Cara Sweet of Bloomington, cradles her two day old son Jonah at BroMenn Regional Medical Center Tuesday evening.

Hillary Clinton proposes $5000 baby bonds

By: Andrew Cross

Posted: 10/4/07

New York senator and Democratic presidential candidate Hillary Rodham Clinton recently announced that every child born in the United States should receive a bond in the amount of $5,000.

According to Clinton, the bond would mature on the child's 18th birthday.

The exact value of the bond at that time would be dependent upon current interest rates.

"If they have finished high school they will be able to access it to go to college or maybe they will be able to make that down payment on their first home," Clinton said.

Clinton's suggestion came while speaking in front of the Congressional Black Caucus. The CBC represents about 40 million Americans.

Clinton did not propose a way to fund such a program, nor did she comment on the estimated total cost.

Nearly 4 million babies are born each year in the United States. The proposed baby bonds would place an estimated $20 billion burden on the federal government. Some critics of Clinton's proposal are quick to bring up the issue of Social Security.

Social Security currently claims more than 6 percent of a working individual's paycheck. This number doubles for self-employed persons.

"Saving Social Security would cost much less money than we are currently spending on the Iraq War," Julie Webber, associate professor of politics and government, said.

Even if the government could make room in the budget, Clinton's proposal would put thousands of dollars into the hands of every 18-year-old in the country. Years of legislation would be required in order for the federal government to mandate exactly what the money is spent on.

"Unfortunately, the people paying (for the baby bonds) would mainly be in the middle ages," Robin Hanson, associate professor of economics at George Mason University, said. "This would raise their taxes even more."

"The baby bond would act as a baby subsidy. Parents would see having kids as being a bit less expensive," Hanson continued.

Hanson went on to say that an increase in babies born in the United States could be very beneficial.

Clinton, the Democratic front-runner for the 2008 election, believes the program will help people get back to the tradition of saving. Clinton said that although saving has become harder with rising college and housing costs, she believes the program will help build a stronger economy.

"We want to make an investment in America's young people," Clinton said. The United Kingdom attempted to instate baby bonds in 2003. Although the program was designed to benefit the poorest families, numbers showed that the poorest families benefited the least.