The Grinches Who Steal Christmas

Payday lenders use the holidays to target consumers most likely to wind up in a vicious cycle of debt.

Stealing Christmas with 500 percent interest rates.

By Rebecca Thiess  

 

The holidays are upon us, and for many this is a season of financial stress and strain as well as joy – a time when the need for an extra couple of hundred dollars can seem especially acute.
For payday, title loan, and auto title lenders, that makes the holidays a season of opportunity. And many of these lenders don’t just make an extra push at the end of the year; they actually insert a holiday theme into their advertising!

Cash Title Exchange, a Mississippi-based lender, sent out a colorful direct-mail piece promising “the cash you need this holiday season” and featuring a smiling Santa Claus with an armful of presents. “Even Santa needs help,” the ad pointed out.

[SEE: Political Cartoons on the Economy]

Santa was also a co-star in a TV spot for TitleMax, based in Savannah, Georgia: “Come to TitleMax now for cold hard cash,” says the cheery announcer. “Your car title is your credit – Ho! Ho! Ho!”
What such companies don't advertise, and what many borrowers don’t know, is exactly how much money they will ultimately have to pay for the relatively small sum they receive immediately. Because such loans typically carry fees that work out to the equivalent of 300 to 500 percent in annual interest, many borrowers are forced to take out a long string of loans to cover payments on the original one. Their loan fees often end up dwarfing the amount of money they borrowed in the first place.

Targeting borrowers during the holiday season hits many when they are feeling the most vulnerable. And ads aren’t just splashed in public places, they are sent out in focused mass mailings to people who are particularly likely to respond—the elderly or those with low annual incomes.

While loans like these may be marketed as a way to deal with a one-time emergency or secure a little extra holiday cash, they routinely lead people into a cycle of long-term debt. The Consumer Financial Protection Bureau, in its research on the small-dollar loan market, has found that four out of five payday loans end up being rolled over or renewed within two weeks, with half of those becoming part of a sequence of 10 or more loans. And that is exactly the outcome these lenders are counting on: Getting people to borrow repeatedly, paying fee after fee, is their business model.

In an enforcement action against ACE Cash Express, the bureau exposed the company for using a variety of illegal tactics, including false threats of criminal prosecution, to bully its borrowers into repeatedly taking out new loans to cover the cost of old ones. A graphic from the company’s own training manual spelled out its preferred method of entrapment.

In 2015, the Consumer Financial Protection Bureau is widely expected to announce a set of proposed consumer protection rules that could change this market for the better. This should be welcome holiday news: Most Americans have a negative opinion of payday lenders. (65 percent hold an unfavorable view, versus only 15 percent with a favorable view, according to a recent national survey.)

[SEE: Editorial Cartoons on Congress]

Payday lenders are hurting Americans; but the industry has been using political contributions to safeguard its profit stream, and Congress has so far been unwilling to regulate.

A recent report by Americans for Financial Reform sheds light on exactly how much this industry is spending to exercise influence in Washington. In the 2014 election cycle, payday, auto title and installment lenders, along with other entities that play a role in their operations, reported more than $13 million in political spending, with much of that money coming from trade associations that represent the industry in Washington. Major spenders also include some of the trade associations’ big corporate members — the actual payday lenders themselves. Cash America, a company found by the Consumer Financial Protection Bureau to be using illegal debt collection tactics and overcharging service members and their families, spent over $1.7 million in the 2014 cycle on lobbying and campaign contributions.

But the next holiday season could be a bit brighter. The bureau could make lenders verify that loans are affordable in light of a borrower’s income and expenses; reduce the payday debt trap from the typical 200 days a year to no more than 90; and put borrowers back in control of their own bank accounts. The holidays are a time for joy and giving, and as the residents of Whoville know, there is no room for the Grinch.

White House Fact Sheet: Council of Economic Advisers Releases Report Highlighting New Research on SNAP’s Effectiveness and the Importance of Adequate Food Assistance

THE WHITE HOUSE

Office of the Press Secretary

FOR IMMEDIATE RELEASE

December 8, 2015

FACT SHEET: Council of Economic Advisers Releases Report Highlighting New Research on SNAP’s Effectiveness and the Importance of Adequate Food Assistance

A new report released today from the White House Council of Economic Advisers (CEA) finds that the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, is highly effective at reducing food insecurity—the government’s measure for whether households lack the resources for consistent and dependable access to food. The report highlights a growing body of research that finds that children who receive food assistance see improvements in health and academic performance and that these benefits are mirrored by long-run improvements in health, educational attainment, and economic self-sufficiency. The report also features new research that shows benefit levels are often inadequate to sustain families through the end of the month—resulting in high-cost consequences, such as a 27 percent increase in the rate of hospital admissions due to low blood sugar for low-income adults between the first and last week of the month, as well as diminished performance on standardized tests among school age children.

Each month, SNAP helps about 46 million low-income Americans put food on the table. The large majority of households receiving SNAP include children, senior citizens, individuals with disabilities, and working adults. Two-thirds of SNAP benefits go to households with children.

Today’s CEA report draws on a growing body of high-quality research about food insecurity and SNAP, finding that:

SNAP plays an important role in reducing both poverty and food insecurity in the United States—especially among children.

·         SNAP benefits lifted at least 4.7 million people out of poverty in 2014—including 2.1 million children. SNAP also lifted more than 1.3 million children out of deep poverty, or above half of the poverty line (for example, $11,925 for a family of four).

·         The temporary expansion of SNAP benefits under the American Recovery and Reinvestment Act of 2009 (ARRA) lifted roughly 530,000 households out of food insecurity.

SNAP benefits support vulnerable populations including children, individuals with disabilities, and the elderly, as well as an increasing number of working families.

·         Nearly one in two households receiving SNAP benefits have children, and three-quarters of recipient households have a child, an elderly member, or a member with a disability. Fully 67 percent of the total value of SNAP benefits go to households with children as these households on average get larger benefits than households without children.

·         Over the past 20 years, the overall share of SNAP recipient households with earned income rose by 50 percent. Among recipient households with children, the share with a working adult has doubled since 1990.

 

SNAP’s impact on children lasts well beyond their childhood years, providing long-run benefits for health, education, and economic self-sufficiency.

·         Among adults who grew up in disadvantaged households when the Food Stamp Program was first being introduced, access to Food Stamps before birth and in early childhood led to significant reductions in the likelihood of obesity and significant increases in the likelihood of completing high school.

·         Early exposure to food stamps also led to reductions in metabolic syndrome (a cluster of conditions associated with heart disease and diabetes) and increased economic self-sufficiency among disadvantaged women.

SNAP has particularly large benefits for women and their families.

·         Maternal receipt of Food Stamps during pregnancy reduces the incidence of low birth-weight by between 5 and 23 percent.

·         Exposure to food assistance in utero and through early childhood has large overall health and economic self-sufficiency impacts for disadvantaged women.

The majority of working-age SNAP recipients already participate in the labor market, and the program includes important supports to help more recipients successfully find and keep work.

·         Fifty-seven percent of working-age adults receiving SNAP are either working or looking for work, while 22 percent do not work due to a disability. Many recipients are also the primary caregivers of young children or family members with disabilities.

·         SNAP also supports work through the Employment and Training program, which directly helps SNAP beneficiaries gain the skills they need to succeed in the labor market in order to find and retain work. During fiscal year 2014, this program served about 600,000 SNAP recipients.

Even with SNAP’s positive impact, nearly one in seven American households experienced food insecurity in 2014.

·         These households—which included 15 million children—lacked the resources necessary for consistent and dependable access to food.

·         In 2014, 40 percent of all food-insecure households—and nearly 6 percent of US households overall—were considered to have very low food security. This means that, in nearly seven million households, at least one person in the household missed meals and experienced disruptions in food intake due to insufficient resources for food.

 

While SNAP benefits allow families to put more food on the table, current benefit levels are often insufficient to sustain them through the end of the month, with substantial consequences.

·         More than half of SNAP households currently report experiencing food insecurity, and the fraction reporting very low food security has risen since the end of the temporary benefits expansion under ARRA.

·         New research has linked diminished food budgets at the end of each month to high-cost consequences, including:

o    A drop-off in caloric intake, with estimates of this decline ranging from 10 to 25 percent over the course of the month;

o    A 27 percent increase in the rate of hospital admissions due to low blood sugar for low-income adults between the first and last week of the month;

o    An 11 percent increase in the rate of disciplinary actions among school children in SNAP households between the first and last week of the month;

o    Diminished student performance on standardized tests, with performance improving only gradually again after the next month’s benefits are received.

Administration Efforts to Build on Progress

To reduce hunger and improve family well-being, the Obama administration has been and remains dedicated to providing American children and families with better access to the nutrition they need to thrive. These investments make a real and measurable difference in the lives of children and their families, and ensure a brighter, healthier future for the entire country.

Through the Recovery Act, the Administration temporarily increased SNAP benefits by 14 percent during the Great Recession to help families put food on the table.  Reports indicate that food security among low-income households improved from 2008 to 2009 amidst a severe recession and increased unemployment; a significant part of that improvement is likely attributable to SNAP.

The Administration has also developed several initiatives to improve food security and nutrition for vulnerable children.  Through the Community Eligibility Provision, schools in high-poverty areas are now able to offer free breakfast and lunch to all students with significantly less administrative burden. Recent revisions to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) added a cash benefit to allow participants to purchase fruits and vegetables, a change that substantially increased the value of the package. The Administration also has expanded access for low-income children to nutritious food during the summer months when school meals are unavailable and the risk of food insecurity is heightened. The results of these efforts have been promising. In 2014, the U.S. Department of Agriculture (USDA) delivered 23 million more summer meals than in 2009.  And the Administration has successfully implemented Summer Electronic Benefits Transfer for Children (SEBTC) pilots, which provide additional food assistance to low-income families with children during the summer months. These pilots were found to reduce very low food security among children by 26 percent.  The President’s 2016 Budget proposed a significant expansion of this effort.

Finally, this Administration has provided select states waivers to test ways of reducing the administrative burdens of SNAP for elderly households, a population that continues to be underserved. After seeing positive results in participating states, including an increase of elderly participation by more than 50 percent in Alabama, the President’s 2016 Budget included a proposal to create a state option that would expand upon these efforts to improve access to SNAP benefits for the elderly.

New Data Reveals High Unbanked, Underbanked Rates in Localities across America

By Kasey Wiedrich

According to the latest estimates published in CFED’s Assets & Opportunity Local Data Center, one in every nine households (11%) in American cities with 200,000 or more residents are unbanked, meaning that they have neither a checking account nor a savings account. This figure is significantly higher than the national average of 7.7% for all households—roughly one in every 14 households.

Without a bank account to store and accrue earnings, unbanked households lack even the most basic tools through which to build a safety net for emergencies, and are effectively shut out of the economic mainstream. Additionally, one in every five (20%) households in major cities is underbanked, meaning that while they have access to a bank account, these households still use alternative financial services, like money orders or high-cost short-term loans, to manage their finances. Family Assets Count, a partnership between CFED and Citi Community Development, is putting national data in the hands of local decision-makers to advance solutions to this issue.

Through the Family Assets Count project, CFED used the latest biennial Survey of Unbanked Households from the FDIC to develop new estimates of household financial access for cities and counties across the country, updating data previously released in 2014. These estimates provide a glimpse into the factors that influence a household’s banked status, and illustrate the pervasiveness of—and need for comprehensive solutions to—the nation’s financial access crisis.

Of major U.S. cities, Newark, NJ, has the highest unbanked rate, with 23.3% of its households identified as unbanked. Detroit has the second-highest rate with 19.9% unbanked. These positions are reversed for underbanked rates: at 28.5%, Detroit has the highest underbanked rate of all American cities with a population greater than 200,000 people, while Newark has the second-highest rate, at 26.9%. Newark and Detroit also had the highest unbanked and underbanked rates, respectively, among major cities in 2011.

These findings point to the need for solutions that address the financial vulnerabilities facing households across the country, especially households of color, those with low incomes and those without postsecondary degrees.

To find out about how families are faring on these measures in your city, visit the Assets & Opportunity Local Data Center. For more on how some groups are using this data, visit FamilyAssetsCount.org.

The Consensus Council, Inc. receives $20,000 award from Tom's of Maine for NDESPA

                                   

FOR RELEASE:             December 3, 2015

CONTACT:       Scott Fry, Senior Program Director

                        The Consensus Council, Inc.

                        701.224.0588, ext. 106

The Consensus Council, Inc. receives $20,000 award from Tom’s of Maine

As part of the 50 States for Good initiative, The Consensus Council, Inc. of Bismarck, ND (http://agree.org) is one of 50 states and the District of Columbia to win a $20,000 award from Tom’s of Maine to support grassroots community goodness.

Tom’s of Maine (http://www.tomsofmaine.com/home) serves customers personal care needs with imaginative science from plants and minerals, works to inspire those they serve with a mission of responsibility and goodness, empower others by sharing knowledge, time and talents and profits, and help to create a better world by exchanging faith, experience and hope.

“This funding will help to advance the work of the North Dakota Economic Security & Prosperity Alliance whose mission is to help North Dakotans of low and moderate income to build assets for the future” said Rose Stoller, Consensus Council Executive Director.

The NDESPA coalition began in 2008 and works to build and sustain a system of economic security for all through poverty awareness and education, grassroots and community capacity-building, research and data development and promotion of policies and practices to eliminate disparities and obstacles for achieving economic security.

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CFED: A National Grassroots Campaign to Mobilize Americans against Wealth Inequality

A National Grassroots Campaign to Mobilize Americans against Wealth Inequality

The Inclusive Economy Blog

For years, CFED has recognized the role that the tax code plays in exacerbating wealth inequality. We’ve documented again and again how “upside-down” tax programs help those at the top grow their wealth while doing little for everyone else, and we have pushed for specific policy reforms to change the equation. Unfortunately, just analyzing the tax code isn’t enough to change it. Over the last several decades, these inequitable tax programs have only increased in size, widening the divide between those at the top and the rest, between men and women and between white households and households of color. To change these tax programs, advocating on our own is not enough—we must engage the majority of people in America who are currently getting the short end of the stick.

But here’s our challenge: how do we get people to engage on an issue as boring as tax policy? Our solution? This week, we launched a new national campaign: Turn It Right-Side Up.

The Turn It Right-Side Up campaign kicked off on Monday with a new website—TurnItRightSideUp.org—and a new animated video that simplifies the tax issues we face. The video is just the first step; as the campaign grows and evolves, we’ll continue producing new materials and engaging new audiences to promote the importance of equitable tax reform. One central way we’ll do this is by working with those who matter most: taxpayers themselves. Turn It Right-Side Up will amplify the voices of the low-wage workers and advocates who, by sharing their powerful stories, can effect meaningful change.

There are three ways you can participate in the Campaign right now:

Watch the video to learn about how the upside-down tax code impacts families in your community.

Sign up to stay informed about opportunities to take action.

Share this Campaign with friends and colleagues.

By joining the Turn It Right-Side Up campaign, you will advance equitable tax programs that help all families in America have the opportunity to get—and stay—ahead.

Resources from around the Coalition: Hunger and Poverty, Child Care, Housing Recovery and More

By William Marker - November 12, 2015

Hunger and Poverty. Child Care. Housing Recovery. This week we continue our series, Resources from around the Coalition, where we highlight great work that CHN’s member organizations are putting out.

• Bread for the World recently issued individual state fact sheets highlighting hunger and poverty across the nation. Their fact sheets provide important state data on the number of households struggling to put food on the table and the number of people in poverty, and make several policy recommendations to Congress. They also ranked states on hunger and poverty, finding Mississippi, Arkansas, and Louisiana highest in hunger and Mississippi, New Mexico, and Louisiana highest in poverty. You can read more about your state here.

• On a related note, TalkPoverty, a project of the Center for American Progress, has a very useful graphic that allows you to look up poverty data by state and by Congressional district. The site allows you to see the poverty and child poverty rate compared to other states and districts and breaks down the data by race and ethnicity. To find out the statistics for your state and Congressional district, visit their site here.

• The Center on Budget and Policy Priorities (CBPP) recently released an interactive map that shows state imprisonment rates and spending over the past few decades. Click on the map below to see the rates and figures for your state and other states across the country.

• A new report by the Center for Law and Social Policy (CLASP) highlights the importance of the Temporary Assistance for Needy Families (TANF) program for children in poverty. They explore different policy options to support parents and children during pregnancy and infancy. The paper also focuses on ways to improve benefits and services for families. You can learn more and read the full report here.

• The Economic Policy Institute (EPI) released a report showing that high quality child care is unaffordable for many working families. EPI finds that child care costs among families with two children exceed the cost of rent in 500 out of 618 US communities. They also find that infant care costs exceed the average cost of public in-state college tuition in 33 states and the District of Columbia. To learn about this growing problem in your state and to find more interactive graphics, click here.

• Recent data from the US Bureau of Labor Statistics showed the unemployment level falling in October to 5%, its lowest level in 7.5 years. However, the National Women’s Law Center (NWLC) points out that many minority groups are still being left behind in the economic recovery. They show that while overall unemployment fell in October, unemployment for adult Black women increased to 8.1%, while that number increased to 9.2% for adult Black men. You can see more on the recent data here.

• The Center for American Progress (CAP) released a report bringing attention to the uneven housing recovery in the United States following the Great Recession. While overall home values are on the rise in the past few years, the report highlights that there is still much work to be done in some parts of the country. They show that nearly 1,000 counties across the nation have seen either stagnant of increased percentages of underwater homes – where the owners’ homes are worth less than homeowners owe on them – since 2011. To find statistics on your county, visit CAP’s interactive map.

• The National Employment Law Project recently put out their latest Unemployment Insurance Policy Advocate’s Toolkit to provide people with resources on various state unemployment insurance issues. You can learn more and read the toolkit online here.

Fact of the Week: 100 CEOs Have As Much in Retirement Assets As 41 Percent of American Families

Coalition on Human Needs by Lecia Imbery 

 

A new report from the Center for Effective Government and the Institute for Policy Studies found that the 100 largest CEO retirement funds are worth a combined $4.9 billion – an amount equal to the entire retirement account savings of 41 percent of American families. A Tale of Two Retirements provides detailed statistics on the staggering gap between the retirement assets of Fortune 500 CEOs and the rest of America (including those who work for said CEOs).

Among the other shocking findings highlighted in the report:

• Nearly half of all working age Americans have no access to any retirement plan at work. The median balance in a 401(k) plan at the end of 2013 was $18,433, enough to generate a monthly retirement check of $104.

• 29 percent of Americans nearing retirement (aged 50-65) have no retirement savings at all.

• Fortune 500 CEOs saved $78 million on their 2014 tax bills by putting $197 million more in special tax-deferred accounts than they could have if they were subject to the same rules as other workers. These special accounts grow tax-free until the executives retire and begin to withdraw the funds.

• Nearly 50 percent of the retirement assets held by Fortune 500 executives are in tax-deferred compensation plans that are not available to most of their employees.

With these and other findings, the report shows how the rising inequity in retirement security is the result of rules that are intentionally tipped to reward those on the highest rungs of the ladder. Thankfully, the report also discusses what we can do about it. Several recommendations are included to rebalance the scales and ensure a secure retirement for all workers, not just those at the top. These policy changes include ending tax-deferred compensation for corporate executives, eliminating tax breaks for companies that increase worker retirement insecurity, expanding Social Security by requiring CEOs to pay their fair share, strengthening the ability of workers to unionize, and supporting universal retirement funds, among others.

The Center for American Progress and the Schwartz Center for Economic Policy Analysis at the New School recently held an event focusing on how tax reform could address the coming retirement crisis. At it, they noted that the top 20 percent of earners reap 60 percent of the benefits of retirement tax expenditures, while the bottom 40 percent of earners see only 3 percent. Some of the recommendations from the conference included refundable tax credits for retirement savings, reforms at the state level, and guaranteed retirement accounts, a sort of hybrid between a pension and a 401(k)-type contribution plan.

According to all of these sources, if current trends continue, an increasing number of workers, including middle-class workers, will face downward mobility in retirement. More than half of all working-age households are in danger of having to make severe and painful cuts to their standard of living as they age. Policymakers should be looking at the recommendations from these organizations and acting to ensure that a safe and secure retirement can be available to all Americans, not just CEOs.

The post Fact of the Week: 100 CEOs Have As Much in Retirement Assets As 41 Percent of American Families appeared first on Coalition on Human Needs.

NDESPA Testimony to Interim Health Services on the Cliff Effect

North Dakota Economic Security and Prosperity Alliance (NDESPA) 

Testimony to the Interim Health Services Committee

Wednesday, November 4, 2015

Good afternoon Chair Lee and members of the Interim Health Services Committee.  Thank you for examining the cliff effect related to employment and public assistance programs through Study 3049.

I am Karen Ehrens and am here today as a private citizen, public health professional and partner in the North Dakota Economic Security and Prosperity Alliance, or NDESPA.  NDESPA is a coalition of organizations around the state working to build and sustain a system of economic security for all through poverty awareness and education, grassroots and community capacity building, research and data development and promotion of policies and practices to eliminate disparities and obstacles for achieving economic security.  I have provided a list of the coalition’s member organizations.

The cliff effect is loss of benefits as the result of a minor increase in gross wages, like a raise in pay or an extra work shift, that can push a family off program eligibility, losing some benefits or all benefits, like falling off a cliff. Often, the increase in hours or pay is not enough to make up the difference in an individual’s or a family’s lost benefits. Falling off the cliff can keep a family in poverty and inhibit their economic self-sufficiency.

Because of the complexity within and between public assistance programs, there will not be one single solution to helping end the cliff effect.  Each program has different income qualifying levels and other specific eligibility requirements. And because program requirements are set at the federal level, changing federal requirements may be out of the states’ hands. 

But, there are solutions being tried in other states to enrich these state run federal programs. NDESPA is beginning to gather information about ways North Dakota could mitigate the cliff effect and truly move people out of poverty.  NDESPA would be willing to provide an overview of the findings at a future meeting for the committee's consideration.  NDESPA also suggests continuing to coordinate poverty relief programs, saving and asset building, education and training, and childcare.

Cutting Giant Holes in the Safety Net

From the nytimes.com By Eduardo Porter

A girl collecting plastic bottles from local parks in Arizona in 2012. Her mother was no longer receiving welfare checks because she had already participated in the program for the maximum amount of time allotted by the state. Joshua Lott for The New York Times

Arizona, where I was born, in July became the first state to cut poor families’ access to welfare assistance to a maximum of 12 months over a lifetime. That’s a fifth of the time allowed under federal law, and means that 5,000 more people will lose their benefits by next June.

This is only the latest tightening of the screws in Arizona. Last year, about 29,000 poor families received benefits under the Temporary Assistance for Needy Families program, 16,000 fewer than in 2005. In 2009, in the middle of the worst economic downturn since the Depression of the 1930s, benefits were cut by 20 percent.

And if Paul Ryan, the Republican lawmaker from Wisconsin who is expected to become speaker of the House, has his way, poor people in many other states can expect similar treatment in the years ahead.

A bit of history is necessary to understand how we reached this point. Two decades ago, when the Clinton administration agreed with a Republican-controlled Congress to “end welfare as we know it,” Washington replaced the poor’s entitlement to aid from the federal government with a fixed block grant to states.

The states were given great flexibility about how to spend the money and a powerful incentive not to give it to the needy. And for all the initial enthusiasm for the idea, welfare reform has fallen far short of the claims of its supporters.

Nonetheless, the block grant approach has emerged as the central plank of the Republican strategy to confront America’s intractable poverty. The party’s main presidential candidates have woven poverty and inequality into their campaign speeches. Nearly all of them are expected to show up in January at the Republican poverty summit meeting in Columbia, S.C., organized by Mr. Ryan, who has laid out detailed plans to overhaul what remains of the American social safety net.

Mr. Ryan has proposed to turn Medicaid into a block grant to the states. Last year, he put forth an “opportunity grant,” a block grant to replace just about everything else the federal government provides lower-income people — not just the Temporary Assistance for Needy Families program, known as TANF, but also food stamps, housing assistance and energy aid — into one dollop of money. The main exceptions would be Social Security and the earned-income tax credit.

For all the talk about creating opportunity for the poor, and how ill-served they are by the current mix of government programs, it’s hard to view these plans as anything but a bald effort to save money.

But don’t just take my word for it. Take it instead from Peter Germanis, one of the White House advisers who help write President Ronald Reagan’s welfare reform proposal of 1986, called “Up From Dependency.” He has been affiliated with the Heritage Foundation and the American Enterprise Institute, both conservative advocacy and research organizations in Washington.

Over the summer, Mr. Germanis published a startling confession. Writing “as a citizen and in my capacity as a conservative welfare expert,” he apologized for whatever role he may have had in the welfare reform enacted in 1996.

“To the extent that anything I ever wrote contributed to the creation of TANF or any block grant, I am sorry,” he wrote. “As I hope to demonstrate in this paper, a block grant for a safety net program is bad public policy.”

And he does. Among the easier charges to make against the Needy Families block grant is that it was not meant to adjust for inflation. It was $16.5 billion two decades ago; it is $16.5 billion today. According to the Center on Budget and Policy Priorities, it has lost more than a third of its buying power.

What’s more, states were given both incentives and tools to redeploy the money to other priorities. Notably, they could get around the requirement to meet job participation benchmarks simply by reducing the caseloads of beneficiaries — almost a direct instruction to bump people off.

“States did not uphold their end of the bargain,” said Ron Haskins, an expert on welfare who worked for more than a decade for House Republicans. “So why do something like this again?”

Arizona is a prime example of what has happened in states where Republicans rule. By now, only about nine out of every 100 poor families benefit from the cash welfare program, down from 55 percent two decades ago. This has nothing to do with the program’s objective of helping poor adults with children escape the stigma of welfare and get a job, still the best antipoverty tool there is. Arizona simply needed the money for something else.

Specifically, as noted in a report by researchers at Arizona State University’s Morrison Institute for Public Policy, the state, facing a huge jump in the number of neglected children put in foster care, needed more money to “plug state budget gaps and to fund child protection, foster care and adoption services.” Rather than ask state taxpayers to help fill the gap, lawmakers took it from the pockets of poor people.

On average, states use only about a half of their funds under the TANF program to fund its core objectives: Provide the poor with cash aid or child care, or help connect them to jobs.

Ending the poor’s entitlement to government aid is counted as a success because it has reduced the rolls of people on welfare. But that is not the same as helping the poor get a job, overcome dependency and climb out of poverty. Welfare was essentially made irrelevant to the lives of the poor. It is meager yet increasingly difficult to get.

Today only 26 percent of families with children in poverty receive welfare cash assistance. This is down from 68 percent two decades ago.

And it’s not as though there are no more poor people in America. In 2012, one out of five households receiving food stamps reported no other source of income. Millions more scrape by on modest assistance and low-paying jobs. But by making the poor almost exclusively the responsibility of the states, our national politicians can claim the problem has been solved.

This is what’s most worrying about the block grant strategy to address the bane of poverty: It allows the assistance to wither while poverty survives.

Forum editorial: More ND children in poverty

inforum.com

Posted on Oct 20, 2015.

INFORUM

(701) 241-5406 (FAX)

Fargo ND 101 5th Street North 58102

North Dakota politicians and policy makers, proud of the state’s economic success, might not be so proud if they examined the latest child poverty statistics from the Annie E. Casey Foundation. The children’s welfare foundation reported last month that North Dakota had the third-highest increase in child poverty in the nation from 2013-14. A jump of 25 percent in the child poverty rate in one year is nothing of which to be proud.

The disturbing statistic comes at a time when the state’s unemployment rate was the lowest in the nation. It comes at a time when the state’s economy – energy, agriculture and accelerating business and industry diversification – was exceptionally strong. Even with the significant downturn in the oil sector and a decline in farm commodity prices, North Dakota is doing well. And during the time the Casey Foundation measured child poverty, energy and Ag were not slowing.

Historically, legislators and others who dismissed the state’s child poverty rate pointed to conditions on American Indian reservations as skewing the statistics. But recent analyses of the numbers by North Dakota Kids Count and other social service agencies suggest an increase in child poverty in cities like Fargo and Grand Forks is a significant part of the problem.

Moreover, the research indicates children in poverty come from homes where parents are working, but not earning enough to lift their families out of poverty. So while the state can crow about a low unemployment rate, the underemployment rate is a more telling measure when examining child poverty.

The 2013-14 Casey survey shows the 25 percent increase in child poverty can be attributed in part to an endemic and mostly invisible low-wage economy that defies the fashionable mantra: “A rising tide lifts all boats.” Even in a state whose leaders boast about a rising tide, the reality is that boats with children are taking on water and sinking. Surely, North Dakota can do better by its kids.

Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.

Does the Social Safety Net Work?

The Inclusive Economy Blog

Last month, the Census Bureau released updated annual estimates of Poverty, Income, and Health Insurance Coverage. Nationally, many of the trends from recent years continued unabated: there was no change in median annual income or the official poverty rate. The stagnation in the income and poverty numbers remains troubling, but there is a silver lining: the social safety net is helping to ensure the well-being of American families.

These data are invaluable for tracking how Americans are faring in this economy, but the official poverty numbers still don’t give a complete picture of low-income families’ complex financial lives. Since the spike in the poverty rate in the wake of the recession, our nation’s social benefit programs have done incredible work, largely keeping household poverty at bay and families afloat. Nowhere is this role more evident, nor articulated more clearly, than in the Census Bureau’s Supplemental Poverty Measure (SPM) estimates of household poverty.

The SPM is the Census Bureau’s more comprehensive view of both household poverty and the effect of public benefit programs on poverty alleviation. This measure has historically remained higher than the official poverty rate, particularly among the elderly and this year’s SPM estimates are no different. However, the share of children in poverty drops nearly five percentage points, from 21.5% according to the official poverty measure down to 16.7% in the SPM—a total of over 3.5 million fewer children living in poverty:

What accounts for these dramatic differences? These declines in childhood poverty can be traced back to the national Earned Income and refundable Child Tax Credits, without which the childhood poverty rate would have been 23.8%, and the Supplemental Nutrition Assistance Program (SNAP), which lowered the childhood poverty rate by nearly three percentage points, from an estimated 19.5%. Both of these programs had significant effects on the overall poverty rate, as well, though the effect of both pales in comparison to that of the Social Security program, which keeps a full 26 million Americans above the SPM’s poverty threshold, and, without which, poverty in the United States would balloon to nearly a quarter of the population:

The Census Bureau’s estimates of Health Insurance Coverage provides further evidence of the real impact of the nation’s social safety net. The 2014 estimates represent the first full year of data after the implementation of the Affordable Care Act (ACA) and its accompanying expansion of Medicaid benefits to the adult population living in households earning up to 138% of the federal poverty level.
The effects were big. Both the CPS health insurance survey (national only) and the American Community Survey (national and state) estimates show a three percentage point decline in the national uninsured rate, which is directly attributable to the implementation of the ACA. In other words, the share of uninsured Americans fell more after one year under the ACA than it had over the entire previous decade. As expected, the groups that experienced the largest declines in percentage uninsured were those with the highest historic rates: working age adults and communities of color, all of whom experienced declines greater than four percentage points:

What Can We Do?

The data are clear: U.S. safety net programs provide critical support to low-income children, families and individuals. While these programs have continued to keep millions of Americans out of poverty and away from disaster, they have collectively failed to bring down the poverty rate, which has hovered around 15 percent for far too long. Similarly, dogged improvements in the economy at large—such as steady job growth and low interest rates spurring private sector investment—have done little to tangibly improve the financial security of the majority of American households. The stubborn persistence of these historically high levels of poverty belie the superficiality of these improvements to our economy.

This is where states have an opportunity—and a responsibility—to pick up the slack where the private sector and federal government have fallen short and implement broad-based social reforms that provide all citizens the foundation necessary to thrive. Only half of the states and the District of Columbia offer a statewide EITC, to complement the federal tax credit. As demonstrated in Table 2, the EITC has served as one of the nation’s key weapons in the fight against childhood poverty; expanding this benefit at the state level will provide the youngest Americans the early support they need to develop and flourish throughout their formative years.

Additionally, while the ACA will continue to drive down the national uninsured rate by increasing access to affordable health care, 20 states have chosen not to expand Medicaid, leaving thousands of the poorest Americans without affordable health insurance coverage. Correcting this will not only result in fewer Americans in poverty, but will also create a healthier and more productive workforce.
States should also eliminate asset limits for public benefit programs, removing a major impediment facing many families and allowing a greater number of families at the margins to take advantage of our nation’s many foundational resources. Many states have already taken each these steps, but only when every state acts will the US truly have an opportunity economy, one in which all citizens can take part.

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Victory! Military Members Just Got Enhanced Consumer Protections Against Predatory Lending

The Inclusive Economy Blog

Military members are used to dodging bullets and watching out for enemy operatives. But when it comes to their finances, they have also had to watch out for predatory lenders who charge outrageous interest rates—and many of those who didn’t have gotten trapped in debt. That’s because, until just this week, consumer protections for service members were very limited.

 

On Saturday, however, updates to the rules governing the 2006 Military Lending Act (MLA) took effect, providing service members and their families with a set of strong protections against predatory lenders. Those updates, finalized by the Department of Defense (DoD) this summer, aim to enhance the MLA by expanding the scope of credit products covered under the law, as well as by closing loopholes that lenders have exploited to continue providing high-cost, predatory loans to service members.

A little history: prior to DoD’s effort to update their rules, the MLA established a number of key consumers protections for services members and their families, including setting an inclusive 36% Military APR (MAPR) cap for loans made to services members, prohibiting refinancing (unless at better terms than the initial loan), check-holding and automatic access to bank accounts or deduction from military pay. The law also prohibit forced arbitration against service members.

However, the 2006 MLA still left much to be desired. The law narrowly defined the covered “consumer credit” to just three closed-end products: payday loans up to $2,000 with a term of 91 days or less, vehicle title loans with terms of 181 days or less and tax refund anticipation loans. In addition to the narrow definition, the 2006 law also provided lenders with a number of loopholes to get around the law. For example, when it came to a payday loan or auto title, all a lender had to do was either increase terms of the loan past the defined covered length or simply lend more than the established cap. Just as many predatory lenders have done in the civilian lending market, they took notice of these loopholes and exploited them to their advantage.

This weekend, that changed. The new rules tip the scales in favor of service members by extending protections established under the 2006 law to a broad range of financial products, including private student loans as well as all deposit advance products, refund anticipation, payday and auto-title loans. Additionally, the law also enhances the 36% MAPR by including the cost of any add-on credit products, such as credit insurance protection, as part of the MAPR calculation. Credit cards are also included in the rules, but protections for these products will not begin until October 3, 2017. Moving forward, service members will have the enforcement backing of the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission, along with strong mechanisms to ensure lenders follow these new rules. Among those mechanisms is the ability to void a loan that is in violation of the new standards.

While the new rules will work to ensure that these members and their families have the protections they need to keep from falling into debt traps, they are only limited to active duty members (as it was in the original 2006 law), leaving veterans in the same boat as civilian consumers—vulnerable to predatory lenders. Both of these groups also need strong protections from predatory lending. That responsibility, however, belongs to the CFPB. We hope that as the CFPB works its way towards releasing their much anticipated small-dollar credit rules, that they too also do the right thing by proposing strong protections that will benefit all consumers, including veterans.

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Active work on Housing and Childcare in Western North Dakota

From: The Vision West ND consortium housing committee is working on a template of available housing incentives that will be sent to the municipalities in the VWND region. The committee hopes this will help cities improve their capacity to attract housing developers. The Vision West ND Consortium held its regular meeting on September 15 via telephone conference call. Twenty five people, including consortium members, associate members, and state and federal agency staff participated in the call.  Buster Langowski, Hazen, chaired the consortium meeting. Vision West ND welcomed two new associate members during the consortium meeting. The members included Houston Engineering, Inc. and NDSU Extension Center for Community Vitality. The transportation committee is in the process of sending letters to the US and ND Departments of Transportation, the US Congressional delegation, Governor Dalrymple, and the ND House and Senate leadership in support of four-lane paving Highway 85 from I-94 to Watford City. The child care committee partnered with Child Care Aware to incorporate the child care portal into its website in an effort to take the information statewide.The child care portal, originally developed by The Strom Center in Dickinson and hosted on the state's SBDC website, connects those wishing to enter the child care industry with the resources necessarto start their business.   Experts reported it takes two months for required background checks to clear potential start up child care business owners, which puts an obstacle in the path for adding more child care spaces. The consortium declined to give associate members a vote, rather they kept them as participating, non-voting members. Karalea Cox from Common Sense Consulting reported on the VWND Technical Assistance Retreat held in Watford City, ND. The Retreat was for plan directors and consortium members to focus on economic development and diversity. The next consortium meeting will be held in Crosby, N.D. on October 20. More information can be found at www.visionwestnd.com. - article compiled with assistance from Katelin Dukart