Booker: Baby Bonds can help close a gap created by 400 years of inequality | Opinion

Posted Feb 28, 2021

By Cory Booker

Wealth, unlike income, is often passed from one generation to the next — and with it, access to opportunity. Those who have wealth can do things like buy a home, get a college degree without being saddled with debt, or start a small business. Those who start life without wealth are often robbed of the opportunity to ever get it.

Today, the gap between those who have wealth and those who don’t is at its highest point in decades — in 1963, families near the top had six times the wealth of families in the middle; by 2016, they had 12 times the wealth. And this gap is particularly stark along racial lines — a recent study by the New Jersey Institute of Social Justice found that the median net worth for a Black or Latino/a New Jerseyan is $179, compared to $106,210 for a white New Jerseyan.

The same is true nationally: the median Black family has about $1 in wealth for every $8 held by the median white family. Put even more starkly, the 400 wealthiest Americans, according to Forbes magazine hold more wealth than all Black families in the U.S., combined.

The wealth gap in America is an urgent crisis that is denying generation after generation of New Jerseyans access to opportunity. That’s why I’ve proposed giving every child born each year in our country — including the 100,000 New Jerseyans born each year — a “Baby Bond” — a savings account seeded with $1,000 at birth that will grow in value as every child grows up. Depending on a family’s income, a child would receive up to an additional $2,000 added to their account, plus interest, each year — in New Jersey alone, roughly one in eight kids would qualify for this full payment.

By age 18, a child could access up to $50,000 to pay for college, put a down payment on a home, or jump-start a small business — the kinds of investments that create intergenerational wealth and change life trajectories.

As President Biden seeks to ‘build back better’ our economy in the wake of the devastating pandemic, he should embrace Baby Bonds as an idea that can help level the playing field and expand opportunity to every American child.

A 2019 study out of Columbia University found that a proposal like this one would be so effective at closing the racial wealth gap that it would nearly eliminate it among young adults. Additionally, a McKinsey report found that closing the racial wealth gap in America could grow our economy for everyone by 4% - 6% of our GDP — or anywhere between $1 trillion and $1.5 trillion.

The truth is, the wealth gap is in large part the result of generations of federal policies that have perpetuated and exacerbated it — from tax policy that subsidizes wealth building for those who are already wealthy, to Social Security and minimum wage laws that initially and intentionally excluded jobs traditionally held by Black Americans, to a history of racially discriminatory federal housing policy that blocked Black families from homeownership.

I’m excited to see growing momentum behind the Baby Bonds idea in the Senate, with 14 sponsors for legislation to create the program including Senate Majority Leader Chuck Schumer. I am hopeful and excited about the possibility of Baby Bonds becoming a reality, and what it will mean for New Jersey if young people born in every town and every county have access to opportunities that can help make their dreams a reality.

Today, as we work toward the long-term recovery of the biggest economic crisis since the Great Depression and confront deep-seated, systemic injustice in our country, we have the chance not just to repair the harm that has been done, but to take bold action that will make transformative change in the life trajectories of millions of kids.

If Congress acts to pass Baby Bonds into law, we can start to make intergenerational economic mobility in America the rule, not the exception, and we can and we will give future generations of New Jerseyans a new American birthright: opportunity.

U.S. Sen. Cory Booker has served in the Senate since 2013. He is also the former mayor of Newark.

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published this page in News and Politics 2021-03-01 03:18:38 -0800