Oct. 19, 2009
Jay Leno has mentioned it in his monologue.
Last week, both US News & World Report and Fox's Glenn Beck wrote about it.
In July, Next Gingrich penned an op-ed in favor of it.
In April, the Reverend Jim Wallis and former speechwriter to President George W. Bush, Michael Gerson, praised it.
And, all along, a bi-partisan group of Senators and Representatives, now led by Chuck Schumer, have been behind it. Even arch-conservative Rick Santorum, who Schumer worked hard to defeat, stood side-by-side with Schumer to introduce it in Congress a few years back.
The "it" is the ASPIRE Act, a lifelong savings and financial literacy account created at birth for every child in America. The bill allows the savings to be used for college, a first home, and retirement, and offers greater benefits to those most in need.
But why now, and from such an odd mix of people? Would it work? And would the Obama Administration get behind it?
Let's start with why. Perhaps it's the fact that we're all waking up hung-over from our spending binge, drowning in a pool of debt, realizing it's time to start saving again. And if we can't learn this lesson, let's at least make sure our kids learn it from day one.
Perhaps it's because we're realizing, as President Obama has stated, that if America doesn't start saving again, our long-term economic health is at risk. Do we really think we can keep on living the high-life off of the savings of other nations forever?
Or perhaps it's because the harsh reality of a nearly 10% unemployment rate and this stubborn recession have sparked interest in bold measures, like the ASPIRE Act, to give each generation a fresh shot at economic success. Indeed, the best data show that economic mobility is, at best, stagnant, and has been for 30 years now.
But would it work?
Chances are good. The United Kingdom has made this a reality for each of their 700,000 newborns every year. Parents at all income levels are saving in the accounts, and financial literacy is being taught in math and other classes. An experiment in the U.S., called SEED (Saving for Education, Entrepreneurship, and Downpayment), has been encouraging as well. In fact, there's not a continent in the world where some version of this idea isn't being tested or already made into law.
The Obama Administration, which has proposed a progressive savings agenda in its budget plans, would find much to like. Their experts, like a lot of other savings experts these days, seem enamored of the "behavioral" perspective on savings - the idea that irrational factors, especially inertia, are perhaps the best predictors of who saves. Make savings easy and, especially, automatic - make saving the "default" position, as they say. Ironically, the point is not to think about saving, just to do it.
Well, then why not embrace the ultimate savings default - automatically getting an account the day you are born? And no doubt the Administration's goal of retirement security for all Americans would be best realized if saving were started early in life, letting compound interest perform its magic over the longest possible time. Saving early in life also means you need government less later in life.
So, we've got buzz, good reasons to do this, evidence that it will likely work, and an Administration that should be supportive. As Congress tackles the complex issues of health care reform and energy policy, perhaps they'll look forward to the really simple, timely, and achievable idea to start each American on a lifetime path of saving and investing.
Conan, are you listening?