Congressional Democrats have reintroduced a “Baby Bonds” bill that, if passed, would create a federally funded seed savings account, giving $1,000 to every American child at birth, plus, depending on household income, additional $2,000 deposits each year until the child turns 18.
U.S. Sen. Cory Booker (D-NJ) and Rep. Ayanna Pressley (D-MA) say their American Opportunity Accounts Act legislation could level the playing field, making economic opportunity a birthright and helping to close persistent racial wealth gaps.
Under the proposal, the funds given to American children would sit in a federally insured account managed by the Treasury Department, gaining roughly 3% interest. Once account holders turn 18, they can access the account, which at the maximum amount could grow to roughly $50,000 with accrued interest factored in. Account holders can then use that money to do things like put a down payment on a home, pay for college or start a business.
The annual supplemental payments would be on a sliding scale depending on household income. Families making more than 500% of the poverty line (approximately $132,500 for a family of four) wouldn’t receive the additional annual deposits.
“In a country as wealthy as ours, every person should have access to economic opportunity and the chance to build assets and create wealth,” Booker said in a news release.
Booker has proposed the bill in the past, but he didn’t gain much support for it from his Congressional colleagues. He also touted it during his presidential bid last year. Now, the proposal looks to have more traction: It currently has 15 co-sponsors in the Democrat-controlled Senate, including Senate Majority Leader Chuck Schumer.
Separately, Republican Sen. Mitt Romney (R-Utah) recently introduced the Family Security Act that would give families $350 a month for each child age 5 and under and $250 a month for each child age 6 to 17.
“American families are facing greater financial strain, worsened by the COVID-19 pandemic, and marriage and birth rates are at an all-time low,” Romney said in a news release.
What do you think of these Congressional proposals?