Well, in the first place, that's 8% of the federal budget, which seems like a pretty small price to pay for ensuring that everyone has a basic existence (minimal food/shelter). There are certainly stupider things we spend 8% of the federal budget on.

And in any case, one purpose is to be a replacement for the current piecemeal programs we have, which aren't cheap to begin with. Food stamps + Section 8 + EITC currently costs about $150 billion per year, plus some additional amount in bureaucracy and litigation due to complex rules, plus some additional economic damage caused by market distortion due to the fact that food stamps + section 8 aren't normal cash (EITC is better for that). That leaves maybe $100-150b, some of which is probably also redundant with existing welfare programs (I just picked three big ones), or about 3-4% of the federal budget.

If you want to keep it budget-neutral, how about an across-the-board 3-4% cut to all other budget categories in return? Or, we could just, as you point out, remove the temporary "overseas contingency operations" (Iraq/Afghanistan wars) supplement to the regular DoD budget, which is $125b in 2012, returning the DoD to its baseline budget. If I had a line-item veto pen I could pretty easily come up with another few hundred billion in savings if you'd like (cut agriculture subsidies, cut Medicare Part D, transition TSA/air-traffic-control to being fully user-fee-funded, do another round of domestic military-base closures through a BRAC-like process, etc., etc.). :)

I know you're just using it as comparison, but didn't the Iraq War start in 2003? And if this[1] is to be believed, the total cost of the war is ranging around $3.2-4 trillion. That's thirteen and a third years of your $300 billion scenario.

And it's not like that $300 billion just disappears into a black hole. Because poor people need it to live they are spending it immediately, which multiplies out across the economy, certainly more so than a war does. And I'm not even counting the human life cost of war. So yes, just giving people $10K a year isn't that bad considering what we have done.

I just love the thinking though: "we've spent all this money to kill people for no reason and now you expect us to feed Americans?!?!"

[1] http://costsofwar.org/

I think you answered your own question. Spend the money on on people instead of the military. I am a fan of TVA type government workfare. It is not close to perfect, but it is better than the MIC. I would rather have contracters skimming graft off of construction and litter cleaning and boarding schools (my pet solution to inner city collapse) and science labs and music and dance troupes,than off of bombs and desert deployments.