Recap
Poverty, income volatility, job instability, and lack of social mobility are real problems in the US. While most Americans manage to climb the socioeconomic ladder to achieve a decent version of the American Dream, some get stuck on the lower rungs in unreliable jobs with no future. They need help. In previous posts (here, here, and here), I proposed an Adult Student Basic Income (ASBI) that would effectively address these societal ills, plus boost labor market participation and labor productivity, all at manageable expense.
The ASBI I’m proposing would provide monthly stipends to adults enrolled at least part-time in approved postsecondary training and education programs, from ESL classes to apprenticeships to graduate school. Recipients would receive $1000/month up to six years total, as long as they are participating in an approved program of at least one month’s duration. The benefit would not be means-tested, so recipients could work as much as they want without jeopardizing ASBI payments.
How to Fund An ASBI
The ASBI would mostly pay for itself through reduced spending on other government programs, such as Federal Student Loans, Supplemental Security Income (SSI), Social Security Disability Income (SSDI), Temporary Assistance for Needy Families, Earned Income Tax Credit, and Medicaid. Pell Grants would be eliminated and many other safety-net programs would have smaller budgets because they are means-tested and anyone receiving an ASBI would either be ineligible for cash benefits, receive lower benefits, or have to pay more for benefits. An ASBI would not impact eligibility for some non-cash benefits such as housing and Medicaid, as well as any aid meant for children. However, ASBI recipients would have to pay somewhat more for their Medicaid premiums.
As for SSI and SSDI beneficiaries, if they are able to meet the minimum requirements of ASBI participation (part-time home-based training/flexible hours) and are under 62, they will not qualify for disability benefits unless they are ASBI participants or have used up their six years of ASBI. The value of the ASBI ($1000/month) would then be deducted from their benefit payments. However, the ASBI is higher than the maximum SSI benefit and much higher than the average SSI benefit ($551 in 2019), so individuals would make more money receiving an ASBI than being on SSI (and with fewer strings attached). As for the expense of education and training, there are plenty of free and inexpensive online and in-person classes offered through adult schools and community colleges that would be available to low-income ASBI participants, many of whom would also qualify for state aid to help with school expenses.
I’m going to guess that around 45 million Americans would receive an ASBI per year. That’s more than double the number of adults who attended college or vocational school in 2018 (per the US Census Bureau). Note that the figure of 45 million year-round ASBI recipients has the same dollar value as 90 million half-year recipients.
Assuming the equivalent of 45 million full-year ASBI recipients a year, here’s what the funding for an ASBI might look like*:
So how did I arrive at a cost of $2 a day in new taxes for the ASBI? Easy: tax increase of $216 billion divided by 328.3 million US residents = $658 = less than $2 a day/per Capita.
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* This is the April 2021 Edition. Earlier versions had somewhat different figures, which I update periodically to incorporate new information and considerations.
Links:
Student Aid Overview - US Department of Education
Federal Mandatory Spending for Means-Tested Programs