Baby Steps and Baby Bonds

Over the past few months I’ve let go of two practices that allowed me to make regular progress on this blog. One letting go was very conscious—I want to get Love Economy, my first novel, through the difficult birthing process. This hasn’t happened yet, but 2024 is still young! 

Another letting go was perhaps less conscious. During COVID times, when I restarted this project, I allowed myself to abandon hope of regaining the insider policy analyst identity formed during a now long ago first career. This was a positive abandonment, one that allowed me to better relax into my teacher role, play around as an aspiring writer, and mimic some of my favorite podcast hosts.

But then, late last summer, I set myself a list of a “bakers’ dozen” policy recommendations around children and family, leading with a loose, easy-to-write post about the barriers that exist to men leaning in as primary caregivers for young children. After that, I froze. The next posts were to be about “baby bonds,” expanded parental leave, and public funding for child care, each a meaty, wonky, national scope topic, part of a domestic social policy beat that journalists, academics, and policy analysts at non-profits (like I used to be), get paid to work on full-time.

In other words, Prospericity was starting to feel like the type of project where I might want to rein in my natural poet’s tendency to wander from tangent to tangent, and to build a path (separate from the novel) toward getting paid as a writer. But not yet. This blog still needs to remain a format to create a loose outline for ideas, and to highlight the work of others. 

So in this spirit, I want to move directly and without internal pressure into the second of my bakers’ dozen policy recommendations, which is, like I mentioned, on baby bonds. 

Baby Bonds-the UK Experiment

The international context doesn’t usually appear in the foreground of contemporary US policy coverage about baby bonds, which in essence are government funded wealth-building accounts held in trust for children to use when they come of age. But I first got interested in the idea of baby bonds reading news about Tony Blair era Britain. Here’s an op-ed from almost exactly 21 years ago by the flashy, talented, too often wobbly-kneed former Prime Minister preserved in the digital vaults at The Guardian (reminder to self: donate to The Guardian). In the article, the centrist “third way” Blair tosses around some remarkably radical-sounding language about redistributing assets. “Prosperity for a company or a country,” he states, bowing to the free market orthodoxy of the time, “can only be secured if we get the best out of all our people. Asset redistribution is a vital means of achieving it.”

In a manner typical of lots of Clinton/Blair era 1990s policy initiatives, Blair’s socialist-sounding baby bonds program was small-scale, with small payments. According to this 2020 explainer by Rowena Crawford and Carl Emerson at the Institute for Fiscal Studies (IFS), the Labour government “went live” in 2005 with Child Trust Funds for all British newborns in an amount of £250, or £500 for certain newborns eligible for other means-tested benefits. As it turns out, the program was expanded to include another payment for seven-year-olds in 2006, but then “swiftly abolished by the coalition government in its first set of cuts.” By January 2011 the program was over, but not before roughly £2 billion was invested in 6.3 million trust funds. The median trust fund, according to the IFS, was valued at about £650. 

The IFS piece contains a fascinating column chart indicating that even these small payments shifted the distribution of gross financial wealth among British children. For nineteen-year-olds born in the year before the program went live, less than 40 percent held more than £500 in assets in their own names. For the group born the following year, that number was around 70 percent. Still, both before and after the program, it appears from the IFS analysis that few British children held more than very small quantities of assets. To me it seems unlikely that a few hundred pounds would have made much of a difference in life outcomes like university going, buying homes, or starting a business, at least in a high-cost developed economy like the UK.

I’ve devoted so much space to this initially widely covered, now defunct British program because the tale reveals a lot about both program design and politics that seems relevant in the US today. There is the issue of sustainability: despite many fine words the British effort appears to have lacked deep political support and so lasted less than a decade. There is the issue of scale: what amount of resources would really make difference toward the goal of “asset redistribution” that former Prime Minister Blair articulated? There is the issue of progressiveness: given the extreme wealth disparities in US Society, what balance of universalism and means testing is optimal? There is the issue of race: in the US baby bonds initiatives tend to be linked to the debate about reparations. It is no coincidence, I think, that the leading US advocate of baby bonds, New School Professor Derrick Hamilton, is Black. So are both congressional sponsors of the American Opportunity Accounts Act, US Senator Cory Booker (anyone else wish he’d run for President again?) and US Representative Ayanna Pressley. 

The American Opportunity Accounts Act

In February of last year Sen. Booker and Rep. Pressley reintroduced the American Opportunity Accounts Act as S. 441 and H.R. 1041. I will refer to the bill here as the AOAA. The legislation, if passed, would stipulate that each child born in the US would receive a $1,000 “American Opportunity Account.” Each subsequent year, until they reach age 18, the child would receive an additional amount depending on family income, measured as a percent of the federal poverty level. The maximum payment would be $2,000 per year for children up to 100 percent of the poverty level (this would add up to just under $50,000, with interest, by age 18). At 125% of the poverty level the annual payment amount would drop, and then again at 175%, 225%, and 325%. At 500% of the federal poverty level, or for a family income of roughly $126,000, the payments would kick out entirely.

In this basic design, the AAOA very much follows a 2010 article in the Review of Black Political Economy by Derrick Hamilton and William Darity. Directly comparing their own vision for the US with the British endeavor still operational the time, the authors state that “We envision a ‘baby bond’ plan of much greater scale and magnitude—progressively rising to $50,000 or $60,000 for children in families in the lowest wealth quartile and accessible once the child turns 18 years of age.” In this regard it truly is possible to see Hamilton as an intellectual founding father of the baby bonds idea in the US. In an interesting twist, however, Hamilton and Darity envision a program based on the “net worth of the child’s family.” The actual AOAA legislation introduced by Booker and Pressley in 2023 relies on a system that, as noted above, is based on income, not wealth. Very likely this is because income is easier to measure. 

Going back to the four issues (sustainability, scale, progressiveness, and race) mentioned in relation to the British initiative, the above discussion suggests a sticky line in the US policy sands since at least 2010, around the third issue of progressiveness. I would describe the Booker and Pressley legislation, together with the Hamilton and Darity proposal that underlies it, as highly progressive and focused on the poorest children. Based just on the press release linked above, a child in a family with, say, a single earner working as a school teacher at $70,000 a year would get only about $500 per year. A child in a family with two parents working as school teachers, or as, say, a school teacher and a firefighter, would get nothing beyond the initial $1,000. By contrast, children from very poor families earning below around $30,000 a year would get an amount equal to or greater than their parents’ alarmingly meager annual incomes.

In terms of scale, I would describe the Booker and Pressley legislation with the word “moderate.” It is much more ambitious than the now defunct Tony Blair era child development accounts program in the UK. The US program as currently envisioned would endow at least the poorest children with a substantial nest egg to invest in education, a business, or a home. Still, the program would not, according to this Columbia University academic study, dramatically change the racial wealth gap. Hamilton and Darity would not have been surprised by this in 2010, as they admitted as much in their article. 

In terms of race, the AOAA legislation is definitely racially conscious. In fact, and this is one of the reasons I like the baby bonds concept so much, it is racially conscious in a way that ought to be palatable to a broad spectrum of constituencies and political actors. Since Black families are much more likely to be poor, baby bonds can be seen as a step in the direction of reparations. But at the same time, the program as envisioned in the AOAA does not take the divisive step of setting up race as a barrier to entry. Because poor children are disproportionately Black, Latino, and Native American, the program gives disproportionately and appropriately to these needier kids, if they are in fact poor. If white and Asian American children are disproportionately growing up in wealthier households (it’s worth noting that the household wealth of Asian American families was close to double that of white families in 2022 according to this Brookings Institution fact sheet), then these children would get less, but not expressly because of their race. The important point is while race would not exclude any child from participation in the program, baby bonds would still tend toward ameliorating racial inequality. 

This leaves the crucial issue of political sustainability. Here, the demise of the UK effort might be read as a cautionary tale. One might argue, rightly, that in the US we’re talking about a different country with a different political system. Then again, we’re also talking about a different time, one in which belief in Reagan/Thatcher era nostrums about free market capitalism hold much less political sway, and concerns about racial equality hold much more.

In a way baby bonds ought to be a perfect social initiative for today’s times, as they represent an opportunity to increase social prosperity in a way that expressly targets race without being either piously “woke” or racially exclusive. The emphasis on wealth building and personal choice ought to appeal to conservatives, or at least the actual conservatives out there who haven’t converted to the authoritarian MAGA brand. The family focus should appeal to conservatives too – one could even argue convincingly that the baby bonds idea is pro-natalist, a conservative-identified cause.

Still, not surprisingly given the brokenness of our national politics, the Booker/Pressley legislation is not about to pass at the federal level. Instead, progress on baby bonds programs has come among the states. Check out, for instance, this excellent recent episode of the Vox podcast The Weeds that deals with a major new initiative in Connecticut. The episode features none other than Professor Derrick Hamilton as a guest. Or see this detailed Urban Institute policy update on the “State of Baby Bonds,” which includes an appendix on child development account initiatives enacted or proposed in eleven states as of 2022. 

All in all I love the baby bonds idea. I love the way the whole idea centers children, the way it addresses race without being racially exclusive, and the way it focuses on asset building. The proposed funding mechanism in the AOAA, which pulls on reforms to estate and inheritance taxes, strikes me as unobjectionable as well. Baby bonds are no cure all, but they are an obvious means to increase and widen prosperity for all children and families.

Links to Gaza protest coverage

On a totally different thread, I wanted to post several links to articles on the Gaza protests, especially at Columbia, since I hold a degree from Columbia and my experience there makes the news feel more vivid and personal. I want to say that I oppose the Netanyahu government’s prosecution of the war, and the Biden Administration’s snail-like reluctance to make hard demands on the Israeli government. But I also find the general tenor of the current protests deeply troubling. The calls for “intifada” and the elimination of the Jewish state emanating from the heart of my alma mater’s neoclassical campus in some ways break my own heart. Rather than speak too directly about this myself, I want to provide several links that do so eloquently. I especially commend the first Atlantic article by George Packer, 

Here’s George Packer’s elegiac piece in The Atlantic on the 1968 protests at Columbia, and on how we are witnessing the “reaping of the consequences that trashed the postwar idea of the liberal university.” 

Here’s another article in The Atlantic article by Judith Shulevitz on how threatening language calling for “intifada” and the destruction of a Jewish state of Israel need to be taken at face value. I am reminded here of how the outrageous things said by Donald Trump and his supporters need to be taken at face value, and on the moral equivalency of apologists and enablers on both the illiberal right and the illiberal left. 

Here’s economist Adam Tooze’s perspective on the ground at Columbia, and his fascinating analysis of how modern American universities make their money, 

Here’s the Brookings Institution’s Natan Sachs on Derek Thompson’s Plain English podcast talking about the actual war.

Here’s author Paul Berman writing in the Washington Post on his experience as a protester back in 1968, and on how feckless faculty members today have created a “dangerous climate of opinion” at Columbia.