While every child, regardless of race, would be eligible for the program, studies show it would significantly narrow the racial wealth gap due to this sliding scale. According to Booker, the poorest children would accumulate about $46,200 in their trusts by age 18, while the wealthiest would have about $1,700. At this point, the child would have access to their account and could use the funds for a down payment on a home, college, or starting a business.
Although proposals like Booker’s have been discussed since the 1990s, they have failed at the federal level. Hillary Clinton originally included baby bonds in her 2008 presidential platform, at one point suggesting a $5,000 deposit for each child, before scrapping it entirely.
Booker promoted baby ties during his own run for president in 2019 before quitting. His Senate bill currently has 15 co-sponsors. A House version, championed by Rep. Ayanna Pressley (D-MA), has 25.
With Congress not acting on the baby’s bonds, policymakers at the city and state levels are taking action on their own. In June 2021, Connecticut became the first state to pass baby bond legislation. Children whose births are covered by the state Medicaid program will have an estimated $10,000 nest egg by their 18th birthday thanks to this initiative.
In the fall of last year, the Washington, D.C. City Council approved a new children’s trust fund that will provide an initial deposit of $500 for children born at or below the poverty line. federal. Those who continue to fall below this income threshold will receive deposits of up to $1,000 per year until they turn 18. New York City also introduced a baby bond program, albeit a much smaller one, in 2021.
More recently, the California State Legislature allocated $100 million in July 2022 to fund trust funds for two particularly disadvantaged groups of children: children from low-income families who have lost a parent or a primary carer due to Covid-19 and those in long-term foster care. . The details are still to be settled.
State legislators in Washington, Iowa, Wisconsin and Massachusetts are also actively considering baby bond programs. Experts from The New School and Prosperity Now are following this trend and have identified the essential elements of baby bond legislation at national and local levels. Such evaluation and follow-up work will be essential if effective and well-managed pilot Baby Bond programs can help build momentum for federal action.
Given the widening of our country’s wealth gaps during the pandemic, baby bonds will likely only grow in popularity. In 2019, the richest 1% of U.S. households owned 40% of the nation’s private wealth. This gap is probably even greater today. By May 2022, US billionaires had seen their wealth increase by more than $1.7 trillion, an increase of almost 60% since the start of the Covid-19 crisis, according to the Institute for Policy Studies and Americans. for Tax Fairness.
In the long run, our goal should be to disband the Lucky Sperm Club that gives such a small elite such vast economic and political advantages over ordinary Americans. For now, we should try to help as many children as possible thrive with no luck in the picture at all.