The American Prosperity and Stability Act¶

Policy Rationale¶

Published January 2026¶

Legislative Intent and Context¶

The American Prosperity and Stability Act (APSA) addresses the fundamental instability at the heart of American economic life: the structural precarity that prevents most households from planning beyond the immediate future. Despite extraordinary national wealth, nearly half of American adults lack savings to cover three months of expenses. While most can handle a single emergency, they have no buffer against job loss, illness, or sustained disruption -- leaving them trapped in financial survival mode, unable to plan or invest in their futures. This is not a personal failing -- it is a design flaw in how prosperity is distributed in a modern economy.

The APSA establishes the American Prosperity Stability Payment (APSP) -- a stable monthly income floor for every eligible adult -- funded by the American Prosperity Contribution (APC), a broad-based contribution on goods and services sold for domestic use. Together, they create a stability infrastructure analogous to Social Security, but operating during the working years when families are formed, careers are built, and futures are determined.

This is not redistribution. It is shared investment in the material conditions necessary for freedom, democratic citizenship, and human flourishing.

I. Rationale¶

1. Economic Precarity as Structural Problem¶

American economic policy has long assumed that growth alone ensures widespread prosperity. This assumption has failed. Productivity has grown. Corporate profits have grown. Yet household financial stability has eroded. The benefits of growth concentrate upward; the risks of daily economic life shift downward onto individuals and families.

When households lack the financial runway to weather setbacks, the future collapses into the present. People cannot plan, invest in education, relocate for opportunity, or start businesses. They survive rather than thrive. This precarity expresses itself politically as fear, resentment, and democratic fracture.

The APSP addresses precarity at its structural root: the absence of a stable income foundation.

2. Broad Coverage Prevents Stigma and Strengthens Political Durability¶

Means-tested programs create stigma, administrative burden, and political vulnerability. They divide the electorate into "taxpayers" and "beneficiaries" -- a division that invites backlash and retrenchment.

The APSP reaches approximately 90% of American adults -- everyone below the clean exit threshold of 10x the Federal Poverty Level (~$150,600). There is no application process beyond simplified filing. There are no eligibility hurdles, no intrusive verification procedures, no benefit cliffs that punish work or marriage.

Broad coverage creates a massive political constituency. Attacking the APSP means attacking most Americans. This is the logic that has protected Social Security for generations. The APSP extends that protection to working-age Americans.

The 90% threshold is structural armor. When nine in ten voters receive direct payments, dismantling the program becomes politically untenable regardless of which party controls Congress.

3. Work Incentives Through Stability, Not Coercion¶

Traditional welfare programs phase out benefits sharply as income rises, creating effective marginal tax rates above 50% -- sometimes above 70%. This punishes work and traps households in poverty.

The APSP uses a smooth benefit adjustment that never creates cliffs or traps. As income rises, the income-adjusted stability payment tapers gradually using a concave (logarithmic) formula -- but never so steeply that working more leaves families worse off. The APSP ensures that additional earnings always improve household financial position.

Moreover, the APSP strengthens labor market outcomes by reducing desperation. When workers have a stable income foundation:

They can reject exploitative wages and conditions
They can invest in education and retraining
They can relocate for better opportunities
They can negotiate from a position of strength

This is not a reduction in labor supply. It is an improvement in labor market efficiency. Workers match to better jobs. Wages rise to reflect actual productivity rather than desperation. Businesses that rely on coercion rather than competitive wages must adapt or fail.

4. Macroeconomic Stabilization Through Automatic Demand Support¶

Recessions are driven by collapsing demand. When households lose income, they cut spending. Businesses respond by cutting investment and employment. This creates a downward spiral.

The APSP is a powerful automatic stabilizer. Because APSP payments are funded by the APC -- which is proportional to economic activity -- the system naturally absorbs shocks:

In recessions, APC revenue declines, but automatic benefit adjustments rise as incomes fall
In expansions, APC revenue rises, funding the system as household incomes recover

The Stability Buffer -- a reserve fund built during good times -- ensures that APSP payments never decline during downturns. This prevents procyclical cuts that worsen recessions.

Stable household income creates stable consumer demand. Stable demand enables rational business planning. Rational planning supports employment stability. This feedback loop reinforces economic resilience.

State governments face chronic revenue instability. Sales taxes collapse during recessions precisely when demand for public services rises. Income taxes are similarly volatile. This forces states into procyclical budget cuts -- laying off teachers, delaying infrastructure, and cutting services when they are most needed.

The APSA directs 20% of APC revenue to states through a pure population-share formula. At full implementation, this provides approximately $312 billion annually -- substantial resources distributed transparently based on the number of residents each state serves. This allocation:

Provides stable revenue across business cycles
Enables predictable resources for long-term planning
Uses a completely transparent formula (population share) that every state can verify
Creates democratic accountability at the state level for allocation decisions

II. Benefit Structure Rationale¶

The Two-Component Design¶

The APSP uses a two-component structure: a baseline payment ($200/month) plus an income-adjusted stability payment (up to $428/month). This design serves distinct purposes:

The baseline payment creates broad political constituency:

At $200/month ($2,400/year), the baseline is large enough to be meaningful to recipients across income levels
It ensures the program is genuinely nationwide -- visible to middle-income voters, not just the poor
It alone covers typical APC contribution burden for households earning up to ~$50,000
It establishes political durability similar to Social Security's universal structure

The income-adjusted stability payment concentrates additional support where need is greatest:

Maximum $428/month ($5,130/year) at zero income
Uses logarithmic taper that protects middle-income recipients from steep phase-out rates
Phases out completely at stability exit threshold (7x FPL, ~$105,420)
Ensures deep poverty receives substantially more than middle-income recipients

Combined maximum benefit of $628/month ($7,530/year) -- anchored at 50% of the Federal Poverty Level -- provides meaningful support for those with no other income while remaining below levels that would substantially replace work income.

The Minimum Payment Guarantee¶

The APSA establishes a flat $200/month baseline for all recipients below the clean exit threshold. There is no taper -- everyone who qualifies receives at least $200/month.

This design:

Eliminates complexity: No calculations needed for baseline-only recipients
Creates clear messaging: "Everyone who qualifies gets at least $200/month"
Enables broader coverage: Extends payments to 90% of adults with simple administration
Maintains clean exit: Benefits end entirely at 10x FPL, avoiding gradual phase-out confusion

III. Coverage Expansion Rationale¶

Why 90% Coverage?¶

The APSA sets the clean exit threshold at 10x FPL (~$150,600), covering approximately 90% of American adults.

This expansion serves several purposes:

Political durability: When nine in ten voters receive payments, the program becomes structurally defended. A future Congress hostile to anti-poverty measures would still face the reality that 90% of their constituents benefit directly.

Coalition breadth: Professionals earning $130,000 now receive the $200/month baseline payment. This expands the constituency beyond "poor people" to include suburban swing voters.

Messaging clarity: "Nine in ten Americans receive payments" is a powerful political frame. Even those above the threshold benefit from state investments funded by their share.

IV. APC Rate and Revenue Rationale¶

Why 12%?¶

The 12% APC rate was carefully calibrated to achieve several objectives:

Match program needs: Federal revenue (~$1.25T) covers full program operation with appropriate buffer
Reduce contribution burden: The rate is lower than most European VAT rates
Create clean number: 12% is easier to communicate than alternative rates
Generate surplus for stability: Maintains adequate reserves for bridge payback and buffer contributions

Phase-In Schedule¶

Phase	APC Rate	Timeline
Launch	6%	Years 1-2
Expansion	9%	Years 3-4
Full	12%	Year 5+

This maintains consistent scaling while reducing burden at every phase.

V. Bridge Period Funding Rationale¶

The Core Problem: Fiscal Chicken-and-Egg¶

The APSP requires APC revenue. The APC requires time to implement. People in precarity cannot wait.

This creates a fundamental timing problem: the program cannot reach people until it has funding, but the funding cannot reach full scale until the program is operational. Traditional approaches would delay benefits until revenue infrastructure is complete -- potentially 18-24 months of nothing while the APC ramps up.

The Solution: Hybrid Bridge Funding¶

The Bridge Period funding mechanism solves this problem through a three-component hybrid:

Component	Share	Rationale
Bounded Deficit (40%)	Treasury borrowing capped at $400B	Enables immediate funding without unlimited fiscal exposure
Bridge Taxes (30%)	Progressive income/corporate taxes	Creates immediate progressive revenue; demonstrates fiscal seriousness
APC Pre-Collection (30%)	Early APC at 3-4%	Builds APC infrastructure while generating revenue

Why Not 100% Deficit?¶

Pure deficit financing would invite fiscal criticism and undermine political credibility. The bounded deficit component ($400B cap) provides necessary flexibility while demonstrating that APSA is not simply "printing money." The statutory payback requirement ensures that Bridge Period borrowing is investment, not permanent expansion.

Why Not 100% Upfront Taxation?¶

Pure taxation before benefits would delay delivery and create political opposition. The bridge tax component provides immediate progressive revenue while the full system builds -- but does not delay benefits until taxes accumulate.

Comparison to Prior Federal Interventions¶

Program	Duration	Total Cost	Funding	Payback
COVID Economic Impact Payments	~13 months	~$931B	100% deficit	None
APSP Bridge Period	~24 months	~$900B	Hybrid	Statutory requirement

The APSP Bridge Period is comparable in scale to proven federal interventions -- but with superior fiscal architecture. This is not emergency spending without an exit. It is investment in infrastructure that pays for itself.

VI. Summary¶

The American Prosperity and Stability Act represents careful policy design optimized for multiple objectives simultaneously:

Broad coverage (90%) creates political durability through massive constituency
$200 baseline provides meaningful benefit to middle-income recipients
Income-adjusted stability payment concentrates additional support where need is greatest
12% APC rate funds the program with appropriate surplus while staying below European rates
State revenue sharing (20%) creates coalition alignment with governors and state treasuries
Bridge Period funding enables immediate delivery without fiscal recklessness

The result is a program that reaches more people, provides a higher guaranteed floor, and costs contributors less -- better outcomes for recipients with reduced political attack surface.

Shared contribution. Shared prosperity. Shared stability.

Prepared by: Albert E. Ramos Director, The American Policy Architecture Institute

Contact: info@policyarchitecture.org Website: www.policyarchitecture.org