New Jersey Sen. and presidential hopeful Cory Booker first unveiled his Baby Bonds plan back in October 2018, but the proposal is now just picking up steam. The proposed idea would give a $1,000 savings account to every newborn in the United States, a figure that would increase every year based on family income. Although the term "Baby Bonds" might sound a bit humorous (I'm imagining an infant reboot of James Bond), it's an interesting idea that could help alleviate income equality in America.
There are many gaps in the U.S., including the achievement gap in education and the wealth gap that exists between white families and families of color. California Sen. Kamala Harris addressed the education gap with her teachers pay raise plan, while Booker is tackling the issue of income equality with his Baby Bonds program.
Before I get into the fine details of Booker's proposal, it's first important to address the racial wealth gap that exists in this country. In 2016, "the median wealth for black and Hispanic families was $17,600 and $20,700, respectively, compared with white families’ median wealth of $171,000," according to the Center for American Progress. Income equality is not simply about who has more money in the bank — how much a person and family earns dictates their access to home ownership, education, and health services. When people aren't receiving a fair share of the pie, their quality of life suffers.
To address this pressing issue, Booker wants to give every newborn a $1,000 trust that would increase every year. So, if a family of four makes $21,500 a year, then their child would receive $2,000 from the government annually until age 18, according to CNBC. On the higher end of that scale, a family with an annual income of $81,575 would receive $250 a year. With $2,000 placed in a savings account every year, a child would have $46,215 by the time they reached 18.
“It would be a dramatic change in our country to have low-income people break out of generational poverty,” Booker said about the plan in a conversation with Vox. “We could rapidly bring security into those families’ lives, and that is really exciting to me.”
Per CNBC's report, "people would not be able to dig into the funds until they hit 18, and the uses of the money would generally be limited to paying for college, buying a house and saving for retirement."
Additionally, the U.S. Treasury Department would "manage the accounts and the annual rate of return would be around 3 percent."
It's not clear whether Booker's plan will ever come to fruition because he's not doing so well in the polls at the moment. The presidential hopeful has "qualified on the polling front for most of April, hovering between 2 and 4 percent throughout the month," according to The Hill.
If Booker doesn't make the cut, politicians should consider a similar plan to Baby Bonds. It definitely isn't a solution to the racial wealth gap (I want to be crystal clear on that), but it is a step in the right direction. And at the very least, income inequality in America should be an ongoing conversation.