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Booker's Latest Genius Plan Is To Hand Each Baby Thousands of Taxpayer Dollars

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In a field of 24 individuals that includes everything from a former vice president to the mayor of South Bend, Indiana, and a wonky spiritual guru, you need something to stand out in the 2020 Democratic presidential field. You need a way to spend our money.

But that’s not all. You need a hook too. You need something with a catchy name, such as Sen. Elizabeth Warren’s “Ultra-Millionaire Tax,” her way to wipe out student debt and pay for other stuff. The Green New Deal is already taken, sadly, so frontrunner Joe Biden had to settle for the “Biden Plan for a Clean Energy Revolution & Environmental Justice” when he named his $5 trillion climate change program.

On that level, therefore, I have to give it to Cory Booker. The New Jersey senator may be mired deep in the field, pulling just 2.7 percent in the RealClearPolitics polling average. However, he’s got a catchy name for his way to spend your money: “Baby bonds.”

It’s actually not a new idea, with Booker having introduced the plan in the Senate last December. Given that it was the Senate and the Democrats aren’t in charge there, it predictably went nowhere.

However, it was a good setup for the rollout of baby bonds as a major part of his campaign.

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Here’s how it would work, according to CNBC: Every child would receive a $1,000 bond from the government when he or she is born. Depending on how poor or wealthy the child’s family is, up to $2,000 could be added to the savings account every year.

The funds couldn’t be used until each American becomes an adult, and there are a limited number of things that the baby bonds could be used to pay for: a college education, home ownership and investment in retirement funds, for instance. The annual rate of return for the bonds, which the Treasury Department would manage, would be 3 percent.

According to Booker’s analysis, these bonds would raise the wealth of the average young black American from $2,900 to $57,845 and that of the average young white American from $46,000 to $79,159.

In a tweet, Booker wrote this would “virtually close the racial wealth gap in our country.”

“So many Americans’ lives are dictated by how much money is in their parents’ bank accounts,” read a statement from Booker, according to Yahoo! News.

“Their zip code, their job, and even how much student loan debt they have will impact the lives their children and their children’s children live. The failure to act against generations of discriminatory policies and an upside-down tax code has resulted in a racial wealth gap that is only growing. We have a responsibility to put an end to this injustice, and with Baby Bonds, we have an opportunity.”

So, what could possibly be wrong with this? So many things.

It’s held as a matter of conservative gospel that wealth redistribution is a bad thing without explaining why it’s a bad thing.

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Perhaps we should look at the other side of the question: Where is the evidence that inequality of wealth has anything to do with poverty? In a country that’s a kleptocracy, yes, perhaps it is. However, the idea that wealth represents a zero-sum game has always been a matter of liberal dogma, and it’s simply not true.

Do you think "baby bonds" is a good idea?

“The relationship between poverty and inequality remains unclear, in part because the number of confounding variables and broader societal changes make any kind of determination difficult,” the libertarian-leaning Cato Institute noted in a 2016 report. “But what research there is generally finds that poverty cannot be tied to inequality.

“For instance, a recent paper by Deirdre Bloome of Harvard finds ‘little evidence of a relationship between individuals’ economic mobility and the income inequality they experienced when growing up … Over a twenty-year period in which income inequality rose continuously, the intergenerational income elasticity showed no consistent trend.’ While most studies examine these trends at the national level, she delves into state-level variation in inequality and social mobility. Again, she finds no evidence of a relationship, as ‘the inequality to which children were exposed in their state when growing up provides no information about the mobility they experienced as adults.’”

It is clear that Booker’s plan is as much about addressing inequality as it is about addressing poverty. It’s not just the language he uses, but the methods he would use to fund the plan. Independent Journal Review notes that the Senate version of the baby bonds bill, the “American Opportunity Accounts Act,” would fund this by increasing capital gains tax from 20 percent to 24.2 percent and also increasing the estate tax.

Whether this could fund a proposal of this magnitude is one thing; these subjects, generally speaking, cost a bit more than the original sticker price might indicate. Economists are divided over whether capital gains taxes can negatively affect GDP, but there’s also the fact this is meant to affect the same “ultra-millionaires” Sen. Warren wants to target — you know, the ones who have the kind of income mobility to avoid these taxes when they get too high.

Those who really get soaked likely won’t be “ultra-wealthy.” In fact, it’ll probably end up being people like you and me. Even when the “ultra-millionaires” end up paying some of it, that’s also money they’re not spending creating jobs and wealth in other ways.

And then there’s how this is being positioned. In an article Booker retweeted, Yahoo! News noted that “[s]ome observers have said the plan could be considered a form of slavery reparations. Booker has not shied away from that characterization. In an interview with Yahoo! News last year, Booker said his policy would definitely have a ‘racial impact’ because of the ‘stunning’ wealth gaps between people of different races, but he said the policy ‘ultimately is about income.’”

Disguised reparations are still reparations, and if Booker thinks there are “stunning” wealth gaps between races in the United States, he should probably look at the stunningly bad poll numbers for reparations. If this isn’t something Booker shies away from, it will be an even bigger problem for his campaign than it already is.

Finally, the plan assumes there will be no externalities associated with it. I can tell you the biggest one I see right off: The use of this money for higher education.

The cost of attending college has already exploded because of the “free money” provided through student loans — one reason why college loan forgiveness has now become a major issue in the campaign season. If the money is used for education — and you can imagine how many 18-year-olds will end up using it for that — how are we not going to see another explosion in the cost of college education? How seriously do you think they’re going to take it?

There’s no evidence this will work as planned. There’s no evidence that it will come in at the cost at which it’s being proposed. There’s no evidence it’ll get the support of voters. There’s no evidence the money will be invested wisely or won’t cause externalities. There’s no evidence this is anything but old wine in new bottles, just another form of renamed wealth redistribution.

Ah, but what a name. Baby bonds. If only Joe Biden had come up with it.

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C. Douglas Golden is a writer who splits his time between the United States and Southeast Asia. Specializing in political commentary and world affairs, he's written for Conservative Tribune and The Western Journal since 2014.
C. Douglas Golden is a writer who splits his time between the United States and Southeast Asia. Specializing in political commentary and world affairs, he's written for Conservative Tribune and The Western Journal since 2014. Aside from politics, he enjoys spending time with his wife, literature (especially British comic novels and modern Japanese lit), indie rock, coffee, Formula One and football (of both American and world varieties).
Birthplace
Morristown, New Jersey
Education
Catholic University of America
Languages Spoken
English, Spanish
Topics of Expertise
American Politics, World Politics, Culture




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