be quantified separately, without any assumption that these amounts should fully cancel each other.
a) Collection of excise carbon fees, starting at a fee of $____ per ton.
i) Carbon fees increase consumer prices for carbon-intensive goods, but also progressively shrink the carbon-dependent share of the economy, while pulling money into the federal treasury (deflationary).
ii) Carbon fees per-ton are expected to increase over time, but further details of that policy are not defined in this model.
iii) The combination of carbon fees with UBI is often referred to as “Carbon Fee and Dividend”. 

b) Monetary policy adjustment by Federal Reserve, through interest rates and reserve requirements.
i) The Tuesday Money stipends may be partly funded in terms of “Quantitative Easing for People”.
ii) We expect this investment to lead to growth in both real GDP and productivity.
iii) Depending on all the choice-parameters in this model, there could be net inflationary (or deflationary) pressure on the national economy. The Federal Reserve is expected to maintain its own policies of tightening and accommodating in order to mitigate such pressure. 

See additional offsets in our Reconciliation Rules post (2nd in this series) 

3) In crude terms all these actions in subsection IV.2 may be said to help finance or “pay for” UBI spending, although we recognize the following caveat:
a) Like UBI itself, each such change in spending, taxation, and monetary policy may have its own impacts on demand, wages, employment. 

4) Overall these revisions to federal spending and revenue are intended to result in a federal government that is both simpler and more effective in serving the people. 

For a more detailed treatment, please see:
Tuesday Money - full description (PDF, 7 pages)

The remaining rules are summarized in posts 2 and 3 of this series