Posted: 04/17/03

Arguing with Sherraden and Boshara about IDAs feels like arguing with Freud and Jung about psychology. While we sometimes disagree, they've fought long and hard for an obviously worthy cause, and their ideas have made a real difference in some lives.

On the point of whether the poor can save enough for IDAs to be an effective way to build wealth, Sherraden quotes me out of context. My point was that some liberals object to IDAs because they don't think the poor can save enough. But I carefully chose my words to say that Sherraden's own work shows, unsurprisingly, that "most of the poor are hard pressed to save much," with median net savings of $10 per month. Two-thirds of participants in his study made unmatched withdrawals, sacrificing $2 later because they needed $1 now. Still, for a minority of low-income families, IDAs surely help.

To get to the main point in both their responses, Sherraden and Boshara clearly share a larger vision, but their vision does not appear to be breaking through. I fear the IDA movement has morphed into a small-bore idea that nibbles at the edges of redistribution while conservative economic forces are doing just the opposite.

Let me stress for the umpteenth time that this is not a criticism of what IDA's do; they demonstrably enable a small group of poor people to make critical investments, investments that have the potential to make a lasting multigenerational impact on their families' living standards. My comments should not be misconstrued as a critique of those programs. To the contrary, we should be doing much more of that.

I'm just trying to figure out why the stuff Sherraden and Boshara wrote about seems to be—at least to me—so far off the national policy agenda. To the contrary today's New York Times (May 23) announces that Congress has all but agreed on the new Bush tax cut, a supposedly $320 billion, multi-year tax cut that will almost surely cost more than $800 billion before all is said and done. According to my newspaper, this year the plan delivers tax savings of $13,400 to married-couple families with incomes around $500,000 and $1,100 to those making about $60,000. The lowest-income families get almost nothing. This plan will pass despite the fact that the administration already passed $1.3 trillion in highly regressive tax cuts in 2001.

These are huge changes in public policy and budget priorities. If you read these articles about the tax cut and then turn to Sherraden's and Boshara's responses, the cognitive dissonance is overwhelming. I understand and take solace in that fact that Sherraden and Boshara have the ears of highly place people; they have, in Sherraden words, “… advised extensively on these policies on both sides of the Atlantic.” But they—we all—need to think about what's going wrong on this side of the pond.

I don't think it's simply that some elderly voters got confused in Florida and we lost the coin toss. What needs to be better understood is why it's “class warfare” when policy-makers want to strengthen the hand of the poor while massive redistribution upward is successfully sold as a “growth plan.”

Now there is a line of thinking that IDAs have some traction here because they draw support across the political spectrum. But the point I tried to make in my piece is that when it comes to really making some progressive changes, what politicians such as Sen. Rick Santorum (R-Penn.) support are unlikely to amount to much.

Sherraden's and Boshara's responses seem to suggest that IDAs as they exist today are, in Boshara's words, the camel's nose under the tent, “…a small but necessary down payment on that larger vision.” They usefully get policy-makers thinking beyond income and about the importance of assets. But how do you get from there to, as Sherraden writes, “… the Child Trust Fund precedent in the United Kingdom sets the stage for a universal children's account in the United States within the next 20 years”? Not if conservatives continue to successfully implement a program that will starve the federal government of revenue.

I asked lots of people on both sides of the issue to look at an early draft of my piece. A number of asset advocates correctly pointed out that I overlooked an important advance: the lifting of the asset test for Food Stamps in many states. Pre-Temporary Assistance for Needy Families (TANF), if a Food Stamp applicant owned a car worth more than about $4,500, the value over that amount was added to the income eligibility test. This clearly made no sense. Now only nine states still subscribe to this lousy asset test; the rest have either wholly or partially discounted the value of a car in determining eligibility for Food Stamps. This is a solid accomplishment and one for which many good people have fought. But think about the magnitude of this gain compared with what's going on with tax policy today.

We need to think bigger. Let's get together and come up with some big, progressive ideas -- and then think about how to convincingly explain them to the electorate. Some of the Democratic candidates are doing just that right now with health care, which I think is a great idea. Let's do the same thing with minimum wages (we should raise it and index it), living wages, tax policy, safety-net policy, the environment, education and, yes, asset-based policies as well. Let's take a page from the opposition and think big. It's working for them.