The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include children's savings accounts, the budget, and inequality.
Children’s Savings Accounts
The recent momentum behind children’s savings accounts, which started two weeks ago when Senator Ron Wyden announced his support for universal children’s savings accounts (CSAs), continued to build up steam this week. At a Senate Finance Committee hearing, Senator Chuck Schumer told Treasury Secretary Jack Lew referring to children’s savings accounts, “I’m gonna bother you until you end up supporting it, so it’s now or later, take your pick.” At the same hearing, Wyden reiterated his support for CSAs by summarizing some of the most convincing arguments for offering them: “The idea of helping young people, particularly ones of modest income, be part of the opportunity to accumulate wealth in this country is especially important, and such accounts can open doors to higher education, home ownership and retirement security.”
The new momentum isn’t limited to just the United States Senate. On the other side of Capitol Hill, Representative Joe Crowley (D-NY) proposed a plan that would offer “USAccounts” to every newborn. In his article about the proposal for Think Progress, Zack Beauchamp explained that the plan would seed each account with $500 and match additional savings through an expansion of the Child Tax Credit. Rep. Ruben Hinojosa (D-TX) introduced the RAYS Act to allow children to receive contributions to a Roth account, even when they don’t have earned income. Mark Miller wrote about the bill for Reuters. Our blog post on the RAYS Act is here.
Maine has had a voluntary college savings seed grant available for a number of years called the Alfond College Challenge. The plan offered a $500 seed deposit to any parent of a child in Maine that signed up for a college savings account before the child’s first birthday. After several years of disappointing take-up rates, the organizers of the College Challenge announced this week that they are shifting to an automatic, “opt-out” model. Michael Sherraden and Margaret Clancy applaud and analyze the move here.
The Budget
The President released his fiscal year 2015 budget this week, which includes a reiteration of his administration’s myRA plan and a proposal to establish “automatic enrollment in IRAs (or ‘auto-IRAs’) for employees without access to a workplace savings plan.” To coincide with the President’s budget, the House Budget Committee Majority Staff released a report on poverty programs. Jordan Weissmann for Slate challenged some of the report’s findings and pushed back against the claim that government programs hinder economic mobility. Monica Potts, who recently joined the Asset Building Program as a Research Fellow, also offered a critical response to the report in the American Prospect. Among her criticisms is a pushback against proposals to impose tighter asset limits, which, she says, forces families to “spend down all of their savings and other possessions to receive short-term assistance, which can make it harder for them to bounce back.”
Part of the disagreements about poverty programs may actually come from the very way we talk about poverty. Josh Ishimatsu for the Shelterforce Blog writes that “the term poverty . . . is carrying a lot of excess baggage. And this is the heart of the matter. . . . The problematic aspects of a poverty discourse are deeply embedded.”
Inequality
Joe Weisenthal offers what he calls “a depressingly simple explanation for the weak recovery”: “Why is the economy so weak? It's simple: Inequality.” Beyond the economic consequences, Kathleen Geier identifies a perhaps even more insidious one: “Economic inequality kills,” she writes. One way that has been proposed to fight inequality is to strengthen the Earned Income Tax Credit, or as Tim Fernholz calls it, “a twist of the tax dial.” For a local perspective on the effects of economic inequality, the D.C. Fiscal Policy Institute released a report showing that wage inequality is growing in the District. Sarah Anne Hughes gave the highlights of the report for the local blog DCist. In a cynical vein, John Dickerson explained this week “why the 1 percent have nothing to fear” about their status in the economy. Both major political parties need donations from wealthy Americans, and so neither is likely to make income inequality a policy priority, he argues.
Quick Hits
The Consumer Financial Protection Bureau is suing a for-profit college for "predatory lending tactics." The agency argues that consumers were encouraged to take on more debt than they needed. Stephen Burd of New America’s Education Policy Program gives the details.
The College Board announced that it would revise the SAT to be less discriminatory against low-income students. By making available more free studying materials and designing questions to be more relevant to what students actually learn in school, the College Board hopes to lessen the strong correlation between family income and test scores. Nick Anderson for the Washington Post reported on the story.
We are excited that Monica Potts, a poverty writer for the American Prospect, has joined the Asset Building Program as a Research Fellow. We look forward to featuring her work on this blog and in other venues.
![Publication Image]( "Publication Image")
Children’s Savings Accounts
The recent momentum behind children’s savings accounts, which started two weeks ago when Senator Ron Wyden announced his support for universal children’s savings accounts (CSAs), continued to build up steam this week. At a Senate Finance Committee hearing, Senator Chuck Schumer told Treasury Secretary Jack Lew referring to children’s savings accounts, “I’m gonna bother you until you end up supporting it, so it’s now or later, take your pick.” At the same hearing, Wyden reiterated his support for CSAs by summarizing some of the most convincing arguments for offering them: “The idea of helping young people, particularly ones of modest income, be part of the opportunity to accumulate wealth in this country is especially important, and such accounts can open doors to higher education, home ownership and retirement security.”
The new momentum isn’t limited to just the United States Senate. On the other side of Capitol Hill, Representative Joe Crowley (D-NY) proposed a plan that would offer “USAccounts” to every newborn. In his article about the proposal for Think Progress, Zack Beauchamp explained that the plan would seed each account with $500 and match additional savings through an expansion of the Child Tax Credit. Rep. Ruben Hinojosa (D-TX) introduced the RAYS Act to allow children to receive contributions to a Roth account, even when they don’t have earned income. Mark Miller wrote about the bill for Reuters. Our blog post on the RAYS Act is here.
Maine has had a voluntary college savings seed grant available for a number of years called the Alfond College Challenge. The plan offered a $500 seed deposit to any parent of a child in Maine that signed up for a college savings account before the child’s first birthday. After several years of disappointing take-up rates, the organizers of the College Challenge announced this week that they are shifting to an automatic, “opt-out” model. Michael Sherraden and Margaret Clancy applaud and analyze the move here.
The Budget
The President released his fiscal year 2015 budget this week, which includes a reiteration of his administration’s myRA plan and a proposal to establish “automatic enrollment in IRAs (or ‘auto-IRAs’) for employees without access to a workplace savings plan.” To coincide with the President’s budget, the House Budget Committee Majority Staff released a report on poverty programs. Jordan Weissmann for Slate challenged some of the report’s findings and pushed back against the claim that government programs hinder economic mobility. Monica Potts, who recently joined the Asset Building Program as a Research Fellow, also offered a critical response to the report in the American Prospect. Among her criticisms is a pushback against proposals to impose tighter asset limits, which, she says, forces families to “spend down all of their savings and other possessions to receive short-term assistance, which can make it harder for them to bounce back.”
Part of the disagreements about poverty programs may actually come from the very way we talk about poverty. Josh Ishimatsu for the Shelterforce Blog writes that “the term poverty . . . is carrying a lot of excess baggage. And this is the heart of the matter. . . . The problematic aspects of a poverty discourse are deeply embedded.”
Inequality
Joe Weisenthal offers what he calls “a depressingly simple explanation for the weak recovery”: “Why is the economy so weak? It's simple: Inequality.” Beyond the economic consequences, Kathleen Geier identifies a perhaps even more insidious one: “Economic inequality kills,” she writes. One way that has been proposed to fight inequality is to strengthen the Earned Income Tax Credit, or as Tim Fernholz calls it, “a twist of the tax dial.” For a local perspective on the effects of economic inequality, the D.C. Fiscal Policy Institute released a report showing that wage inequality is growing in the District. Sarah Anne Hughes gave the highlights of the report for the local blog DCist. In a cynical vein, John Dickerson explained this week “why the 1 percent have nothing to fear” about their status in the economy. Both major political parties need donations from wealthy Americans, and so neither is likely to make income inequality a policy priority, he argues.
Quick Hits
The Consumer Financial Protection Bureau is suing a for-profit college for "predatory lending tactics." The agency argues that consumers were encouraged to take on more debt than they needed. Stephen Burd of New America’s Education Policy Program gives the details.
The College Board announced that it would revise the SAT to be less discriminatory against low-income students. By making available more free studying materials and designing questions to be more relevant to what students actually learn in school, the College Board hopes to lessen the strong correlation between family income and test scores. Nick Anderson for the Washington Post reported on the story.
We are excited that Monica Potts, a poverty writer for the American Prospect, has joined the Asset Building Program as a Research Fellow. We look forward to featuring her work on this blog and in other venues.
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