Sen. Cory Booker (D.-N.J.) is proposing a plan—the American Opportunity Accounts Act—that he calculates will provide $46,215 to every 18-year-old in the lowest income bracket by giving them annual subsidies in a federally managed savings account.
Booker cited his plan in a Tweet he sent out this morning.
“We must close the wealth gap that’s undermining equal opportunity in our country,” Booker said in his Tweet. “My baby bonds will help level the playing field by creating a savings account for every U.S. child—to invest in themselves through things like paying for higher education.”
Booker’s Tweet retweeted an article tweeted by prosperitynow.org. The article was headlined: “Cory Booker’s America Opportunity Accounts Act is a Bold Step Towards Wealth Equality.”
“Today, with the announcement of the American Opportunity Accounts Act, we’re excited to see Senator Cory Booker (D.-N.J.) take a concrete step to help level the wealth-building playing field and ensure that all children—especially those who come from low- and moderate-income families—have a fair shot to reach financial security and prosperity,” said the article.
It linked to an article at Vox, entitled: “An exclusive look at Cory Booker’s plan to fight wealth inequality: give poor kids money.”
“America has a massive, growing racial wealth gap,” Vox said. “The median white family today holds nearly 10 times the wealth of the median black family.
“Sen. Cory Booker (D-N.J.),” Vox continued, “is introducing a bill aimed at closing that gap. His idea is to give low-income kids a sizable nest egg (nearly $50,000 in some cases) that they could use for wealth-building purchases, like a down payment on a house or college tuition.”
“It would be a dramatic change in our country to have low-income people break out of generational poverty,” Booker told Vox. “We could rapidly bring security into those families’ lives, and that is really exciting to me.”
Vox explained how Booker’s plan would work:
“His American Opportunity Accounts Act would give each child born in the United States a savings account with $1,000. Each year, until the child turns 18, the government would deposit as much as $2,000 into that account. The size of the annual payment would depend on the child’s family income, with lower-income families receiving larger checks. …
“Booker’s office estimates that a child who remains in the lowest income bracket of the program (meaning she gets the largest, $2,000 payment each year) would accrue $46,215 by her 18th birthday. A child in the highest income bracket of the program (above 500 percent of the poverty line, or $147,100 for a family of four) would end up with $1,681—just the original $1,000 payment plus earnings accured from the government investing it in low-risk funds.”