The 50th anniversary of the War on Poverty naturally prompts reflection on how much progress has been made and how to chart a path forward. While there is a marked divergence in the diagnosis of poverty’s roots and the policy prescriptions necessary to address them, a consensus is emerging that new efforts are needed to promote opportunity, economic mobility and to ensure that the American Dream remains attainable.
The idea that any person, no matter his or her starting place at birth, can get ahead and build a successful life lies at the heart of the American Dream. By providing the resources to weather the unexpected or invest in the future, savings can boost the immediate financial circumstance of one generation and the future prospects for the next. In fact, the Pew Economic Mobility Project finds that, among children born into families in the lowest income quartile, nearly three-quarters moved up over a generation if their parents were high-saving as opposed to only half of children with low-saving parents.
In the Obama administration’s budget request for fiscal year 2015, investments in saving and asset building are $573 billion.
- Savings and Investment: $124 billion
- Retirement: $148 billion
- Homeownership: $245 billion
- Post-secondary education: $56 billion
This is a substantial sum, an investment justified by the goals of mobility and resiliency that savings and investment, retirement savings, homeownership, and post-secondary education have been demonstrated to support. Unfortunately, the overwhelming majority of these resources will be directed through the tax code, heavily weighing the scales in favor of middle- and upper-income families who are better able to take advantage of tax preferences, leaving little directed to the seventy percent of households with incomes too low to claim these benefits. The imbalance created by this approach worsens wealth inequality and misses the potential of assets to help chart a path out of poverty and to strengthen the middle class. This paper provides an assessment of federal spending in support of asset building objectives, accounting of each program within the four primary asset categories, and proposes ideas that would rebalance the scales.