Senator Clinton's suggestion last week that we create "Baby Bonds" is a good, big idea which is already working in Great Britain--and would work here. These $5,000 bonds for newborns would be a starter kit for success, a kind of early IRA helping children of all income brackets go to college, buy a house, invest in the market, or the like.
Predictably, thrifty right-wingers who've never complained about W's excesses immediately started yelling about its cost and its supposed similarity to McGovern's $1,000 "Demogrants" to all in 1972, but this proposal deserves substantive debate. It shouldn't get buried in a presidential race filled, so far, with endless media thumb-sucking about polls and money. The national, economic and individual benefits of Baby Bonds are too significant to ignore:
- *Great Britain's "Child Trust Funds": Though the British program only began in 2005 for children born after Sept. 1, 2002, administrators are already seeing unprecedented jumps in savings rates in poor families. The head of one of the largest fund providers tells how one family deposited 30 baptism checks along with their bond. If we followed the UK's program, the government would provide parents with vouchers or bonds to start a child savings account for each baby. Parents could then decide how to manage these long-term savings accounts or have the government manage them.
Families would be encouraged to add to these tax-free accounts with additional vouchers available to low-income families who can not make the same contributions that wealthy families can as a child grows. Savings could only be withdrawn only when a child turns 18. In order to protect low-income families and the usefulness of Baby Bonds, households will not become ineligible for any tax credits they may otherwise receive when a child turns 18 and claims the funds. (The New Democracy Project, a non-profit I head, co-published a similar proposal last year as part of a 40-point "Democracy Protection Act." You can read it here.)
- Fiscal & Economic Implications: With 4 million newborns annually, this proposal could cost some $20 billion a year. When Republicans need to find that much and more for subsidies to an oil industry making record profits or a war costing $10 billion a month or a drug prescription benefit for seniors, no problemo. Reagan-Bush 41's deficit financing in effect stole from Bill Clinton's budget and Bush 43 is stealing from (perhaps) Hillary Clinton's budget--but why should Republican administrations have all the fun? Why can't Democrats too propose new spending, especially since pay-as-you principles can still achieve balanced budgets. That is, just as a cigarette tax would have entirely funded the SCHIP expansion, a budget bill could deduct $20 billion from fossil fuel subsidies and transfer it to all newborns--or perhaps only those born to families with, say, under $1 million in net assets (exclusive of homeownership).
Much like the 1944 G.I. Bill, which invested in millions of veterans by helping them attend college or buy a house, Baby Bonds will ultimately build a stronger American economy and society. (Time's Richard Stengel upped the ante when he proposed a similar program that tied access to the bond to a year of national or military service.) Children participating in financial decisions as they approach 18 will likely pay more attention to the market and their government--one becomes more involved if one's own money is at stake. And since the American savings rate in 2006 went negative for the first time since the late 1940s, a savings account will naturally teach children to save from a young age, encouraging life-long financial planning.
- Equal Opportunity means Economic Opportunity: In the past 30 years, real median income has remained flat while the top 1% has seen their income and wealth double. Authors like Kevin Phillips in his 2002 Wealth and Democracy and Robert Reich this month in Supercapitalism have documented the cavernous and growing divide between the rich and everyone else in our winner-take-all economy.
One way to increase opportunity for middle-class families is to allow their children to enjoy the magic of compound interest just as wealthier offspring do. This isn't about making everyone rich or letting young adults go on graduation trips and buy big flat-panel TVs; it's about partially leveling the playing field and returning to the meritocracy that has long defined our democracy. Take it from author and self-made multi-millionaire Peter Barnes: "I was lucky enough to have parents who paid for my education at Harvard, helped me purchase my first home and invested in my first startup. Now I've established trusts funds for my sons to do similar things. But what about the millions of American children who aren't as fortunate as mine?"
Since all sides of the political spectrum believe in economic opportunity, let's help 18-year-olds with a modest nest egg to start their adult lives. In 2005, 1 in 5 American families had zero or negative net wealth. America has the steepest inequality of any Western economy. If we wisely help those at the sunset of our lives with Social Security and Medicare, how about at the dawn of our lives with Baby Bonds?
Even better would be an almost entirely automated society where goods are produced by machines and every American own a piece of the new Automated economy.
Alternative energy and an automated economy would free people to work on important things instead of just going thru the daily grind in order that a minute percent of the population can have most of the resources.
A 5G bond isn't going to do jack shit to get a kid through college when it matures. It won't even pay for their books. And what career will be left for that kid by the time he/she grows up if our trade policies continue to degrade our wages and standard of living?
A real 'big idea' is what Dennis Kucinich has proposed - end NAFTA, no more trade agreements that benefit Big Biz at the expense of workers' quality of life. But Hillary 'I Love Me The Lobbyists' Clinton wouldn't dare propose an idea that would actually do some good. Instead she's trying to bribe voters. Typical old school politicking we just don't need anymore.
We should pay people for NOT having kids!
If we wisely compel those who die before reaching retirement age to pay for those who do; if we're going to wisely compel those who don't have children to support the offspring of those who do (which they already do in the form of property taxes for schools) ... why not keep going? Let's have those who work pay to support those who don't want to work. What's that, we do that already? Great! But let's expand it; from now on, everyone has the choice: work, or guaranteed welfare, whichever you feel like doing (or NOT doing).
How about the gov't starts buying up every foreclosed home and gives them away to families with 5 or more children? How about we change the national motto from "In God We Trust" to "You Work For Us" (or is that "US"?). How about we start painting 30 ft. tall pictures of Hillary on the sides of gov't buildings, including all of those new ones we'll soon have to build, and begin issuing federal -- sorry, I mean "state" (in the big sense of the word) school uniforms?
How about we continue to take from those who try and give to those who don't try? How about we dig up Stalin, Khrushchev, and Brezhnev, and tell them "You had the right idea all along; now, if you just hadn't been so mean about it. ..."
the other Socialist countries of Europe is that
they already have elaborate social-welfare
programs for the health & education of all
their citizens.
We have almost nothing of the sort, by comparison.
The proposal is just to give every kid
a birthday present (I guess): a $5K US
bond, worth $2.5K when issued. Pay for
not even a half-semester of college, maybe.
On the whole, universal health care would be
much more useful. Let's get that done, shall we?
Conniving Calculating Clinton's new "Chicken in every pot" - such political BS!
Yep, that's what the country needs: a $5000 INCENTIVE FOR ILLEGALS to drop their anchor babies here. The invasion should reach new levels never before seen by any country. (It would make D-Day seem like a casual gathering of folks for a picnic.)
Here's an alternative - do like Sarkozy in France who is rounding up 25,000 illegal invaders THIS YEAR ALONE and deporting them all. Sarkozy should serve as a model for the current crop of US elected weasels who won't do what is necessary to enforce the law of the land and stop the invasion.
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If it's the former, it's not like you're ponying up $5K per kid at the get-go...more like $500-1000.
No matter though...this idea stinks. What is the percentage of taxpaying households that will have kids each year...maybe 30%?? Singles...gay couples...couples who are done "breeding" (retirees, most couples past 45).
They're all supposed to pony up tax dollars for those who CHOOSE to have kids? HA!!! There's already a backlash against 'breeders' by single coworkers who are sick of covering for these people & subsidising their benefits...this takes that to a whole new level.
And while I agree that college is a great goal...it's a bit elitist to think that every kid will...SHOULD...go to college.
This is a non starter & can/should be used as ammunition AGAINST Hillary when opponents wanna paint her as a nanny-state tax & spender
With all due respect, I think you're taking a short term view in your argument about people not having kids/done breeding etc., paying for this. It's like me (who rarely gets sick and has insurance) being annoyed about paying taxes to fund the medical care of someone with no health insurance. I say bring it on. We don't all necessarily believe in an eye for an eye.
I think the idea behind this plan is to give the next generation an opportunity that this one didn't have. And to ultimately produce a higher earning segment of society that will ultimately pay off the five grand multiple times through higher income or housing taxes, etc.
The article also didn't say that every kid SHOULD go to college. It suggested that if the money weren't to be used for that it could be applied to the purchase of a home. Again, another form of revenue and tax generation. (Education does seem to be the preferred method of expenditure though.) And I can guarantee that there are thousands of kids out there who would kill for a college education if they had some help in getting it.
If you leave this bond thing aside, it seems to me that the education system here needs to be completely overhauled to make it accessible to everyone, regardless of income. Only then can the gap between lower and upper classes be narrowed. I'd be happy to pay an extra 10% on my taxes if I thought my kids wouldn't go into massive debt attaining what europeans get for free.
Why is it "socialism" to give each newborn American $5,000 -- but it's NOT "socialism" to saddle each newborn American with a $30,000 debt?
Most of our "national" debt was accumulated during two Presidencies: Reagan's and Dubya's. They, and their Congressional allies, were the true "socialists".
-- TP
Democrats are always left cleaning up their messes! Yes we have a record deficit thanks to an unecessary war and tax cuts for the rich! Social Security is also at risk. Nevertheless, good judgement is about prioritizing. One does not get rid of good programs but just rework the budgets
This plan that Hillary has proposed IS time-tested worldwide and ensures atleast something for future generations of Americans instead of the debt they will inherit due to insane economic policies under this administration
Democrats are always left cleaning up their messes!
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Worth repeating every minute, every day, every election year!
at it this way: instead of coming into the world
owing $30K, now it'll be $35K *and* you'll get
a personalized certificate for the $5K portion.
Obviously, the government would need to borrow
the money for such a program anyway. It all
just goes on the tab, these days.
All just pieces of paper, anyway.
Oh, and look at your mortgage, your credit card bill, even your paycheck. All those are "pieces of paper", too.
-- TP
Those who are above 300% but below 400% don't get it.
Those who are above 400% must fund the $5000 per child for those below 300%.
Forget about all the "land of opportunity" drivel. America is now more class-divided than Europe.
As for all the talk about "redistribution" and "socialism"...calm down! This is hardly socialism. Besides, how do you think the rich got so rich??
The rich are rich because of specific policies of the government, tax laws, corporate subsidies, etc, etc. It's funny how nobody screams "socialism" when the government grants billion-dollar subsidies to industries that all already raking in billions of dollars. THAT's called re-distribution.
The answer, it seems to me, for making the future of our children brighter is to actually face the problems we have already created head on. Not create yet another unfunded mandate that our children will have to pay for with compound interest accrued to Red China or whoever is actually paying our bills these days.
Give $5000 to "every" child born in the US.
First of all this would include greatly incourage illegal immigration along other attempts to take advantage of our numerous guest worker programs. All babies born on US soil are considered US citizens due to a faulty intrepretation of the 14 admendment that needs to be rectified either by legislation or appeal to the SCOTUS. Until this issue is resolved the idea of "Baby Bonds" legislation is unsupportable.
Second it is another huge entitlement that will be available to rich and poor alike. How do you predict the future financial well being of parent(s) a decade or more into the future? Why promise to give money to families who may be well off in the future? Especially when, our existing social welfare programs need to be protected from future finanicial default? I also see huge problems administering this program.
There is a big difference between this proposal and well thought out New Deal Social welfare legislation like Social Security that binds the public with a Social contract.
This is bad idea is a prime example of corrupt old fashioned Tammany Hall Democratic pandering.
She got an early advance to avoid Senate ethics rules on sources of income.
Maybe John Edwards could pay taxes on his law suit revenues. I am not in that income level, so I may not word this very well. But Edwards managed to pay himself about $15,000 a year, which he paid income taxes on, but he was able to push several million dollars a year through some loophole, into a foreign bank account, that allowed it to become tax free.