Sen. Cory Booker Of NJ Says Time Is Ripe For 'Baby Bonds'

NEWARK, NJ — Sen. Cory Booker of New Jersey pushed for the idea of federal “baby bonds” throughout the presidency of Donald Trump. And now that Joe Biden and Kamala Harris have taken office, the former football star isn’t planning on letting up his blitz.

On Thursday, Booker and Rep. Ayanna Pressley of Massachusetts reintroduced the American Opportunity Accounts Act in Congress. If it becomes law, the bill would create a federally-funded savings account for every newborn in the nation. Read the full text here.

Here’s how it would work, according to a joint statement from Booker and Pressley:

“At birth, every child [in the United States] would be given an ‘American Opportunity Account’ seeded with $1,000. Each year, children would receive up to an additional $2,000 deposit into their American Opportunity Account, depending on family income. These funds would sit in a federally insured account managed by the Treasury Department, achieving roughly 3 percent interest. Account holders may access the money once they reach age 18 and use the funds for allowable uses like homeownership, financing a higher education or starting a small business.”

Details about possible funding sources weren't immediately available. But Booker initially said it could be at least partly paid for by raising estate tax rates and lowering the threshold to apply to estates over $3.5 million, Newsweek reported.

According to Booker, a Newark resident, there’s a chronic racial wealth gap in the United States, where the typical white household has eight times the wealth of the typical Black household.

“Due to systems of oppression throughout our country’s history – from slavery to redlining – a disproportionate share of Black families have been unable to accrue and pass down wealth to their children, grandchildren, and future generations the way many white families have,” Booker said.

Pressley agreed, calling baby bonds “one of the most effective tools at our disposal to help break generational cycles of poverty.”

“By establishing baby bonds as a birthright, our bill will provide every child an opportunity to pursue higher education, purchase a home, and build wealth for generations to come,” Pressley said.

In January, Booker and Pressley reached out to Biden and Harris, urging them to include the American Opportunity Accounts Act in the next federal economic recovery package.

“Staggering wealth inequality in the U.S. has only worsened in the past six decades, especially along racial lines,” they wrote. “According to the 2019 Survey of Consumer Finances, the median white family has eight dollars in wealth for every one dollar held by Black families, and the members of the Forbes 400 wealthiest Americans own more wealth than all Black families in the U.S. combined.”

It isn’t the pair’s first time at the rodeo when it comes to baby bonds; Booker and Pressley first introduced the American Opportunity Accounts Act in 2019. And after years of advocacy from grassroots groups throughout the nation, the concept is gaining traction by the day, they say.

The current version of the bill has gained support from 15 U.S. senators, including Senate Majority Leader Chuck Schumer of New York, Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont.

“With a Democratic majority in the Senate, I believe the time is ripe to not just help people survive now, but thrive in the future,” Booker opined. “We can build back better by making baby bonds a reality.”

Booker’s home state of New Jersey isn’t immune from the wealth gap, some experts say. According to one recent estimate, the top five percent of the state's households bring in almost 16 times as much as the bottom 20 percent, and white families have a median net worth of $352,000, compared to $6,100 for Black and $7,300 for Latina/Latino families.

Gov. Phil Murphy has proposed a state-level baby bonds program in New Jersey, which would deposit $1,000 into an account for every baby born into a household that earns less than 500 percent of the federal poverty level, or $131,000 for a family of four.

Roughly three out of four New Jersey infants would be eligible, officials previously said.

• See related article: New Jersey 'Baby Bonds' Could Shrink Gap Between Rich, Poor

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