This Plan to Give Infants $20,000 Could Put a Dent in Income Inequality
Two economists are backing up a plan that would create $20,000-$60,000 'baby bonds' for all children born in the US.
Two economists have a plan for reducing the US’s rampant income equality problem, one that would create a $20,000-$60,000 ‘baby bond’ for all children born in the US, for use after their 18th birthday. While this is already done at a much lower £500 ($684.48) price point in England, the plan could be a great way to address the fact that the next generation of American parents will by in large make less money than their predecessors.
According to Darrick Hamilton of the New School and William Darity of Duke University, the economists who presented the idea at an American Economic Association conference last week, the money invested at birth can help kids purchase a home, pay for college, or start a business. Darity iterated to the Kansas City Star how 40 percent of the wealth in the US ($36 trillion) is owned by one percent of the population, but he ensured commonly used statistic didn’t go in one ear and out the other by noting that the ‘baby bonds’ plan would only cost about $80 billion a year (about 0.5 percent of that 36 trillion). The Trump administration has already expressed some ‘genuine’ interest in reducing economic burdens placed on new parents back in February of 2017.
When the current administration’s new tax bill was still being crafted, Ivanka Trump went to lawmakers and urged them to include a $500 billion deduction for childcare expenses. While the White House claims they remain committed to that cause, a report by CNN Money points out that due to the administration’s most recent tax overhaul “70 percent of the [child care] benefits will go to families that make $100,000 or more. And 25 percent will go to people earning $200,000 or more.” This ‘benefit’ will ultimately be of no use to the average American household where a typical family only earns $56,000 a year.
The ‘baby bonds’ solution, while it seems like a very radical response to income inequality, has actually been suggested by big-time Democratic politicians before. Back in 2007, the Senator Hillary Clinton (NY) proposed a far more modest $5,000 baby bond at a forum sponsored by the Congressional Black Caucus. As more and more Americans begin to believe that wealth distribution in the US unfairly favors the rich (63 percent in 2015) the concept of a ‘baby bond’ could become an integral part of the Democratic party platform moving forward.
As the Democrats clamor to disrupt Republican and conservative dominance in all branches of US government during this years midterm elections, appealing to voters’ desire for income equality and the Trump administration’s failure to deliver on some key child care promises with an idea like ‘baby bonds’ could carve out a new political path forward.