Booker Thinks He Can End Inequality by Giving Tax Dollars to Toddlers: 5 Things to Know About ‘Baby Bonds’

Cory Booker
Eduardo Munoz Alvarez/Getty Images

Sen. Cory Booker (D-N.J.) claims he has a plan to end wealth inequality in the United States by giving babies thousands of dollars each year.

Booker — who is one of 23 Democrats in the 2020 presidential primary — sees wealth inequality as a top problem in the United States, and he has a plan that he thinks would stop it.

Here are five things to know about wealth inequality in the United States and Booker’s “baby bonds”:

What is wealth inequality?

Wealth inequality is the massive disparity in total wealth — meaning total assets (income, properties, stocks, etc.) minus total liabilities (debts) — between the top earners in the United States and the average workers.

Currently, three men in the United States — Jeff Bezos, Bill Gates, and Warren Buffett — own as much wealth as the bottom 50 percent of Americans. The richest 5 percent of Americans own two-thirds of the wealth in the country.

This disparity increases when it is broken down by race. The median wealth of a family that is black is just 2 percent of the median wealth of a family that is white in the United States, and black and Latino Americans are more than twice as likely to have zero or negative wealth because of debts.

Wealth inequality is often perpetuated down family lines, as children of wealthy parents inherit and grow the wealth passed down through generations.

Is wealth inequality a problem?

It depends on who is asked.

Some argue that wealth inequality is bad for all Americans because there is less wealth to be split among the average consumers. If a majority of the wealth is pooled among a few people, it isn’t being spent by those in the lower and middle classes.

People in this camp tend to believe redistribution is the only way to stop the inequality and restore balance to the economy. Booker claimed there “is no American Dream without equity.”

Others claim wealth inequality isn’t a problem at all. The Cato Institute — a libertarian thinktank — notes that there are several reasons why wealth inequality isn’t a problem. There is no evidence that wealth inequality increases poverty or forces the poor to stay poor while the rich get richer.

People in this camp tend to believe the wealthy earned their success and improved the world in the process. For example, Bezos, the founder of Amazon, is worth more than $150 billion, but he also created hundreds of thousands of jobs.

Additionally, this camp argues that redistribution won’t solve the problem. For example, if the government took every penny from Bezos, Buffett, and Gates — approximately $345.3 billion — and split it equally to the nearly 329 million American citizens, each person would only get a one-time payment of around $1,050. Ignoring the economic disruption and mass layoffs that would likely occur if this happened, a thousand dollars isn’t enough to drastically improve the wealth levels of any American.

What is Booker’s plan?

During a speech on Sunday, Booker told the crowd at a conference for MoveOn that he could reduce racial and wealth inequality by issuing interest-bearing government bonds to each child when they are born.

Watch Booker explain “Baby Bonds”:

Booker’s plan is to give every baby — no matter the wealth of the parents — a $1,000 bond. Then, depending on the wealth of the parents, the government would add up to $2,000 per year to the bond.

By the time the child hits 18 years old, he or she could have a bond worth upwards of $50,000 to use to fund a college education, a down payment on a house, or a new business.

Would it end wealth inequality?

Booker’s “baby bonds” could reduce income inequality, but there are no guarantees.

As Booker noted in his speech to MoveOn, his proposed legislation for baby bonds was studied by Columbia University, and researchers found it could greatly reduce the racial wealth gap.

A key cornerstone of wealth creation is investment, which this proposal would generate. However, like with all investments, it is up to the individual to make the right decisions.

Booker’s plan only allows for the money to go toward retirement plans, home ownership, or college tuition.

Screenshot/Vox

While homeownership and retirement tend to be stable investments, college degrees can cost well above the $50,000 potential of the bond and do not guarantee the generation of wealth.

Who is going to pay for it?

Booker’s legislation — the “American Opportunity Accounts Act” — calls for raising the capital gains tax in the United States from 20 percent to 24.2 percent. He would also increase the estate tax — referred to by some conservatives as the death tax — by increasing the government’s cut on wealth passed down from generations.

Capital gains taxes have been found to reduce the overall GDP while decreasing activity in the stock market, lowering investment in the private sector. Less investment in the private sector could result in job losses and lower wages.

Booker’s plan could accomplish a reduction in wealth inequality in the United States, but it’s up to Americans to decide if they think it is a problem that needs to be solved at a cost to the overall economy.

What do you think?

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Bonnie Keever
Member

He must be rich cause you are not taking my money and giving it to others take it out of your own pay check

Carol
Member

All the vacuous Democrat presidential hopefuls are trying to outdo each other with their ludicrous ideas for how to give people free stuff!! To quote my pal, Bugs Bunny, “what a bunch of maroons.”

Mary Ridosh-Spalding
Member

If he does that, then where is the money going to come from to pay off the women he assaults???

Lily Sarkisian
Guest
Lily Sarkisian

Booker will say and do anything to get elected……..and we all know he will not keep any promise…….By the way has he ever held a job?

Stephanie
Member

Cute name. Idiotic idea.

Bill Antonini
Guest
Bill Antonini

Just another bull shit plan from a liberal who has lived at the public trough all his adult life and possibly before. Another big liberal waste in the same manner as Wilson , FDR and that hog jawled SOB LBJ. Try getting your “people” to work for their success. You, of all people, should know that the hard working Americans have transferred some $15 Trillion to the lazies since LBJ’s great society program began. You will never get near the White House on your own. Better hope someone like Mr. Pennsylvania or was it Mr. Delaware picks up your option.

CeeDub
Member

Not one word about how much this program would cost. Some quick math based on current birthrates puts the cost at $200B at year 18. Somebody has to pay for that…take every dollar from Gates, Bezos & Buffett and it covers the program for 1.75 years…then what? You would be creating another huge socialist program within a capitalistic economy. So what happens at year 18 when you have nearly 4 million teenagers entering the economy having $50K to spend on college and/or housing (forget retirement programs…stats tell us that would never happen)? The somewhat free market will respond accordingly with… Read more »

Guest
Guest
Guest

Booker’s master plan: Investing in “Baby Bond Plan” while promoting late term abortion! Only people with split personalities can buy into that!! Back to the drawing board Booker!

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