Economists and wealth inequality experts Dr. William “Sandy” Darity and Darrick Hamilton have argued for baby bonds as a race-neutral way to close the racial wealth gap between Black and white people in the U.S. Baby bonds are not really bonds. They’re a trust fund or endowment endowed to every newborn infant, regardless of race. The bonds grow on the basis of the wealth of the child’s family.
The idea is for children to access the money when they turn 18. Beneficiaries will know the money is coming and they’ll have a stake in the system. It will be a downpayment on an apartment or it will subsidize their college fund or start up a business. It will also create a financial basis for giving them financial literacy courses because they would be sure that they would have something to manage.
Here’s Darity proposal for paying for Baby Bonds: “If we estimate that there’s about 4 million new infants born in a given year and each child gets $20,000, that’s $80 billion per year. Since there’s a gestation period of 20 years before you have to make the first payouts, you could set up a trust fund to fund the trust. The annual expense is $80 billion – not much of an expense in terms of the U.S. budget.”
In 2019, the U.S. spent $4.45 trillion.
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