Poverty

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 the household balance sheet, cash and payments, higher education, housing, and public benefits.

The recent deliberations in Washington about the fiscal cliff have triggered a national debate in the United States about the nature, extent and future sustainability of key elements of the U.S. social safety net: Social Security, Medicare, Medicaid, support for education, the unemployed and the poor.

Editor's note: We're off next week, so there won't be another Asset Building News Week until 2013! We wish our readers a very safe and happy holiday season and look forward to connecting with you in the New Year.

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 the middle class, student debt, housing, inequality, gender-based issues, and tax time.

Editor’s Note:This post was authored by Michael Chasnow. Michael is the Operations Manager for the 1:1 Fund, an online community, conceived and capitalized by CFED, that promotes educational opportunity for low-income students. He received an MBA and masters in urban planning from UNC-Chapel Hill.

Graduating college is a critical step for children from lower income families aspiring to join the middle class. According to 2012 Postsecondary Education Opportunity Research, only 10% of low-income children living in families in the bottom quartile of income (~$33,000 and below) graduate from college by their mid-20s. This low graduation rate severely limits their future opportunities. According to the U.S. Census Bureau, individuals with a college degree earn on average over $900K more in their lifetime than high school grads, and, as the Lumina Foundation argues, more college graduates in the work force also benefits the U.S. economy by helping to create jobs. Additionally, graduating college increases one’s chances of gaining employment (and thus building wealth), with college graduates’ unemployment rates at 3.8% and workers with high school degrees at 8.1% as of November 2012.

If there is to be any durable hope for a social contract that transcends left-right partisanship, that contract must rest upon a majority consensus about policies that are efficient, fair, and sustainable. Once the smoke has cleared from this November’s battle over the role of government, what will endure are several policy prescriptions kept alive by an objective reading of economic history and a general consensus among economists.

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 the social safety net, inequality and wealth gaps, housing, and financial institutions.

Here at the Asset Building Program we write regularly about the inefficiency and ineffectiveness of asset limits in public benefits programs. Recent research conducted by our own Aleta Sprague and Rachel Black documents the substantial burden asset limits place on benefits administrators and participants alike, examines trends with asset limit policies at the state level, and identifies ways to reform these policies to better promote long-term financial stability.

In particular, Sprague and Black found that asset limits for benefits like SNAP (food stamps) and TANF (cash welfare) run counter to purported program goals of efficiency and financial independence. As guest blogger Jessica Bartholow recently put it: "remember what more than a decade of research on asset poverty and economic security for low-income households has taught us: that families are less likely to find their way back to financial solvency when they’ve lost everything they have." Forcing families to spend down any small savings they have before they qualify for benefits thwarts their efforts to get back on their feet.  

Sprague and Black have a new piece of commentary up on the Spotlight on Poverty site that delves into some of the recent policy conversations states are having about asset limits.

In his 2012 nomination acceptance speech in Charlotte, President Obama argued that this election represented “a choice between two fundamentally different visions for the future.” It is also true to say that we faced a choice between two fundamentally different visions of the past. And despite Obama’s reelection, the debate rages on in a closely-divided electorate and in Washington. Underneath disagreements over Obamacare, Medicare advantage cuts and Medicare vouchers, and individual retirement accounts, there is an argument about which model of social policy is best for the country.

The fundamental ideological conflict surrounding the Welfare State in the U.S. is no longer over the scope of government, but instead how the government carries out its responsibilities and delivers services. The conservative and neoliberal vision is one of a government that provides a comparable range of benefits as conventional liberals, but rather than designing and delivering the services directly, it provides coupons for citizens.

Editor’s note: This post was authored by Lauren Pescatore, Debbie Stein and Amy Greene of TaxCreditsForWorkingFamilies.org, a website dedicated to educating and informing advocates and public officials about the importance of the state and federal tax credits to working families. Their site includes a 50 State Resource Map that serves as a quick reference guide as to the status of tax credits across the country.

Because so many low- and middle-income families live paycheck to paycheck, tax refunds are prime opportunities—sometimes the only opportunity—for families to save. Refundable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit not only offset some or all of these working families’ federal income taxes; they often  provide additional income to help offset other types of taxes. Because they are refundable, if the size of a family’s credit exceeds the amount of income tax it owes, the family receives the difference in the form of a refund check. The Child and Dependent Care Credit, although not currently refundable, can also provide significant tax savings for working parents with child care expenses. These credits provide many working families with a lump sum refund that they can save or invest.