Gov. Phil Murphy joined with legislators, faith leaders and community advocates Wednesday to promote his Baby Bonds initiative, which will provide a $1,000 deposit into an account for approximately three out of every four babies born annually in New Jersey.
The idea, advanced at the federal level by U.S. Sen. Cory Booker (D-N.J.), is said to be an investment to address longstanding economic- and race-based wealth disparities that have only been further exacerbated by the COVID-19 pandemic.
Funds in each child’s account would be invested so 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 homeownership, higher and continuing education or entrepreneurship.
The details of the plan are not fully clear. Such as: Will it be a one-time contribution or 18 years of contributions? (Which, obviously, would come with a much higher price tag, but a much bigger payout.)
The bonds would cost about $80 million a year, each year, if they were only given to newborns. If such were the case, those bonds would be worth approximately $1,300 after 18 years, based on the current bond rate of 1.35% — a nice figure, but certainly well short of life-changing money.
This much is clear: Anyone born into a family earning $131,000 a year or less — which is about 70% of New Jersey births — would get a bond.
Those with Murphy at an event Wednesday in Paterson applauded the idea. Here is a look at their statements:
“We are seeing wealth inequality at its highest point in decades, which is severely limiting equal opportunity for many Americans. In a country as wealthy as ours, every child should have an opportunity to build assets, create wealth and achieve upward mobility. As I continue working to address the racial wealth gap on the federal level, 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.”
U.S. Rep. Bill Pascrell (D-9th Dist.):
“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. As we work to eliminate systemic issues for building wealth and financial well-being exacerbated by this crisis, Baby Bonds look out for the next generation of New Jerseyans on the horizon.
“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. I applaud Gov. Murphy for the courage, wisdom and far-sighted vision to bring forward this proposal that will change lives.”
State Sen. Ronald Rice (D-Newark):
“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. Baby Bonds are simply an investment in the next generation of our state. 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.”
State Sen. Nellie Pou (D-Paterson):
“Baby Bonds are a critical investment in our children’s future. Now is the time to think big and to support working families across our state. This proposal will provide a financial foundation for children who need it most.”
Assemblyman Benjie Wimberly (D-Paterson):
“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.”
Assemblywoman Shavonda Sumter (D-Paterson):
“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 William Moen (D-Camden):
“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 more clear 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.”
Reva Foster, chair of the New Jersey Black Issues Convention:
“It’s my pleasure to support this important initiative for Baby Bonds and to look out for future generations with an understanding of the wealth disparity that has long haunted the Black community. With this initiative, future generations will have a leg up and be able to secure a home, continue higher education or start a business. All of this will help not only the recipients, but their community, and will inspire others to do the same.”
First lady Tammy Murphy:
“For working families across our state who live paycheck to paycheck, a Baby Bond will give their children an opportunity to break the cycle of income inequality. And, it will send every child in New Jersey the clear message that we believe in them, and they should believe in themselves, too. This is our chance to make sure that every child on the brink of adulthood has both a dream and the start of a plan to pursue that dream.”