Congressional Savings Caucus

In this era of sharp political divisions, it is heartening to see the occasional outburst of bipartisanship. One of those rare events occurred today with the launch of the Congressional Saving and Ownership Caucus. On the Senate side, the Caucus is co-chaired by Senators Rick Santorum (R-PA) and Kent Conrad (D-ND). The House Caucus is headed by Representatives Jim Cooper (D-TN), Phil English (R-PA), Harold Ford, Jr. (D-TN) and Thomas E. Petri (R-WI).
The caucus is an offshoot of the work of the New America Foundation’s Asset Building Program. Earlier this month, New America released their outline of programs for an Ownership Society. These recommendations mostly focused on building financial assets (hence the tie-in with a Congressional Caucus focused on savings) and include their signature recommendation of creating children’s savings accounts at birth (similar to the British Child Trust Fund).
Beyond strictly financial assets, the recommendations also include programs for homeownership and saving for educational purposes. In addition to education programs (which clearly fall under the category of investments in intangible assets), there are a few other ideas for what we would consider intangible assets. These include recommendations for strengthening financial literacy, increased R&D in the financial sector to meet the needs of the “unbanked,” and supporting microenterprise development.
The New America issue brief also includes ideas on protecting assets, such as curbing predatory lending, and for strengthening the Community Reinvestment Act (CRA) to improve low-income lending. I wish it had taken the next step and included programs to protect credit ratings – a key intangible asset of both individuals and businesses. Issues concerning identify thief as well as the role of credit rating agencies (as discussed in an earlier posting) would be fruitful areas for further work. It would also be of interest to look at how the CRA could be used to promote the development of intangible assets for low-income individuals and in low-income communities.
The other area that I think needs further elaboration is in the educational programs. These programs, including the educational savings accounts (Section 529 savings plans), are geared to formal education, especially college. In an intangible economy, we need to boost continuous learning, not just static earning of a degree. We need to find a way to craft the rules for these educational programs to allow them to be used for broad learning activities, without opening the programs up to the huge array of potential abuses. Clearly this is an area that will require a lot more work.
In the meantime, the creation of the Savings Caucus is to be applauded. At today’s press conference, Caucus chairs delicately side-stepped the hot button “savings” issue of Social Security. It remains to be seen whether the Caucus, launched with high hopes today, can avoid floundering on the hard political rocks of Social Security. Let us hope so.

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