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There's
no question what pocketbook issue is most dear to
Americans.
It's
relieving a 9.7 percent unemployment rate and securing
more jobs. The concern is at the top of public opinion
polls and was a focus of President
Barack Obama's
recent State of the Union address.
But the
administration also has resurrected some pet pocketbook
ideas for the middle class that have been sitting in
Washington
files for years: aid for moderate-income people with
children, relief for people dealing with painful college
loan payments, and nudges to get people saving for
retirement.
All were
mentioned in Obama's speech and are likely to be among
the recommendations in a report to be issued this month
by the
Middle Class Task Force
, headed by Vice President
Joe Biden
. Given the constraints of a burgeoning budget deficit,
it's difficult to imagine much more than gestures to the
middle class now, but the task force is expected to ask
Congress
to work on the following:
COLLEGE
LOAN HELP
With the
total cost of a four-year education close to
$80,000
at many public universities, students who borrow money
for college leave with an average of
$20,000
in student loans and about
$3,000
in credit card debt.
Tuition
has been rising at a rate 10 times faster than the
median family income since 1979, according to government
figures, so loans are necessary for many students.
Student advocates say large student loans begin a spiral
of ongoing debt for many young Americans.
The Obama
administration proposal: After leaving college, those
with student loans would not have to devote more than 10
percent of their income to college loan payments after a
basic living allowance. And if after 20 years a balance
remained, it would be forgiven. Currently, monthly
payments can't exceed 15 percent of income, and the
responsibility to pay off loans ends after 25 years.
Another
proposal would increase funding for Pell grants for
low-income students and extend
$2,500
college tax credits for middle-income families.
PAYING
FOR CHILD AND ELDER CARE
According
to the task force, since 2000 the cost of child care has
grown twice as fast as the median income of families
with children, and in 39 states exceeds the cost of
in-state public college tuition.
Average
yearly costs range from
$4,000 to $15,000
for infants and
$4,000 to $11,000
for 4-year-olds.
The task
force is proposing an expansion of the child-care tax
credit. The maximum credit now for families with two
children and incomes up to
$43,000
is
$1,200
. Under the proposal, the limit would be
$2,100
. Families with incomes under
$115,000
could qualify for a lesser amount.
The
credit would reduce taxes people pay. In addition, for
low-income parents, the task force is recommending
$1.6 billion
in child-care assistance for roughly 200,000 children.
Also,
$100 million
would help older Americans with in-home care,
transportation and services so they can remain in their
homes.
RETIREMENT
SAVING
Even
before the recession and stock market crash in 2007,
Americans were far behind with retirement saving.
The Center for Retirement Research
has calculated that 51 percent of households will not be
able to keep up their standard of living in retirement.
To
address this, many large employers, with the
government's blessing, started a couple of years ago to
enroll employees in 401(k) plans automatically and to
place money from employees' paychecks in stock and bond
mutual funds. Employees can decline to participate.
But less
than 10 percent opt out. Research shows inertia is a
powerful force: People often don't enroll in 401(k)
plans or invest well if they must take action, but they
don't drop out if their employer enrolls them
automatically.
The next
move is to extend the practice to small employers, many
of which don't offer 401(k) plans. Under the
administration's proposal, small employers would enroll
employees automatically in IRAs, which are easier to
administer than 401(k) plans.
After
accumulating
$5,000
, an employee's money could be invested in stock and
bond funds called target-date funds, which are designed
to get people prepared for a certain retirement date.
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