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On Oct. 6, Rep. Eddie Bernice Johnson, a Democrat from Texas, introduced in Congress the Financial Education for Teachers and Students Act, which would authorize federal grants for pilot programs to teach financial literacy to middle and high school students.
In this season of pitched legislative battles about health care reform, climate change, and financial regulation, it is difficult to imagine that Johnson's bill will garner much attention, much less attract the support necessary for enactment.
And yet, consider:
- The secretary of the treasury (Timothy Geithner) and the chairman of the congressional committee with primary oversight over the Internal Revenue Code (Charles Rangel) have both claimed, during the past year, that they did not understand or were unaware of (!) the rules governing preparation of their income tax returns.
- In order to purchase homes that they could not afford, millions of Americans borrowed money on conditions that they did not understand (negligently in some cases, willfully in others) and with which they could not comply. The resulting mortgage and credit crises nearly brought down the entire U.S. financial system.
- Over the course of several decades, the average American stopped saving almost entirely -- a trend only recently reversed by the onset of the great recession.
- Individuals, families, localities, states, and, indeed, the federal government have demonstrated an inability to balance their books, and the result is a debt burden with serious consequences for future generations.
The trends and behaviors that contributed to the recession illustrate the need to expand our ideas about a "core curriculum" -- reading, writing, math, science, and history -- so that it also includes money management.
Courses in financial planning could teach students to become good financial citizens in the same way that civics and government courses nurture good political citizens.
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