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What individuals, families and every generation stands to lose as

Congress battles

 

WASHINGTON, Sept. 30 /PRNewswire-USNewswire/ -- AARP Chief Executive

Officer Bill Novelli issued the following statement regarding the lack of bipartisanship and decisive action in Congress yesterday. In addition, AARP

released an assessment entitled "The Cost of Inaction: Ten Ways It Impacts You."

 

Novelli's statement follows:

 

"Yesterday, Americans could only watch as the Dow plummeted 778 points yesterday. It plummeted because Congress failed to come together in a bipartisan manner to offer a solution to American families. Our country

grows weary and weakened with every hour and every day that Congress refuses to take action toward protecting home values, retirement dreams and younger generation's opportunities.

 

"AARP has assessed the cost of Congress' inaction and we've found at least ten ways this will cripple the American dream we are all working so hard to achieve. Congress must act. Now."

 

The Cost of Inaction: Ten Ways It Impacts You

 

Layoffs and Increased Unemployment

 

 --  Doing nothing means that as our credit system freezes up and Main Street        businesses are no longer able to obtain financing for routine operations, business activity will slow and many companies may be forced to lay off workers.

 --  The number of Americans without a job continues to rise at an alarming rate and those who are unemployed are finding it more and more difficult to find a job, particularly those 50+.

   

Long-term Unemployed and Average Duration of Unemployment by Age,

August 2008

 

Age           % Unemployed 27+ Weeks                 Average Duration of                                                     Unemployment

 

    25-54                 22.9%                        19.3 weeks

    55+                   23.5%                        21.4 weeks

    Source: U.S. Bureau of Labor Statistics, Table A-36.

 

--  Over the past 12 months, the number of unemployed persons has increased by 2.2 million and the unemployment rate has risen by 1.4 percentage points, with most of the increase occurring over the past 4 months.
--  In August, the number of long-term unemployed (those jobless for 27 weeks or more) rose by 163,000 to 1.8 million, an increase of 589,000 over the past 12 months. The newly unemployed -- those who were jobless fewer than 5 weeks -- increased by 400,000 over the month.

   

Loss of Consumer Credit

 

--  Doing nothing means that as credit markets tighten, the availability of consumer credit for items like homes, cars, appliances and other

purchases will be severely curtailed.  It will also dry up access to student loans, putting college out of reach for countless hard working students. This will contribute to and accelerate the current slow down in our overall economy.

   

Student Loans

 

--  According to the College Board, undergraduate students borrowed $14.5

billion in private loans during the 2006 - 2007 school year.

 --  The downturn has forced many student loan companies to cease lending. In a typical year, one bank may stop lending - since August 2007, 33 banks have done so. Because of this, banks have been forced to re-evaluate their lending terms - making it harder for students to get a private loan by requiring higher credit scores and co-borrowers. It has been projected that these tighter requirements may exclude up to 20% of

borrowers who were previously eligible.

   

Loss of Value and Increased Threats to the Safety of Retirement Savings

 

--  Doing nothing will perpetuate the current uncertainty in the financial markets, encourage risky and speculative activities, and lead to

additional losses in value of retirement savings held in pension funds and individual accounts.
--  Working America doesn't have all that much saved ... and what they have been able to save has seen, on average a 20% decline. (More than

half of all working households have $25k or less saved for retirement.)
 --  From its highs in October 2007, all three major stock market indexes are down about 20 percent. That means you could have lost $40,000 if your 401(k) was worth $200,000 at its peak.

   
Increased Foreclosures

 

 --  Doing nothing will increase the number of 50+ homeowners at risk of foreclosure.  Almost 700,000 older Americans are already delinquent or in foreclosure - more than a quarter of all foreclosures or delinquencies (28.1 percent).

--  Such an outcome will greatly endanger the prospects for a secure retirement for these older households and make the recovery from our

current economic problems more lengthy and difficult.

 

Loss of Housing Equity

--  Doing nothing will perpetuate the current downward slide in housing prices and values.  Home equity is the single largest component of

household assets, especially among households headed by older Americans. Doing nothing will further these equity losses.

 

   

Threatening the Stability of America's Banking System

--  Doing nothing could encourage runs on banks, increase the potential for bank insolvencies, and force further consolidations in the banking system which has its own risks in terms of competition, consumer choice, and furthering the "too big to fail" mentality.  Widespread bank failures could also severely stress current safeguards like the Federal Deposit Insurance Corporation fund.

 

 

 

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