New Jersey Looking to Offer Most Babies in the State $1K in Bonds. Could Other States Follow?
New Jersey Governor Phil Murphy is proposing a plan to bolster economic equality for all families in the state.
As Americans have taken to the streets calling for an end to systemic racism, some lawmakers have responded by brainstorming, writing, and enacting legislation that might actually begin to create positive change for families who have, for far too long, faced ongoing inequality. A new proposal from New Jersey Governor Phil Murphy aims to do just that. The gist: If passed through state legislature, the state would give families earning under $131K per year a $1,000 "baby bond" upon the birth of a child. Here are all the details.
How the Plan Would Work
Starting with babies born in 2021, the bonds would be given to children born in households earning less than 500 percent of the Federal Poverty Level—up to $131,000 per year for a family of four. Murphy says this would apply to approximately three in four children born in New Jersey. That means approximately 72,000 kids around the state would receive the bond next year.
The New York Times reported that considering this week's 30-year bond rate of 1.35 percent, the $1K would amount to $1,270 with interest after 18 years. In response, Murphy said that the state "reserve[s] the right" to add even more money to these accounts, as this initial proposal could simply be a starting point. He also explained that its annual $80 million cost to the state would be paid for with cuts to state agencies and lifting the state's cigarette tax to the nation's highest level.
The proposal was inspired by congressional legislation written by New Jersey Sen. Cory Booker and Massachusetts Rep. Ayanna Pressley, which would provide $1,000 at birth and additional yearly payments based on family income. And when Hillary Clinton ran for president in 2007, she also proposed $5,000 baby bonds.
The Case for the Legislation
According to the Pew Research Center, data from 2018 found that the top one-fifth of U.S. households, defined as those earning more than $130K, earned 52 percent of the nation's wealth, more than the other four-fifths combined. And Pew noted the U.S. also has the highest level of income inequality of any G7 nation. The COVID-19 pandemic has only served to shine light on and worsen those existing cracks.
In an interview with the Times, Murphy said, "The inequities are too wide, too raw, to ignore."
The state legislature must land on a $32.4 billion, nine-month spending plan before the new fiscal year starts on October 1, and this proposal could be a part of that new plan.
Here's hoping lawmakers take action now. As Booker told the Times, the proposal could be an "igniter of dreams." He added, "It immediately gives kids a stake in expanding their imagination about what’s possible for them."