New Mexico eyes "baby bonds" movement
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Child welfare advocates are pressuring New Mexico, which has the largest proportion of Latino residents nationwide, to create state-funded saving accounts for children born into poverty.
Why it matters: Roughly 28% of New Mexico children under age 5, and a quarter of those under 18, live in poverty — while the official poverty level nationally is 11.1%.
State of play: About a quarter of U.S. states are debating or showing interest in a program to endow U.S. citizens with a grant worth thousands of dollars when they turn 18, according to the Harvard Kennedy School.
- Proposals for so-called baby bonds have passed in Washington, D.C., Connecticut, and California and been introduced at the federal level and eight additional states.
- The grants, which start accumulating at birth, can be used to start a business, purchase a home, save for retirement, or pursue a college degree.
Zoom in: New Mexico's state treasurer, Laura Montoya, tells Axios a new baby bonds program could be a "game changer" and help erase economic gaps in her state, where about 75% of all children are born into families using Medicaid.
- Depending on what legislators decide, the state could start a child with $500 to $2,000 or more into a savings account at birth to be available after they turn 18, she says.
- The baby bonds could be used to create wealth as soon as the child becomes an adult and may be used to introduce residents to financial literacy.
Connecticut, which launched the country's first statewide baby bonds policy in June 2023, begins with a $3,200 deposit. Washington, D.C., starts at $500.
- When children reach a certain age, they must spend their share on job training, college, property — something that could build wealth.
- In D.C., qualifying babies start with $500 and receive as much as $1,000 each year if their parents' income doesn't exceed three times the federal poverty threshold.
How we got here: Advocates tie the inspiration for baby bonds back to Thomas Paine's 1797 pamphlet, "Agrarian Justice," Axios' Sophia Cai reports.
- The concept has been championed in modern times by some economics scholars.
- Hillary Clinton, in 2007, floated the idea of giving each American newborn a $5,000 bond at birth. Sen. Cory Booker's (D-N.J.) presidential campaign platform in 2019 featured a federal baby bonds program.
- The idea gained momentum as lawmakers searched for ways to address racial inequality after the murder of George Floyd in May 2020.
Reality check: It's unclear if Montoya and advocates can get a baby bonds proposal through the New Mexico legislature in next year's session.
- Advocates struggled to convince state lawmakers to pass a bill requiring financial literacy in high school and instead got it as an elective.
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