[Congressional Record Volume 147, Number 82 (Wednesday, June 13, 2001)]
[Senate]
[Pages S6217-S6218]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LIEBERMAN:
  S. 1025. A bill to provide for savings for working families; to the 
Committee on Finance.
  Mr. SANTORUM. Mr. President, today, Senator Joseph Lieberman and I 
are introducing the Savings for Working Families Act, which seeks to 
expand opportunities through Individual Development Accounts, IDAs, to 
enable the working poor to save for a home, educational expenses, and 
micro-enterprise and small business efforts. We have already 
reintroduced this provision this year as Title I of bipartisan 
legislation, S. 592, ``the Savings Opportunity and Charitable Giving 
Act of 2001.'' Rep. Pitts and Rep. Stenholm are also introducing a 
bipartisan companion bill on IDAs in the House of Representatives 
today.
  IDAs have been endorsed by President Bush during the presidential 
campaign and were included in his budget. IDAs are also included in 
H.R. 7, ``the Community Solutions Act.'' We strongly support the 
charitable giving incentives in our bill but in the context of this 
legislation, which includes savings incentives provisions, we are 
seeking to add additional tax relief for those working hard to save.
  IDAs are matched savings accounts for working Americans restricted to 
three uses: 1. buying a first home; 2. receiving post-secondary 
education or training; or 3. starting or expanding a small business. 
Individual and matching deposits are not co-mingled; all matching 
dollars are kept in a separate, parallel account. When the account 
holder has accumulated enough savings and matching funds to purchase 
the asset, typically over two to four years, and has completed a 
financial education course, payments from the IDA will be made directly 
to the asset provider.
  Financial institutions, or their contractual affiliates, would be 
reimbursed for all matching funds provided plus a limited amount of the 
program and administrative costs incurred, whether directly or through 
collaborations with other entities. Specifically, the IDA Tax Credit 
would be the aggregate amount of all dollar-for-dollar matches 
provided, up to $500 per person per year, plus a one-time $100 per 
account credit for financial education, recruiting, marketing, 
administration, withdrawals, etc., plus an annual $30 per account 
credit for the administrative cost of maintaining the account. To be 
eligible for the match, adjusted gross income may not exceed $20,000, 
single, $25,000, head of household, or $40,000, married, to prevent the 
creation of any additional marriage penalties.
  Our legislation is aimed at fixing our Nation's growing gap in asset 
ownership, which keeps millions of low-income workers from achieving 
the American dream. Most public attention focuses on our growing income 
gap. Though the booming American economy has delivered significant 
income gains to the Nation's upper-income earners, lower-income workers 
have been left on the sidelines. This suggests to some that closing 
this divide between the have-mosts and the have-leasts is simply a 
matter of raising wages. But the reality is that the income gap is a 
symptom of a larger, more complicated problem.
  Success in today's new economy is defined less and less by how much 
you

[[Page S6218]]

earn and more and more by how much you own--your asset base. This is 
great news for the millions of middle-class homeowners who are tapped 
into America's economic success, but it is bad news for those who are 
simply tapped out--those with no assets and little hope of accumulating 
the means for upward mobility and real financial security. This 
widening asset gap was underscored in a report issued earlier this year 
by the Federal Reserve. The Fed found that while the net worth of the 
typical family has risen substantially in recent years, it has actually 
dropped substantially for low-income families.
  For families with annual incomes of less than $10,000, the median net 
worth dipped from $4,800 in 1995 to $3,600 in 1998. For families with 
incomes between $10,000 and $25,000, the median net worth fell from 
$31,000 to $24,800 over the same period. The rate of home ownership 
among low-income families has dropped as well. For families making less 
than $10,000, it went from 36.1 percent to 34.5 percent from 1995 to 
1998; for those making between $10,000 and $25,000, it fell from 54.9 
percent to 51.7 percent.
  How do we reverse this troubling trend? IDAs are the unfinished 
business of the Community Renewal and New Markets Empowerment 
initiatives which became law in December of 2000 and will increase job 
opportunities and renew hope in what have been hopeless places. But to 
sustain this hope, we must provide opportunities for individuals and 
families to build tangible assets and acquire stable wealth.
  How do we do this? We believe that the marketplace can provide such 
opportunity. Non-profit groups around the country have launched 
innovative private programs that are achieving great success in 
transforming the ``unbanked''--people who have never had a bank 
account--into unabashed capitalists. Through IDAs, banks and credit 
unions offer special savings accounts to low-income Americans and match 
their deposits dollar-for-dollar. In return, participants take an 
economic literacy course and commit to using their savings to buy a 
home, upgrade their education or to start a business.
  Thousands of people are actively saving today through IDA programs in 
about 250 neighborhoods nationwide. In one demonstration project 
undertaken by the Corporation for Enterprise Development, CFED, a 
leading IDA promoter, 2,378 participants have already saved $838,443, 
which has leveraged an additional $1,644,508.
  While data have been encouraging, unfortunately IDA programs are 
still limited and too scattered across the Nation. This amendment will 
expand IDA access nationwide by providing a significant tax credit to 
financial institutions and community groups which they will pass 
through to IDA account holders. This credit would reimburse banks for 
the first $500 of matching funds they contribute, thus significantly 
lowering the cost of offering IDAs. Other State and private funds can 
also be used to provide additional match to savings. It also benefits 
our economy, the long-term stability of which is threatened by our 
pitiful national savings rate. In fact, according to some estimates, 
every $1 invested in an IDA returns $5 to the national economy.
  IDAs are supported by a variety of groups including the Credit Union 
National Association, the Corporation for Enterprise Development, the 
National Association of Homebuilders, the Financial Services 
Roundtable, and the National Conference of State Legislators.
  Individual Development Accounts, combined with other community 
development and wealth creation opportunities, are a first step towards 
restoring the faith in the longstanding American promise of equal 
opportunity. That faith has been shaken by stark divisions of income 
and wealth in our society. With the leadership of the President and the 
Speaker, I am hopeful, along with Senator Lieberman and other 
supporters in the Senate, that Congress will take this significant step 
toward restoring the long-cherished American ideals of rewarding hard 
work, encouraging responsibility, and expanding opportunity this year.
                                 ______