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The Asset Building News Week is a weekly Friday feature on the 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 food assistance, tax issues, the health-wealth connection, alternatives to banking and the prepaid card industry, and the mortgage crisis.
This week saw a flurry of conversation about the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps). Pennsylvania made a surprising announcement that they are reinstating the asset limit test for SNAP participants, despite the fact that 35 states have eliminated their asset test. The Inquirer has a thorough piece on the matter, that quotes anti-hunger advocates and members of the business community opposing the move. Justin King weighed in with a blog post on the topic, which sums up the issue with its snappy title: "PA Shoots Itself in the Foot." The Washington Post and Huffington Post report on the discussion amongst Republican presidential candidates about SNAP and other public benefits programs. As Robert Greenstein from the Center on Budget and Policy Priorities points out, dollars spent on benefits programs overwhelmingly go to the families in need - not to administrative overhead as is claimed by program detractors.
Tax Season is Coming
With tax season around the bend, Kentucky Governor Steve Beshear encouraged state residents to take advantage of the Earned Income Tax Credit. According to the local news coverage, there were over 400,000 EITC claims filed in 2010, bringing in $876 million in direct benefits to working families. The EITC frequently provides lower-income families with a unique asset building opportunity because it may be the single largest influx of income in a given year. In tangentially related news, Lindsay Lohan owes $94,000 in unpaid federal income tax from 2009, according to the LA Times.
Health and Wealth
Relationships between health and wealth can be difficult to explain, but there is evidence that people with higher incomes and wealth are in better health. For example, the Journal of Health Affairs blog reports that "young adults with diabetes can expect to earn $160,000 less in wages over their working lives compared to peers without diabetes." They hypothesize that diabetes affects educational opportunities in turn limiting vocational opportunities. Meanwhile, the CDC reports a complicated link between income and binge drinking: their study found that "binge drinking is more common among those with household incomes of $75,000 or more, but the largest number of drinks consumed per occasion is significantly higher among binge drinkers with household incomes of less than $25,000 – an average of eight to nine drinks." This research sheds light on the interplay between social and economic factors and health outcomes.
Mortgages and Home Prices
The Consumer Financial Protection Bureau initiated its first public investigation of a company's mortgage practices. The LA Times reports that 2012 may see a spike in foreclosures "as banks deal more aggressively with 3.5 million seriously delinquent mortgages." The chairman of the Federal Reserve, Ben Bernanke, sent a report to Congress last week and is expressing "a willingness to double down on a three-year bet that’s failed to revive housing," according to a Bloomberg News article.
Alternatives to Banking
Megan McArdle at The Atlantic and Felix Salmon at Reuters continued an interesting debate that started last week about the world of predatory payday lending, credit unions, and other issues facing consumers who use non-mainstream banking products. First, Salmon reported back on conversations he had with a Missouri-based lobbying group that represents loan shops and a credit union. McArdle responded with skepticism. Salmon's subsequent response is here and McArdle's feedback is here.
Prepaid Card Industry
Fox Business makes some predictions about the prepaid card industry in 2012. Bankrate.com interviewed the CEO of Rushcard (which makes prepaid cards) and the answers provide some insights into the demographic these companies are targeting: "younger than the traditional check-cashing user," "a lot of these customers have children," and "a very hardworking population that has very strong aspirations." Suze Orman came out with a prepaid card that drew a lot of attention, including this US News article that compared it to other prepaid products to see how it stacks up.
Lastly, check out this piece at The Nation about Latino voters in 2012.Victoria DeFrancesco Soto makes the case that disproportionate impacts of the recession on Latino unemployment, wealth, and educational opportunities will strongly weigh in the minds of Latino voters this fall - and Obama should pay attention.
Update: Alan Krueger, labor economist and chairman of the White House Council of Economic Advisors, spoke at the Center for American Progress about the impact of income inequality. He stated: "The rise in inequality in the United States over the last three decades has reached the point that inequality in incomes is causing an unhealthy division in opportunities and is a threat to our economic growth." Krueger's full remarks are available here. Also check out this interview with Ezra Klein, who had the opportunity to follow up with Krueger and pushed him to elaborate on the economic drivers of inequality.