Giving babies $1,000 at birth is an ‘unprecedented opportunity for financial security,’ Ayanna Pressley and Cory Booker say
Posted For: MugsMalone
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Rep. Ayanna Pressley and Sen. Cory Booker urged the Treasury Department to support their “Baby Bonds” legislation.
The bill would give babies $1,000 at birth, with additional contributions each year depending on family income.
They argued it would advance racial equity and ensure financial security at birth.
Two Democratic lawmakers want to put every American on the right financial track — at birth.
On Wednesday, Massachusetts Rep. Ayanna Pressley and New Jersey Sen. Cory Booker sent a letter, first viewed by Insider, to the Treasury Department’s chair and vice chair of its Advisory Committee on Racial Equity (TACRE), Michael Nutter and Felicia Wong, respectively — and they urged the two officials to support their “Baby Bonds” legislation.
Last month, the two Democratic lawmakers reintroduced the American Opportunity Accounts Act, which would give every child a savings account of $1,000 at birth, also known as Baby Bonds. The account would receive additional deposits each year depending on the child’s family income, and when the child turned 18, they would be able to access the funds.
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“This policy would provide every child in America with unprecedented opportunity for financial security,” Pressley and Booker wrote in their letter.
“The impact would be transformative: at a cost of approximately $60 billion annually, less than 10 percent of what we currently spend to subsidize wealth-building through the tax code, we can give every American a stake in our economy and agency over their future,” they added.
Pressley and Booker emphasized how their legislation would help advance racial equity. They cited reports from Columbia University and Morningstar that found Baby Bonds would “substantially” close the racial wealth gap. For example, the Morningstar report said that “the median Black family in our sample with a child turning 18 has 94% less wealth than the median white family, and the median Hispanic family has 88% less wealth. When we introduce baby bonds, this gap narrows to 71% for Black families and 67% for Hispanic families.”
Along with Pressley and Booker, other Democratic lawmakers have been stressing the benefits of Baby Bonds over the past year. In December, the Joint Economic Committee — led by Democratic Rep. Don Beyer — released a report on the benefits of the policy, and how it would help Americans invest in higher education or start a business, building wealth later in life.
“The transition to adulthood is a challenging time for everyone. Ensuring that children can enter this defining stage of life with a nest egg would open up a world of possibilities and provide new pathways to building wealth,” Beyer said in a statement.
While support for baby bonds at a federal level has mainly been from Democratic lawmakers, Republican-led states like Iowa and Wisconsin have introduced similar proposals, which Booker and Pressley said shows “growing momentum and support for this legislative proposal across the country, paving the way for eventual federal passage.”
Even former President Donald Trump appears to be on board with the idea — Politico reported that Trump wants to encourage population growth by implementing “baby bonuses” as part of his presidential platform.
“When it comes to racial justice, we cannot afford to wait,” Pressley and Booker wrote. “Baby Bonds is exactly the type of bold, comprehensive program necessary to advance racial equity in the economy and address acute disparities for communities of color.”
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