College Students Are Up To The Fiscal Challenge

University of Iowa Students Win National Fiscal Challenge with Innovative Budget Plan

This week on Facing the Future, host Bob Bixby along with Concord Coalition National Field Director Phil Smith, spoke with the winning team of this year’s Fiscal Challenge competition from the University of Iowa. The Fiscal Challenge is an annual contest where college teams from across the country design and defend plans to put the federal budget on a sustainable path, tackling the daunting task of stabilizing the national debt over a 30-year horizon.

The University of Iowa team, led by faculty advisor Professor Alexandra Nica, impressed the judges with a comprehensive and thoughtful approach to fiscal reform. This was their first time competing, yet they managed to win the national championship with a plan that mixed tough policy choices and values-based trade-offs.

Learning Beyond the Classroom

Dr. Mike Aguilar, founder and president of the Fiscal Challenge and an economics professor, explained the educational philosophy behind the contest. “I want them to learn in a way that’s different than the classroom,” he said, emphasizing that the challenge encourages students to think analytically about stabilizing the debt-to-GDP ratio. Aguilar also highlighted the real-world relevance of the problem: “Hopefully, if they didn’t really see that before starting this journey, they understand it and feel it now, that daunting challenge we have before us.”

Alexandra Nica, the team’s faculty advisor and Director of Undergraduate Studies in Economics, described the experience as “amazing” and “very intense,” noting that the students dedicated many hours over several weeks to develop their plan.

The Team and Their Innovative Approach

Phil Smith, who served as the event moderator, described their Olympic-themed approach, where each policy area was represented by one of the Olympic rings. The students even graded themselves with gold, silver, and bronze medals based on how well they believed their policies would perform.

The team consisted of eight students, each responsible for different parts of the budget plan. Thi Nguyen and Emma Kajtazovic tackled demographics, immigration, and childcare. Tim Ottesen focused on Social Security, while Jack Kuehl covered defense and AI-related revenue proposals. William Lynott Hawbecker led the tax reform section, and Kasey Ludlow handled healthcare. Brent Lumpkin and Abigail Morf served as alternates ready to step in on any topic.

Nguyen explained the core problems the team addressed: “What really stood out for us was the huge amount of interest that we pay, and how much that would be over the next 30 years. At the same time, we also have a demographic problem in that we have an aging population. The Social Security Trust Fund is going to run into problems really soon, and on top of that we have an unaffordable healthcare system, so those were the core drivers of our decisions.”

Tackling Social Security and Demographics

Tim Ottesen explained the team’s approach to Social Security reform, which involved both increasing revenues and reducing benefits for higher-earners. Their key revenue measure was an expansion of the employer-side tax to include all cash wages and fringe benefits, such as health insurance and stock options. Ottesen emphasized the equity considerations. “We stayed away from options like raising the retirement age, which disproportionately harms blue-collar workers that can’t afford to take those reduced benefits by retiring early, and quite frankly, don’t live as long post-retirement as higher-income individuals do,” he said.

The team also recognized the importance of immigration as a solution to demographic challenges. Ottesen stated, “Our goal was to be able to offer these benefits to the immigrants paying into the system, while capitalizing on the new income we’re bringing in from them.” This approach helped address the looming insolvency of the Social Security Trust Fund while supporting economic growth.

Healthcare and Cost Containment

Healthcare was another major focus, with Kasey Ludlow explaining the team’s strategy to lower costs without raising revenues. “We wanted to really focus on bipartisan solutions that have had support from both parties in the past. And then, on top of that, we wanted to focus on increasing transparency in healthcare. A lot of times, there’s black boxes of pricing. You don’t know exactly what you’re going to pay until you have to pay it,” he said. The team cut costs by adopting site-neutrality payments between hospitals and doctors’ offices, reducing Medicare Advantage overpayments and reforming payments to pharmacy benefit managers.

Tax Reforms and Environmental Considerations

William Lynott Hawbecker, who led the tax proposals, explained their use of a carbon tax combined with deregulation in the energy sector to balance environmental goals with economic growth. “We found that using a carbon tax would allow us to disincentivize some of the negative impacts on the environment… And then we paired our carbon tax with some deregulatory policy that would increase the speed of investment within the energy sector,” Hawbecker noted. This balanced approach aimed to foster investment in cleaner energy sources while mitigating potential economic harm.

He also stressed the importance of efficient tax collection: “Another big portion of our tax policy was our reinvestment in the IRS. For every dollar you give to the IRS, we tend to see around a $6 return on that.”

Political Feasibility and Public Education

The team was acutely aware that technical soundness alone would not be enough; political feasibility was critical. Emma Kajtazovic highlighted this challenge: “The majority of Americans do support a BRAC-style commission for Social Security reform, and I believe that was a really good point to push us to the national championships.” The BRAC model (Base Realignment and Closure), used historically to close military bases, involves a commission whose recommendations Congress can only accept or reject, simplifying politically difficult decisions.

Brent Lumpkin, an alternate team member, spoke about the importance of public education to build support for complex reforms. “People need to understand the scale of the budget crisis before it becomes something that we just can’t go back from,” he said, underscoring the urgency of educating the public on the fiscal challenges ahead.

Conclusion

The University of Iowa’s winning plan in the Fiscal Challenge demonstrated that with rigorous analysis, thoughtful values, and a willingness to tackle difficult trade-offs, college students can contribute meaningful solutions to the nation’s fiscal challenges. Their success highlights the importance of experiential learning and public engagement in budgeting and economic policy.

Congratulations to the Iowa team, and the six finalists, for their achievements. As Phil Smith said, “It’s fascinating to see young people come to the stage and present a plan in front of experts,” a hopeful sign for the future of U.S. fiscal responsibility.