Proposal to give $1,000 at birth to American infants would lower inequality, Booker says

A bill reintroduced by Sen. Cory Booker and Rep. Ayanna Pressley, D-Mass., would create a federal nest egg program for American children.

Advocates say it would close a long-established racial wealth gap, by creating a “seed savings” of $1,000 for children at birth that gains money until the child turns 18.

In New Jersey, the median household wealth of white families was $322,500, compared to $17,700 for Black families and $26,100 for Latino families, according to a study released last year by the New Jersey Institute for Social Justice.

Booker and Pressley said the proposal would make “economic opportunity a birthright” for Americans.

"‘Baby Bonds’ would fix our broken tax code by providing every American child with startup capital for their life, and helping to drive down the wealth inequality that holds American families back from their full potential,” Booker said.

As of this month, Washington, D.C., California and Connecticut have passed their own baby bonds proposals, according to the Urban Institute.

Under the American Opportunity Accounts Act, introduced last week, the money would start at $1,000. Depending on the family income level, the child would get up to an additional $2,000 stowed away.

Interest would accrue until the child turns 18, so that, for example, the account for a minor from a family of four that earns less than $25,000 a year would have $46,215, according to an estimate from the two congressional offices.

The money could only be used for “qualified expenses” like buying a home, financing a college degree, or “any other investment in financial assets or personal capital that provides long-term gains to wages and wealth.”

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Booker first introduced the Baby Bonds proposal in 2019, but the idea never moved past committee.

Support for it comes from the Democrat side of the aisle, including Sens. Chuck Schumer, D-N.Y.; Elizabeth Warren, D-Mass.; and Bernie Sanders, I-Vt.

In New Jersey, Gov. Phil Murphy made national headlines in 2020 at the height of the pandemic when he tried to create a state-level program, but the idea never gained legislative support.

It would have invested $1,000 for every baby in households that earn less than 500% of the federal poverty level, or $131,000 for a family of four. Like Booker’s proposal, the money would have grown over time until the child turned 18. The program would have affected 72,000 children and cost the state roughly $80 million.

This article originally appeared on NorthJersey.com: Baby bonds bill proposal made by NJ Senator Cory Booker