WASHINGTON (AP) – Aaliyah Manning’s dreams of becoming a psychologist ended abruptly during her freshman year at Potomac State in West Virginia when the cost of continuing her education became overwhelming.
“The money just wasn’t there,” said Manning, 25. “I knew I wasn’t going to finish, so I just had fun.”
After a year, he returned to the nation’s capital doing fast food jobs. She now lives largely on public assistance in a two-bedroom apartment with her boyfriend, his mother and his 9-year-old daughter from another relationship. He still has student debt and a baby boy on the way.
She sees a brighter future for this baby, thanks to a landmark social program she started in Washington. Called “Baby Bonds,” it will provide children from the city’s poorest families with up to $25,000 when they reach adulthood — to be used for multiple purposes, including education.
“It would be such a different opportunity for him, very different than what I had,” he said.
The idea of Baby Bonds has moved quickly from a fringe left-wing notion to real policy—with the District of Columbia as the first laboratory. Lawmakers from coast to coast are watching the experiment, one that advocates say could reshape America’s growing wealth gap in a single generation if enacted at the federal level.
A week after giving birth to her second child, a daughter named Kali, Aaliyah Wright told The Associated Press that she didn’t expect to have much in the way of savings to support her children when they grow up, especially with about $80,000 in college loan debt.
She and her husband, Kainan, are on Medicaid despite steady jobs (she’s an employee at an NGO and he’s a barber) and an estimated annual income of about $70,000.
Even at that income level, their new daughter would qualify for the district’s program, albeit at a lower level.
“At that stage of maturity and adulthood, that money can open the door to pretty big things,” Kainan Wright said.
Bonds are more precisely trust funds, designed to provide a financial boost at a critical time for the poorest children. At age 18, each enrolled child would receive a one-time payment that can be used to fund higher education, invest in a business, or pay for a mortgage.
“Think about all the things people do with money to support themselves or what parents do for children,” said Kenyan McDuffie, the D.C. Council member who pushed the Baby Bonds program last summer. The city has so far identified 833 babies born since then who will receive up to $25,000 when they turn 18.
The idea, originally proposed by academics in 2010, came into the spotlight when New Jersey Sen. Cory Booker, DN.J., made it a centerpiece of his 2020 presidential campaign.
“I think it’s a growing idea,” Booker said. “And it’s a great idea. It’s on the level of Social Security. It’s on the level of Medicare.” He added: “One generation would create a dramatic change.”
But for politicians, the price can be daunting. Booker’s national plan projected an annual cost of $60 billion, which he proposes to finance by raising taxes on the wealthy.
Washington’s program will cost $32 million for the first four years alone.
Despite the price tag, Baby Bonds proposals have recently appeared in Wisconsin and Washington state. while Massachusetts has convened a task force on the matter. California just created a version, with Baby Bonds funds specifically for children who lost parents to COVID.
The idea’s journey from academia to on-the-ground policy has been fueled by the national debate on poverty sparked by the pandemic as multiple proposals have been floated at the state level.
But most failed to see the light of day.
Gov. Phil Murphy, DN.J., publicly supported a Baby Bonds proposal in 2020. But the Legislature removed it from his budget, and Murphy has not proposed it again.
In June 2021, the Connecticut Legislature approved America’s first statewide Baby Bonds program. But in May this year, the same government delayed the start by two years.
Connecticut Treasurer Shawn Wooden, who has defended the program, said he remains convinced the policy’s time has come. “There’s a lot of interest in it,” he said. “And always with these things we need what we call first movers.”
Wooden has discussed Baby Bonds with members of President Joe Biden’s domestic policy team. McDuffie’s office has fielded inquiries from several state governments.
The concept is new enough that it’s still being addressed in real time, with multiple models and internal discussions among proponents about things like how best to determine suitability.
Washington’s program is open to families on Medicaid who make less than 300 percent of the federal poverty line: about $83,250 for a family of four. Connecticut’s will automatically enroll any newborn from a family into the state’s Medicaid program.
Booker’s proposal would have given each newborn a fund of Baby Bonds and $1,000 in seed money. All subsequent payments to the fund would have gone heavily on the poorest families.
There are also differences in payments. Booker’s proposal would have paid about $46,000 to children from the poorest families, while Washington expects to pay a maximum of $25,000. Connecticut’s plan would pay about $13,000 — which Wooden described as “pretty much the floor” for a serious Baby Bonds effort.
Naomi Zewde, an assistant professor of health economics at the City University of New York, said her 2019 analysis of the concept of Baby Bonds suggested the program would strengthen the economic position of both white and black Americans, while massively shrink the racial wealth gap.
But there are critics.
Veronique de Rugy, a senior researcher at George Mason University’s Mercatus Center, said the program could tie up millions that could be used to address immediate immediate needs. At the same time, he said, “it doesn’t encourage a culture of savings.”
Economist Michael Strain of the conservative American Enterprise Institute says the price tag makes the program a “tough sell.”
Wood counters that the program will have an immediate impact, leading to real-time behavioral changes in programming, academics and aspirations.
“How much is enough to inspire a child and their family to think about the future,” he said. “There is great value to be placed on hope. We know what despair looks like in our communities.”
Manning, the mother-to-be, said knowing about the program and its payment would change the way they talk about her son’s future.
“It would be much more focused,” he said. “Do you know what you want to do? What are your plans;”
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