As more and more Americans are expected to save for their own futures, millions of low-income individuals get conflicting messages from their government: Save, and don't save. Over the last decade a consensus has been emerging among researchers, policymakers, and practitioners about the importance of helping low-income persons save and build wealth. Fortunately, many state and federal programs have emerged to do just that. Yet, with limited exceptions, rules for the nation's public assistance programs aimed at this same group of people - Food Stamps, Medicaid, and TANF, for example - send the exact opposite message: Don't save. In recent years a number of states - including California, Colorado, Illinois, Ohio and Virginia - have exercised their limited authority to reform asset rules for means-tested programs. At the same time, there has been little action at the federal level - until now. Representative Conyers (D-MI) has proposed legislation that would reform asset limits across several major income-support programs including TANF, SSI and food stamps. Senators Chambliss (R-GA) and Harkin (D-IA) have introduced legislation to liberalize the limit as part of the Farm Bill reauthorization. In his budget proposal earlier this year, President Bush signaled support for asset limit reform in the food stamp program by proposing to exclude retirement savings accounts. With increasing awareness of the need for asset limit reform - and a real vehicle for improvement in the Farm Bill- the time is right to address the mixed message our government is sending to low-income Americans. Removing the penalty to save will enable more individuals to put themselves on a path to financial independence.
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