Let’s Give Our Children a More Certain Future This Holiday Season

By Janet Murguía, President and CEO of NCLR, and Bruce Lesley, President of First Focus

The New Year usually symbolizes an opportunity for new beginnings and growth, but American households face a very different reality in 2013. On January 2, the fiscal cliff will leave many families with $2,000 less to put food on the table, or even a roof over their children’s heads, unless Congress comes to a budget agreement this month.

The fiscal cliff’s automatic, across-the-board budget cuts come at a time when children and their families are already struggling. Kids are facing the highest levels of poverty since the Great Depression, and Latino children are faring the worst: about 1-in-3 Hispanic kids live in poverty today. If sequestration goes into effect, federal funding for kids will be cut by an additional $6.4 billion in Fiscal Year 2013.

Children represent the largest constituency of Americans who would be impacted by the fiscal cliff at 30 percent of the U.S. population. And Latino children now make up nearly 1-in-4 children under the age of 18, and are critically important to our nation’s future. An analysis from NCLR (National Council of La Raza) highlights what sequestration means for our kids:

  • 96,000 children will not be served by Head Start, including 34,000 Latino kids
  • 80,000 children will not receive the Child Care Development Block Grant, including 16,000 Hispanic children
  • 1.8 million low-income public school students will not receive extra reading and math help because of cuts to Title I. The 37 percent of Latino kids who attend high-poverty schools could be affected by these cuts.

We saw from the recent presidential election that Latinos, as a voting bloc, highly favor greater investment in all our children. At 10 percent of the electorate and over 12 million voters, the historic turnout of Hispanic voters is a critical factor in urging politicians to take action for kids. A nationwide election eve poll released by Lake Research Partners on behalf of First Focus Campaign for Children (FFCC) shows overwhelming support from Latino voters for a wide range of federal investments in America’s children at levels higher than voters of all demographics and political affiliations.

The damage sequestration would mean to kids is simply unacceptable to Hispanic voters and the public at-large that broadly supports raising revenue and oppose budget cuts that impact kids. Latino children are one of the fastest growing segments of kids in school. Cutting programs that contribute to their development and ensure they are prepared to meet the requisites of a future labor market would not only hurt their personal future success but undercut the strength and competitiveness of the nation’s economy. This is not lost on Hispanic voters who consistently list education and children’s issues at the top of their priority list.

In another poll conducted by Public Opinion Strategies on behalf of FFCC, the majority of American voters disapprove of Congress making budget cuts to an array of children’s programs, including: education (75-24%), the Children’s Health Insurance Program (74-17%), Medicaid (73-27%), child abuse and neglect (66-33%), the Child Tax Credit and Earned Income Tax Credit (63-34%), student loans and financial aid for college students (59-40%), Head Start (59-40%), and child care (54-44%).

Despite the popularity of investing in America’s next generation, discretionary spending on children has declined by about $2 billion since 2010. Children have borne a disproportionate share of the spending reduction to combat the federal deficit. In fact, the share of federal spending going to kids fell six percent in the past year.

The budget and impending sequestration clearly do not align with our children’s needs, and what voters want. Kids and their families deserve better. Let’s hold our lawmakers accountable. Contact your representative and tell them to keep kids off the table.

As Fiscal Cliff Draws Nearer, There Is No Time For a Plan B

By Janis Bowdler, Director, Wealth-Building Policy Project

This New Year’s, many Americans across the country will have quite a bit weighing on their minds at a time when they are supposed to be clinking champagne glasses and making their resolutions for 2013.  In less than two weeks, our country will go over the fiscal cliff, resulting in a tax hike for millions of Americans and severe funding cuts to education, health care, and housing programs, to name a few.  That is unless Congress and the Obama administration can reach a deal on the federal budget.

For a brief moment earlier this week, it appeared that both sides were willing to compromise.

But that glimmer of hope was fleeting, and it seems negotiations are at a standstill.  Republican leadership is now pushing “Plan B,” which the House will vote on tonight at 6:00 p.m.

Simply put, “Plan B” is bad for Hispanic families.  It fails to meet NCLR’s principles for a fairer federal budget.  The plan further reduces tax liability for those at the top while pushing working families toward poverty.

The wealthiest would be the big winners should this plan pass.  Under “Plan B,” millionaires would get an estimated $50,000 tax cut, while 25 million middle class families making less than $250,000 a year would see their income taxes increase by an average of $1,000 apiece.  And,millions would lose access to the Child Tax Credit, as well as the Earned Income Tax Credit, which are valuable tools that help prevent many Latinos from falling below the poverty line.

All of this while also allowing the sequester to move forward, gutting critical investments in education, jobs, and housing.  For example, in many poor districts, where federal funding covers a substantial portion of their budgets, for every $1 million that a school district receives in federal funding, sequestration will take away $82,000.  For districts with disproportionately large Hispanic and Black populations, that loss could have devastating effects.

“Plan B” is not a viable option for Latinos or this country.  Thankfully, President Obama has already issued a veto threat.  However, that does not mean both sides should stop trying to reach an agreement.  We strongly urge House Speaker Boehner and President Obama to put America’s working and middle-class families ahead of politics.  We need a fair approach to deficit reduction where everyone pays their share.

We must end this stalemate.  Far too much is at stake for the American people.  Nobody wins if we go over the fiscal cliff, and the clock is almost up.

State job creation policies matter for Latinos

By Alicia Criado, Policy Associate, Economic and Employment Policy Project, NCLR

I recently received an email from Vicky, an NCLR supporter, who thanked me for reporting each month on how Latinos are doing in today’s economy.  She also shared that she is unemployed and has come to realize that being bilingual is not enough to help her land a job.  Vicky does not have postsecondary education has found that employers want the whole package in a worker:  adequate training, in-demand skills, and education beyond high school.

Many jobseekers like Vicky are keenly aware of what it takes to stand out in today’s job market, where the ratio of unemployed workers to job openings is more than three to one.  Just over five years from now, in 2018, only 10% of jobs in the U.S. economy will be open to workers with less than a high school degree.  Yet today nearly two out of five (38.4%) Latino adults—and almost half of foreign-born Latino adults (47.5%)—do not have a high school diploma.  These facts are alarming given that by 2050 one in three American workers will be Latino.

It is not clear that the legislators who Vicky and approximately 12 million Latinos helped elect in 2012 understand the needs of the Latino workforce.  According to our latest report, Now Hiring?  Latinos and the Job Creation Policies in the South Atlantic, legislators in South Atlantic states have made plans to create jobs without taking stock of the barriers that the burgeoning Hispanic labor force faces.  State policymakers are paying little to no attention to the intersections of local job creation policies and current state workforce development, immigration, and transportation systems.  Necessary investments in programs like basic skills training, which help Latinos successfully compete for jobs, are often overlooked.  Priority is placed on developing and expanding tax incentives to encourage companies to create jobs and endorsing actions like anti-immigrant legislation that hinder Hispanic workers’ access to employment.  These choices are to the detriment of workers and businesses alike, thus undermining job growth initiatives.

There is a need for significant policy adjustments at the state level to ensure that jobs in the fastest-growing industries are available to Latinos, the fastest-growing segment of workers.  Given the diversity of Latino workers, a one-size-fits-all approach won’t work when developing strategies to meet their unique needs.  This is especially true for Latinos in the South Atlantic.  Disproportionate numbers of Hispanics in the region possess limited formal education or English proficiency and largely have inadequate access to language training.  For example, among Latinos over the age of 25 in Georgia, 44.2% have not completed high school and 70.5% have limited English proficiency.  If we look at this same population next door in Florida, we find that just 26.3% do not have a high school diploma and 57.4% speak English less than very well.  Solutions and approaches must be tailored to local needs.

Now more than ever there is a need for policymakers to ensure that Latinos have a seat at the table to inform the job creation agenda at the state level.  The needs and concerns of the Hispanic community should no longer be an afterthought.  The early warning signs uncovered in Now Hiring?  Latinos and the Job Creation Policies in the South Atlantic call for serious policy discussions on how to ensure that jobs are within reach for a broader share of workers and their families.  It is paramount that in this time of limited resources legislators endorse customized policy solutions that benefit employers and cultivate the workforce for years to come.  These discussions can’t wait because our economy won’t work without Latinos.

Read NCLR’s latest study, Now Hiring?  Latinos and the Job Creation Policies in the South Atlantic, to learn more about the barriers that Latinos face in the labor market and why job creation policies are failing to maximize the employment potential of America’s rapidly growing workforce.  For more information, please contact Alicia Criado, Policy Associate at NCLR, at acriado@nclr.org.

We’re a Unified Voice for Communities

By Jesus Altamirano, Regional Field Coordinator, Colorado

Not much can keep our Affiliates down when they band together.

Our Colorado Affiliates know this well. Recently, NCLR Affiliates El Comite de Longmont, Scholar-to-Leader Academy, GOAL Academy, and Mi Casa Resource Center, descended on Denver to speak to U.S. Senators Mark Udall (D) and Michael Bennet (D) about the impact of the impending debt crisis, the so called “fiscal cliff.” Like NCLR, our Colorado Affiliates are concerned about the effects extreme cuts would mean to the millions of American Latino families who rely on vital social services and they expressed just that to their senators.

Kudos to our Colorado Affiliates for being champions for communities! Check out some photos of their advocacy below and then tell us what the impending fiscal cliff crisis could mean to you.

Colorado advocates in their meeting Colorado advocates outside the meeting Colorado advocates in their meeting

The Federal Housing Administration: Unsung Hero of the Housing Market

By Jose A. Garcia, Policy Fellow, Wealth-Building Policy Project

The Federal Housing Agency (FHA) is one of the unsung heroes of the housing market.  Despite helping to save the housing market following the mortgage crisis in 2007, the FHA is continuously attacked, erroneously, for its commitment to provide mortgage liquidity in times of need and encourage lending to low income households.

American Enterprise Institute (AEI) recently released a report on the riskiness of the Federal Housing Administration’s (FHA) lending practices.  The report conflates and confounds data to reach misleading conclusions and recommends unnecessary changes.  FHA’s current financial challenges are overwhelming due to loans insured between 2007 and early 2010 as well as a single loan product:  seller-financed mortgages.  However, its losses are not due to creditworthy borrowers with lower credit scores and lower down payments, and AEI would do well to remember that correlation is not causation.  Furthermore, FHA no longer insures seller-financed loans.

If that is not enough for you, let’s look into this further.  For decades, lenders have been able to successfully provide reliable and sustainable mortgage products to low income communities across the country that are profitable for the markets and fair to vulnerable borrowers. A decade long study conducted by UNC Center for Community Capital of 46,000 low-income homeowners found that of those who received traditional 30-year, fixed-rate mortgages with a small down payment, 95% of homeowners were paying their mortgages. UNC’s study shows that correctly structured home loans to low-income households perform quite well, leading to sustainable homeownership and sound business opportunities for lenders.

For many low- and middle-income American households and communities of color, the FHA is a critical part of the mortgage lending repertoire to access homeownership.  By insuring loans made by private lenders—even during severe economic downturns—the FHA provides stability to the housing market and access to credit.  This was never truer than after the recent housing crisis, when credit became difficult to access and many lenders turned to the FHA.  Now the 78-year-old agency may need help to continue its good work, and if it does, American taxpayers should lend a hand.  Doing so benefits not only families looking to purchase their first home but the economy at large.

The FHA helped hold down the fort as the housing market reeled from the aftermath of bad loans and Wall Street greed.  Based on an analysis by Moody’s analytics, the agency’s actions in 2011 alone helped prevent housing prices from decreasing an additional 25% and from a 40% decrease in the sales of new and existing homes, saving three million jobs and half a trillion dollars in economic output.  By stepping in, the FHA rescued tens of thousands of middle-class families from losing their home equity and, in many instances, their homes.  The agency did this by backing a larger share of mortgage originations as private investors fled the housing market.  At the peak of the housing bubble,  FHA insured one-third of loans made in 2009, compared to 5% before the alarms rang in 2006.

Despite the important role that the FHA played in keeping the housing market from total economic collapse, Edward Pinto from AEI stated that, “This paper reports on a comprehensive study that shows the FHA is engaging in practices resulting in a high proportion of low- and moderate-income families losing their homes.”  Fiscal projections point to a shortfall between what the FHA needs to cover all its claims over the next 30 years and how much it has on hand.  FHA’s possible shortfall was not caused by lending to low- and middle-income households but rather due to maintaining liquidity in the housing market.  The shortfall does not mean a definitive need for taxpayer monies to cover it—it will be months before we know that for sure.

The FHA has already addressed unsustainable programs that contributed to its trouble.  Its seller-financed down payment assistance program, which called for the originator to cover the down payment, often resulted in originators inflating the purchase price of a home in order to do so.  This in turn led to financially unstable loans, especially during the recession, that resulted from the subprime debacle.  Congress banned the program from FHA insurance in 2008, after FHA had tried to eliminate the program for years.

While the seller-financed down payment program did not work, most FHA products do.  Low- and middle-income borrowers and communities of color have benefited from sustainable and profitable mortgage loans insured by the FHA.  The FHA provides a necessary service that the conventional market does not provide.  However, by pointing fingers at the FHA, critics are undermining the ability of an agency that has been critical in keeping the mortgage market accessible and affordable, providing sustainable pathways to homeownership for millions of Americans.