Booker, Pressley Urge Biden Administration to Include “Baby Bonds” in the Next Economic Recovery Package

Landmark program will create a federally-funded savings account for every American child and drastically reduce the racial wealth gap

WASHINGTON, D.C – U.S. Senator Cory Booker (D-NJ) and Congresswoman Ayana Pressley (D-MA) urged 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 is growing across the House and Senate. The legislation has gone from 1 to 14 Senate cosponsors covering the full breadth of the Democratic caucus, including incoming Senate Majority Leader Chuck Schumer. 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 recovery 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.

Senator Booker and Congresswoman Ayanna Pressley introduced American Opportunity Accounts Act in 2019.

The full text of the letter can be found here and below:

January 13, 2021

The Honorable Joseph Biden, Jr.                                             The Honorable Kamala Harris

President-Elect                                                                           Vice President-Elect

Office of the President-Elect                                                   Office of the Vice President-Elect

1401 Constitution Avenue, NW                                              1401 Constitution Avenue, NW

Washington, D.C. 20230                                                         Washington, D.C. 20230

Dear President-Elect Biden and Vice President-Elect Harris,

As your Administration and Congress consider emergency relief legislation, we urge you to “go big,” with a bold vision for racial and economic justice. The American Opportunity Accounts Act, or “Baby Bonds,” which would create a federally-funded savings account for every American child, represents a once-in-a-generation opportunity to close the racial wealth gap and unleash economic opportunity for every American. 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. 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 COVID-19 pandemic and ensuing “K-shaped” recovery has only further exposed vast economic inequities along racial lines. Today, 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 hold more wealth than all Black families in the U.S. combined. To be clear, these disparities are the result of intentional policymaking. For decades, federal, state, and local policy has stripped wealth and opportunity from Black and Brown people, and our tax code is overwhelmingly skewed to reward the already-affluent. We have an opportunity to build a just economic recovery that addresses the economic injustices of the past and present and moves us towards an economic future that leaves no family behind.

The American Opportunity Accounts Act would represent perhaps the most ambitious ever federal effort to directly combat wealth inequality. As a birthright, every child would be given an “American Opportunity Account” seeded with $1,000. Every year thereafter, children would receive between a $0 and $2,000 deposit, depending on family income, with funds sitting in a low-risk account managed by the Treasury Department. Beginning at age 18, account holders would be able to access and utilize the funds for wealth-building activities including homeownership, higher and continuing education, and entrepreneurship—the kind of investments that change life trajectories and break generational cycles of poverty.

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.

Sincerely,