The Poverty Forum
Policy Proposal Summaries
Lifetime Savings Accounts. Many American families and communities have low or negative savings rates. The America Saving for Personal Investment, Retirement, and Education (ASPIRE) Act would create a savings account for every child born in the United States. Each account would be "seeded" with $500 from the federal government. Households at or below 50 percent of the national medium income would be eligible for a supplemental initial contribution of $500. Additional investments of up to $2000 per year can be made from individuals, family members, foundations, etc. Eligible income levels can receive a match of up to $500 per year for additional savings contributions. Withdrawals cannot be made from the account until the child turns 18 years old, when their account will be governed by rules similar to Roth Individual Retirement Accounts (IRAs). These rules allow for tax-free withdrawals without penalty for select asset building pre-retirement uses, including post-secondary education and first-time home purchases. The universal nature of the accounts creates significant opportunities for financial education.
Saver’s Bonus. Building on existing savings incentives, this policy encourages lower-income families to save in order to create the capital necessary for future wealth creation. Lower-income families with incomes of up to 120 percent of the federal Earned Income Tax Credit (EITC) would be rewarded with a Saver’s Bonus for making a commitment to save a certain sum when they file their tax returns, which can be allocated into up to three accounts. Contributions can be made up to $500 annually to eligible savings accounts, such as IRAs, 401(k)s, 529 College Savings Plan, Coverdell Education Savings Accounts, U.S. Savings Bonds, and Certificates of Deposit (minimum 6 months).
Financial Services Corps (FSC). The creation of a Financial Services Corps would help low- and middle-income households address their personal finances and plan for their future by enlisting financial experts and advisors to deliver personalized financial counseling and planning. Financial counselors would provide tools, resources, and support to local, regional, and workplace initiatives to ensure these families are reached effectively. This would include collecting and analyzing data to understand the short, medium, and long-term financial education, counseling, and planning needs of these households, and exploring new strategies and approaches to financial education and advice through an innovations fund.
Individual Development Accounts (IDAs). The creation of Individual Development Accounts has resulted in 8,400 new homeowners, 6,000 educational purchases, and 5,200 small business start-ups and expansion purposes. This proposal addresses the expansion and enhancement of the program for matched savings accounts that reward monthly savings of families who are saving toward a high-return asset such as a first home, post-secondary education, or a small business. The savings incentive is provided through matching funds from private and public sources. The proposal includes the expansion of the current federal Assets for Independence (AFI) Act appropriation, funding a nationwide IDA demonstration through tax incentives that offer one-to-one credit for financial institutions that contribute matching funds to IDAs, issuing of financial education classes, and modifying the requirements for AFI assistance.
Expand New Markets Tax Credit (NMTC) for Economic Stimulus in Low-Income Communities; Making Community Development Entities (CDEs) Eligible for Tax Credits for Job Creation. These Department of Treasury issued tax credits primarily used by financial institutions are a proven tool for generating investments that create jobs and community impact in low-income communities. Since 2002, more than $156 billion in credits has been requested from the Treasury, which has had only $19.5 billion in available allocation authority. This proposal asks for the expansion of the current budget from $3.5 billion to $5 billion in 2009; a modification of regulations to make credit available for individual and "green" investments; an allocation of $2 million in tax credits to create jobs in low-income communities; and the modification of use eligibility so Community Development Entities (CDEs) can use New Markets Tax Credits to improve and maintain housing stock for low-income families.
COMMUNITY FACTORS: REDUCING POVERTY
Create Two Million New "Opportunity" Housing Vouchers. This policy recommends increasing housing vouchers that allow more families to live in communities rich with opportunity. People want to live where they have direct access to high-quality schools, employment opportunities, and social networks.
Connect Disadvantaged and Disconnected Youth with School and Work. Through this proposal the Obama administration would play a part in encouraging business and industry groups like the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Federation of Independent Business, and others to develop innovative partnerships to link young adults to work experiences that will combat isolation and poverty. In 2005, nearly 1.7 million U.S. teenagers were unemployed and not in school. Congress is considering a series of funding decisions that would expand YouthBuild, strengthen the Job Corps program, and provide up to $1.2 billion for summer youth employment.
Simplify and Expand Pell Grants and Make Higher Education Accessible to Residents of Each State. Often the poorest children and workers in this country have the fewest opportunities for education. Accessible education—from early childhood through post-secondary—is essential to increase opportunity and mobility. It has become increasingly difficult to secure a good job without a post-secondary education. Higher education must be made affordable for low-income individuals, and Pell Grants play a critical role in creating access to such an education for poor youth.
Establish Community Empowerment and Services Integration Grants (CESIG). This proposal recommends the establishment of a new categorical grant program primarily focused on the needs of youth and children in poor communities. Recipients of grants would be required to assess high-poverty regions based on rigorous data analysis and community consultation and create a remediation and integration plan with specific, measurable goals and deadlines. This proposal cites the success the non-profit Harlem Children’s Zone®, (HCZ®), has had fighting poverty with a community-based approach, and urges similar federal efforts through the creation of Promise Neighborhoods.
Establish a Lead National Organization (LNO) to Provide Technical Assistance to CESIG. The federal government should select a LNO to provide research support, data collection aid, and technical assistance to grant recipients and investigate and develop remediation plans. The LNO would be responsible for connecting relevant national resources (e.g. universities, government agencies, think-tanks, and other relevant institutions) with problem areas and to tap knowledge, expertise, and effective models.
Establish Waivers to Facilitate CESIG Implementation. In order to most efficiently utilize grant funds, state and local coalitions that develop integration and remediation plans should be able to apply for a federal waiver to permit them to realign funding between formula and block grant funding streams. This realignment would enable them to support target-specific programs to reduce already identified problems. Waivers would be approved for a limited period and would be contingent on the ability of the state/local coalition’s ability to demonstrate measurable progress toward the identified goals.
Establish a Community Empowerment Trust Fund. Under our current paradigm, communities experiencing success at reducing poverty are often "punished" as state governments shift resources toward more needy areas. To compensate for this effect, state/local coalitions and regions that demonstrate success in achieving their community remediation goals would be eligible for additional federal funding to support the acceleration of their programs. The proposed waivers and funding would be time- and performance-bound and subject to review, suspension, or cancellation.
COMMUNITY FACTORS: REDUCING RECIDIVISM
Full Funding for the Second Chance Act. The U.S. Department of Justice estimates that two-thirds of ex-offenders will be rearrested for new crimes within three years of release, and about 40 percent will be re-imprisoned. The fiscal impact of incarceration was estimated at more than $50 billion last year. The Second Chance Act, which was signed into law in 2008, authorizes $130 million for a wide variety of programs, activities, and studies. Congress has not yet appropriated funds to continue Second Chance. It is critical that the new administration and Congress provide necessary funding for states, localities, and non-profit organizations to provide assistance to the 2 million Americans currently incarcerated through programs such as the Ready4Work and Prisoner Re-entry Initiatives--joint efforts by Department of Labor and Department of Justice that have cut recidivism between 15 to 50 percent compared with national averages.
Second-Chance Employment Initiative. This policy proposal calls for national education and analysis on the ability of ex-offenders to remain employed under current restrictions, through a nation-wide study as to whether current restrictions and barriers are necessary and effective. This proposal also recommends a review of federal, state, and local government policies that restrict ex-offenders in applying for government jobs. It would implement grants for states to discourage private-sector employers from using simple employment questions to screen out ex-offenders and expand efforts to help ex-offenders expunge criminal records that pose an unnecessary barrier to employment.
Voting Rights Restoration. Civil participation is an important aspect of reconciliation between an ex-offender and the community, yet 11 states deny the vote to those convicted of felonies. An additional 35 states keep parolees from voting and 30 states restrict voting for those on probation. Immediate steps are needed to address this problem at both the federal and state levels. This proposal recommends Congress should pass and the president should sign the Democracy Restoration Act to restore voting rights at the federal level for individuals convicted of felonies. Additionally, Congress and the president should establish a bi-partisan commission to study state laws as they relate to felons and make recommendations to reform such laws to assure fairness and consistency and promote the reconciliation of ex-offenders with their communities.
Expansion of Employment and Training Opportunities for Ex-Offenders. Congress should fully fund the Energy Independence and Security Act of 2007 to increase training and employment opportunities for ex-offenders in the area of "green jobs" and encourage the Department of Labor to work with states and other grantees funded through this program to develop community-based programs targeted at training ex-offenders for these jobs. The Pathways Out of Poverty Demonstration Program should continue to be developed and expanded.
High School Graduation Fund. The federal government should create an incentive fund for school districts to implement innovative programs to increase high school graduation rates. This fund would also include waivers from federal restrictions that hinder implementation of innovative models. In exchange, school districts would need to show approval and cooperation by the State Education Agency, a private philanthropic organization, an institution of higher learning, parents affected by the changes, and the community. The proposed reforms must be school-wide, evidenced-based programs. Some examples include: accelerated academic catch up, college preparatory curriculum, early warning systems that track indicators such as absenteeism, comprehensive college guidance/ student advisement, parental involvement, experiential job-based learning, access to dual credit, and teacher professional development.
Education Savings Program. The federal government should establish a college savings program designed to increase college attendance and success among low-income students. A savings account would be created for every child who would be eligible for a Pell Grant according to their parents’ most recent tax return or based on their eligibility for other means-tested federal income support programs. The federal government would deposit an amount into the account each year that would be based on the family’s Pell eligibility. For example, if a student would be eligible for a $5,000 Pell Grant, the government could deposit 10 percent, or $500, into the account annually. Families, employers, or non-profit organizations could also deposit money into these accounts. Families would receive an annual statement showing the growth of the fund. These accounts could only be used for college expenses and could not be withdrawn for other purposes. In addition to providing financial assistance for a post-secondary education, these accounts could also significantly impact a parent’s expectations of their child’s ability to attend college. While most middle-class and high-income families view college as a rite of passage, for low-income families it is often seen as an impossible dream. Setting an early expectation for college helps students and families achieve this goal.
Strengthen and Protect the Healthy Marriage and Responsible Fatherhood Initiatives and Expand Access to Marriage Education. Over the past 30 years, the prospects of divorce, rates of non-marital childbearing, and domestic violence have diverged sharply by class. In depth qualitative studies of low-income couples find that such couple’s relationships often form by chance rather than by plan. Yet, these couples usually want to stay together and marry, yet desperately need tools to make their relationships strong. The Deficit Reduction Act of 2005 provided funding of $150 million each year for healthy marriage promotion and responsible fatherhood. This program should continue to exist; should continue to stress the benefits of marriage over cohabitation; should continue to strengthen the marriage field; should continue to promote responsible fatherhood; and should continue to research the impact marriage has on poverty and other outcomes. The federal government should also make it a policy to evaluate current anti-poverty programs, and any expansion of anti-poverty programs, to determine how to structure them in a way that encourages healthy family formation and does not create disincentives to marriage or responsible fatherhood.
Expand Earned Income Tax Credit (EITC) by Eliminating Marriage Penalty: The Center on Budget and Policy Priorities reports that in 2003 the Earned Income Tax Credit raised the income of 4.4 million persons in low-income working families, including 2.4 million children, so that they were not poor. The EITC now moves more children out of poverty than any other government program. This policy proposal asks for the strengthening and expansion of the EITC by eliminating the marriage penalty while seeking to mitigate any unintended effects to discourage stay-at-home parenting. It also provides an additional credit tier for 3 or more children, rather than the current two-child maximum. Included in these changes is the creation of a new EITC for individuals age 21 and older who work at least 30 hours per week. Creating a new individual EITC would likely encourage more unskilled workers into stable formal sector employment earlier in life. It would also eliminate the perverse disincentive of the current credit, which taxes marriage (for two earners with custodial children) and work (among second earners in married couples).
Keep the SCHIP "Unborn Child" Regulation in Place. In 2002, the Department of Health and Human Services (HHS) improved the State Children’s Health Insurance Program (SCHIP) by stating that the word "child" in the statute may include the period from conception to birth. Twelve states have already chosen to provide health care to pregnant women and their unborn children under this regulatory option. The administration should keep the "unborn child" regulation in place so states that have chosen this option can be secure in choosing to provide health services to needy children and their mothers. The regulation should continue to be clear in supporting the health needs of the woman during and for 60 days after pregnancy, as long as this is consistent with the health of the child. This improvement in the bill would serve both women and children, and reaffirm SCHIP’s key principle of allowing states to design children’s health care programs that best serve their needs.
Funding for the AIDS Drug Assistance Program. This proposal calls for increasing funding for the AIDS Drug Assistance Program (ADAP) by $175 million in 2010 and beyond, and increasing funding for the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act early diagnosis grant program from $30 million to $50 million in 2010 and beyond. Funds should be as accessible to states as soon as possible. Low-income communities, especially African-American and Latino communities, experience high levels of HIV infection. According to the Centers for Disease Control and Prevention, African Americans in the United States have an infection rate seven times as high, and Latinos three times as high, as whites. Currently, half of people infected with HIV do not receive needed drug treatments. Federal programs provide vital support to states and localities to help detect and treat low-income persons with the disease, but federal funding needs to be expanded to meet the need. ADAP is authorized by Title II of the Ryan White Act. As of 2008, ADAP received a federal appropriation of $808 million; however, ADAP has many people on waiting lists. Costs are expected to increase as more effective drug regimens become available. An estimated additional $175-$200 million per year is needed to fully fund the program and eliminate waiting lists. The Ryan White Act also provides funding for enhanced HIV testing through an early diagnosis grant program, but with an estimated 250,000 people living with HIV who have never been tested, this program also needs to be expanded.
MAKING WORK WORK
Extend the Child and Dependent Care Tax Credit. Low-income parents with incomes below $15,000 who work outside the home can claim a maximum tax credit of $2,100 for two children. People earning more than $25,000 receive a $1,800 credit for two children. But this tax credit is not refundable. That means that if you owe no federal income taxes, you get no dependent care tax credit. As a result, poor people gain very little. In fact, most of the $2.7 billion credit claimed in 2001 went to middle-income and high-income families. In addition, the credit is structured to benefit two-income families at the expense of single-income families. To address these problems and strengthen the tax credit we propose extending this tax credit to all working families, regardless of a single or two-income situation; making this tax credit refundable at least up to the employee’s and the employer’s share of the Social Security/Medicare tax; and increasing the amount of the tax credit by the amount of inflation since it was last raised and from now on index the tax credit to the rate of inflation.
Increase the Minimum Wage. Full-time work should keep a family out of poverty, not keep them in poverty. Those who work full time ought to receive compensation (wages plus tax credits) that is at least 125 percent of the federal poverty level. To move our country in this direction, we propose an increase to the minimum wage by at least $1.00 above the $7.25 rate (which becomes effective in July 2009) and index the minimum wage going forward to the inflation rate. Critics argue that an increase in the minimum wage will result in employers cutting back on jobs, particularly during a time of recession. However, many studies demonstrate that recent state and federal raises to the minimum wage have caused minimal job loss. The proposed increase to $8.25 represents a modest approach that should garner bipartisan support.
Child Tax Credit. Starting in 1999, parents with children under 17 years of age could deduct $500 per child from federal income taxes they owe. In 2004, this amount was raised to $1000 per child. This is a wonderful pro-family policy, but the credit is refundable only to families whose income exceeds $8,500. Therefore, the credit does not help the poor who earn less than the poverty threshold.This credit is scheduled to lose half its value at the end of 2010.To strengthen the credit we propose: maintaining its value at $1,000 after 2010 or increasing it by combining it with an expanded Child and Dependent Care Tax Credit; increasing the benefit to 17- and 18- year-olds, or, alternatively, for the same age range the dependent exemption is available; adjusting the credit annually for inflation, as is done with the dependent exemption; and making the credit refundable at least up to the employee and employer’s share of the Social Security/Medicare tax.
STRENGTHENING CIVIL SOCIETY
Allow Non-Itemizers to Deduct Charitable Giving. Encourage Counter-Cyclical Giving Goals to Community-Serving Organizations. The deep economic downturn has increased the demands on community-serving organizations, while decreasing (or threatening to decrease) the resources those organizations require to assist those in need. In addition to other legislative changes, this proposal asks President Obama to work with Congress to pass a bill that would allow non-itemizers—66 percent of all taxpayers—to deduct a portion of their charitable gifts. Studies have shown that when the government gives taxpayers deductions for their charitable contributions, taxpayers contribute substantially more to charities. Alongside leaders from faith communities, business, philanthropy, and secular service organizations, President Obama should also issue a call to those sectors to engage in counter-cyclical giving and service in this time of great and increasing economic crisis and need. The President should encourage the leaders to commit to specific giving targets (e.g., per denomination or business association) and then, a year hence, host a meeting to assess how the challenges have been met.
Launch State-By-State Benefit Bank Program. Every year low-income Americans fail to claim millions in state and federal benefits that they are eligible to receive. The incoming administration should encourage each state to launch a Benefit Bank program that works with religious and secular communities to help people claim state and federal benefits that are often left unclaimed, including Earned Income Tax Credit, food stamps, medical benefits (including children’s health insurance) and heating/cooling assistance. Benefit Banks were pioneered by religious groups, including the National Council of Churches USA (NCC) and the Jewish Council for Public Affairs (JCPA) in cooperation with several other national groups. They have seen success in several states. According to the NCC, clients who participate in the program average about $4,500 in additional benefits annually.
Ease the Process of Forming Community-Serving 501(c)(3) Organizations. Government programs, corporate giving programs, foundations, and individual donors often require recipients to have IRS 501(c)(3) status in order to obtain funds and sometimes in-kind support. Houses of worship often wish to form separate 501(c)(3) organizations when they seek to serve those outside their congregations, whether they will use government funds or private funds in doing so. However, many groups that serve low-income people find the process of seeking status as 501(c)(3) organizations to be complicated and overly expensive.
This proposal asks the federal government to hold hearings under the auspices of its Council for Faith-Based and Neighborhood Partnerships to gather information about the specific assistance community-serving groups need in obtaining this status. In these forums, policymakers should consider the creation of an "EZ application form," creating a rule that would require the Internal Revenue Service to waive filing fees for applications from smaller groups dedicated to serving low-income people, and asking the IRS to expedite consideration of applications from community-serving groups for 501(c)(3) status. President Obama should use the bully pulpit to call upon lawyers’ associations to urge their members to include in their pro bono work assistance to community-serving groups seeking to obtain 501(c)(3) status
SIGN THE PETITION
Make your voice heard.
Acces information on poverty policy & other resources
The Poverty Forum is made up of 8 teams who came up with 25 policy proposals addressing domestic poverty. Brief summaries, complete white paper policy proposals, and a press kit can be found on our Resource page.