Congresswoman Ayanna Pressley and her colleagues sent a letter urging President-elect Joe Biden and Vice President-elect Kamala Harris to include the American Opportunity Accounts Act, or “Baby Bonds,” in the next economic recovery package.
When passed into law, this groundbreaking legislation will create a federally-funded savings account for every American child that will make economic opportunity a birthright for every American and substantially close the racial wealth gap.
Staggering wealth inequality in the U.S. has only worsened in the past six decades, especially along racial lines. According to the 2019 Survey of Consumer Finances, the median white family has eight dollars in wealth for every one dollar held by Black families, and the members of the Forbes 400 wealthiest Americans own more wealth than all Black families in the U.S. combined.
Momentum for Baby Bonds is growing across the House and Senate, and recent studies by Columbia University and Morningstar have found that a program like Baby Bonds would substantially close the racial wealth gap among young adults in America.
“By investing in Baby Bonds, along with critical income support measures like rental assistance, SNAP, and the child tax credit, we can ensure that struggling families not only weather this economic crisis, but also have the resources to bounce back from future ones as well,” the lawmakers wrote. “On the heels of historic Democratic victories in Georgia just last week, now is the time to act to ensure people can not only survive, but thrive.”
The lawmakers continued: “The impact would be transformative: at a cost of approximately $60 billion annually, less than 10 percent of what we currently spend to subsidize wealth-building through the tax code, we can give every American a stake in our economy and agency over their future. We can also begin to address persistent inequities: recent studies by Columbia University and Morningstar have found that Baby Bonds would substantially close the racial wealth gap.
“When it comes to racial justice, we cannot afford to wait. 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.”
If adopted into the next economic relief package, the American Opportunity Accounts Act, or “Baby Bonds,” would give every child an “American Opportunity Account” at birth seeded with $1,000 that grows every year between a $0 and $2,000 depending on family income, until the age of 18. Kids growing up in the poorest households would have accounts of $50,000 to spend on eligible wealth-building activities, disproportionately benefiting Black and Brown children most harmed by the expansive racial wealth gap.