New Jersey ‘Baby Bonds’ Could Shrink Gap Between Rich, Poor – West Orange, NJ Patch

NEW JERSEY — A proposed program in New Jersey would give many newborns a $1,000 “baby bond” and shrink a growing gap between the rich and the poor, Gov. Phil Murphy says.

Despite proposed cuts across many areas of the budget due to the coronavirus crisis, the state’s Baby Bonds initiative is still on the table, Murphy confirmed during a Wednesday news conference.

The program would deposit $1,000 into an account for every baby born into a household that earns less than 500 percent of the federal poverty level, or $131,000 for a family of four.

Roughly three out of four New Jersey infants would be eligible, officials said.

Here’s how it would work, the governor’s office said:

“The parameters of the proposal require newborns to either be born in New Jersey or born to parents who are New Jersey residents to be eligible for an account. Baby Bond recipients would have to be New Jersey residents to withdraw funds from their accounts, although they would not have to spend these funds in New Jersey. Under the governor’s initiative, the state would establish the Baby Bonds Initiative Fund, which would include individual accounts for eligible residents. Funds in each child’s account would be invested so that they generate returns that are at least equivalent to 30-year U.S. Treasury bonds. Recipients would be able to withdraw funds when they turn 18 for allowable uses that build wealth such as home ownership, higher and continuing education or entrepreneurship.”

Some experts say that baby bonds would be a welcome boost in a state where the top five percent of the state’s households bring in almost 16 times as much as the bottom 20 percent, and white families have a median net worth of $352,000, compared to $6,100 for Black and $7,300 for Latina/Latino families.

“While COVID-19 has had an enormous financial impact on many New Jersey families, it has laid bare systemic inequities that have disproportionately denied families of color an equal chance to achieve upward mobility,” Murphy said.

“To emerge from this crisis as a stronger, fairer, and more resilient state, we need to lay the foundation for the next generation of New Jerseyans to secure their spot in the middle class and break the cycle of economic inequality,” the governor added.

Some state lawmakers dumped water on the idea of giving out baby bonds during a time of financial crisis, including Assembly Minority Leader Jon Bramnick, a Republican.

“I would hope that Democrats in the legislature, who understand our fiscal condition, will say that the Murphy thousand dollar payment to anyone born here is crazy,” Bramnick quipped.

But Murphy’s proposal has gotten strong support from social justice activists and other elected officials, including U.S. Sen. Cory Booker and U.S. Rep. Bill Pascrell.

Booker, who has been a fierce advocate for baby bonds at the federal level, said wealth inequality has hit its highest point in decades. New Jersey’s program is a common sense solution, he added.

“In a country as wealthy as ours, every child should have an opportunity to build assets, create wealth, and achieve upward mobility,” Booker said. “I applaud Gov. Murphy for prioritizing economic inequality and introducing this bold proposal aimed at leveling the playing field for children in New Jersey growing up in low-income families.”

Pascrell also offered glowing support for the idea of baby bonds.

“This innovative proposal will help create a nest egg for every baby born in New Jersey whose family may struggle to start their child off on the right financial foot,” Pascrell said.

“Now, more than ever, we need to empower the next generation to start on a level playing field and give them the tools to build a better world for themselves and their children,” the congressman added.

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The proposal has gained enthusiastic support from several state legislators, including Sen. Ronald Rice, chair of the New Jersey Legislative Black Caucus, and Sen. Nellie Pou, chair of the New Jersey Legislative Latino Caucus.

“With so many New Jerseyans in communities of color struggling to stay afloat right now, saving money for a child’s future is not an option,” Rice said. “Generational poverty holds back far too many people, and the governor’s proposal is a creative way to support working class families at a time of great need.”

Pou said that baby bonds would be a critical investment in the future of New Jersey’s children, especially amid the COVID-19 crisis.

“Now is the time to think big and to support working families across our state,” Pou said. “This proposal will provide a financial foundation for children who need it most.”

Other state legislators said that baby bonds would be a big win for any family struggling to make ends meet in New Jersey. They included:

Assemblywoman Shavonda Sumter – “Creating a healthy financial start for future generations is pivotal to the future of New Jersey. This means implementing wealth-building strategies such as saving for a college education to limit loan debt, encouraging homeownership, and ensuring greater access to capital. The glaring disproportionate access to all of the above has had a grave economic and generational impact on working poor families. The high-level investment of Baby Bonds in New Jersey’s children will make the state a leader in the nation in eradicating poverty and reducing persistent economic disparities.”

Assemblyman Benjie Wimberly – “Even prior to the COVID-19 pandemic and the ensuing nationwide economic crisis, too many New Jersey families struggled with poverty and a lack of access to educational, social, and economic opportunities. The need for investment in our communities and our children has never been greater. Baby bonds are a down payment on the success of our future generations and I support the governor’s proposal.”

Assemblyman William Moen – “One of the first initiatives I started working on was developing the framework for a Baby Bonds program in the Garden State. While COVID-19 has affected all of our lives in different ways, it has made it ever clearer the need to narrow the income inequality gap and continue to help New Jersey families reach income equity. Now is the time to start this conversation. I commend the governor on this proposal, and look forward to working alongside him and the legislative leadership to advance this issue.”

New Jersey’s proposal has also gained a big thumbs-up at the grassroots level.

“The proposal to establish a Baby Bond program for New Jersey to help reduce our state’s extreme racial wealth gap is a bold and welcome idea,” the New Jersey Institute for Social Justice (NJISJ) said.

“For too long, public policies have supported asset development for well-off, predominately white communities while excluding communities of color, and this proposal is an important step in promoting wealth-building for families that have previously been left out of our state’s prosperity,” the NJISJ stated.

The proposal has seen its share of criticism online, however.

“I have lived in New Jersey my entire life and this just might be the dumbest thing I have ever seen,” a Twitter user wrote. “At an average rate of growth equivalent to the 30-year bond rate the investment would be worth about $1,270 after 18 years. Can you honestly claim that will narrow the wealth gap?”

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