The Ladder

A Blog from New America's Asset Building Program

Asset Building News Week, December 3-7

Published:  December 7, 2012
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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 housing, taxes and wealth gaps, the safety net, and financial products.

Housing and Homelessness

A new study by the Washington, D.C.-based civil rights policy organization Poverty and Race Research Action Council finds that federally assisted housing programs, while largely fulfilling their mission to provide housing to needy families, nevertheless overwhelmingly place residents is neighborhoods with underperforming public schools. In reporting on the study, the Wall Street Journal’s MarketWatch notes that by placing families in neighborhoods without quality schools and without access to greater opportunities, the larger purpose of affordable housing programs, which should be to improve the lives of needy adults and children, is being ignored. Both the Nation the New York Times discussed some of the most urgent problems facing affordable housing initiatives and offered some policy solutions. The Nation noted that only one out of four people who qualify for affordable housing programs receives any kind of housing support, and, as mentioned in a recent Asset Building News Week post on the Ladder, even those who receive benefits can face unconscionably long wait times before assistance is rendered, as is the situation in the District of Columbia. Unfortunately, Congress remains unsympathetic to the problems associated with the low-income housing crisis. A Center on Budget and Policy Priorities (CBPP) report out last week warned of the imminent threat to affordable housing programs if the fiscal cliff negotiations are resolved without an increase in revenues. To add to the nation’s housing woes, even when an affordable housing project has secured funding and an enthusiastic sponsor, the fate of the program often hangs on the public’s not-in-my-back-yard suspicions, as is the case with one project reported on by a local paper in Howard County, Maryland.

Taxes and the Wealth Gap

While the CBPP warns of the fiscal cliff’s looming detrimental effects to affordable housing, the fallout from the political negotiations are likely to be felt among many other areas of interest for asset-building priorities. Binyamin Appelbaum and Robert Gebeloff for the New York Times investigated the relationship between tax rates and the nation’s fiscal problems. The reporters explore the tax code’s malignant contributions to our current fiscal situation by analyzing tax revenue data and, by way of a poignant video essay, interviewing suburban Illinoisans to reveal their conflicted attitudes about government services and government taxes. Among the article’s most salient findings is the narrowing of the gap between the tax rates of the rich and of the poor, most clearly illustrated in an accompanying graphic. For more information on the relationship between taxes and the wealth gap and for a discussion of the potential for asset building through tax policy, attend the Center for American Progress’ event, “Building Wealth at Tax Time for Low-Income Families” tomorrow afternoon with Reid Cramer of New America’s Asset Building Program.

President Obama, meanwhile, continues his “middle-out” (as opposed to top-down or “trickle-down”) policy towards addressing the nation’s fiscal problems. As reported by the Atlantic, central to the President’s agenda is to provide support for the middle class and to support more aggressive tactics in the fight against inequality. Unfortunately, inequality is widening at an astounding rate. African Americans currently face bankruptcy at higher rates than other groups, and the non-profits that serve the essential function of filling the gap in services to the poor where government support missing are likely to see their budgets tighten as a result of the fiscal cliff. Furthermore, it appears that the effects of the wealth gap are likely to be perpetuated long after the fiscal cliff debacle is resolved due to a rising “health gap,” recently identified by the Columbia University Department of Epidemiology’s 2X2 Project.

The Safety Net

As mentioned last month in a News Week post on the Ladder, legislative proposals for requiring drug screenings as a prerequisite for receiving government aid are both widely debated in many state legislatures around the country and strongly opposed by many advocates. The American Civil Liberties Union is challenging a Florida law requiring drug screenings for TANF recipients, while just this week the Kansas state Senate is considering a similar bill to require drug screenings of welfare recipients. Neither Kansas nor Florida, however, maintain as poor of a record as Connecticut in terms of the proportion of cases in which SNAP benefits (food stamps) are wrongly denied or terminated to eligible individuals. A U.S. District judge recently found “systemic failure” in the delivery of SNAP benefits in the state, which ranks 53rd in the nation (behind D.C. and the territories) for the proportion of such wrongfully handled cases. Meanwhile, in Arizona, which has one of the highest rates of SNAP participation, food stamp rolls continue to swell, maintaining the state’s current “near-record-high levels” of SNAP participation.

Financial Products

A new for-profit bank plans to set up shop in Harlem with the express purpose of serving the neighborhood’s underbanked. CheckSpring Bank, which has seen success with a previous branch in the Bronx, will offer services to transition the underbanked population from alternative banking products to mainstream banking. The city of Chicago will begin an initiative in collaboration with the Consumer Financial Protection Bureau to limit predatory banking practices in the city. Through new ordinances and better oversight, the city hopes to protect its citizens from a proliferation of predatory financial services. In the short term, however, it appears that those underbanked individuals will have a less merry Christmas than usual, as a new survey reveals that the underbanked population is likely to spend less on gifts than last year. In an innovative (and slightly sarcastic) proposal, MarketWatch suggests that one way to promote financial capability among Americans is to apportion a certain amount of the government’s penalties collected from bank scandal trials to a “National Public Education Foundation for Financial Capability.” Finally, MSN money makes some predictions about the state of personal finance and consumer credit for 2013.  For one, the site predicts that the rise in prepaid cards like Walmart’s Bluebird will put check-cashing establishments in “dire straits” because unbanked consumers now have more than just one option when it comes to alternative banking.

Quick Hits

Just three days left to submit proposals to the FinCapDev challenge, a follow up to the MyMoneyAppUp challenge. Sponsored by D2DFund and the Center for Financial Services Innovation, the goal of FinCapDev is "to cultivate an ecosystem of American innovators, software developers, financial service firms, investors, and nonprofits innovating new mobile tools to help consumers control and shape their financial futures." 

Brookings released a new report this week making a case to fundamentally reform the mortgage interest deduction. Stay tuned for more legislative action on that front as lawmakers contemplate various options.

Don't miss our guest blog post this week, authored by Lauren Pescatore, Debbie Stein and Amy Greene of TaxCreditsForWorkingFamilies.org.

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