Online-Only Sale of Savings Bonds Leaves Many Low-Income Americans with No Savings Options | Commentary
By Rep. Matt Cartwright Our nation is in the midst of a personal savings crisis. According to a Bankrate.com survey, 25 percent of Americans have no emergency savings and 67 percent have fewer than six months’ worth of expenses saved.
Even worse, the latest data from the Federal Deposit Insurance Corporation suggests that 10 million households, or one in 12, are completely unbanked, meaning they have no access to either a savings or checking account.
The majority of households aren’t saving enough money, while many are saving nothing at all. Meanwhile, the U.S. Treasury is in the process of removing one of the only reliable savings vehicles available to many vulnerable Americans.
In a decision made without public comment or congressional inquiry, the U.S. Treasury discontinued the paper savings bond program. Formerly available over-the-counter at banks and other financial institutions, savings bonds must now be purchased online.
While the Tax Time Savings Program still allows taxpayers to receive federal tax refunds via paper savings bonds, Treasury officials have only committed to maintaining this program through the 2015 tax season. That’s why I reintroduced the bipartisan Save Access to a Valuable Investment Needed to Generate Savings Act, which would prohibit Treasury from discontinuing the Tax-Time Savings Bond Program for five years unless the department implements a universally accessible non-electronic alternative.
If the Tax Time Savings Program is allowed to expire, many Americans will find it impossible to purchase savings bonds. That’s because TreasuryDirect, the online service which allows Americans to buy savings bonds, requires a bank account, Internet and computer access, as well as a certain degree of tech savvy — things which millions of Americans simply don’t have. The service makes it very difficult to give savings bonds as gifts — a primary reason for many to buy savings bonds — because it requires the recipient’s Social Security number and is even more complex if the recipient is under 18.
The digitalization of savings bonds is causing the near extinction of this savings vehicle and physical symbol of patriotism. According to the U.S. Treasury Department’s Bureau of the Fiscal Service, savings bond sales declined from $1.7 billion in fiscal year 2011 — the last year paper bonds were sold – to $719.4 million in fiscal year 2012 – a decrease of 58 percent.
With the elimination of paper savings bonds, millions of small savers and investors who do not have bank accounts, Internet access or digital literacy are losing one of the only savings vehicles available to them.
The reality is that low-income Americans are most impacted by the Treasury’s actions. According to an analysis of Census data commissioned by the advocacy group Consumers for Paper Options, households with incomes below the national average are 18 percent less likely to have Internet access – and access to TreasuryDirect.
Given the overwhelming savings crisis in this country, any elimination of a savings vehicle aimed at low-to-moderate income Americans needs to be carefully examined. That’s why last year I led a successful bipartisan effort to launch a Government Accountability Office (GAO) review of the savings bond program.
Most importantly, the GAO study will examine accessibility issues with the Treasury’s move to completely digitize savings bonds. We have also asked that the GAO look at strategies for making TreasuryDirect more accessible to those without bank accounts or regular Internet access, as well as the negative impact of eliminating the Tax Time Savings Program.
It’s only right for our government to preserve the sale of paper savings bonds. They should be accessible and equitable for all – especially for Americans who need it most.
Rep. Matt Cartwright, D-Pa., serves on the House Committee on Natural Resources and the House Committee on Oversight and Government Reform.
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