[Congressional Record Volume 146, Number 9 (Monday, February 7, 2000)]
[Senate]
[Page S374]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SAVINGS FOR WORKING FAMILIES ACT OF 2000
Mr. ABRAHAM. Madam President, this week, I joined with my good
friends, Senator Lieberman and Senator Santorum, to introduce the
Savings for Working Families Act of 2000. This important legislation
would enable low-income working Americans to increase their savings and
build assets, thus allowing them to enter and become a contributing
part of America's economic mainstream and benefit from its
unprecedented period of economic growth.
Right now, despite the fact that the net worth of American families
has increased dramatically over recent years, the net worth of families
with incomes below $25,000 per year has actually decreased. As many as
20 percent of American families are ``unbanked''--meaning that they do
not have either a checking or a savings account.
This disparity has had a severe and damaging affect not only on the
ability of lower-income Americans to obtain financial assets but it has
drastically reduced the chances of the working poor to achieve upper,
or even middle class status. Even more distressing is the impact this
disparity has had on children and minorities: one-third of all American
households, and 60 percent of African-American households, have zero or
negative net financial assets and 40 percent of all white children, and
a staggering 73 percent of all Black children, grow up in households
with zero or negative net financial assets.
The lack of financial assets creates almost insurmountable obstacles
against purchasing a home, starting a small business or investing in a
post-secondary education--all investments which would enable these
families to better their economic status and fully participate in the
American dream, a dream which should be available to all American's
willing to put forth the effort and initiative.
And, Madam President, providing economic opportunity to all Americans
is not only the right thing to do morally, but it is the right thing to
do economically. Not only will this legislation empower our lower-
income working Americans but it will benefit the entire society in the
form of new businesses, new jobs, increased earnings, greater tax
revenue, reduced welfare expenditures and a higher national savings
rate. Case-in-point, Mr. President, IDAs yield over $5 for every $1
invested.
Simply put, Madam President, without productive assets such as a
home, a college education or a business upon which to build a
successful financial future, the working poor may continue to work but
they will also continue to remain poor.
The legislation we are introducing today, the Savings for Working
Families Act of 2000, recognizes the need to invest in the working
poor: empower them with the ability to build assets, own a piece of
their neighborhood and achieve wealth.
Specifically, this legislation would establish Individual Development
Accounts for poorer Americans, through which account holders can
deposit any discretionary earned income and their Earned Income Tax
Credit refund and have up to $500 of their savings matched, each year,
by a financial institution. A tax credit would be made available to
financial institutions and for investment in qualified non-profits
administering qualified IDA programs, in order to provide incentives to
match, dollar-for-dollar, IDA account savings, up to $500 per person
per year.
In order to promote asset building, the matched savings accounts
would be restricted to buying a first home, receiving post-secondary
education or training, or starting a small business. In addition,
account holders would participate in classes designed to increase their
financial literacy and better prepare them for full and successful
participation in the mainstream economy.
Madam President, I am also pleased to note that Congress has already
recognized the important contributions that IDAs make to our
communities and our economy in several important ways. In 1996,
Congress included in the 1996 welfare overhaul law, a provision
allowing states to include IDAs in their Temporary Assistance to Needy
Families (TANF)--welfare-to-work--plans. Since then, 28 states have
included IDAs in their state TANF plans, 27 states have passed some
form of IDA legislation, and five more states have IDA legislation
pending. In addition, Congress established the Assets for Independence
Act in 1998, which provided $125 million over 5 years for IDA
demonstration programs. This Act is expected to reach an additional
30,000 to 40,000 working-poor Americans by 2003.
Last summer, the Senate tax bill included a provision, similar to
this bill, which would also have established tax incentives to
encourage financial institutions to match the savings of lower-income
account holders. I feel privileged to have voted for the tax bill,
which included many pro-family and pro-community provisions such as the
establishment of the Individual Development Accounts.
Lastly, I am proud to be the lead sponsor of comprehensive bi-
partisan and bi-cameral community development and renewal legislation,
the American Community Renewal Act, which includes IDAs as a means by
which communities can help themselves. Please allow me to take this
opportunity and thank Senators Lieberman and Santorum for their
continued support and effort of IDAs and the American Community Renewal
Act.
In closing, Madam President, the Savings for Working Families Act of
2000 provides a common sense long-term solution by providing working
lower-income Americans the education and the tools by which they gain
the financial know-how necessary to succeed in today's economy.
It is important to recognize that achieving family development,
neighborhood revitalization and community resurgence begins by
empowering people to help themselves--this legislation provides this
opportunity. I am looking forward to working with my colleagues this
session to ensure the passage of the Savings for Working Families Act
into law.
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