Booker Brings Back Baby Bond Bill; ‘Close The Gap,’ NJ Senator Says

NEWARK, NJ — Sen. Cory Booker of New Jersey isn’t giving up on “baby bonds.”

On Wednesday, Booker and Rep. Ayanna Pressley of Massachusetts announced that they’re bringing back the American Opportunity Accounts Act for another go-around, hoping to get the federal legislation passed this time. Read More: Cory Booker Says Time Is Ripe For 'Baby Bonds'

The goal? Create a federally-funded savings account for every child in the United States.

According to Booker, a Newark resident, the American Opportunity Accounts Act would give every child a “fairer chance at economic mobility” by creating a seed savings account of $1,000 at birth.

Here’s how it would work from that point onward, he said:

“Each year, children would receive up to an additional $2,000 deposit into their American Opportunity Account, depending on family income (see chart below). These funds would sit in a federally insured account managed by the Treasury Department, achieving roughly 3 percent interest. Account holders may not access the money until they reach age 18 and will only be able to use the funds for allowable uses like homeownership and higher education — the kind of human and financial capital investments that changes life trajectories.”

The legislation would be “fully paid for” by making “commonsense reforms” to federal estate and inheritance taxes, including restoring the estate tax to 2009 levels, Booker said.

It’s all based around a simple concept, according to Booker: wealth is primarily passed down from one generation to the next, creating a gap that gets wider as time goes on – not better.

According to statistics from the senator’s office, generations of subsidizing the richest households have entrenched an extraordinary wealth gap, especially by race:

“The gap in wealth between the richest Americans and the middle class has grown dramatically in the past 50 years. In 1963, families near the top had six times the wealth of families in the middle; by 2016, they had 12 times the wealth. There is also a pernicious racial wealth gap in America. In 2016, the median Black family had about $17,000 in wealth compared to the typical white family who had about $170,000.”

“Americans today are having a harder time accessing homeownership, higher education, and a secure retirement than their parents did just a generation before them,” Booker said. “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.

“Baby bonds would fix our broken tax code by providing every American child with startup capital for their life, and helping to drive down the wealth inequality that holds American families back from their full potential,” he added.

The bill is cosponsored by: Senators Dick Durbin (D-IL), Ed Markey (D-MA), Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Sherrod Brown (D-OH), Richard Blumenthal (D-CT), Chris Van Hollen (D-MD), Brian Schatz (D-HI), Sheldon Whitehouse (D-RI), Chuck Schumer (D-N.Y.), Tammy Baldwin (D-WI), Amy Klobuchar (D-MN), and Kirsten Gillibrand (D-N.Y.).

A list of endorsing organizations can be found here.

The senator’s office released the following estimates by income level:

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