Washington’s Democratic lawmakers are renewing the baby bond proposal to give every American child $1,000 at birth.
$1,000 Per Child, Plus Up To $2,000 Per Year Thanks To Baby Bonds New Plan – Here’s How (PHOTO: Money)
Baby Bonds New Plan
The “baby bond” funds, called American Opportunity Accounts, would then be topped off with up to $2,000 per year, depending on a family’s income. The accounts would be federally insured and managed by the U.S. Department of the Treasury. Account holders would be capable to access the payments once they turn 18 to use the money for eligible uses, like in higher education or homeownership.
Sen. Cory Booker, D-N.J., and Rep. Ayana Pressley, D-Mass re-introduced the bill, called the American Opportunity Accounts Act. Senator Booker and Representative Pressley in a letter to Treasury Department Advisory Committee on Racial Equity Chair Michael Nutter and Vice-Chair Felicia Wong said that The impact of the baby bonds would be transformative: at a cost of approximately $60 billion annually, less than 10 percent of what we currently spend to subsidize wealth-building through the tax code, we can give every American a stake in our economy and agency over their future.”
Here’s How The Baby Bon New Plan Works
At birth, every American child would be given an “American Opportunity Account” worth $1,000 in federal funds. Annually, eligible children would receive up to an additional $2,000 deposited into their accounts based on family income.
The baby bond funds would sit in a federally insured account governed by the Treasury Department, achieving roughly 3% interest. The money would become accessible at age 18 for allowable expenses like home ownership or higher education. The value of the account would vary depending on a family’s income. For a family of four with earnings below $25,100, the account could rise to $46,215 per child and for a family of four with an income of $125,751, the account would be worth $1,681, or the total development of the initial $1,000 payments without $2,000 yearly allotments.
Funding for the payments would come from increases in inheritance and estate taxes. The bill has picked up a host of Democratic backers, including Sens. Dick Durbin, D-Ill., Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vermont.
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