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Yahoo
21 hours ago
- Business
- Yahoo
Opinion - Baby bonds — not bonuses — are what we need to strengthen families and build wealth
To encourage Americans to start families, the White House recently proposed baby bonuses, a policy where the government would offer one-time financial payments of $5,000 to parents upon the birth of a child. With the cost of living rising, it's clear Americans need economic support. Particularly for income constrained families, $5,000 could provide a near-term boost — maybe help pay for a year of diapers and baby formula. But what happens once the bonus runs out? Without wraparound supports, like quality education, affordable health care and pathways to meaningful employment, many parents will find themselves right where they started: stuck in a cycle of financial insecurity and unable to afford basic necessities. Quick fixes, like a baby bonus, don't work. This moment requires people-focused investments that are durable and both short and long term, so working people — and their kids and grandkids — can thrive in the years to come. The formula to make that happen calls for combining cash for today with capital for tomorrow. One way our federal government can invest in 'capital for tomorrow,' is in the form of baby bonds. Baby bonds are a bipartisan, government policy in which every child would receive a publicly funded trust account upon birth that they could access at 18. The amount would vary based on household income, with children from working families or lower income backgrounds receiving more. This substantial start-up capital would allow young adults to pursue research-based wealth-building activities including home ownership, entrepreneurship, and debt-free college or training. In fact, legislative guardrails ensure the resources are applied only to these eligible purposes. If we think of income as an essential flow of resources to support daily living, wealth is a stock or reserve of resources that buffers us from economic shocks and allows us to lead lives that are more fulfilling and self-directed. For most of us, income, hard work, and education aren't enough to get us to this next level of prosperity. Programs like the Child Tax Credit or a guaranteed income, similar to President Trump's stimulus checks during the pandemic, are important 'cash for today' provisions, keeping families afloat. But, to achieve real economic security and freedom over lifetimes, Americans need opportunities to build wealth. Research shows that while baby bonuses may lead to a temporary uptick in birth rates, the effect often fades over time. Studies have also found that the cost of a baby bonus scheme would be substantial relative to any marginal increase in births, raising questions about whether the investment could create a greater impact if put into childcare, housing or education, instead. Conversely, by establishing a strong foundation of capital for low-income individuals, the baby bonds program recognizes that we all have different starting points — and works to create a world where those facing economic barriers can access similar opportunities to those who are born into resources. With bipartisan support, Connecticut became the first state to pass and fund a baby bond effort in 2023. This initiative provides $3,200 to every child whose birth is covered by the state's Medicaid program. This seed capital is invested and carefully managed by the State Treasury. Beneficiaries can keep the funds in their accounts until age 30, with the value projected to grow to nearly $12,000 by the time the first recipients turn 18. On the heels of Connecticut's implementation, another 20 states — red, blue and purple — have either introduced or are seriously considering similar legislation. Another 11 baby bond pilot projects are also in the works, including in Vermont, Georgia, Missouri, New Mexico and Maryland. Research suggests that a nationwide baby bond proposal (like the American Opportunity Act as introduced by Sen. Cory Booker (D-N.J.) and Rep. Ayanna Pressley (D-Mass.)) would significantly close the country's extraordinary wealth gap and have positive effects on family wealth, student debt, home equity and retirement savings across gender, race and ethnicity. A separate 2024 study by the Urban Institute found that a federal baby bonds program would decrease the share of people that take on student loans and reduce the total amount of debt held by student loan borrowers. We know the ingredients needed to promote families, grow a vibrant middle class and build an economy that works for all of us: a combination of cash for today, capital for tomorrow and policies that make life's essential needs, like health care and housing, more affordable. More than a baby bonus, this recipe will provide the base level of resources necessary to allow people the freedom to make the choices they want, such as starting a family, without worrying about financial survival. In these times, wanting and being able to afford the American Dream are two different things. It will be family-first, wealth promoting investments like baby bonds — not just baby bonuses — that will get us there. David Radcliffe, State and Local Policy Director, The New School's Institute on Race, Power, and Political Economy Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
a day ago
- Business
- The Hill
Baby bonds — not bonuses — are what we need to strengthen families and build wealth
To encourage Americans to start families, the White House recently proposed baby bonuses, a policy where the government would offer one-time financial payments of $5,000 to parents upon the birth of a child. With the cost of living rising, it's clear Americans need economic support. Particularly for income constrained families, $5,000 could provide a near-term boost — maybe help pay for a year of diapers and baby formula. But what happens once the bonus runs out? Without wraparound supports, like quality education, affordable health care and pathways to meaningful employment, many parents will find themselves right where they started: stuck in a cycle of financial insecurity and unable to afford basic necessities. Quick fixes, like a baby bonus, don't work. This moment requires people-focused investments that are durable and both short and long term, so working people — and their kids and grandkids — can thrive in the years to come. The formula to make that happen calls for combining cash for today with capital for tomorrow. One way our federal government can invest in 'capital for tomorrow,' is in the form of baby bonds. Baby bonds are a bipartisan, government policy in which every child would receive a publicly funded trust account upon birth that they could access at 18. The amount would vary based on household income, with children from working families or lower income backgrounds receiving more. This substantial start-up capital would allow young adults to pursue research-based wealth-building activities including home ownership, entrepreneurship, and debt-free college or training. In fact, legislative guardrails ensure the resources are applied only to these eligible purposes. If we think of income as an essential flow of resources to support daily living, wealth is a stock or reserve of resources that buffers us from economic shocks and allows us to lead lives that are more fulfilling and self-directed. For most of us, income, hard work, and education aren't enough to get us to this next level of prosperity. Programs like the Child Tax Credit or a guaranteed income, similar to President Trump's stimulus checks during the pandemic, are important 'cash for today' provisions, keeping families afloat. But, to achieve real economic security and freedom over lifetimes, Americans need opportunities to build wealth. Research shows that while baby bonuses may lead to a temporary uptick in birth rates, the effect often fades over time. Studies have also found that the cost of a baby bonus scheme would be substantial relative to any marginal increase in births, raising questions about whether the investment could create a greater impact if put into childcare, housing or education, instead. Conversely, by establishing a strong foundation of capital for low-income individuals, the baby bonds program recognizes that we all have different starting points — and works to create a world where those facing economic barriers can access similar opportunities to those who are born into resources. With bipartisan support, Connecticut became the first state to pass and fund a baby bond effort in 2023. This initiative provides $3,200 to every child whose birth is covered by the state's Medicaid program. This seed capital is invested and carefully managed by the State Treasury. Beneficiaries can keep the funds in their accounts until age 30, with the value projected to grow to nearly $12,000 by the time the first recipients turn 18. On the heels of Connecticut's implementation, another 20 states — red, blue and purple — have either introduced or are seriously considering similar legislation. Another 11 baby bond pilot projects are also in the works, including in Vermont, Georgia, Missouri, New Mexico and Maryland. Research suggests that a nationwide baby bond proposal (like the American Opportunity Act as introduced by Sen. Cory Booker (D-N.J.) and Rep. Ayanna Pressley (D-Mass.)) would significantly close the country's extraordinary wealth gap and have positive effects on family wealth, student debt, home equity and retirement savings across gender, race and ethnicity. A separate 2024 study by the Urban Institute found that a federal baby bonds program would decrease the share of people that take on student loans and reduce the total amount of debt held by student loan borrowers. We know the ingredients needed to promote families, grow a vibrant middle class and build an economy that works for all of us: a combination of cash for today, capital for tomorrow and policies that make life's essential needs, like health care and housing, more affordable. More than a baby bonus, this recipe will provide the base level of resources necessary to allow people the freedom to make the choices they want, such as starting a family, without worrying about financial survival. In these times, wanting and being able to afford the American Dream are two different things. It will be family-first, wealth promoting investments like baby bonds — not just baby bonuses — that will get us there. David Radcliffe, State and Local Policy Director, The New School's Institute on Race, Power, and Political Economy
Yahoo
4 days ago
- Business
- Yahoo
DC mayor presents 2026 budget amid forced cuts, impacts from federal job loss
WASHINGTON (DC News Now) — D.C. Mayor Muriel Bowser to the public Tuesday, which includes a $21.8 billion operating budget. 'We feel very good today. It's budget day which is always a good day for us,' Bowser said. ' … We are proud of the work we've done and the decisions we've made. And this is a budget for D.C.'s future.' The budget comes amid massive changes to the federal government, including an estimated loss of 40,000 federal jobs in the District, which is expected to reduce D.C.'s revenue by $1 billion over the next four years. PREVIOUS COVERAGE Council expects to receive 2026 budget soon after meeting with Mayor, CFO The budget also accounts for federal interference that gutted the District's current FY 2025 budget by more than $1 billion. 'With this budget, we're not waiting for change to happen – we're making change happen. The Growth Agenda is about creating jobs for D.C. residents and generating the economic activity we need to keep D.C. a world-class city,' said Bowser. 'This budget acknowledges the challenges we are facing, but also includes bold, forward-thinking solutions to change our economic trajectory.' PREVIOUS COVERAGE: DC councilmembers request to meet with Mayor, CFO amid 2026 budget delays FISCAL YEAR 2025 SUPPLEMENTAL BUDGET The presentation of the 2026 budget was delayed by nearly two months, after Congress passed a continuing resolution in March that reverted D.C. back to 2024 spending levels. The city administration was forced to deal with a $1.13 billion gap and cut funding accordingly. That resulted in the FY 2025 supplemental budget. To address the gap, the mayor first implemented the '6% solution,' which allowed D.C. to increase spending levels by 6% across all categories. Ultimately, the District was forced to reduce spending by $347 million in fiscal year 2025. A hiring freeze was implemented on all vacant positions, resulting in $63 million in savings. $175 million in non-personnel service reductions were made. Those cuts included contracts, grants, supplies and more. New programs that had not started yet were stopped, including the Child Tax Credit, which has been eliminated — an issue that was pressed by several councilmembers during the questioning portion. It also halts the Baby Bonds Program which officials said faced legal challenges because it required Medicaid to share HIPPA information. $3 million was cut from the Safe Passage program, a program that helps students safely get home from school. The program will remain intact during the school year but will not operate during the summer months. No furloughs, layoffs or facility closures were proposed. FISCAL YEAR 2026 BUDGET To build the 2026 budget, Bowser said she considered three questions. 'Does this investment keep people and families in D.C. and attract new residents or attract new residents? Does it create economic activity to fund city services and programs? And does it attract new businesses and create new jobs for D.C. residents?' said Bowser. 'If the answer to those questions is 'no,' that's something we look very hard at.' The largest percentage of funds was given to the District Department of Transportation and the District of Columbia Public Schools. Highlights of the budget include cutting 'red tape,' making it easier for businesses to operate. Those include repealing Initiative 82, which would've required restaurants to pay a base minimum wage, not including any tips. PREVIOUS COVERAGE: Hospitality workers rally in DC to save Initiative 82 The proposal repeals the Parking Benefit Equivalent Program, which required businesses to provide a transit stipend if the business provides a stipend for parking, and reforming TOPA, or the Tenant Opportunity to Purchase Act. The budget increases $30 million in spending for MPD to hire more officers, create a new horse mounted unit and purchase crime fighting technology. $681 million is earmarked for supporting horizontal construction and parking at the old RFK Stadium Site. This, as Bowser and the Commanders struck a deal to bring the team back to D.C. $500 million of that funding will come from the existing ballpark tax, which was freed up after D.C. paid off its debt for building Nationals Park early. In terms of school funding, $2 billion will be used to modernize 30 schools, $270 million will support pay raises for teachers and $148 million will be used for small capital improvements like HVAC and window replacement at schools. There is $3 million proposed for high impact tutoring. The Early Childhood Educator Pay Equity Fund will be fully funded in fiscal year 2026, but not beyond that. Gone from the budget is funding to build a new jail. According to City Administrator Kevin Donahue, the cost to build a new jail has ballooned to $1.4 billion. Instead, the District will shift to a privately funded jail that is staffed and run by D.C. employees. 'This is not a private entity running the jail,' Donahue said. 'This is an answer to a problem that is, how on earth to do we close the [jail] … in a timely manner,' he explained. One councilmember pushed back asking how this year would be different from last year when the same idea was pitched. Funding is included in the budget to finish the planning process for the jail. DGS will issue an RFQ and RFP for a private entity to take out the debt and build the jail. Changes are also coming to D.C.'s Medicaid program. Because Medicaid costs are forecasted to increase by $182 million, Bowser proposed changing the eligibility requirements. Specifically, the plan aims to 'shift childless adults and adult caregivers between 138% – 200% of the federal poverty level to a new health plan run by the D.C. Health Benefits Exchange with largely the same benefits, minimal to zero premiums and out-of-pocket costs, and ability to utilize existing managed care organizations to avoid coverage disruptions,' according to the Mayor's presentation. This will impact more than 25,000 people. The mayor's team said that those individuals who will lose access to Medicaid could still be eligible for other coverage, federal tax credits and premium subsidies, or financial assistance programs at the federal level. The Deputy Mayor of Health and Human Services said the District will work with them to find new coverage. 'We're going to work with the exchange… (and) look at the commercial marketplace to work with those individuals that will lose coverage under Medicaid,' said Deputy Mayor Wayne Turnage. Paid Family Leave also took a hit in the proposed budget in an effort to balance overtime costs. Families wanting to take leave to care for another family member is limited to two weeks and only includes immediate family. The Child Tax Credit was not reintroduced for the FY 2026 budget after its proposed cut for the FY 2025 Supplemental Budget. Ward 5 Councilmember Zachary Parker said he looked forward to seeking to reverse this decision with the council. Electrification programs and renewable energy purchases are being scaled back, sparking at least two councilmembers to convey concern regarding the District's climate commitment. COUNCIL SCHEDULE The council will begin holding hearings on the budget on Thursday, May 27. It's expected to take its first vote on the budget July 14. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Daily Mirror
4 days ago
- Politics
- Daily Mirror
What is the two-child benefit limit and will Keir Starmer scrap it
In the clearest hint yet Labour could ditch the policy the Education Secretary Bridget Phillipson said the policy - introduced by George Osborne - had pushed kids into poverty Bridget Phillipson has insisted scrapping the two-child benefit limit is an option "on the table" to reduce poverty. In the clearest hint yet Labour could ditch the policy the Education Secretary said the policy - introduced by George Osborne - has pushed kids into poverty. Ms Phillipson also said it will be the "moral mission" of the Labour government to ensure fewer children grow up in poverty. She added: "The changes to the social security system the Conservatives introduced haven't had an impact on the decisions people are making around family size. All it has done has pushed more children into poverty." Ms Phillipson's comments came after the government faced a backlash for delaying the publication of a major strategy on tackling grim rates of child poverty. It had been due to report in the coming weeks but has been pushed back to the Autumn to align with the Budget. It means any official decision on the two-child benefit limit may be some months away. Here The Mirror looks at the policy and how many kids are impacted by it. What is the two-child benefit limit? People on benefits are able to claim additional amounts of Child Tax Credit and Universal Credit for their children. But the two-child benefit limit, which applies to kids born after April 2017, restricts parents from claiming for a third or subsequent child. An exception was made for children born as a result of rape. It is separate from Child Benefit. When was it introduced? It was first announced by austerity Chancellor George Osbrone in 2015 and was one of the most severe cuts to the welfare state. It came into force two years later in April 2017. How many children are impacted? More than 1.5million children are affected by the policy, according to the latest figures. But it estimated an extra 108 kids are impacted every single day because it applies to all children born after April 2017. They say the number of children affected will continue to rise until 2035. This is when the first child hit by the policy will turn 18. How much does a family lose? It depends on the size of the family and the circumstances. The Institute for Fiscal Studies suggested last year a single parent with three children will be £3,455 worse off each year because of the policy. How much would it cost? Estimates for the cost of scrapping the policy vary. But the Resolution Foundation think tank has estimated it would be around £3.5 billion by the end of this Parliament (2029/30). Some organisations have suggested it would be lower. How many children could be lifted out of poverty? Experts argue if the policy was scrapped by Labour it would be the most effective - and immediate - way of reducing child poverty. Charities believe it could pull 350,000 kids out of poverty overnight. If it isn't scrapped many expect rates of child poverty to continue to rise. Will Keir Starmer scrap it? The PM has previously resisted calls to scrap the measure and seven Labour MPs were suspended for voting against the government last summer over the issue, including ex-Shadow Chancellor John McDonnell. But reports over the weekend claimed the PM is now open to abolishing the two-child limit, which has been labelled "cruel" by Gordon Brown. No10 insisted on Tuesday the government is "not going to rule anything out" in attempts to tackle poverty. But any formal decision is not expected to be formally announced until the Budget.
Mint
4 days ago
- Business
- Mint
Trump Accounts? Republicans Have Had Better Ideas
The Republican tax bill contains flashy goodies for families with kids. The flashiest: savings accounts for children — branded Trump Accounts — created and initially funded by the Treasury Department. These will consist of $1,000 in invested assets for each American citizen born through 2028, plus whatever funds parents later add. So if you want to have a baby, hurry up! The seeding of the accounts expires at the end of President Donald Trump's term. The president has made his goal clear: 'I want a baby boom.' House Republicans also proposed expanding the Child Tax Credit from $2,000 to $2,500; that would also expire in four years. But if more babies are the goal, these cash carrots are the wrong incentive. Claudia Goldin said it best in her recent paper, 'Babies and the Macroeconomy': 'The birth rate is … clearly determined by forces that are independent of the whims of governments.' In a 2021 review of the literature of thirty-five studies across Europe and North America, 'Can Policies Stall the Fertility Fall?,' the three authors — a statistician, a sociologist and a public health expert, all in Norway — concluded that even sizable cash benefits have a modest impact on fertility. Instead, the authors found child care and paid leave to be more promising levers. Access to child care slightly increased both the number of children families have and the number of first-time births — especially among low- to middle-class families. Child care support may increase the fertility of stay-at-home mothers by giving their older toddlers access to care. Paid parental leave was also found to have small, but positive, effects on fertility, in particular for higher-earning parents. Unfortunately, paid leave for parents and child-care support are largely missing from the reconciliation bill, though there are a handful of renewed and expanded tax credits for businesses that provide these things. The GAO reports that these have historically been underutilized. Perhaps baby-making isn't the goal anymore. After all, Trump Accounts cannot be accessed until the kids turn 18 and are explicitly for the kids, not the parents making the babies. Perhaps a better way to view Trump Accounts is not as encouraging a baby boom, but as a broader investment in family economic well-being. That would be good news. As a country, we chronically underinvest in the young in favor of the old. Parents are more pessimistic about their kids' future, according to Wall Street Journal polling, than any time in recent memory. The US is an international outlier with its high share of single parents. Labor policy still doesn't reflect the reality that in most households, all parents are working. But there are better ways to promote familial financial well-being than Trump Accounts. The same criticisms apply as when Democratic Senator Cory Booker ran for president on a platform of baby bonds: First, families need support today, not locked up funds to be used two decades from now. This is particularly true for the bottom half of the income distribution. Second, none of these savings accounts speak to each other — 529, 401k, IRA, FSA or HSA, now Trump Accounts. It can be hard to predict where you'll need the savings, and savers are penalized for withdrawing for other uses. Hence the long-time conservative push for universal savings accounts. Third, there is still a taxpayer cost attached: a nearly $20 billion price tag when combining the costs of seeding the accounts and tax-free contributions, according to the Joint Committee on Taxation. If the contribution program doesn't expire after 3.5 years, the price tag will rise by another $15 billion over the next 10 years, based on their average expected annual expenditures for 2027 and 2028. I believe we need more public investment in children, but the question remains: Who is paying for that? And fourth, two-thirds of American kids cannot read or do math at grade-level by fourth grade. This suggests that instead of an investment whose biggest expected use is higher education, children need earlier investments in high-quality tutoring to stay on track. Before sharing in the noble goal of stock ownership, let's get reading and math right. To which I'd add a fifth: a four-year expiration date suggests a short-term political mindset and budget trickery much more than seeding the ground for long-run family flourishing. When it comes to supporting families, President Trump would do best to return to his roots. In his first term, he doubled the Child Tax Credit; boosted funding for the Child Care and Development Block Grant, the country's primary way of delivering child-care support to low-income families; passed 12 weeks of paid parental leave for all federal workers; and proposed a universal 6-week paid leave program for all American moms. On top of this, he oversaw a time of exceptional economic growth. This go-around he seems determined to inflict tariff pain and higher costs on American families. An extra $500 in child tax credit payments per family for a few years sounds nice, until you realize that the costs of tariffs per family are currently estimated to be nearly $3,000, per the Yale Budget Lab. Moreover, the bill as drafted puts us somewhere between $3 and $4 trillion more into debt; guess who inherits that. It might not have had the snazzy Trump Account branding, but Trump's first term arguably was a much better deal for babies. More From Bloomberg Opinion: This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Abby McCloskey is a columnist, podcast host, and consultant. She directed domestic policy on two presidential campaigns and was director of economic policy at the American Enterprise Institute. This article was generated from an automated news agency feed without modifications to text.
