Alaska Gives Every Resident Cash Each Year. Could The Program Work Nationwide?

A new report on a "social wealth fund" could be the framework for the future of the United States.

Matt Bruenig's concerns about the economy have grown alongside the explosion of America's wealth in the last few years.

The lawyer, policy analyst and progressive blogger doesn't see an American economy that's firing on all cylinders: he sees an economy that has unevenly distributed wealth to the very top. And in a new paper released by The People's Policy Project, an organization Bruenig founded, he proposes a radical idea to solve that inequality: a "social wealth fund."

"Wealth is way, way more unevenly distributed than income," Bruenig said in an interview with A Plus. "80 percent of U.S. wealth is owned by millionaires. The bottom third, collectively, own no wealth. That is to say, their assets and their debts are off-setting and bring their net worth to zero."

That inequality has caused a host of problems in America, according to Bruenig. He says it distorts our politics in a way that the needs of the most wealthy are addressed first. It leaves people in the middle and bottom of the economy feeling insecure about their financial situations, as they have little or no savings and no assets. And, perhaps most importantly, wealth inequality seeps into income inequality.

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"One of the reasons why income inequality is so high is that if you own wealth, you get income," Bruenig explained. "That's the charming aspect of owning wealth. Wealth gets you money."

As Bruenig put his mind toward finding solutions for this problem, he focused on Alaska, where one of the most popular government programs in the United States exists. For the last 35 years, people living in Alaska have received an annual check from their state government just for being residents.

The Alaska Permanent Fund works by levying a tax on the extraction of gasoline, a natural resource that is abundant in Alaska. Revenue from the tax is stored in a fund that invests in a portfolio of stocks, bonds, and real estate, among other ventures. Each year, as that portfolio grows, the state of Alaska pays out dividends from the fund evenly to Alaskan residents. With an annual investment return of 8.78 percent, the payoff isn't too shabby: some years have paid out dividends as high as $2,072 to its more than 600,000 citizens, or $8,288 for a family of four. 

Alaska residents pose for a family portrait.
Alaska residents pose for a family portrait.

In 2017, the payout was only $1,100. This year, the check was for $1,600. Both were lower than planned after Gov. Bill Walker's decision to use the state fund that supplies the checks to fill a budget gap. Alaska's budget took a hit after oil prices plummeted in 2015, and Walker's decision to fill the budget gap with money from the permanent fund dividends was a controversial one — he is now facing a tough re-election in November, and the Alaska Permanent Fund is a headline issue.

According to Bruenig, such a program could be replicated by the federal government and implemented nationwide. 

"The federal government has a somewhat easier go of it because they do have the same kind of resource potential," Bruenig told A Plus.  "They own lots of federal lands, which have a lot of mineral resources. They could follow the Alaska model. But the other thing they could well is they could levy taxes on very affluent people."

In his paper, Bruenig elaborates on the ways the federal government could start and operate the fund, which he calls the American Solidarity Fund. 

As with any social wealth fund, money and assets would be put into the fund and a public entity — in this case, the Treasury Department — would manage those funds and create an investment portfolio. The returns from the portfolio would be used to pay dividends to each citizen in the United States each year.

Bruenig suggests a combination of ideas to raise money for the American Solidarity Fund: He proposes nine different potential levies and taxes on corporations or the super-wealthy, like inheritance and gift taxes or a market capitalization tax. He says the federal government could also donate its assets or, alternatively,  borrow money at low interest rates and invest in the stock market.

Bruenig's plan also includes opening the door for voluntary contributions, or donations from the wealthy, which he says is a surefire way to bring in additional revenue from a group of Americans who tend to be philanthropic.

Bruenig points to Norway's successful social wealth fund, as well as the state funds in Alaska, Texas, Utah, and Oregon as examples of how such a fund could succeed. Still, a plan like the American Solidarity Fund is radical by most standards. Many politicians in the United States would immediately label the idea socialism, while others would be totally adverse to any proposal that includes more taxes or more government control of capital. 

Bruenig, though, is not phased by the detractors. 

"What we know is that it works," Bruenig said. 

In his paper, Bruenig points to the numbers. Receiving $8,000 in dividend payments increases the income of an Alaskan family with $20,000 in earnings by 40 percent and the income of a family with $200,000 by four percent. That outcome alone has helped Alaska become the most wealth-equal state in the country, as of 2016. 

Storefronts in Seward, Alaska
Storefronts in Seward, Alaska. Joseph Sohm / Shutterstock.com.

Expanding a program like the one in Alaska may be a long shot in the near future, but Bruenig's paper — and his advocacy  — could be laying the groundwork for such a program down the road. There are politicians interested in the idea already, Bruenig says, though none are ready to come out publicly and support it. His path forward is to find one politician who will proudly put their name on the plan and then rally others to join them when the public support for such a plan grows. 

That may not be so unrealistic; in Alaska, the social fund enjoys immense support. 40 percent of Alaska residents say the dividends make a "great deal or quite a bit of difference in their lives." 39 percent say it makes a "fair amount or only some difference," and only 20 percent says it makes no difference. Mothers with children, women without college degrees and native Alaskan women are among those who say they benefit the most. 78 percent rate the fund favorably.

"I think I have a good shot at that [getting a politician on board], especially after the next election," Bruenig says. "We have a few people coming into Congress who are left-wing and not afraid of the socialist label."

Cover image via RUBEN M RAMOS / Shutterstock.com.

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