Baby bond: Bill introduced that would give American children $1,000 from birth

If accepted, the bill could mean every newborn in the US would have $50,000 by the time they turn 18

File image: Ayanna Pressley and Cory Booker believe the baby bond bill would help close the racial wealth gap (AP)

Senator Cory Booker and representative Ayanna Pressley on Thursday reintroduced the "Baby Bonds" bill, that proposes giving every American child a federally-funded savings account with $1,000 (£730) at birth.

The proposal, its authors say, would make “economic opportunity a birthright for every American and help close the racial wealth gap”,

The bill already has the support of 15 senators, all of them Democrats, including the Senate majority leader Chuck Schumer. It proposes to create and seed a savings account of $1,000 at birth, with additional deposits of up to $2,000 (£1,460) each year, depending on household income.

“The funds will sit in an interest-bearing account, which can be accessed by account holders at age 18 for allowable uses like buying a home, paying for educational expenses or starting a business,” said a statement.

The funds would be in a federally insured account, managed by the Treasury Department, and by the time a child turns 18, there could be about $50,000 (£36,560) in an account.

This is not the first attempt by Mr Booker and Ms Pressley to push the bill. They had introduced it in the Congress session in 2019 as well but it failed to garner enough support.

It appears to be faring better this time around. From having just one cosponsor previously, the legislation now has 15 Senate cosponsors and state-level proposals have been tabled in multiple states.  It has eight cosponsors in the House of Representatives as well – again, all Democrats.

Mr Booker said that 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”.

“We know this growing gap has been driven in part by federal policies and a federal tax code that subsidises asset building for some Americans but fails to extend and expand that opportunity for all Americans. Baby Bonds will start to level the playing field. In a country as wealthy as ours, every person should have access to economic opportunity and the chance to build assets and create wealth,” he said.

While Congresswoman Pressley noted: “Baby Bonds are one of the most effective tools to help close the racial wealth gap and break generational cycles of poverty.

“By establishing Baby Bonds, our bill will provide every child an opportunity to pursue higher education, purchase a home, and build wealth for generations to come,” she said.

Mr Schumer, lending his support to the bill, remarked that it “will help address inequality, establish the foundation of a solid financial future for our kids and serve as a down payment on the milestones that too many families find are out of basic reach”.