[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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