New Jersey Gov. Phil Murphy Proposes 'Baby Bonds' Plan For Families Making Less Than $131,000 Annually
NEW BRUNSWICK, N.J. (CBSNewYork) -- As the wealth gap continues to widen in the United States, a new idea is being seriously considered that would give kids a head-start in saving money -- baby bonds.
Gov. Phil Murphy made headlines Tuesday, announcing a bold, new plan to tackle wealth disparity by giving New Jersey newborns "baby bonds."
"As this child grows, so too will the value of this bond," the governor said.
Under the proposal, the state would deposit $1,000 into the account of every child born in 2021 to a family making up to $131,000 per year.
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Economist Darrick Hamilton, who has been pushing the policy for over a decade, says the money helps address a disparity that has left white families in the U.S. ten times wealthier than Black families.
"Basically, Black families have limited capital to get into an asset that appreciates over their life in comparison to some white families in which they will receive a trust," Hamilton told CBS2's Christina Fan.
The bond would benefit three out of every four children born in New Jersey.
On the child's 18th birthday, they can withdraw the funds to pay for education, buy a house or start a business.
"In a nutshell, the difference between a renter and a homeowner, and I'm overly simplifying to make the point, is that one has a down payment and the other doesn't," Hamilton said.
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The initiative would cost the state about $80 million annually and would continue each year.
Some political experts, like former state assemblyman John Wisniewski, are worried about the long-term financial cost.
"I want to help these children as much as anybody else, but is it the right way to be helping them? Can that billion dollars be better spent, for instance, on child health care?" Wisniewski said.
Murphy says this investment will provide hope to the future generations, beginning day one. Economists are watching to see if other states catch on.
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