Financial literacy for politicians

ANNAMARIA LUSARDI WASHINGTON, DC, UNITED STATESI have argued in my blog postings that individuals need financial literacy because we are increasingly asked to make financial decisions that have important consequences. But there is a group for whom financial literacy is even more important, since their decisions are going to affect the whole population. These are our politicians. 

As a case in point, the consequences of the standoff about the debt ceiling are severe. For the first time in history, the US debt has been downgraded from AAA to AA. This could mean higher interest rates, for example, on mortgages or car loans, and thus higher costs for many consumers. The stock market gyrated last week, dropping sharply, and it dropped more than 600 points on Monday, destroying in less than a week most of the gains that had been made slowly over many months. These are serious problems that affect real people! 

When politicians make decisions with such consequential economic implications, they must be financially literate. Consumers learned about the costs of financial illiteracy during the financial crisis; politicians will likely get their lessons soon, if what they want to see is what happens to an economy in which basic economic principles are ignored. 

There have been a number of statements by politicians that reveal their financial illiteracy. One example: the argument that it does not matter (or we should not care) if the world is watching or what the world thinks of how the US handles the debt ceiling. This is unfortunately wrong. A large portion of US debt is held by the Chinese, and so it does matter what other countries think of the discussion about the debt ceiling, and politicians should care—in fact, they should care a lot. Another example: the suggestion that we should let the government default to demonstrate how important it is to reign in the deficit. This is strange financial decision-making. It is the equivalent of a household wanting to burn down the house to discipline its members. I would recommend trying that strategy on a desert island but not in a country inhabited by 300 million people. 

I doubt financial illiteracy is concentrated in one political party only. We have witnessed poor economic decisions a lot in the past few years. Having public debt on an unsustainable path is not only problematic, but it provides a bad example to citizens as well. Not just the federal government but also state and local governments have done a poor job in keeping their finances in order. 

The decisions that politicians make have enormous implications for the economy and for all of us. We are the ones paying the cost of the decisions that are made. We should demand that the politicians we sent to represent us and who are bound to make these important decisions be financially literate and explain their decisions to us in economic terms. A fragile economy that has survived a very severe crisis and is trying to recover from a great recession needs politicians who understand basic economic principles, now more than ever.


The NFL is Back

ANNAMARIA LUSARDI WASHINGTON, DC, UNITED STATESI was very happy to hear that the NFL lockout was over and I have been avidly reading the sport section of the newspapers. I normally read the business section, but this week I could not bear any longer to read the discussion about the debt ceiling and it was good to go straight to the sport pages. While attending the National Bureau for Economic Research (NBER) Summer Institute last week, I have startled a few economists with my conversations about football; I enjoyed that!

There are four things I like about the agreement that was reached last week:

1) Players’ safety and health. The agreement limits on-field practice time and contact. Importantly, it limits full-contact practice in the preseason and regular season. Who needs head concussions? I was appalled at the statistics about injuries among football players when I read them. These are serious issues and I frankly wonder why it took so long to worry about players’ safety. This discussion has already trickled down to college football and I was very happy to see that the Ivy League colleges have also adopted a limit to football practices to reduce head injuries. Importantly, the new agreement provides enhanced injury-protection benefits and an opportunity for current players to remain in the player medical plan for life. It also set up a fund for medical research, health care programs and NFL Charities. These are smart features; a big thumb up.

2) Benefits for retired players. The agreement provides additional funding for retiree benefits and sets up a fund to increase the pensions of pre-1993 retirees. This is also a good and needed program. The career of players is often very short (and cut short by injuries as well) and it is hard to accumulate a good pension on a short career (let alone think about pension when one is 22!). We have read too many stories of players running out of money after the stop playing and it is important to find ways to provide for the players’ future. Another thumb up.

3) Improvements to career transition and degree-completion programs. Because, as already mentioned above, the career of players is short, it is important to provide help in their career transition. Players have very specific skills that can be used well in sport but also in other fields, but they need help in translating those skills or simply in being connected to other fields. Some players have not completed their college education and, given the returns to higher education, it is beneficial to facilitate and help players finish their degrees. A thumb up here as well.

4) Sharing among players. To those who believe players are greedy and want absurdly high wages, I would like to point out there is absurdly high amounts of money on the table and the projections are for high growth in that money in the future as well. In fact, players have agreed not only to a stricter salary cap bu a new fund will also be created to redistribute savings from the new rookie pay system to current and retired-player benefits and a veteran-player performance pool. And we have now heard news about Peyton Manning staying with the Colts but passing up being the highest paid player in NFL history. This will allow the Colts more flexibility to sign other players. This is the statement Manning made: “Whether I deserve to be the highest-paid player over the next five years is irrelevant. I would rather them use the money and keep the players they want to keep and get other players.” One thumb up to Peyton Manning. Another thing I want to remind readers is that players donate generously. Many have their own charities and are very sensitive to social issues related, for example, to poverty, education, and discrimination. Because of that spillover, I would have preferred to see more rather less money going to the players.

But the best news is that we will be able to go see the games. I am getting ready to not only watch them in TV but to go to the stadium. As for the other lockout (about the debt ceiling) I think politicians could learn a thing or two from the NFL.


Liberty Tax Service Helps Create Awareness for Federal Financial Aid for Postsecondary Education in Underserved Communities

Liberty Tax Service provides FREE forms completion assistance in English and Spanish to families and students interested in applying for Federal Student Aid.


    (Virginia Beach, VA) – Liberty Tax Service, the fastest-growing retail tax preparation company in the industry, is helping students and families in underserved communities throughout the United States realize their dream of advanced education by creating awareness of the Financial Student Aid program and offering FREE assistance with completing these applications through their offices nationwide.
     In early 2010, Liberty’s Hispanic Programs Team met with the White House team leading the Initiative for Educational Excellence among Hispanic Americans and learned that there is a wide gap in awareness of the availability of Federal Student Aid for postsecondary education among households in minority communities throughout the United States. Additionally, completing these forms can be a daunting task for many in these communities. In meetings with the U.S. Department of Education, it was further established that creating awareness of federal student aid and assisting families to successfully navigate the application process has been identified as a key opportunity to realistically increase the postsecondary school attendance rate in the Hispanic community, as well as in other minority communities in the United States.
     Over the span of three decades, the real, inflation-adjusted cost of tuition for private four-year colleges has more than doubled; tuition at public four-year institutions has nearly tripled. Consequently, making college affordable for all students is a top priority for the Obama Administration.
Inspired by the White House Initiative meetings and conversations, the Diversity Program’s Team at Liberty Tax Service realized that their local offices could help close the gap in awareness of and applications for Student Financial Aid in minority communities, and could do so in both Spanish and English across the nation. Since some of the information needed for applications comes from the applicants’ or their family’s tax returns, Liberty Tax Service embarked on a mission to become a trusted resource for encouragement and assistance in applying for financial aid.
In December, 2010, Liberty Tax Service offices across the U.S. received training and materials explaining the benefits, process, documents and information needed for FAFSA (Free Application for Federal Student Aid) forms completion services. Liberty’s offices became a bilingual resource for English and Spanish materials provided by the Department of Education as well as created in-house, offering FREE forms completion assistance. Potentially qualified clients were encouraged to submit applications for their children and/or for themselves. Educational information was posted on the Liberty Tax Service websites (English and Spanish) with links to the Department of Education resources and websites; and seminars were created that are currently being presented at high schools, community colleges and various educational outreach programs across the nation in English and Spanish.
     Supporting the White House Initiative’s objective of closing the gap in the Hispanic community also became a major focus of the 2011 outreach program for Liberty Tax Service’s Una Familia Sin Fronteras initiative, a unique educational outreach program that brings financial and fiscal education seminars and courses to Hispanic communities across the nation, at no cost. In early January, the Hispanic Programs Team deployed a comprehensive Spanish-language communications program to create awareness of Federal Student Aid and its benefits, explaining the process and basis for qualification, and encouraged consumers to benefit from its bilingual services for assistance in navigating the FAFSA process, provided by HISPANIC SERVICES SEAL OF EXCELLENCE CERTIFIED offices.
In weekly, 30-minute, Spanish-language educational radio shows in 29 markets across the U.S. sponsored and hosted by Liberty Tax Service’s Una Familia Sin Fronteras initiative and Foundation, the availability of Federal Student Aid for postsecondary education was a frequent topic, with numerous call-ins from listeners with questions about qualification, as well as the application process. In March, Liberty also hosted Spanish-speaking representatives from the Department of Education as guests on many of these shows, allowing the voice of the FAFSA program to be shared with our educational alliances within the government.
     According to Juan Sepulveda, Director of the White House Initiative on Educational Excellence for Hispanics, “The simplified Free Application for Federal Student Aid (FAFSA), now available in Spanish, allows applicants to retrieve tax records electronically from the Internal Revenue Service, making it easier to complete—as the 35% increase in applicants now shows. In addition, the amount of federal funding available for college-going students has doubled; Administration investments in Pell Grants have grown the award from $4,730 in 2008 to $5,550 today, enabling more low-income students—particularly Latinos—to receive assistance in paying for college. These improvements to the FAFSA and federal funding will help this nation lead the world in education and have the highest proportion of college graduates by 2020.”
     “Education is a key component to the growth and economic strength of our Latino communities in the United States,” explains Martee Saldaña Pierson, Director of Diversity Programs for Liberty Tax Service. “For this reason, we created our Una Familia Sin Fronteras educational initiative and Foundation so we can bring FREE education to our Hispanic communities and do so in their own language. Our alliance with the White House Initiative Team has been instrumental in bringing vital education resources to our Hispanic neighbors, and we plan to continue pushing forward with this important program as we work together for the betterment of this ‘emerging majority’ that is our Hispanic population.”
     Liberty Tax Service is also partnering with school districts and community colleges in many areas to offer bilingual seminars and consultation sessions students and families who wish to learn more about Federal Student Aid and the application process. Organizations or schools that are interested in holding open houses or meetings to discuss Federal Student Aid with presentations and/or consultation by qualified Liberty Tax Service professionals in both languages should contact Martee Pierson at Liberty Tax Service, 757.301.8111.



New Release


For Immediate Release     July 25, 2011


 Sharon Robinson, Branch B. Rickey Panel Discussion Among 

Highlights of MiLB Youth Leadership Academy at VBSV


ST. PETERSBURG, Fla.—A panel discussion about baseball, society and leadership featuring Sharon Robinson and Branch B. Rickey is among the highlights of the inaugural Minor League Baseball™ Youth Leadership Academy that begins tomorrow at Vero Beach Sports Village (VBSV) in Vero Beach, Fla. Robinson is the daughter of Jackie Robinson, the man whom Rickey’s grandfather, Branch Rickey, signed to a contract and brought to the Major Leagues with the Brooklyn Dodgers in 1947 to break baseball’s color barrier. 
   A total of 31 participants, ages 13-15, from the Minor League Baseball cities of Albuquerque, N.M.; Brooklyn, N.Y.; Des Moines, Iowa (Iowa Cubs); Lexington, Ky.; New Britain, Conn.; New Orleans, La.; Omaha, Neb.; and Troy, N.Y. (Tri-City ValleyCats) were selected by their hometown club to receive an all-expenses paid trip to VBSV to participate in the six-day academy, which ends Sunday.  
   “We are excited about the presentations and events we have planned for the 31 teenagers from some of our Minor League cities that are attending our first Youth Leadership Academy,” Minor League Baseball President Pat O’Conner said.  “The caliber of speakers, such as Sharon Robinson and Branch Rickey, who have agreed to assist us in providing these young people with the tools to become successful and productive members of their respective communities is tremendous.” 
   Minor League Baseball Charities provided funding for the academy, which was created to enhance and enrich the participants’ academic achievements and expose youths from underserved communities to life skills training, positive peer development, career opportunities, personal development and health and wellness.  It will not only promote their future through individual growth, but also build their résumé and provide exposure to experiences encouraged for college entrance.  
   Global Promotions & Incentives (GPI), an ASW Global company owned by former Major Leaguer Andre 
Thornton, is a sponsor of the MiLB Youth Academy.  In addition to its sponsorship, GPI is providing a scholarship through Minor League Baseball Charities for one student to attend the Academy. 
    A special session with Sharon about “Breaking Barriers” and overcoming challenges in life will also be part of the curriculum. Other events planned include presentations by O’Conner; former Major Leaguer Orlando Palmeiro; Dr. Ismail Conway, Associate Professor and Chair of the Department of Mass Communications at Virginia State University; Tim Flanagan, owner of Flanagan Custom Leadership Solutions; Virginia Flanagan, who has more than 15 years of professional experience teaching and training emotion management; and Florida A&M student B.K. Jackson, an energetic saxophone sensation who has received numerous awards and has opened for many nationally renowned artists.  A beach outing and a trip to a St. Lucie Mets Florida State League game are also scheduled. 
   Students from the nearby Gifford Youth Activity Center will join the academy participants for some of the presentations and outings, including a service project with the Harvest Food and Outreach Center. 
   The impetus for the Youth Leadership Academy was a similar program executed last summer when MiLB Charities worked with the New Orleans Public Library and New Orleans City Council to provide 40 youths from that city with a weeklong, all-expenses paid recreational and educational trip to VBSV.