TOPLINE
New Jersey Gov. Phil Murphy proposed Tuesday the first-ever state program to give children born in the state an $1,000 “baby bond” that they will receive when they turn 18, as the state attempts to address ongoing inequalities that have become more apparent amid the Covid-19 pandemic and racial justice movement.
New Jersey Governor Phil Murphy speaks at a press conference on August 14, 2019, in Newark, New ... [+]
KEY FACTS
The “baby bond” proposal, which still must be approved by the state legislature, will put $1,000 into an account when children are born, which will accrue interest and be payable when children turn 18.
The bonds, which will start with babies born in 2021, will be given to children born in households earning less than 500% of the Federal Poverty Level—up to $131,000 per year for a family of four—which Murphy said will apply to approximately three in four children born in the state.
The New York Times projects that, based on bond rates, the $1,000 bond would amount to approximately $1,270 with interest after 18 years; Murphy told the Times that the state “reserve[s] the right” to add even more money to children’s account, calling the $1,000 proposal “the start.”
The proposal would cost the state approximately $80 million per year, the Times reports.
The New Jersey proposal was inspired by congressional legislation introduced by New Jersey Sen. Cory Booker and Rep. Ayanna Pressley, which Booker also proposed as part of his presidential primary campaign; the federal bill would provide $1,000 at birth plus additional yearly payments based on family income.
Then-presidential candidate Hillary Clinton also proposed $5,000 baby bonds on the campaign trail in 2007.
Crucial Quote
“At this particular time, when so many families are struggling…let’s make a better promise to the next generation of New Jerseyans,” Murphy said Tuesday in his fiscal year 2021 budget address, saying the $1,000 bond will give children “hope for a better life starting on day one of their own life.”
Big Number
72,000. That’s the approximate number of babies the state projects will receive the $1,000 bond in 2021.
Key Background
The Pew Research Center found that the top one-fifth of U.S. households in 2018—earning more than $130,000, reflecting the requirements for New Jersey’s baby bond—earned 52% of the nation’s wealth, more than the other four-fifths combined. The U.S. also has the highest level of income inequality of any G7 nation, Pew reports. The current political moment has made those inequalities even more apparent: Racial justice protests have drawn attention to racial inequality and the structural inequities faced by people of color, while the Covid-19 pandemic has disproportionately affected people of color and resulted in mass unemployment among low-income and middle class Americans. In his speech Tuesday, Murphy noted that the pandemic has made it clear that our “systems and society...are deeply unequal and profoundly unfair.” “Our communities of color, and communities where economic opportunity has been in short supply, have borne an outsized burden,” Murphy said.
Further Reading
$1,000 ‘Baby Bond’ Proposed in N.J. in Bid to Narrow the Wealth Gap (New York Times)
U.S. Income Inequality Is At Its Highest Level In 50 Years—But There Is Some Positive News (Forbes)
