October 1, 2007
College Funds for Babies
Hillary Rodham Clinton wants to give every child born in the United States a $5,000 “baby bond” that could be used to pay for college or for a buying a house.
When Ms. Clinton, a Democrat and U.S. senator from New York, unveiled the proposal on Friday, she said that such a program would help Americans get back to the tradition of saving that she remembers as a child, according to the Associated Press.
About four million babies are born each year in the United States, the AP noted.
Sara Hebel | Posted on Monday October 1, 2007 | PermalinkComments
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What a stupid waste of money. Do the math. Even at maturity, a $20K yield would be a spit in the ocean at today’s costs, let alone twenty years from now. Can we all agree, no more hicks in the White House?
— marci Oct 1, 04:24 PM #
“she said that such a program would help Americans get back to the tradition of saving that she remembers as a child” She forgets that saving is a discipline not a handout.
— jim Oct 1, 05:02 PM #
Because the bond would be owned by the baby, there would be an immediate cost to the budget of $ 20 billion per year plus accrued interest each year the bond is held. It would increase the government debt, but the actual impact of the program would not occur for 18 years when the cash payments to redeem the debt would begin. The paymeants would have to include the accrued interest and therefore the $5000 will have grown to something on the order of $12,000 or $48 billion a year if all four million people born 18 years earlier decide to cash in. Although the program is described in terms of helping a child, as a practical matter it helps the parent. You could not limit the benefits to lower and middle income families because lot can happen between the time the baby is born and the baby is 18. For example, many young parents finishing law, business, or medical school may be impoverished when their first children are born but wealthy when the kids enter college. This is an expensive way to help low and middle income families 18 years from now.
— David Mathiasen Oct 10, 10:26 AM #