Economic inequalities have consequences. For the poor, it can affect everything from life expectancy to education.
But a new program in the nation’s capital is trying to thwart those findings.
It’s called Baby Bonds, although it works more like a trust fund.
Children of the city’s poorest residents will receive up to $25,000 when they reach adulthood.
The idea was first proposed by two economists in 2010 and was brought to the mainstream by a 2016 presidential candidate.
Sen. Cory Booker was an early supporter of the program in DC and pointed out that while it helps low-income families of all races, there is one in particular that is struggling more.
“We must come up with a bold and ambitious vision for racial and economic justice in this country. I think Baby Bonds is a fundamental part of that,” he said. “Right now, we live in an America where members of Forbes’ 400 richest American households hold more wealth than all black families in the United States combined.”
The racial wealth gap is undeniable. Brookings data shows that “the median white American in their early 30s was $29,000 more than the median black American of the same age.” The gap is even greater among older people.
“Wealth is functional. Wealth allows you to generate other forms of resources and provides economic security,” said Darrick Hamilton, one of two economists who proposed Baby Bonds.
He testified before a committee of the Washington, DC council, arguing that the idea is not unprecedented in American life.
“This idea of Baby Bonds – though I get a lot of credit for conceiving it in its modern form – is as old as the founding of the nation. Thomas Payne talked about a Baby Bonds scenario where he said every American should be endowed with a plot of land so that when they grow up they can tend to that land and enjoy the economic security of the benefits of this land. »
Reviews say it’s expensive and unproven.
But Hamilton points to the post-Depression social programs that President Franklin D. Roosevelt and others initiated.
“I think we can look at our New Deal past and see that an asset-based white middle class was formed through government rights,” Hamilton said. “Programs like the GI Bill, the Fair Housing Act that literally provided Americans with capital resources.”
The first four years of the Baby Bond program are estimated at $32 million.
Still, the program is currently underway in DC and will likely be watched closely by other states considering the same idea.
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