New Program Matches Savings By The Poor

Several national charitable organizations joined members of Congress on Wednesday in announcing a new type of savings account that matches the money low-income Americans save for college, buying a home or starting their own business with money from state and local governments, financial institutions and churches.

The program is sponsoring 2,000 accounts in 13 cities - including Austin, Texas; Indianapolis; San Francisco; Kansas City, Mo.; and Chicago - according to the Corporation for Enterprise Development, a Washington, D.C.-based nonprofit group that helps low-income communities save money.

U.S. Rep. Tony Hall, D-Ohio, and U.S. Sen. Dan Coats, R-Ind., who have written House and Senate bills to give the program federal money, attended Wednesday news conference to help push the program - which was developed George Washington University’s Michael Sherraden in 1991 after studying the financial assets of the poor.

“The middle class, upper income, they have all kinds of breaks,” Hall said. “The poor, they don’t have any breaks.”

Before last year’s welfare reform laws, people on public assistance were penalized for saving, Hall said. The proposed accounts reward the poor for saving their money like home mortgage subsidies, capital gains taxes and pension fund exclusions reward the middle and upper classes, he added.

Robert E. Friedman, founder and chair of the Corporation for Enterprise Development, said the program changes the way the government and businesses help the poor.