Senator Charles Schumer wants to give every child born in the U.S. a $500 savings account, courtesy of the federal government.
The Democrat from New York plans to introduce legislation next week that would establish savings accounts for all newborn U.S. citizens and allow them to grow tax free, with the federal government donating $500 to start each account and, in some cases, making matching contributions up to $500 a year.
Schumer said his plan would encourage youngsters to begin lifelong saving habits and discourage the kind of debt-accumulating free-spending that some financial analysts say has worsened the nation’s current economic crisis.
If adopted, Schumer’s measure would only authorize the savings account giveaway; it would be up to Congress to find a way to pay for it each year.
With more than 4 million babies born annually in the U.S., according to the Census Bureau, the cost of the initial savings accounts in a single year could be about $2 billion.
The proposal could be a tough sell on Capitol Hill, given renewed criticism of the mounting federal deficit.
Under Schumer’s bill, the U.S. Treasury would establish and oversee the individual accounts, awarding them to newborns when their Social Security numbers are issued. The Treasury would funnel $500 into each individual account.
The accounts could be transferred to private banks.
Up to $2,000 a year could be deposited into each tax-free account, and the federal government would match annual contributions of up to $500 for families earning less than the median income.
Account holders would be barred from withdrawing any money until they are 18 years old, and even then tax-free withdrawals would be limited to retirement, home purchases, schooling and other limited spending.
Schumer said that in New York’s Capital Region, an estimated 12,500 babies would qualify each year; they would get a total of $6,250,000 in savings at birth under his plan.
(Source: Times Union)
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14 Responses
His accumulation figure (last paragraph) assumes someone who is born when the market is low, and knows to cash it in when the market is high. $500 invested securely means approximately 3% interest, and that won’t result in a hugh fund to spend later in life.
If paid for by giving people a government bond, it would merely impose the cost of paying for the program on the future taxpayers. If the goal is to stimulate the economy, better to give to people to spend ASAP – and a lot more than $500 would be
If it is instead of existing programs (i.e cutting programs to pay for it), it would be a “Ron Paul-like” switch of control from the government to people. That sounds un-Schumer-like.
Does anyone know if this proposed bill will apply to US citizens born abroad?
starting to seem more and more communist like (sheli shelach=taxpayers money Vshelach sheli)
As an aside – In Canada everyone child born receives a regular monthly payment.
Anyway, where does the government get the money from? From the tax payers, that’s who, and they are not supposed to be spending our money without our permission – taxation without representation, according to the constitution. Our governemnt treats the constitution as a non entity, it is no longer the sane government that the founding fathers put together. It is as corrupt as can be and getting worse. It’s getting scarier every day.
#3– actually it is a very anti-socialist proposal, verging on extreme right. Instead of the government spending money on what it decides you need, it gives you money. Just think of a fanatical libertarian with a Keynesian approach to spending money (especially if paid for with “funny” money).
Boy, he must be really afraid he will lose in the next election. He is proposing nothing more than a bribe.
since when is the government in the gift giving business? this is the most bizarre idea ive ever heard
I wish giving kids money, in and of itself would, ” encourage youngsters to begin lifelong saving habits and discourage the kind of debt-accumulating free-spending that some financial analysts say has worsened the nation’s current economic crisis.”
They should check the water supply in D.C. to see if someone put something in it.
Didn’t Hillary (almost) campaign on this for the 2008 presidency?
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This won’t get him votes – by the time the babies are 18 the interest accumulated will make them rich Republicans.
Hey Shumer..if the Federal Gov’t gives everyone a million dollars, it would save the Treasury billions off the stupidity of the so-called “Stimulus.” Only, you guys wouldn’t be able to control the foolish masses!
Remind him to authorize a $2,000 extra gift when the boy hits his bar mitzvah.
in england, this system has already been implemented in 2003, where every child receives £250 at birth, double that if the parents are on certain benefits, and another payment will be made by the government at the age of 7. up to £1200 may be paid in to the account every year, tax free. in addition, every child receives a weekly child benefit payment into the parent’s account to help pay for the costs of raising the child, and this child benefit is available to all parents, regardless of their income levels.
#5 the socialist part is giving you a naamah d’kisufah which makes you depend on the government also this whole distribution of wealth thing