Democrats unveil a plan to provide every American child with a $1,000 savings account that can be accessed at age 18
- Democrats reintroduced a plan to create $1,000 savings accounts for every newborn in America.
- At 18, people could tap into the accounts to use for things like buying a home or starting a business.
- Sen. Cory Booker and Rep. Ayanna Pressley want the plan to be part of Biden's stimulus package.
Congressional Democrats on Thursday reintroduced a plan to provide every child with a $1,000 savings account that they could access once they turn 18. Some are pushing to include the measure in President Joe Biden's rescue package.
Spearheaded by Sen. Cory Booker of New Jersey and Rep. Ayanna Pressley of Massachusetts, the legislation would each year put up to $2,000 more into an interest-accruing fund managed by the Treasury Department. Children from lower-income families would receive larger cash payments.
At 18, the person could access their funds for specific purposes such as attending college, buying a home, or starting a business. The program would cost $60 billion a year and be offset by hiking estate taxes and closing tax breaks for wealthy Americans, Booker has said.
"To truly 'build back better' our economy, we cannot ignore the extreme and persistent wealth inequality that deprives kids of economic opportunity right out of the gate," Booker said in a statement on Thursday.
He added, "In a country as wealthy as ours, every person should have access to economic opportunity and the chance to build assets and create wealth."
The plan was cosponsored by Senate Majority Leader Chuck Schumer and Sens. Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont, and Dick Durbin of Illinois.
Booker and Pressley are pushing to fold the proposal into Biden's $1.9 trillion emergency spending package making its way through Congress. Insider obtained a letter sent to Biden and Vice President Kamala Harris last month urging them to adopt the measure.
"When it comes to racial justice, we cannot afford to wait," Booker and Pressley wrote in the letter. "As we emerge from this dark period of our nation's history, Baby Bonds is exactly the type of universal, race conscious program necessary to build our economy back better."
The federal government has never attempted to set up this type of program, though there was bipartisan support for child retirement accounts three decades ago. Conservative experts have argued that such a measure may disincentivize people from saving their money, The Washington Post reported in 2019.
J. P. Freire, a representative for the Republican side of the House Ways and Means Committee, criticized Booker and Pressley's plan. He tweeted on Thursday that "the best path out of poverty is a job" and described the measure as a "job killer."
"Baby bonds" were a cornerstone of Booker's 2020 presidential run as Democratic candidates rolled out policies to combat systemic inequality. A 2018 study from researchers at Columbia University found that the measure would help to close the racial wealth gap.
During the pandemic, support has grown among Democrats for plans providing relief through cash payments. Many Democrats favor a proposal to provide monthly checks to parents as part of a stimulus package to address the rising costs of childcare.