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Andrea Levere, President, CFED

Creating a Save and Invest Economy: Asset Building as a Inclusive Poverty Reduction and Wealth Creation Strategy National Disability Institute REI Tour November 4, 2010. Andrea Levere, President, CFED. About CFED.

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Andrea Levere, President, CFED

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  1. Creating a Save and Invest Economy: Asset Building as a Inclusive Poverty Reduction and Wealth Creation Strategy National Disability Institute REI TourNovember 4, 2010 Andrea Levere, President, CFED

  2. About CFED • CFED (Corporation for Enterprise Development) has worked for over 30 years to expand economic opportunity by connecting public policy, private markets and community practice. Our goal is to bring effective approaches for building wealth and financial security to scale at the local, state and national levels. • Major national initiatives include: • Assets & Opportunity Scorecard and Policy Campaign; • Asset Building for Children (ABC) – matched savings for children and education; • Self-Employment Tax Initiative (SETI) – leveraging tax refunds and business counseling for the self-employed; • I’M HOME – turning manufactured homes into appreciating assets; and • innovation@cfed – finding the next generation of social and market innovators.

  3. Asset Building for People with Disabilities • Lens of disability provides unique insights into the opportunities, obstacles and potential of asset building • Strategy of combining income supports and services with asset building products essential • Reduce risk and hardship • Increase financial stability • Achieve financial security and independence • Dynamic diversity of people with disabilities helps to redefine financial inclusion—defying low expectations attached to low income people as well • Drives innovation in policy and practice • Promotes practical, results-oriented approach to asset building

  4. How Well Do We Build Assets at the National Level? Assets matter, but their distribution is highly unequal. • More than one-fifth of the population is “asset-poor” – i.e, does not own enough to survive 3 months without a job at the poverty line; one in three households with children live in asset poverty • 14% of all households and 24% of minority households live in extreme asset poverty – meaning that they have zero or negative net worth • For every $1 owned by a household in the top 20% of income, the bottom 20% own just 2 cents; for every $1 owned by a white household, a minority household has 16 cents Racial disparities in asset ownership are widest, with minorities: • Twice as likely to be asset poor (37.2% vs. 16.4%) • Three times as likely to have a high-cost mortgage loan • Much less likely to own a home or have a college degree

  5. Federal Asset Subsidies are Upside Down • New CFED study documents that the United States spends almost $400 billion annually on wealth building • Subsidies are targeted to homeownership, retirement, education and business development • Over 50% of benefits went to the wealthiest 5% of taxpayers; the top 1% received an average of $95,000 in subsidies, while the poorest received less than $5 • Since most of these subsidies are delivered through the tax code, and not through the budget, they are invisible to the public

  6. How States Build Assets:Assets & Opportunity Scorecard • Most comprehensive tool measuring ownership and economic opportunity at state level • Framework underscores need to integrate asset development, asset protection and income supports to advance financial security • Includes 92 outcome and policy measures in 5 issue areas: • outcome measures describe how families are faring; • policy measures describe what states can do • Formal partnerships with 25 state asset coalitions to advance state policy change

  7. How States Build Assets:Assets & Opportunity Scorecard • Scorecard highlights 12 policy priorities in five areas: financial income and assets; housing and homeownership; business development and jobs, education, and health insurance • Recent survey revealed that over the last year: • States enacted 115 positive and 45 negative policy changes: net gain in state policy • Most successes involved low/no cost policies: raising asset limits, streamlining SCHIP enrollment, regulating predatory short-term loans • Policy progress is possible even in tough times: logic and value of assets approach

  8. The Assets Movement at its Moment • Savings and assets provide a “personal safety net” during tough times and are essential to financial security and stability • Two decades of product development and program delivery have demonstrated the right way for low- and moderate income people to build wealth: • Structure and incentives to facilitate savings • High quality and culturally relevant financial education • Access to fair and reasonably priced debt • Promising policy opportunities at federal, state and local levels to promote and protect assets – with creative efforts to integrate across levels of government and issue areas

  9. Our Message Any tax bill should include asset-building opportunities for low- income families.

  10. Assets Policy Window

  11. The Assets Movement at its Moment • Significant federal opportunities to build and protect assets • Infrastructure Improvements • SSI Savers Act: H.R. 4937 • Automatic IRA Act: S. 3760, H.R. 6099 • Savings bonds at tax time • Bank On USA: $50 million to support local and state campaigns through the CDFI Fund • Matched Savings Expansion • Expanding the Saver’s Credit: S. 3090, H.R. 1961 • IDA Protection Act: H.R. 6067 • Stephanie Tubbs Jones Assets for Independence Reauthorization Act of 2010 (H.R. 6354). • Savings for Working Families Act: S. 985, H.R. 2277 • Savings Enhancement for College Education: H.R. 1351 • ASPIRE: S. 3577, H.R. 4682 Italics= House bill only bipartisan support =

  12. Infrastructure Improvements • SSI Saver’s Act (HR 4937) • Raising the asset limit to $5,000 for a single and $7,500 for joint filers and index these limits for inflation • Excluding retirement savings from inclusion in the asset test (<65 age) • Excluding savings in qualified retirement accounts below a specified ceiling of (indexed for inflation) $10,000 for an individual and $15,000 for a couple or household (indexed for inflation) (>65 age) • Exclude IDAs and Education Savings Accounts as well

  13. IDA Protection Act, HR 6067 • Adds $50 million for AFI IDAs • No match required • Paid for by eliminating a coal tax • Introduced by Congresswoman Linda Sánchez (CA-D)

  14. AFI Reauthorization • Stephanie Tubbs Jones Assets for Independence Reauthorization Act of 2010 (H.R. 6354). • Non-federal match @ 50% • Raise income to 80% AMI • $75 million level • Earned income still a requirement

  15. The Current Saver’s Credit • The Saver’s Credit is a non-refundable tax credit available to taxpayers contribute to employer retirement plans or IRAs • Adjusted gross income must not exceed the following limits: • Lower the individual's AGI, the higher the saver's credit eligibility • Vastly underutilized – 50 million individuals eligible, <6 m claim • Current credit is between 10-50% of contributions up to $2,000

  16. The Proposed Saver’s Credit: HR 1961/S. 3090 • Expands the credit to additional middle‐income working families by raising the income eligibility for families from $55,500 in FY09 to $65,000 • Matches 50% of the first $1,000 of savings for families ($500 for individuals) earning <$65,000 • Automatically deposits matching funds into designated personal retirement accounts by using account information listed on IRS tax filings through IRS Form 8888 (HR 1961 only) • Indexes contribution limits for inflation • Could provide a savings match to up to 50 million US households—largest asset building program in America

  17. Children’s Savings Accounts • Savings Enhancement for Education in College Act (HR 1351) • Saver’s Credit for 529 College Savings Account contributions and computers are eligible • ASPIRE (HR 4682 & S 3577) • one‐time, $500 government contribution at birth • supplemental contribution as much as $500 • Foster Youth Financial Security Act (HR 6193)

  18. The Assets Movement at its Moment • Federal and state efforts to embed asset building products and services into social services • Assets Initiative of the Administration for Children and Families at HHS • Innovations in Workforce development programs • Embedding asset building in rental and affordable housing • Innovation at the municipal level to connect comprehensive financial empowerment agenda with social services and consumer protections • Local asset coalitions • Municipal asset profiles

  19. The Assets Movement at its Moment • New level of engagement with financial institutions to rebuild brand and test new products • Make the business case to achieve meaningful market share • Reassessment of the Community Reinvestment Act • Prepare for the Consumer Financial Protection Bureau • Leverage employers to deliver asset building products and services at scale • Auto-IRA to Direct Deposit • Natural bridge to workforce development and employee retention

  20. Assets Movement at its Moment for People with Disabilities • Collaboration with disability community is essential to design programs and policies that are effective • Focus on assets not deficits: address policy barriers for the disabled that benefit many • Connect income supports and services with innovative programs and products that turn the safety net into a ladder

  21. Contact information www.cfed.org www.cfed.org/go/advocacy http://cfed.org/policy/ federal_policy_advocacy/ http:///saverscreditalliance.cfed.org http://www.childsavingscoalition.org/ Andrea Levere, President, CFED alevere@cfed.org

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