A Silicon Valley Lawmaker’s $1 Trillion Plan to Save Trump Country
The Trump Administration may not believe that automation threatens today’s American workforce, but try telling that to a travel agent or a truck driver or a factory worker or an accountant. One recent study found that for every one robot introduced to the workforce, six related human jobs disappear. But those six humans still need to get by.
That's why many Silicon Valley leaders, even as they innovate entire industries and livelihoods out of existence, have started gravitating toward a not-so-new concept: basic income. Under the idea, the government would provide every citizen with a stipend, no strings attached. Especially in times of economic upheaval, when technological change is both rampant and unpredictable, the thinking goes, a basic income would ensure a baseline of stability.
Now the Valley’s newest congressional representative is bringing the idea to Washington, to the tune of $1 trillion. Democrat Ro Khanna of California's 17th district—home to companies like Apple and Intel—would seem to have little chance of persuading the most conservative Congress in memory to blithely give away so much money. But there's a wrinkle: The biggest beneficiaries wouldn't be Khanna's well-heeled constituents in Cupertino or Santa Clara. It's President Trump's core supporters in rural America who would have the most to gain.
Khanna is preparing to introduce a bill that he calls "the biggest move in orders of magnitude" toward providing a basic income in the US. Specifically, it proposes a $1 trillion expansion of the earned income tax credit, which would roughly double the amount of money going into low-income families' pockets. The main difference between Khanna's plan and the Silicon Valley utopianists' version of basic income is that for now recipients would still have to have a job to qualify. Think of it more as a basic income warm-up.
Khanna, a former Stanford economist who briefly worked for the Commerce Department under President Obama and supported Bernie Sanders for president, knows Congress will probably (ok, definitely) never go for it. For now, that’s fine by him. You could think of his plan as a kind of political moonshot.As with Google Glass, it's a bold idea that may not catch on in the mainstream. But simply injecting the idea into public conversation propels it forward until people finally find it palatable (hello, Snap Spectacles).
"The criticism of the Democrats in the past is that they were too timid. They ran on consultant-driven platitudes and didn't offer a compelling enough vision," Khanna told me as he sipped cappuccino from a paper cup inside New York's Chelsea Market building one crisp morning in March. "As we saw with this election, people are attracted to bold clear ideas."
But the boldest part of Khanna's plan isn't merely what it will cost a budget-conscious Congress. According to the Tax Policy Center, which assisted Khanna in crafting this bill, this plan would compensate the bottom 20 percent of earners for wage stagnation dating back to 1979. Currently a family with one child earning below a certain income threshold receives a $3,400 earned income tax credit. Under Khanna's plan, they would get roughly twice that. The more kids you have, the more money you get. And you don't need to dig too far into a map of average incomes across the US to see where that 20 percent lives. Hint: It ain't Silicon Valley. Instead, the plan, if it worked as promised, would especially benefit states like Arkansas, Mississippi, and West Virginia—in other words, Trump Country.
Coders in Coal Country
Khanna became Silicon Valley's newest voice in Washington in November after ousting incumbent Mike Honda, a member of Congress since 2001, in an acrimonious primary. It was Khanna’s second time running, and his insurgent campaign earned support from techies like Facebook's Sheryl Sandberg, Google's Sundar Pichai, and yes, even billionaire Trump supporter Peter Thiel, who admired Khanna's attempt to unseat a career politician. "Peter Thiel and I disagree on 99 percent of things," Khanna said stiffly, aware of the seeming contradiction that a devout libertarian like Thiel would contribute to his campaign. "But he wants robust, spirited debate."
Support for basic income also doesn't break down along the usual party lines. The idea of a guaranteed income originated with libertarian economist and Reagan administration advisor Milton Friedman, who called it a "negative income tax" and argued it would "dispense with the vast bureaucracy" that dictates welfare programs. At the same time, some progressives argue that basic income would undermine need-based welfare programs and the more important priority of creating jobs.
'This idea you’re going to take a 50-year-old coal miner and turn them into a software engineer is ridiculous. That’s sometimes how the Democratic message came out.'
During his short stint in office so far, Khanna also has not followed the most conventional path. For a congressman whose district is home to billionaires and boasts a median annual income of more than $111,000, he has shown an unusual fixation on crafting policy for the country's rural poor. For too long, he says, the tech industry has not heeded President Kennedy's call to "ask not what your country can do for you." Over the years, the industry has done a lot of asking: for regulatory changes, for high-skilled worker visas, for privacy protections, for net neutrality, for patent reform. To be sure, all of those things help the tech industry thrive. But Khanna says the November election reminded tech leaders that America is a big country, and the tech sector needs to use its power to help Americans who live outside of the industry's narrow, coastal enclaves.
"They don't want a populist backlash," Khanna said of his constituents. "They don't want a country divided by place."
Khanna believes there's little the tech industry can do about such divisions if its leaders continue to cling to the coasts. Shortly after taking office, Khanna traveled to Paintsville, Kentucky, to check out a program that teaches people in Appalachia, many of them the children of coal miners, to code. It also connects them with jobs once they finish. Scaling such programs will be critical to equipping the next generation with the skills they need in a tech-centric economy. At the same time, Khanna acknowledges that Democrats especially can't rest on the notion that code can fix everyone's economic woes. Certainly older workers who bought into President Trump's message about reviving manufacturing didn't buy it.
"This idea you're going to take a 50-year-old coal miner and turn them into a software engineer is ridiculous," Khanna says. "That’s sometimes how the Democratic message came out."
A Not So Modest Proposal
Khanna believes expanding the safety net through the earned income tax credit, a kind of basic income precursor, could help provide more comprehensive support for people caught up in the economic turmoil spurred by automation. And in that, he's not exactly alone. Last year, President Obama and House Speaker Paul Ryan both proposed expansions of the credit that would benefit childless workers. But the more radical idea of a basic income—which is to say, giving away free money—has failed to take hold in the United States especially, as lawmakers fear it would dampen people's incentive to work.
Even Khanna agrees these kinds of subsidies should be tied to work. It's a less radical approach to a basic income, which is why there are optimists like liberal economist Robert Reich who believe Khanna's plan might just have a shot, particularly at a time when Trump's base comprises the people would seem likely to benefit most. "Unless the party has become brainlessly ideological, one would think that this concept would appeal to many of them," says Reich, who has also been working with Khanna on the plan.
The congressman holds no such illusions. Not only would it cost $1 trillion—a hard sell as the Trump administration is gutting the federal budget—but Khanna proposes paying for it with a financial transaction tax, even as the administration rolls back Wall Street regulations. But getting a bill passed isn't really the point. Khanna says Ryan gave Democrats a blueprint for how to operate as the opposition party, and now that the Democrats are out of power, he's following it. "He was proposing budgets into the wilderness," Khanna said of Ryan's approach, "but then they became a real part of the conversation."
For Khanna, the Democrats lost in 2016 because they failed to lay out a clear vision. Whether or not the party ultimately gets behind basic income as part of that vision, Khanna believes Democrats must say what they're for, not just who they're against. Until they win back power, most Democratic proposals will remain hypothetical. They might as well be daring, too.