This week, Representative Ayanna Pressley (D-MA) and Senator Cory Booker (D-NJ) re-introduced the American Opportunity Accounts Act, also known as the “baby bonds” bill, “which would create a federally funded savings account for every American child.”
Sen. Booker first introduced the bill language during the 116th Congress, and then again during the 117th Congress alongside Rep. Pressley; but, “[i]n both sessions, legislators never voted on the bill and only referred it to House committees.”
Hopefully the third time is the charm. If the 118th Congress passes the bill “and President Joe Biden signs it into law, the federal legislation would authorize the secretary of the Department of Treasury to transfer $1,000 into an account for every individual born after Dec. 31, 2023.”
These funds would bear interest in the account and would also receive “additional deposits each year depending on family income. At age 18, account holders could access the funds in the account for allowable uses like buying a home or paying for educational expenses,” per the press release.
The disparity between racial wealth is quite severe—according to the Urban Institute, “in 2019, white households had eight times the wealth of Black households and five times the wealth of Latinx households. Despite some fluctuations over the past four decades, this disparity was as high in 2019 as it was in 1983 for the typical Black family.”
Not only is this gap not caused by choices individuals are making, but evidence also shows this wealth differential is due to systemic racist policies that have long denied Black and other households of color the same opportunities their white counterparts have received.
Fortunately, there has been some change since Sen. Booker first introduced this at the federal level in 2018, and “today, states and localities are pursuing their own versions of baby trusts. Connecticut was the first to enact baby bonds legislation, followed by Washington, DC. Baby bonds legislation has also been introduced in California, Delaware, Iowa, New Jersey, New York, Washington, and Wisconsin.” As leading scholar on the racial wealth gap Darrick Hamilton says, baby bonds are “an economic birthright to capital.”
In a statement Sen. Booker said, “Americans today are having a harder time accessing homeownership, higher education, and a secure retirement than their parents did just a generation before them…This is due in part to our upside-down tax code, which is great at preserving and building wealth for corporations and wealthy families, but fails Americans who are barely getting by and are unable to afford long-term investments to get ahead.
“The racial wealth gap in America is the result of generations of precise and intentional policy violence, so we must be as intentional and as precise about advancing policies that address it head on…Baby Bonds are one of the most effective tools we have for closing the racial wealth gap and breaking the cycles of poverty and trauma that have prevented Black and brown folks from thriving in this country…Black lives and Black wealth matter, which is why Congress must pass our bill without delay,” Rep. Pressley added.