The Problem

“The graying of America means that the portion of people who are of prime working age is getting smaller, with fewer workers available to fill open positions, ultimately reducing productivity, straining the federal budget, and slowing economic growth.” – Antonioli, J., & Malde, J. (2023)  

“…between inflation and the growing federal debt, interest payments on that debt are gobbling up a larger share of federal revenue every year. Per the Congressional Budget Office (CBO), annual net interest costs would total $663 billion in 2023, and by 2053 interest costs on that debt are projected to be nearly three times the amount the federal government has historically spent on R&D, infrastructure, and education combined.” - Exploring the Problem Space: How to Gradually Lower the Federal Debt, Part I

“Rising interest payments can crowd out other priorities in the federal budget and lead to a cycle of higher deficits, growing debt, and even more interest payments in the future…As interest costs rise, so too will the gap between federal spending and revenues. In fact, CBO [Congressional Budget Office] projects that interest costs alone will account for 38 percent of federal revenues by 2053, significantly exceeding the level of 10 percent recorded in 2022.” - Peter G. Peterson Foundation

The Solution

  1. Raise Tax Revenue (addressed in Part I)

  2. Cut Spending (addressed in Part II)

  3. Grow the Economy

  4. Fix the Political Culture

The Formula: Economic Growth = Higher GDP = More Tax Revenue = More $$$$ to pay down the Debt

One Way to Grow the Economy: Promote Adult Education and Training

About a quarter of Americans lack basic skills, defined by the IMF as “the skills necessary to participate productively in modern economies”. The US also suffers from a severe labor shortage:

This is a problem of employability. Too many Americans lack the experience, knowledge and skills that employers want. On the individual level, lack of employability is associated with unemployment, poor job performance, and low wages. When widespread, a lack of employability negatively impacts a country’s labor productivity, standard of living and its potential for economic growth. Increasing the people’s employability boosts productivity, standard of living and economic growth, which translates to higher tax revenues for paying down the federal debt. So how can the US increase the employability of its people?

By paying Americans to upgrade their experience, skills and knowledge, thereby enhancing their overall employability and productivity, what I call an Adult Student Basic Income (ASBI). Go here for more info on how the ASBI would work. As for funding:

The modest tax increase would be more than offset by the ASBI’s positive impact on business conditions, economic growth, social mobility, and household income. What’s not to like?

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Note: This funding scenario is intended as a “proof of concept” for how the ASBI could be financed. The figures are very rough approximations, based on 2021 and 2022 research. The ASBI would be $800/month up to nine months a year, no more than 18 months total. A “person-equivalent” is the equivalent of one person attending school or training nine months in one fiscal year. However, many ASBI recipients would attend short-term programs, such as coding bootcamp or truck driver training. If three students each completed training in three months, combined they would be the equivalent of one person attending for nine months. Thus, 16 million person-equivalents would likely represent considerably more than 16 million actual persons. This scenario entail budget cuts in Pell and SEOG grant program. It also projects smaller budgets for other means-tested programs, because the ASBI counts as income and individuals who would otherwise have been eligible for a means-tested program could lose eligibility or full benefits if they receive an ASBI. This scenario assumes some individuals would choose an ASBI over other benefits, because the monthly ASBI stipend is comparable to what is provided through other programs, plus allows recipients to work without jeopardizing their payments as long as they are able to meet ASBI participation and performance requirements. The funds “saved” from existing programs add up to $59 billion available for funding the ASBI.

However, an ASBI would not be counted as income for some means-tested programs, including housing vouchers, childcare subsidies, Medicaid, and CHIP (Children's Health Insurance Program).