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Lee Sevilla's story is touching and sad, but unfortunately it is a story that is all too common in a country that many consider to be the greatest economic powerhouse in the world.  Like many older women living in poverty today, Lee's descent started when she divorced, left to care for three children on her own with a flailing business.  In frail health and refusing to depend on her children for financial support, she worked low-paying jobs and ultimately could never afford to pay rent in a sky-rocketing real estate market.

 

As a society, we cannot stand by as hard-working citizens live in their cars.  A closer look at Lee's story points to a myriad of public policy shortcomings in this country that will only continue to become more severe as the gap between the rich and the poor widens.  A lack of personal finance awareness left Lee in a vulnerable position after her divorce, while frail health and an insufficient educational background left her no choice but to accept low-paying jobs.  Meanwhile, another sector of society was prospering and driving up general living expenses, making it impossible for Lee to survive with integrity.  We must heed the warnings that are so deeply engrained in Lee's story - we can't afford to give our children anything less than a world-class education, health care and real-life mentoring - because unlike Lee, our children will be competing for jobs and homes with their peers around the world.     

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California Dreamin'?

Posted by Amanda Levinson Dec 18, 2007

The nation rarely waits with bated breath to see what laws California is passing, but health care reform might just be an exception. Yesterday, California’s Assembly voted along party lines to create a mandate requiring all Californians to purchase health insurance through government programs, employers, or on their own. The plan closely resembles those already in existence in Massachusetts, Vermont, and Maine as well as the proposals put forth by presidential hopefuls Hillary Clinton and John Edwards. However, to become law the bill still has to pass the Senate and be approved by voters next November, which seems uncertain given public anxieties about the state’s looming budget gap that has been aggravated by the housing crisis.

 

More interestingly, the debates that have emerged from this process likely presage what we can expect to see on a national level as the issue of health care reform gains momentum. As any exhausted Sacramento lobbyist or policymaker will tell you, the California bill took a year to hammer out, and although it had the support of Governor Schwarzenegger, a Republican, none of the Republicans in the Assembly voted for the bill, which they criticized as putting an undue burden on employers and lacking the guarantee of controlling costs. Some liberals have also questioned the financial impact of the plan on families, and have shunned the bill as a victory for the insurance industry. Our presidential candidates would do well to learn from how the issue plays out over the coming year. Hopefully the spirit of bipartisanism that paved the way for the bill’s victory will not be undermined by bipartisanism in reverse—a joint effort to tank what may be the state’s best shot of providing health care to the large number of uninsured Californians.

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Sadly, almost everyone in the country is feeling the effect of the housing crisis in one way or another.  Today this article captured the devastating effect the crisis has had one particular group: homebuilders, who have the lowest index numbers since 1985. The steady decline in these numbers and sales which began in May 2006 is now also being exacerbated by the impact of the winter season on their industry, when home production and sales are already slower than the rest of the year. And all signs indicate that this trend is likely to continue.

 

It is now clear that the housing situation has spun out of control, with every stakeholder pointing the finger at someone else.  The truth is, many stakeholders are at fault for the crisis.  Accept it.

 

Right now we need a unified front and urgent action to protect the victims of the fallout and prevent this type of devastation from ever happening again.  The subprime crisis has touched not only homeowners at the risk of foreclosing on their homes, but also investors, community residents, licensed and credible mortgage brokers and homebuilders (as discussed in this article). In short, the crisis is effecting everyone from Wall Street to individual homeowners, and the forecast for coming years remains gloomy if nothing substantial is implemented to reverse the damage.  Unfortunately plans of action, like the Bush Administration's plan under Secretary Paulson or the modernization of the FHA, proposed are falling short, and indeed  will either do nothing or even increase the magnitude of the current crisis.

 

We need to approach the situation from various perspectives and bring together a broad group of people to securely protect and prevent people across the board.  My suggestion is to modify term loans to help both investors and borrowers, expand mortgage brokers' regulatory standards and most importantly build partnerships between government, business and civil groups to enhance financial literacy to all who need it.  Your ideas?

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This week, New America Media released the results of a poll showing the attitudes of different ethnic groups toward opportunity and the American Dream. According to the poll, 74% of Latinos, 64% of Asians, and 44% of African Americans believe in the American Dream (defined as "if you work hard, you will succeed in the U.S.). When asked whether every American has the equal opportunity to succeed, 59% of Latinos, 43% of Asians, and 30% of African Americans strongly agreed.

 

While the methodology of the poll was somewhat flawed (for example, it took into account the difference in attitudes expressed by Asians depending on their country of origin but not Latinos, who are an incredibly diverse population), overall the results affirmed that the American Dream is alive and well in the hearts of many new Americans. On the one hand, the results are not surprising, since immigrants tend to self-select for the most optimistic and hard-working among a population. On the other hand, the findings are significant at a time when open hostility toward immigrants is being voiced by the media and many of our presidential candidates.

 

That African Americans are far more skeptical about America being a place where they have equal opportunity and a chance to achieve the American Dream is also significant, and shows the fault lines that exist between the experiences of different ethnic groups in our nation. It would be interesting to know why people think the American Dream is or isn't reachable, and what accounts for the differences between ethnic groups.

 

The poll results are also an interesting contrast to one conducted a year ago by the Aspen Institute, in which racial and ethnic backgrounds were not taken into account. That poll found the following:

 

"--While 81 percent agree that America is the land of opportunity, the idea is not something that is being realized, it is simply an abstract concept.
-- Today, 61 percent of Americans say they are not living the American Dream.
-- 61 percent of Americans who aren't living the Dream say they do not believe that they will ever reach the American Dream in their lifetime.
-- 75 percent say the American Dream is somewhat broken, with just 1 in 4 saying it is "alive and well" today.
-- 9 in 10 agree that it is harder to achieve the American Dream than ever before.
-- In addition, just 49 percent agree that if you work hard and play by the rules, you can lead a solid middle class life. 51 percent of Americans disagree with that statement."

 

Further polls along the lines of what the Aspen Institute and the New America Media conducted should offer a rich and varied picture of how different groups of Americans view the American Dream. In addition, when it is complete, Hope Street Group's Economic Opportunity Index will offer a quantitative perspective on which groups of Americans have the most access to opportunity today, and what is most important to achieving it. Quantitative and qualitative studies combined should offer a complete and varied picture of the state of the American Dream, indicators of where our policies are falling short, and point to what we can do as a nation to rebuild the American Dream for everybody.

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Parents in Maine were cheering yesterday after it was announced that beginning January 1, every child born in the state will be eligible to have a $500 grant deposited into a Maine 529 college savings account. While the idea of Child Savings Accounts has gained a lot of momentum at the national and state levels in recent years, the usual proposal of having the government stake funds in an account has been controversial. Maine's program is unique because it has been fully funded by the Harold Alfond Foundation, a private entity. The program is expected to cost between $7 million and $9 million per year, and will allow anybody to contribute to a child's account, the funds of which can only be used for qualified higher education costs. If a youth decides not to go to college at all, or goes after the age of 28, the funds will be returned to the foundation.

 

Two things are interesting about this approach, and deserve more consideration. The first is the role of a philanthropic organization in universalizing savings for college. The effectiveness of this model should be closely monitored over the next few years so that government (national and state) can learn from it. How many families sign up? How are the funds growing? Are parents contributing? In 18 years, how many more kids will be enrolled in college because of this program?

 

The second interesting aspect of this program is its narrow scope. While saving for college is undoubtedly high on the list of priorities for many parents, the fact remains that not all kids are destined for college. The program's "use or lose" strategy overlooks other important things that also need to be saved for throughout the life cycle. An interesting improvement on the program might be to have child savings accounts where the funds are still protected, but could be contributed to and withdrawn for other important asset-building moments in the life cycle in addition to college, such as buying a home or retiring.

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Dads Unite

Posted by Amanda Levinson Dec 11, 2007

The demand for flexible work arrangements and extended leave after the birth of a child is no longer the sole purview of working moms. In a trend that the media has annoyingly dubbed the "Daddy Wars" (is anybody else tired of the combative and polarizing language used to describe these kinds of debates?), an increasing number of fathers are fighting to spend more time with their families without forfeiting their careers. And many want to, or already do, share equal childcare responsibilities with their partners. According to USA Today, almost 70 percent of working fathers would consider staying home with the kids if money wasn't a consideration.

 

As women continue to outnumber men in higher education and enter the workforce in rising numbers, many men have seen an increase in their responsibilities for childcare. This new generation of fathers faces the same struggles as legions of mothers before them, including the stress of juggling work and family, but without the benefits that many moms have. As a result, men are starting to demand similar benefits that will allow them to care for their children. And really, why shouldn't they get them? Flexible work policies and arrangements that allow for dads to be more involved in childrearing should appeal to conservatives and liberals alike. A bevy of studies has shown that strong paternal involvement helps kids get higher grades and test scores, improves their self esteem, and even increases their assets.

 

As for the "Daddy Wars" and "Mommy Wars," we need a détente--no more moralizing or sparring over who is superior for spending more time with kids than at work, or vice versa. The trade-offs parents face when it comes to career and family are fraught with financial and emotional repercussions for everybody. If you are a dad, we'd love to hear your thoughts about what some sensible policies would look like.

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I could not help but comment on Thursday’s Washington Post Editorial, “College Fairness.”  The editorial applauds three colleges, the University of Virginia, Harvard University and Princeton University for officially ending their early application process all in order to help poor or minority students have a fair chance of getting into  schools. The reasoning is because these schools found that the beneficiaries of early admissions were actually the students who needed the least help getting into school.  Studies report that it is the high to middle income, mostly white students who take part in the early application process, while low income or minority students do not.  By eliminating early admissions, these schools hope to increase college fairness because everyone will be applying at the same time. While the editorial lauds these efforts, I only question them.  Will eliminating early admissions really increase the percentage of minorities and lower income students in colleges across the country?   Since all students will now be applying at the same time, it's possible that this will actually decrease the chances for the same people they are trying to help. I predict that this quick solution will have little impact. We need to get to the heart of the problem, which is why low income and minority students have such a limited chance of getting into college.  We need to make elementary and secondary public schools better so these students have just as much of a chance as other students no matter when they apply.

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The Lure of the Local

Posted by Amanda Levinson Dec 5, 2007

After years of dismissing the hordes of street protestors denouncing free trade and the pernicious effects of globalization, it appears that our nation's leaders have suddenly, and definitively, turned against free trade. Everywhere you look these days, the zeitgeist is anti-globalization. For a while, I thought it was just because I spend a lot of time in San Francisco and Berkeley, where the "localvore" movement reigns supreme. But the directive to grow, buy and eat local is even permeating the heart of Silicon Valley, which thrives on and could not even exist without globalization. A cynic would say that the growing anti-globalization vibe is merely a marketing ploy, and indeed in some situations that seems to be the case (to wit: tiny downtown Menlo Park has put up a banner in recent days urging people to "Shop Menlo Park: Buy Local-Support Local Economy," even if the vast majority of goods sold there are not, in fact, produced in our fair town).

 

It used to be that the only people you could find being very vocal against free trade were those who lived in places where their (mostly manufacturing) jobs had been outsourced, or environmental and labor groups concerned about a global race to the bottom in standards and wages. But as growing numbers of Republicans and Democrats alike turn against free trade and question the effects of globalization on economic opportunity and prosperity (for a window into one Republican's change of heart, check out this article on realclearpolitcs.com), it's worth trying to get to the heart of the matter.

 

Like immigration, the current debate over free trade is dominated by emotion- many middle-class Americans blame globalization in general and free trade in particular for the tremendous anxiety they feel about their economic security. The traditional economic wisdom-that a rising ride lifts all boats-clearly doesn't cut it anymore. And why should it when an increasing number of job categories from lawyers to tech workers are being outsourced? Americans are right to question whether the expansion of free trade agreements is beneficial to them. After all, markets cannot be ethical or moral. But the current move toward market isolationism is a misguided throwback to a time that does not exist anymore, and sets up an unnecessary tension between local needs and broader prosperity that can be shared through globalization.

 

Of course, the devil is in the details, and questions about labor and environmental standards, farm subsidies, and economic competitiveness will trip up even the most astute policymaker. But globalization need not be the death knell of American prosperity. The challenge we face as a nation is how to harness the power of free trade to benefit us all.

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New Orleans is gearing up for another disaster, but this time it is of the man-made type. According to the New York Times, thousands of evacuees who have been living in trailers since Hurricane Katrina are being evicted by FEMA. With the demolition of public housing in New Orleans and rents skyrocketing around the city, displaced residents are beginning to panic about where they’ll end up. Although they were meant to be a temporary solution, the FEMA trailers have merely ended up containing what was almost guaranteed to become a major housing crisis.

 

No affordable housing can be built fast enough for the estimated 6,400 families who will be displaced across Louisiana when they are evicted from their trailers. Indeed, the homeless population in New Orleans has nearly doubled since before the hurricane, and hundreds of people are now camping out in front of city hall. Although it appears that our fear--that these communities of trailer parks would become permanent—was unfounded (see our Op-Ed from shortly after the hurricane), what now faces New Orleans and other communities across the South is potentially worse. Thousands of families risk being left with even fewer housing alternatives than they had before. FEMA has sworn that no family will be left without housing, and let’s hope they make good on that promise. The families of the Gulf Coast need real solutions to help them get back on their feet, including access to affordable, decent housing in communities where they are close to their jobs, transportation, and schools for their children.