WASHINGTON, D.C – Today, U.S. Senator Cory Booker (D-NJ) led a letter urging Majority Leader Chuck Schumer to include the American Opportunity Accounts Act, or “Baby Bonds,” in the reconciliation package. If included and passed, 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. 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.
“The COVID-19 pandemic, ensuing economic crisis, and ongoing recovery have only further exposed vast economic inequities along racial lines,” the senators wrote to Majority Leader Chuck Schumer. “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. These disparities left Black families particularly vulnerable during this crisis as they dealt with the challenges of high costs of healthcare, unemployment, and remote learning without the buffer of savings and resources.”
“To be clear, these disparities are the result of intentional policymaking,” the senators continued. “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.”
“Alongside the investments in families and workers put forward in President Biden’s American Families Plan, we can make meaningful progress towards eliminating these disparities. 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,” the senators concluded.
If adopted into the reconciliation 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 up to $50,000 to spend on eligible wealth-building activities. A study out of Columbia University found a policy like Baby Bonds would substantially reduce the racial wealth gap among young adults.
This letter was also signed by Senators Jeff Merkley (D-OR), Chris Van Hollen (D-MD), Richard Blumenthal (D-CT), Ed Markey (D-MA), Martin Heinrich (D-NM), Sherrod Brown (D-OH), Dick Durbin (D-IL), Brian Schatz (D-HI).
Senator Booker and Congresswoman Ayanna Pressley first introduced the American Opportunity Accounts Act in 2019 and sent a letter earlier this year urging President-elect Joe Biden and Vice President-elect Kamala Harris to include this legislation in the fourth COVID-19 economic recovery package.
The full text of the letter can be found here and below:
August 5, 2021
The Honorable Charles Schumer
Senate Majority Leader
S-221, The United States Capitol
Washington, DC 20510
Dear Majority Leader Schumer,
As you work to craft legislation to support a robust recovery, we urge you to include investments into our children and families through “Baby Bonds,” as outlined in the American Opportunity Accounts Act.
The COVID-19 pandemic, ensuing economic crisis, and ongoing recovery have 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. These disparities left Black families particularly vulnerable during this crisis as they dealt with the challenges of high costs of healthcare, unemployment, and remote learning without the buffer of savings and resources.
The setbacks facing Black families as a result of the pandemic cannot be understated. The outsized impact on the health and employment of Black families further shrunk wealth as families dipped into their limited resources to stay afloat, and data shows that critical asset building investments in education, homeownership, and retirement suffered as Black households depleted their savings. These disruptions have the potential not only to create obstacles for the workers and students in the years to come, but also for the future generations.
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.
Alongside the investments in families and workers put forward in President Biden’s American Families Plan, we can make meaningful progress towards eliminating these disparities. 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.
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