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- Democrats reintroduced a plan to create $1,000 savings accounts for every newborn in America.
- People can tap into the accounts once they turn 18 for purposes like buying a home or starting a business.
- Booker and Pressley want the plan to form part of Biden’s stimulus package.
- Visit the Business section of Insider for more stories.
Congressional Democrats reintroduced a plan on Thursday to provide every child with a $1,000 savings accounts that can be accessed once they turn 18. Some are pushing the measure to form part of President Joe Biden’s rescue package.
Spearheaded by Sen. Cory Booker of New Jersey and Rep. Ayanna Pressley of Massachussetts, the legislation would put up to $2,000 a year into an interest-accruing fund that’s managed by the Treasury Department. Children from lower-income families would receive larger cash payments.
Once they become of age, individuals can access their funds for specific purposes like attending college, buying a home, or starting a business. The program carries a price tag of $60 billion a year that’s offset by hiking estate taxes and closing tax breaks for wealthy Americans.
“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,” Booker said in a statement. “In a country as wealthy as ours, every person should have access to economic opportunity and the chance to build assets and create wealth.”
The plan was co-sponsored by Senate Majority Leader Chuck Schumer, Sens. Elizabeth Warren of Massachussetts, Bernie Sanders of Vermont, and Dick Durbin of Illinois.
Booker and Pressley are pushing for the proposal to be folded into Biden's $1.9 trillion emergency spending package now making its way through Congress. Insider obtained a letter sent to Biden and Vice President Kamala Harris last month urging them to adopt the measure.
"When it comes to racial justice, we cannot afford to wait," Booker and Pressley wrote in the letter. "As we emerge from this dark period of our nation's history, Baby Bonds is exactly the type of universal, race conscious program necessary to build our economy back better."
The federal government has never attempted to set up this type of program, though there was bipartisan support for child retirement accounts three decades ago. Conservative experts argue the measure may disincentize people from saving their money, The Washington Post reported in 2019.
"Baby Bonds" was a cornerstone of Booker's 2020 presidential run as candidates in the Democratic primary rolled out policies aimed at combating systemic inequality in American society. A 2018 study from researchers at Columbia University indicated the measure would help close the racial wealth gap.
During the pandemic, support has grown among Democrats for plans providing relief through cash payments. Many Democrats are in favor of a proposal to provide monthly checks to parents as part of a stimulus package to address the rising costs of childcare.