The Assets Budget is Out of Balance

Two weeks ago, President Obama released his budget request for fiscal year 2015, and under the White House proposal, the United States is poised to spend $573 billion supporting asset development.

• Savings and Investment: $124 billion
• Retirement: $148 billion
• Homeownership: $245 billion
• Post-secondary education: $56 billion

This is a lot of money, but since most of it — $536 billion — will be spent through the tax code, most of it will flow up the economic ladder.

Our new policy paper, Rebalancing the Scales, takes a closer look at how this money will be spent and suggests a few ways that policymakers can make reforms to the way that we invest in savings so that we’re expanding economic opportunity — not the wealth gap. Child Savings Accounts (CSAs), for example, would create an account at birth for every child, endow that account with $500 (with an additional deposit for lower-income households), and provide a progressive match to make sacrificing resources now for a return in the future worthwhile for struggling families.

And other measures that help families build a cushion of flexible savings, like removing asset limits in public assistance programs that create disincentives to save, or by facilitating the opening of a savings account at tax time that families can deposit a portion of their refund into (as the Financial Security Credit would do), could go a long way toward rebalancing the scales of the assets budget.

The thing about federal spending is that, while it may be out of balance, it isn’t inevitable. And, there are solid ideas on the table that give more families a shot at moving up the economic ladder.