Cory Booker is one of the few vegan politicians in the United States, but it’s not just our furry friends that he cares about. Booker wants to help close the racial wealth gap through proposed legislation nicknamed “Baby Bonds,” that would indeed give newborns $1,000. And if Biden answers the call, this legislation could make it into the next COVID-19 relief bill.
How “Baby Bonds” Work
“Baby Bonds,” otherwise known as the American Opportunity Accounts Act, would create a federally-funded savings account for every newborn in the U.S. The federal government would put $1,000 in an investment account for every child and fund an additional $0–2,000 each year depending on family income. Only until these kids reach the age of 18, can they access invested funds and use them for wealth-building activities such as buying a home, paying for higher education, or starting a business. Over the course of 18 years, Baby Bond accounts are estimated to grow to as much as $46,000.
Baby Bonds would cost the Federal Government approximately $60 billion each year. The U.S’s planned annual military spending in 2021 is $934 billion.
A study by Columbia University found that Baby Bonds could significantly reduce the racial wealth gap that’s so prominent in American today. In 2016, the median white family had 10 times more wealth than the median black family. Estimates by Naomi Zewde show that Baby Bonds would raise the median wealth of both white and black groups with an estimated median wealth of young white people $79,000 and young black people to $58,000. Currently that gap is $46,000 (white) compared to $2,900 (black).
In an open letter to President Biden and VP Kamala Harris, Booker asks them to include Baby Bonds in the next COVID-19 relief bill. But Baby Bonds isn’t a new proposal.
Economist Dr. Darrick Hamilton advocated for Baby Bonds in his 2018 Ted Talk where he discusses the growing wealth gap and stigma against people of color.
“Over the last 45 years, wealth disparity has increased dramatically, and essentially, all the economic gains from America’s increase in productivity have gone to the elite or the upper middle class. Yet, much of the framing around economic disparity focuses on the poor choices of black, Latino and poor borrowers. This framing is wrong. The directional emphasis is wrong.” —Dr. Hamilton
We might not see a COVID-19 relief bill pass until mid-March 2021. But it’s clear racial wealth inequality is a human rights issue that can be mended through progressive policy changes like Baby Bonds.
Photo: Cory Booker via Instagram; Twitter