IF THE UR WANTS TO SPEND MONEY, THERE ARE BETTER WAYS:

Cash on delivery: The movement to give every American a trust fund at birth (Rebecca Tuhus-Dubrow, February 1, 2009 , Boston Globe)

In the most commonly promoted version of the plan, the government would contribute an initial deposit at birth, with low-income families receiving a supplement. The family could add to the fund, which would accrue interest tax-free, and the government would offer some matching incentives. At 18, the accountholder could begin to withdraw money for higher education, homeownership, and eventually, retirement.

As proponents see it, universal trust funds, or children's savings accounts, would confront major issues that current policy fails to address. They would foster a culture of saving in an era when the rising price of important goods, such as college, has made assets increasingly crucial to achieve the good life free of indebtedness. They would work against the rampant debt that has contributed to the current financial crisis. And they could help remedy the overlooked problem of wealth inequality, or disparity in assets, which dwarfs even the income gulf between rich and poor.

For the poor, income is necessary to survive, but to escape poverty - to attain education and financial security, to plan ahead and provide offspring with prospects - assets are essential. Social scientists have even identified an "asset effect": owning an asset, whatever the size, appears to impart a greater sense of control and confidence about the future.

"We've structured social welfare spending as a get-through-the-month idea," says Michael Sherraden, director of the Center for Social Development at Washington University. Children's savings accounts, by contrast, would make headway on a more ambitious goal, he says: "How do you develop personal and household capacity over the long run?"

Sherraden's center, along with the Washington-based think tank the New America Foundation, is studying and promoting the idea in the US and around the world. The initiative has attracted the support of powerful Democrats such as Joe Biden, who advocated it during his presidential campaign, and Rahm Emanuel, who as a congressman pushed relevant legislation in the House. But its appeal cuts across ideological lines: prominent conservative fans include the columnist David Brooks and former senator Rick Santorum, who find it compatible with notions of an "ownership society."

It was typical of Paul O'Neill's unfortunate turn at Treasury that he came out for such after he left.

Posted by Orrin Judd at February 13, 2009 7:20 AM