Save the Savings Bond

Former IRS Commissioner Fred Goldberg and Peter Tufano, formerly of Harvard Business School but now Dean of the Saïd Business School at Oxford University, have a terrific op-ed at the New York Times today on the issues around the purchase of paper savings bonds. In "Save the Savings Bond" Goldberg and Tufano outline the recent progress made in improving the savings infrastructure for all Americans, the development of "split refunds" and the "tax time purchase option" for savings bonds that we've talked about repeatedly. They then protest the elimination of the option to purchase savings bonds over the counter (just as members of the Congressional Savings and Ownership Caucus did at the end of July): 

The decision to eliminate the sale of paper bonds at banks is only the latest of several actions that have blunted the impact of these positive developments. The federal government has for years done little to support the savings bond program — eliminating its marketing budget, ending a program that allowed employees to buy savings bonds through payroll deduction, lowering annual purchase limits and making savings bond terms less favorable for small investors. Despite these obstacles, Americans still buy more than $1 billion in paper savings bonds every year.

It’s true that Americans will still be able to buy savings bonds electronically, through a Web-based platform known as TreasuryDirect. But the system isn’t user-friendly, and it presupposes ready Internet access, which about 35 percent of all Americans and 65 percent of low-income Americans do not have. And the system requires a user to have a bank account, effectively excluding the 17 million American adults who are “unbanked.” This may explain why less than 1 percent of the 55 million people who own savings bonds have TreasuryDirect accounts.

Rather than making savings bonds less accessible, the government should encourage thrift by reinventing the bond program for the 21st century.

We've worked extensively with both of these gentlemen over the last few years and they are smart as can be and dedicated to broadening access to savings. Their recommendations for reinventing the savings bond are just the kind of practical, innovative thinking that we should be embracing as we look for ways to improve the efficient function of government, break down barriers to saving for all Americans, and broaden the base of financially stable households.