Child Savings and Redeeming the American Promise

Child Savings and Redeeming the American Promise
Children’s Savings Conference Closing Remarks
April 30, 2014
“Ten years ago we had Johnny Cash, Bob Hope and Steve Jobs. Now we have no cash, no hope and no jobs.
Protect Kevin Bacon.”
— Unknown
The Beginning
Speakers in the opening plenary of this conference framed the current children’s savings context
Michael Sherraden reminded us of his basic thesis posed almost 25 years ago, that assets
matter, not just income or savings, and called for an account for every child. He
underscored Piketty’s thesis—that we will not survive on labor income alone.
Frank DeGiovanni, our truthkeeper, judged that the glass on CSAs was half-full and halfempty.
Leigh Phillips called for clarity—in goals, in what works and in product.
Willie Elliott called on us to ‚free our minds‛ and open them to new possibilities and
implications of CSAs.
Five years ago, SEED had ended with proof of possibility, but the 2008 crash-induced recession
stunted any dramatic progress. The only 1,000+ account CSA initiative was SEED OK with its 1,350+
seeded, matched, randomly assigned accounts (and controls) across the face of Oklahoma.
Today, five years later, we live in a changed world. In San Francisco, Cuyahoga County, Maine and
Nevada alone, we have potentially enduring universal, progressive, automatic enrollment systems
of (tens of) thousands of seeded, matched accounts for Kindergartners and newborns. We now have
paradigm-changing data demonstrating the multiplier effect of early savings. Support for universal
CSA tax credits has crept into the highest reaches of Congress and the Administration, with
consciousness of the need for asset tax reform and the size, regressivity and ineffectiveness of
current asset tax expenditures penetrating the foundation, civil rights and assets fields.
The Six Challenges and Conference Directions
Participants in this conference tackled the six great challenges to CSA growth identified in the
process of putting this conference together, and identified the key paths to progress:
1. Product
New systems of child bank accounts, like those produced by Citi Microfinance for San
Francisco’s K2C, the KIPP Schools; newly engineered systems of accessible, universal,
automatic and progressive 529 accounts in Maine and Nevada, with similar systems
expected to emerge in states like Indiana, Utah, Rhode Island and elsewhere soon; TrustEgg
investment accounts (with 8% returns), as well as more craft credit union products.
2. Platforms
Having learned that CSAs are best added to an existing service delivery platform, active
development of education, tax, entitlement and social service platforms is ongoing.
3. Participation
To get high penetration and levels of saving, there need to be community-specific, highertouch elements to fundamental opt-out systems, like that in Wabash with the Indiana 529
infratructure added to active outreach and financial education by the school superintendant
and related nonprofits. The voices of former child and youth accountholders have to get
louder, more organized, with folks like La Terra Cole in the lead and the Jim Casey Youth
Opportunities Initiative network just behind.
4. Policy
Federal, state and local policy opportunities are legion and cross-pollinating. Representative
Phil English considers CSA policy to be ‚trans-ideological.‛ We must keep the big idea—
universal, progressive, substantial CSAs—in front of Congress and the Administration, and
increasingly the field, as an aspiration, while being ready with smaller pieces of legislation to
attach to whatever is moving: entitlement reform, tax reform, Pell Grant reform, Stafford
loans and the like. And, it doesn’t hurt to have offsets in mind, even as we argue, per Phil
English, that expenditures to incent savings are not really expenditures and don’t really cost
the treasury.
5. Funding
Reducing and/or reallocating individual asset income tax expenditures could provide more
than enough funding for a sizable match/incentive for every man, woman and child in the
country. Individuals and corporations provide new funding possibilities as economic
development tops corporate social responsibility priorities in the public mind. Rethinking
postsecondary finance, with scholarship funds reallocated between traditional scholarships
and more leveraged, earlier child and youth savings combined with financial education
which can involve the family, provide new leverage at no additional cost.
6. Framing
We are interested in both savings and asset accumulation across the income and race
spectrum. We should pursue the marriage and logical linkage between matched savings and
college attendance and completion. Most attendees at this Conference believe that the
purposes and uses of accounts are many and go beyond education to multiple uses across
the life span and represent investments in entrepreneurial growth, animation of individual
talents, capabilities and efforts, and actually add to growth. We are ready and need to
engage in more marketing and raising the profile of CSAs, youth accounts and adult asset
building in this environment where wealth inequality, capital concentration, economic
stagnation, dimming of the American Dream and economic mobility, and the need for
growth and job creation/entrepreneurship have risen to the top of the national agenda.
All Together Now
The Children’s Savings—or as Michael Sherraden and CSD prefer, the Child Development—
Account field, as admirably represented in this room, has never been more vibrant. I am equally
excited by the half of you who have been seeding this field for years or decades, or the half of you
who represent new shoots, new alliances, new approaches and fields. The energy in this room is
palpable; you have changed the world of child accounts on the ground in states and communities
across the country. The four large-scale (and scalable) local and state systems of universal,
progressive child accounts will likely double in the next couple years from seeds already planted. I
am convinced that with this energy, vision and entrepreneurship, this field cannot help but grow,
learn and expand…as long as we keep our eye on the common goal and appreciate, learn from and
embrace our diversifying allies.
Never, perhaps, has a new field been so thoroughly researched from a variety of perspectives using
a variety of methods, including rigorous randomized trials, notably SEED OK. That research has
captured and validated a wide range of impacts and effects of child and youth accounts, including in
the stories of thousands of children, youth and families who now can tell their own stories. The
research has also taught better designs … and raised questions and challenges. The effects of asset
accumulation alone, and our ability to effect it through public/private delivery and markets, has
been proven using the toughest of tests. Savings engagement, participation and levels have often
disappointed, often huddling in the mid-teens without automatic enrollment and high-touch,
community-sensitive peer connection. Benchmarking expectations against participation rates in 529
programs more generally (3%) or participation rates in employer retirement plans is critical.
Too often commentators on the field draw distinctions and seeming contradictions, and speak in
either-or terms: savings or asset building; national, state or local; research or practice; policy or
markets or marketing; innovation or scale; high- vs. low-touch; racial wealth gaps or wealth
inequality more generally. The economic, social and philanthropic recessions put pressure on
participants in the field to distinguish themselves and compete for scarce (if growing) resources and
brand recognition.
But, the simple truth is that this is a both-and world, not an either-or world: assets and savings,
national and state and local, field and research, and policy and markets, innovation and
product/platform refinement, high-touch and sound plumbing. Our disagreements, far from being a
cause for concern, are a reflection of our strength, our diversity and our learning. John Keats talked
about ‚negative capability, the ability to be in doubts and uncertainties without any irritable
grasping after truth and reason.‛ We would do well to embrace this capacity.
The house we are attempting to build is so much bigger than any of us. There is room—and need—
for all. We need simply to stay connected, so that we can learn from, share with and support each
other; CFED’s role is to foster those connections and that learning, to do whatever we can to support
the multifaceted development of this field/movement.
Time presents its own set of conundrums. One of the first pieces of advice I received upon arriving
in DC was that, ‚the rate at which things happen in this city differs from the rate you expect them to
happen by a factor of ten—usually ten times slower; sometimes though ten times faster.‛ Which
reminds me of the Estonian entrepreneur I talked with two months before independence when I
asked him how he could have foreseen, let alone prepared for entrepreneurship when it had been
illegal, and he responded: ‚It’s kind of like trying to catch the bus here. You never know when the
bus is going to show up, but when it does, you have to be there or you’ll miss it.‛ Fifteen years into
the development of the CSA field, 25-35 into the development of the assets field, we have much to
show, including an impact upon tens of thousands of families, but it is clear that building the ladder
of opportunity may be the undertaking of a generation or two or three.
How do we know where we are and what to do? Gloria Steinem’s advice in her National Press Club
speech, ‚Our Revolution Has Just Begun,‛ on the eve of receiving the Presidential Medal of Freedom
earlier this year are as pertinent to the CSA and asset-building movement as they are to larger ones:
‚How do we move forward? It’s not rocket science. We need to worry less about doing what is most
important, and more about doing whatever we can. Those of us who are used to power need to learn
to listen as much as we talk, and those with less power need to learn to talk as much as we listen.
The truth is that we can’t know which act in the present will make the most difference in the future,
but we can behave as if everything we do matters.‛
‚Human beings are linked, not ranked…‛
‚The end doesn’t justify the means; the means are the ends. If we want dancing and laughter and
friendship and kindness in the future, we must have dancing and laughter and friendship and
kindness along the way.‛
‚People often ask me if I’m ‘passing the torch.’ I explain that I’m keeping my torch, thank you very
much—and I’m using it to light the torches of others.‛
‚Because only if each of us has a torch will there be enough light.‛
— Gloria Steinem, ‚Our Revolution Has Just Begun‛
Ms. Magazinge, Winter/Spring 2014, p. 31.
Redeeming the American Promise
I should know better than not to stop with Gloria’s words, but there is another frame I need to put
on the significance and reach of this group and our goals.
By almost any measure—poverty, inequality, economic mobility and growth, opportunity,
disadvantage, racial disparity, economic marginality, middle class size and stability—the American
Dream is dying. As Van Jones noted, ‚we are leaving genius on the table.‛
The ultimate goal and potential of the CSA field is to redeem the American Promise—that all people
matter, that all deserve a chance to build futures for themselves and their families, and that this is
the way we grow, significantly, over the long term, together.
What we have learned from 35 years of effort in the self-employment, savings, asset and child
account fields—if not from 250 years of American history—is that, given a reasonable opportunity,
low-income and even very poor people—and therefore middle-income people—will save, start
businesses, buy and keep homes, go to college, undertake skilled and secure work, and build futures
for themselves, their families and their communities.
It remains for us to build an inclusive savings platform for all Americans, insuring, in Piketty’s
terms, that capital serves the many and not just the few—that investment reaches common people
with uncommon dreams and abilities. Be clear: this savings and investment approach provides a
win for all: the families that thereby start businesses, buy homes, go to college, enter the workforce
and middle class trained; all the other stakeholders in a growing economy, and a public and private
sector that depend on middle-class consumers and producers.
We can no longer afford to spend half a trillion dollars a year in federal income tax expenditures
simply to further enrich the homeownership, retirement savings and asset-building ambitions of the
wealthiest 20, 5 and 1% of taxpayers. We must include the asset-poor majority of Americans who
deserve such asset-building, entrepreneurial incentives/subsidies no less, and for whom they can
really make a difference. The President and incoming chair of the Senate Finance Committee, Ron
Wyden, have called for no less.
Child accounts are the most popular, easily understood and trans-ideological wave of universal,
progressive asset-building policy—the first step toward a truly inclusive, lifelong system of
democratic, economically productive saving, learning and asset building. They are important in and
of themselves, but also in harkening a larger and more profound change: redeeming the American
Is it too much to believe in Redeeming the American Promise? I had the honor of meeting Mrs.
Myrlie Evers last week. She told about how Medgar was number one on the White Citizen’s Council
hit list for virtually the entire time they were married, but that Medgar believed with his whole
being that, once the current racial justice problem was solved and they proceeded to economic
development, in the next phase of the civil rights movement, Mississippi would be the best state in
the Union in which to live. If Medgar could believe in Mississippi—which almost became the first
state in the country to enact a system of universal child savings accounts due to the work of Bill
Bynum, HOPE Credit Union and Lisa Mensah—if Medgar could believe in the redemption of his
home state, we can do no less. We can, and we must, redeem the American Promise.