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A man holds a baby in his arms.
(Photo: Kelly Sikkema/ Unsplash)
‘Baby Bonds’ Can Help Democratize the Stock Market, for Real
Innovative programs like these can help bust up the dangerous concentration of wealth at the top of our country’s economic ladder.
Jan 19, 2024
Nearly all stock market wealth in this country is now owned by the super rich. The wealthiest 10% hold about 93% of all household stock market wealth in this country, Axios reported recently—a record high.
The Institute for Policy Studies analyzed Fed data and found that the lion’s share of these gains went to the richest 1% alone. This elite group owns 54% of public equity markets, up from 40% in 2002.
The bottom half of the country? They own just 1%.
How do we boost the wealth ownership of the bottom half of households? One bold solution is to establish children’s savings accounts, also known as “Baby Bonds.”
There’s been a lot of chatter about the “democratization” of the public stock market. The Fed estimates that 58% of U.S. households have some money in the stock market, mostly through retirement funds like IRAs and mutual funds.
But that hype is missing a key trend: Nearly all that wealth is controlled by the wealthiest 10% of us. As Gillian Tett observed in the Financial Times, “If nothing else, these rising concentrations merit far more public debate, since they challenge America’s self-image of its political economy and financial democracy.”
How do we boost the wealth ownership of the bottom half of households? One bold solution is to establish children’s savings accounts, also known as “Baby Bonds.”
Senator Cory Booker and Representative Ayanna Pressley have introduced the American Opportunity Act, a federal baby bond bill. Under this proposal, children would be provided with a $1,000 savings account at birth, with annual contributions up to $2,000, depending on family income.
At the age of 18, the proceeds of these accounts would become available to recipients for educational expenses, purchasing a home, or making investments that provide for long-term returns. For example, those funds could be invested in mutual funds and retirement funds to increase the nest eggs for non-wealthy individuals.
A number of states, like Connecticut, and a few cities, like Washington, D.C., are already creating baby bond programs. Others have introduced legislation to create them.
Connecticut has a far-reaching program aimed at reducing the state’s racial wealth divide and boosting the wealth of all low-income households. Starting in July 2023, Connecticut began depositing $3,200 into a trust in the name of each new baby born into a household eligible for Medicaid. The program is known by the acronym HUSKY after the popular state college mascot.
Recipients will be able to redeem that capital between the ages of 18 and 30 if they remain Connecticut residents. The HUSKY bonds are projected to grow to between $10,000 and $24,000 in value, depending on when they are withdrawn. The funds will be tax-exempt to the beneficiaries and available for investments such as higher education or job training, homeownership, and small business start-ups.
Other states that have either introduced baby bond legislation or are seriously considering it include California, Massachusetts, Maryland, North Carolina, New Jersey, Nevada, Washington, Wisconsin, and Vermont.
Innovative programs like these can help bust up the dangerous concentration of wealth at the top of our country’s economic ladder. In an age of unprecedented inequality in this country, it’s an idea whose time has come.
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Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
This column was distributed by OtherWords.
Chuck Collins
Chuck Collins is co-founder of CARP and author of Burned by Billionaires: How Concentrated Wealth and Power are Ruining Our Lives and Planet.
Nearly all stock market wealth in this country is now owned by the super rich. The wealthiest 10% hold about 93% of all household stock market wealth in this country, Axios reported recently—a record high.
The Institute for Policy Studies analyzed Fed data and found that the lion’s share of these gains went to the richest 1% alone. This elite group owns 54% of public equity markets, up from 40% in 2002.
The bottom half of the country? They own just 1%.
How do we boost the wealth ownership of the bottom half of households? One bold solution is to establish children’s savings accounts, also known as “Baby Bonds.”
There’s been a lot of chatter about the “democratization” of the public stock market. The Fed estimates that 58% of U.S. households have some money in the stock market, mostly through retirement funds like IRAs and mutual funds.
But that hype is missing a key trend: Nearly all that wealth is controlled by the wealthiest 10% of us. As Gillian Tett observed in the Financial Times, “If nothing else, these rising concentrations merit far more public debate, since they challenge America’s self-image of its political economy and financial democracy.”
How do we boost the wealth ownership of the bottom half of households? One bold solution is to establish children’s savings accounts, also known as “Baby Bonds.”
Senator Cory Booker and Representative Ayanna Pressley have introduced the American Opportunity Act, a federal baby bond bill. Under this proposal, children would be provided with a $1,000 savings account at birth, with annual contributions up to $2,000, depending on family income.
At the age of 18, the proceeds of these accounts would become available to recipients for educational expenses, purchasing a home, or making investments that provide for long-term returns. For example, those funds could be invested in mutual funds and retirement funds to increase the nest eggs for non-wealthy individuals.
A number of states, like Connecticut, and a few cities, like Washington, D.C., are already creating baby bond programs. Others have introduced legislation to create them.
Connecticut has a far-reaching program aimed at reducing the state’s racial wealth divide and boosting the wealth of all low-income households. Starting in July 2023, Connecticut began depositing $3,200 into a trust in the name of each new baby born into a household eligible for Medicaid. The program is known by the acronym HUSKY after the popular state college mascot.
Recipients will be able to redeem that capital between the ages of 18 and 30 if they remain Connecticut residents. The HUSKY bonds are projected to grow to between $10,000 and $24,000 in value, depending on when they are withdrawn. The funds will be tax-exempt to the beneficiaries and available for investments such as higher education or job training, homeownership, and small business start-ups.
Other states that have either introduced baby bond legislation or are seriously considering it include California, Massachusetts, Maryland, North Carolina, New Jersey, Nevada, Washington, Wisconsin, and Vermont.
Innovative programs like these can help bust up the dangerous concentration of wealth at the top of our country’s economic ladder. In an age of unprecedented inequality in this country, it’s an idea whose time has come.
Chuck Collins
Chuck Collins is co-founder of CARP and author of Burned by Billionaires: How Concentrated Wealth and Power are Ruining Our Lives and Planet.
Nearly all stock market wealth in this country is now owned by the super rich. The wealthiest 10% hold about 93% of all household stock market wealth in this country, Axios reported recently—a record high.
The Institute for Policy Studies analyzed Fed data and found that the lion’s share of these gains went to the richest 1% alone. This elite group owns 54% of public equity markets, up from 40% in 2002.
The bottom half of the country? They own just 1%.
How do we boost the wealth ownership of the bottom half of households? One bold solution is to establish children’s savings accounts, also known as “Baby Bonds.”
There’s been a lot of chatter about the “democratization” of the public stock market. The Fed estimates that 58% of U.S. households have some money in the stock market, mostly through retirement funds like IRAs and mutual funds.
But that hype is missing a key trend: Nearly all that wealth is controlled by the wealthiest 10% of us. As Gillian Tett observed in the Financial Times, “If nothing else, these rising concentrations merit far more public debate, since they challenge America’s self-image of its political economy and financial democracy.”
How do we boost the wealth ownership of the bottom half of households? One bold solution is to establish children’s savings accounts, also known as “Baby Bonds.”
Senator Cory Booker and Representative Ayanna Pressley have introduced the American Opportunity Act, a federal baby bond bill. Under this proposal, children would be provided with a $1,000 savings account at birth, with annual contributions up to $2,000, depending on family income.
At the age of 18, the proceeds of these accounts would become available to recipients for educational expenses, purchasing a home, or making investments that provide for long-term returns. For example, those funds could be invested in mutual funds and retirement funds to increase the nest eggs for non-wealthy individuals.
A number of states, like Connecticut, and a few cities, like Washington, D.C., are already creating baby bond programs. Others have introduced legislation to create them.
Connecticut has a far-reaching program aimed at reducing the state’s racial wealth divide and boosting the wealth of all low-income households. Starting in July 2023, Connecticut began depositing $3,200 into a trust in the name of each new baby born into a household eligible for Medicaid. The program is known by the acronym HUSKY after the popular state college mascot.
Recipients will be able to redeem that capital between the ages of 18 and 30 if they remain Connecticut residents. The HUSKY bonds are projected to grow to between $10,000 and $24,000 in value, depending on when they are withdrawn. The funds will be tax-exempt to the beneficiaries and available for investments such as higher education or job training, homeownership, and small business start-ups.
Other states that have either introduced baby bond legislation or are seriously considering it include California, Massachusetts, Maryland, North Carolina, New Jersey, Nevada, Washington, Wisconsin, and Vermont.
Innovative programs like these can help bust up the dangerous concentration of wealth at the top of our country’s economic ladder. In an age of unprecedented inequality in this country, it’s an idea whose time has come.
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