Asset Building 2011: Opportunities and challenges for the new year

As EQUITY publishes its first issue of 2011, an unsettled future seems to face governments, business and individuals alike. On the one hand, according to recent economic data reported by the Vanguard Group, signs indicate that the economic recovery is slowly gaining momentum. It was reported this week that the nation's real GDP grew more than 3% last quarter, thanks in part to an increase in consumer spending. Consumer confidence improved notably in January, and new-home sales picked up during the month of December

These indicators, all of which suggest an improving economic outlook, can and have fluctuated over the last two years.  Are we finally in a place where continuing good economic data indicate a steadily improving economy, or will this simply be another series of positive indicators shortly followed by less ebullient reports?

Messaging delivered through the State of the Union Address aside, 2011 is shaping up to be a very challenging financial year for both federal and state governments and its people alike. President Obama’s economic benchmark is measuring success of our people by the jobs they can find and the quality of life those jobs offer . . . “By the opportunities for a better life that we pass on to our children" could not come at a better time.

Over the next few years, difficult budgetary and spending decisions need to be made, but it is critical to insure that these choices reflect the investment in people, technology and outcomes referenced in the President’s speech. When it comes to making budgetary decisions, it is critical to recognize that all spending is not created equal. For example, “the Federal Government has no separate ‘capital account.’  It treats $1 spent on rations for the  troops – necessary, but here today, gone tomorrow – the same as it treats $1 spent on a windmill that will last 30 years or aid to education that will last a lifetime,” says financial commentator Andrew Tobias.

He continues, “We need to do all we can not to borrow for ‘operating expenses,’ just as you or I should not borrow to buy dinner. But if you’re borrowing to buy a sewing machine that will allow you to start your own little business or borrowing to get an education – that’s okay.  Indeed, nervous-making but more than okay in the long-run, that’s the borrowing that offers the promise of a brighter future.” Of course, what both president Obama and Mr. Tobias are discussing is the concept of asset building, not just for individuals or even groups of individuals but for the nation itself.

When the long overdue idea of paying down the deficit, spending within ones means and investing for the future are finally embraced by both the federal government and states alike, it is crucial that policy makers, advocates  and people with disabilities pay close attention to precisely how and who these policies empower.

In the State of the Union Address, President Obama, specifically mentioned protecting people with disabilities from spending and entitlement cuts, but state budgetary reductions can still drastically affect people with disabilities, their independence and quality of life. The disability community must not simply oppose cuts to health and human services and other disability programs but provide and develop a unified advocacy message to reduce spending while maintaining or increasing investment in programs that empower people with disabilities to work, save and pay taxes.

For example, in California much of the Governor's budget balancing relies on “deep cuts that will weaken the public structures that many Californians rely on…” according to Jean Ross, Executive Director of the California Budget Project. She suggests that protecting our core public systems and structures is essential for securing a prosperous future and paving the way for economic recovery.

Simply put, people with disabilities have to be part of paving that way to an economic recovery.  Simply protecting entitlements, while important, is not enough. People with disabilities have to be part of the solution. It is necessary for both the federal and state governments to invest in programs, tools and technology to assist people with disabilities in gaining employment and building a financial future for themselves and their families. In this way, governments can both permanently increase the tax base while simultaneously slowing the pace of spending.

While the way forward for both federal and state funding priorities will continue to be debated and negotiated, the private sector response to the economic crisis presents even more individual challenges for personal financial planning. 2011 may at some nostalgic point in the not-to-distant future be known as the year when banks really started bumping up there fees.  But hold on, haven't banks already drastically increased all fees? How could they, in such an economy and at a time for national unity, raise fees even further? Doesn't the credit card and financial reform legislation prevent this? Of course, the obvious answer is a resounding no. It would be simplistic at best to believe that once the financial reform regulations began to take effect, banks would simply stand by as some of their most profitable income streams were regulated out of existence. While banks can no-longer charge penalty fees upon penalty fees and must provide notice to raise interest rates, that is all well and good, but if the big banks have their way, interest fees may be the least of one’s concerns this year.

According to Chase, their "Total Checking" account will now sport the dizzying monthly fee of $12 if one fails to maintain a $1,500 minimum balance (or $5,000 across all deposit accounts) or make $500 in monthly direct deposits. That works out to $144 a year in, well, checking fees to access your own money. Chase is certainly not alone; the Bank of America fee structure ranges from $6 to $25 per month depending on the type, number and balances in your Bank of America accounts, while Citibank and Wells-Fargo have similar fee structures in the works. For many people who think they can avoid such fees by maintaining a sufficient balance or through monthly direct deposit, beware. New fees for debit card or ATM withdrawals from other institutions are on the way up, while overdraft protection and insufficient fund penalties continue to rise.

While no-one knows what will ultimately happen economically in 2011, it seems safe to assume a year of uncertainty and caution. That is not to say that opportunity is dead; in fact, 2011 provides several new asset building prospects chronicled in this month’s EQUITY.  From internships specifically for people with disabilities at credit unions (http://www.wid.org/programs/access-to-assets/equity/equity-e-newsletter-february-2011/profile-of-the-month/) to painless retirement savings strategies made possible by 2010’s last minute tax deal (http://www.wid.org/programs/access-to-assets/equity/equity-e-newsletter-february-2011/tip-of-the-month/) to a new income and asset building demonstration project offered by the Social Security Administration in specific geographic areas (http://www.wid.org/programs/access-to-assets/equity/equity-e-newsletter-february-2011/equity-responds-wid-answers-your-questions/), 2011 still provides plenty of programs and strategies to build financial resources even in these uncertain times.

Perhaps now more than ever, it is critical that people with disabilities take advantage of the programs and strategies available through the asset building community. Financial education, smart budgeting and accessing progressive programs focusing on economic empowerment do exist, but it is up to the individual to pro-actively find these programs to build a more successful future.