By Liz Hay
Elm Staff Writer
On Monday, Oct. 22, U.S. Sen. Cory Booker (D-NJ) released a new plan which would give every American child a savings account with $1,000 upon birth. The accounts would be funded by changes to federal estate and inheritance taxes. He will officially propose the “opportunity accounts” when Congress reconvenes in November.
Every year, money would be added to these accounts in proportion to family income. The largest possible yearly addition would be $2,000 for those in the lowest income bracket, while those in the top bracket would see no further additions. The funds would only be accessible once the child has reached age 18, and the money could only go toward certain purchases, such as higher education or home ownership.
While the strict regulation of the money in the account may be initially alarming, it makes sense in the context of the proposal’s purpose. The accounts are funded by tax money and intended to benefit not only individuals but society as a whole. Tax payers are “investing” in these accounts, and the government should act to make sure that that investment money is used wisely.
Included in Booker’s official press release is the estimate that, by the time they turn 18, children of families in the wealthiest income bracket would have access to $1,681. Eighteen-year-olds born into families below the poverty line would have $46,215 in their account.
The press release also states that the intention of the bill is to “help level the playing field in our country to ensure that every child has a chance to live their version of the American dream.”
These opportunity accounts would be absolutely life changing, especially for children growing up in the poorest families. Going to college, enrolling in a job training program, or potentially even buying a home would be made possible for thousands of future adults. Without help or contingency, these people are otherwise stuck in a challenging, often impossible uphill economic battle.
Generational wealth leads to inequality. The Congressional Budget Office put out data to show that in 2013, the top 10 percent of families held 76 percent of the wealth in the nation, while the bottom 50 percent of families held just one percent. Measurements of wealth take into account all assets of a household, like property value and savings, rather than just yearly earnings.
Of course, the racial divide inherent in American wealth inequality cannot be ignored. According to the Institute for Policy Studies, a progressive think tank, “the billionaires who make up the Forbes 400 list of richest Americans now have as much wealth as all African-American households, plus one-third of America’s Latino population, combined.” The racial wealth gap in the United States has only gotten bigger in the past century, and Booker’s proposal could be a huge step toward addressing it.
One in five households have zero or negative net worth. In simple terms, that means one in five families have no money to repair a broken car, seek medical treatment, or even pay a significant traffic fine. Seeking higher education is not even close to being on the table for these families, though it is a life-changing opportunity. Students at Washington College are learning skills necessary for higher-paying jobs, taking on internships, and making crucial connections; these opportunities would be available to more people should Booker’s proposal succeed.
America was founded as a nation of liberty and opportunity. Somewhere in the last 250 years, we have lost sight of those founding values and allowed rampant inequality to infect our society. Booker’s proposed opportunity accounts seek to achieve exactly what it says on the tin: inject opportunity into lives which are otherwise jeopardized by generations of inequality.