August 15, 2014


The Futures Account (RICHARD J. GELLES, August 2014, American Interest)

Can we help expand the middle class and re-open the doors for upward mobility in 2014? Absolutely. The method would model the GI Bill, but use the form of what are called "Baby Bonds" or "child allowances." In September 2007, addressing the Congressional Black Caucus, then-presidential candidate Hillary Clinton floated the idea of a $5,000 Baby Bond:

I like the idea of giving every baby born in America a $5,000 account that will grow over time, so when [young people turn] eighteen, if they have finished high school they will be able to access it to go to college or maybe they will be able to put that down payment on their first home, or go into business. [...]

The idea has finally gotten the attention of some U.S. legislators. Members of Congress have introduced a type of Baby Bond legislation: the America Saving for Personal Investment, Retirement, and Education Act (ASPIRE), initially sponsored by former Senator and former Governor of New Jersey John Corzine, a Democrat, and former Pennsylvania Senator Rick Santorum, a Republican. The bill was first proposed in the 108th Congress (2003-04) and was introduced in each of the next three. ASPIRE legislation called for a deposit of $500 for every newborn in the United States. The funds would compound over time, and when the child reached age 18 the money could be used for education, home ownership, or later for retirement. Additional funds of up to $500 would be deposited each year by the Federal government to match funds in the account by parents, states, foundations, or other entities. For children in families below the national median income ($50,000), an additional $500 would be deposited at the time of the child's birth. ASPIRE was not proposed in either the 111th or the current congressional session. Of course, it got nowhere in its earlier incarnations.

Indeed, none of the Baby Bond or child allowance proposals raised in the United States have achieved any real traction. By and large, they were either trial balloons or sidebar solutions tacked on to academic books that examined social problems. ASPIRE came closest to crafting a supportive social policy, but the meager investment of $500 per child would not have been sufficient to make a real difference, especially if the goal is to reinvigorate the American middle class. My "Futures Account" proposal offers the American working class a pathway to the middle class and secures the existing middle class in its status. It is based on four principles:

The policy must be universal, with no means testing; everyone is eligible.
The policy must be fair; no one is left out.
The policy must be fundable; there must be a realistic method of consistently financing the program.
The policy has to be consistent with the values and principles of a market economy.

Posted by at August 15, 2014 7:49 PM

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