“Baby bonds,” which provide financial subsidies to children as young as 18, are gaining traction across the country as a potential tool to reduce inequality. AFP
Child welfare advocates are calling on New Mexico to create a state-funded savings account for children born into poverty, aimed at addressing the economic disparities faced by many young residents. We are asking you to create an account. New Mexico has the largest Latino population in the United States and one of the highest rates of child poverty. Approximately 28% of children under the age of 5 and a quarter of all households with minors are economically vulnerable, far exceeding the national average of 11.1%.
Axios reports that the concept of “baby bonds,” which provide financial subsidies available to children when they turn 18, is gaining traction across the United States. In fact, about a quarter of U.S. states are considering similar programs, according to the Harvard Kennedy School.
Baby bond proposals have been approved in Washington, D.C., Connecticut, and California, and have also been filed at the federal level and in eight other states. The goal of these initiatives is to provide young people with funds that they can use to start a business, buy a home, pursue higher education, or save for retirement.
New Mexico State Treasurer Laura Montoya told Axios that such a program would be critical for a state where 75 percent of children (or 92,842 minors) were born into families receiving Medicaid. He said it has the potential to bring about change. Depending on what the law decides, the state could allocate between $500 and $2,000 in each child’s savings account at birth, giving them access to it when they reach adulthood. Montoya believes baby bonds could also be a stepping stone to improving financial literacy in the state.
By comparison, Connecticut’s statewide baby bond program, launched in June 2023, starts with a deposit of $3,200 per child, while Washington, D.C.’s state-wide baby bond program starts with a deposit of $3,200 per child, while in Washington, D.C., it has a $500 contribution at birth and is available for low-income families. There is also an additional annual deposit.
The idea of baby bonds dates back to Thomas Paine’s 1797 pamphlet Agricultural Justice, but there has been a renewed interest in them in recent years. In 2007, Hillary Clinton proposed $5,000 bail for each newborn in the U.S., and Sen. Cory Booker introduced it as part of his plan to address racial and economic inequality in his 2019 presidential campaign. emphasized the idea. Momentum for this policy gained further momentum following the 2020 murder of George Floyd.
Despite the potential impact, it is unclear whether Mr. Montoya and his allies will be able to secure legislative support for baby bonds in New Mexico, especially with mandatory financial literacy education (eventually electives). This is especially true given the difficulties faced in promoting the “Popular Act” (which was passed as a law).
© 2024 Latin Times. Unauthorized reproduction is prohibited. Please do not reproduce without permission.
