The Assets Report 2008

The purpose of this annual report is to summarize and take stock of the current state of federal policy through an asset-building lens, especially as it affects the asset base of families with lower incomes and fewer resources, which is the focus of our work. The report is divided into three sections. The first is a review of policy developments from the past year related to asset building, highlighting administration action and significant legislation, including assets-related bills introduced in the first year of the 110th Congress; the second is an examination of the President’s budget proposals for Fiscal Year 2009 from an assets perspective; and the third is a forecast of the assets policy issues that may be considered in Congress during the year or two ahead. A companion report, The 2008 Assets Agenda, to be released in April will offer a detailed description of a range of policy proposals to broaden savings and asset ownership.

Below are the highlights of the report:

2007 Review

• The Administration responded to the housing crisis by creating the HOPE NOW alliance to conduct aggressive outreach to homeowners at risk of delinquency and foreclosure.
• FHASecure was launched as a refinancing option for homeowners with non-FHA adjustable rate mortgages in response to the housing crisis.
• The IRS began allowing taxpayers to directly deposit their tax refunds among a maximum three accounts, a change expected to facilitate savings by simplifying the process of making deposits.
• The Senate introduced the New Saver’s Act, a set of 14 low-cost proposals to increase savings, especially by lower-income Americans.
• The House of Representatives reintroduced the ASPIRE Act, to establish universal children’s savings accounts, opened automatically at birth.
• The Freedom to Save Act, the first sweeping proposal to reform asset limits in major public assistance programs was introduced by Representative John Conyers (D-MI).
• Proposals to reform the asset limit in the Food Stamp Program were included in both the House and Senate versions of the Farm Bill.
• The College Cost Reduction and Access Act was passed, changing the way some Section 529 accounts are treated in financial aid calculations.
• Presidential candidates in both parties highlighted savings policies as part of their economic policy platforms.

President’s Budget Proposals FY 2009

• The budget includes over $407 billion in tax expenditures related to asset building, which will overwhelmingly accrue to middle- and upper-income households, according to the Joint Committee on Taxation.
• Consolidation of tax-preferred savings accounts is proposed which would create a system of Retirement Savings Accounts, Lifetime Savings Accounts, and Employer Retirement Savings Accounts.
• The President makes his second consecutive proposal to extend “Saver’s Credit” eligibility to deposits made in Section 529 College Savings Plans.
• The Community Development Financial Institutions (CDFI) is again slated for a drastic funding reduction, including the outright elimination of funding for Native Initiatives.

2008 Preview: What’s on the Agenda in Congress This Year

• The stimulus package, passed by Congress in January and signed into law by the President, will deliver $110 billion in tax rebates beginning in May.
• The potential onset of a recession may trigger additional calls for a policy response, which could include a focus on savings incentives and financial education. Though passage of specific savings legislation is unlikely, savings proposals are expected to generate interest and attention.
• Further examination of issues that created the housing crisis may lead to legislative and regulatory changes in the mortgage market and more broadly to the provision of financial services.
• Deteriorating economic conditions may lead to a second stimulus bill, creating opportunities to consider additional policies designed to encourage savings and financial stability.

For the full text of the assets report, please see the PDF attached below.