The State of the Union
President Obama used his sixth State of the Union address to direct the nation’s attention to the widening wealth-gap between affluent and struggling Americans. According to researchers, the gulf between these groups has been growing since the 1970s, with the bottom 90 percent of Americans owning a mere 23 percent of total U.S. wealth in 2012. A central component of the President’s plan to reverse this trend is to restructure the tax code in a way that would help middle-class families cover expenses like education and childcare. USA Today’s John Waggoner outlined the proposal, which included closing the stepped-up basis loophole, increasing the tax rate for capital gains, and creating a fee for financial institutions to discourage excessive barrowing. These changes would finance several tax breaks for average Americans, including a tax credit for two-earner households; an expansion of the EITC to single, childless workers; a larger childcare tax credit; and a strengthened and permanent American Opportunity Tax Credit (AOTC). To pay for some of the tax credits for students, the President proposed a change to how the tax code treats college savings plans. Libby Nelson of Vox delved into the mechanics of the plan, which would make higher education tax credits more progressive through “a broader [AOTC] that's more generous to low-income students and fewer tax incentives for families who can afford to save for college.” Allie Bidwell reported on criticism that the plan doesn’t do enough to ease the financial burden of low-income students.
Second-Chance Economy
In today’s economy, one misfortune or mistake can become a permanent obstacle to finding a good job and building a better future. This reality can be devastating for many Americans who want to work but cannot find stable employment. Rachel Black and Aleta Sprague for CNN chronicled stories of people who have become unemployable simply because they were unemployed. The numbers reflect a vicious cycle: if you have been jobless for more than a year, you have less than a 1 in 10 chance of finding a job. Employment prospects are particularly dismal for people who must disclose that they have been incarcerated. This problem is further complicated by states – like Maine, Missouri, and Wisconsin – looking to policies that would make it more difficult for people with felony convictions to receive welfare benefits. Clinton Yates, who writes for The Washington Post, touched on some these of issues: “The plight of someone coming back to society from incarceration is still largely misunderstood, and the population is inadequately served.”
Listen to a new podcast conversation in New America’s Weekly Wonk with Anne-Marie Slaughter, Rachel Black, and Aleta Sprague on the mismatch of the American Dream and our one-strike-you’re-out economy – and what can be done about it.
Child Poverty
Jana Kasperkevic of The Guardian highlighted a new report by the Southern Education Foundation (SEF) that found that 51 percent of public school children qualified for federal programs for free or reduced-price lunches in 2013 – the highest rate in at least 50 years. Demos’s Matt Bruenig supplemented the SEF report with data from the American Community Survey and found that “the rise in poverty among K-12 students is a general economic phenomenon affecting private and public school students alike. In fact, the private school poverty rate rose faster over this period than the public school poverty rate.” The National Center for Children in Poverty (NCCP) at Columbia University's Mailman School of Public Health released its annual factsheet on low-income children this week, finding that a staggering four out of every ten American children belong to low-income families.
Quick Hits
Rourke L. O'brien reported in The Los Angeles Times that the GOP Congress is using the disability insurance program as leverage for a Social Security overhaul.
The YouthSave Consortium published a new website and report on the performance of savings accounts for youth in Colombia, Ghana, Kenya, and Nepal.
