New Jersey senator Cory Booker recently announced a proposal for “baby bonds,” or the creation of public trust funds for children as a means to ameliorate wealth inequality, and in particular, the racial wealth gap. His proposal is partly modeled on the work of economists and RSF grantees Sandy Darity (Duke University) and Darrick Hamilton (New School), two leading experts on the racial wealth gap. Darity and Hamilton’s research has also helped spark the recent push for a federal jobs guarantee, a measure supported by Senators Kirsten Gillibrand, Bernie Sanders, and Booker.
In a 2016 interview with RSF during his time as a visiting scholar, Sandy Darity outlined the concept of baby bonds, which he called “an anti-inequality measure designed to address the wealth gap.” He explained how such an initiative would work in practice:
This program would create public trust funds for all newborn infants that they could access when they reach eighteen. It’s simply universalizing the model that wealthy families already use—giving kids a trust that they can access at a certain age. The amount of the trust would be graduated based on the wealth position of the parents. And this would be a universal program—meaning that every child, regardless of how wealthy their parents are, would receive something—but those kids whose parents have less wealth would have greater amounts in their trusts.
Under Booker’s plan, which draws from this model, the federal government would provide a trust account for every child and add up to two thousand dollars annually, depending on the wealth of the child’s parents. By age eighteen, the poorest children would have a trust of up to fifty thousand dollars, to be used for education, professional training, or buying a home. As Booker told the New Yorker, such a program would not only help ameliorate wealth inequality, but would also deliver psychological benefits to children of the poorest families. “Imagine if they had thirty or forty thousand dollars to go wherever they want,” he said. “Just the psychology of that—it’s limitless.”