Bill Aims to Give $1000 in Savings Accounts to Every Baby Born in the U.S.
The "baby bonds" legislation, introduced by Sen. Cory Booker (D-N.J.) and Rep. Ayanna Pressley (D-Mass.), is an attempt to give every American child more economic mobility.
Families from coast to coast have been struggling economically, and now, in an attempt to address wealth inequality and bolster the federal government's child benefits, Congressional Democrats have reintroduced legislation that aims to offer concrete help in the form of $1,000 "baby bonds." The American Opportunity Accounts Act aims to grant every American child a fairer chance at economic mobility by creating a seed savings account of $1,000 at birth.
Here are the specifics.
How the Plan Would Work
The bill, led Sen. Cory Booker (D-N.J.) and Rep. Ayanna Pressley (D-Mass.) and co-sponsored by 15 other senators, babies born after December 31, 2021 would be granted a government-run "American Opportunity Account" and $1,000 in that account.
The account will accrue approximately three percent interest, and the federal government would deposit up to $2,000 in the account each year until the child turns 18. The amount deposited would depend on the household's income level. Families would not receive any additional funds if they make more than 500% of the poverty line. (As of last month, that was approximately $132,500 for a family of four.)
The approximate maximum amount kids could have in their savings accounts by the time they turn 18 and would be eligible to withdraw funds? $50K, according to Booker, who was explaining the plan on the campaign trail during the primary season.
What to Know About the Bill's Background
It bears noting that this isn't the first time the legislation has been presented to Congress. Booker and Pressley previously introduced the bill in 2019, but it didn't advance to becoming law. Republicans pushed back on it, lamenting the high price tag and labeling the plan as illustrative of government overreach.
And last summer, New Jersey Gov. Phil Murphy proposed a similar program be included in the state budget, but the measure was left out, as state lawmakers were concerned about the expense ($80 million a year), and they felt they had bigger fish to immediately fry, given the pandemic.
But now that Congress is controlled by Democrats, Booker says the bill is "gaining traction and momentum." Politico reported this week that the senator is hopeful the measure can be passed and signed by President Joe Biden. "It was lonely when we introduced it the first time. Now, we have 15 senators, including Majority Leader Chuck Schumer," he noted.
It's One of Several Plans Aimed at Helping Children
Whether the American Opportunity Accounts Act passes or not, many representatives seem committed to finding new ways to support families. Yesterday, Sen. Mitt Romney (R-Utah) introduced a child benefits proposal that would give children $4,200 every year up to six years old then $3,000 per year after that through age 17. And the Washington Post reported that Congressional Democrats are working on a similar proposal that would direct the Internal Revenue Service to send monthly checks to families.
While it's unclear which of these plans will make it to President Biden's desk, it's heartening to see lawmakers pushing forward on bills centered on giving many American families a fighting chance.