Ray Boshara in The Record (NJ) on Child Savings Accounts

Communications — Mon, 22 Oct 2007 08:26:00 -0400

New America in the News:

Concerned about the nation's poor savings rate, lawmakers such as Sen. Hillary Clinton have been talking about getting the government directly involved in establishing savings accounts for children.

The New York senator caused a stir last month when she said she would like to see every newborn receive a $5,000 bond that could be used later for college or a home purchase. Her remarks drew derision, and she has since backed away from that idea. About 4 million babies are born every year in the United States.

Lawmakers have kicked around a more modest plan for several years, one initially co-sponsored in 2004 by Jon Corzine, a Democrat, and Rick Santorum, a Pennsylvania Republican, who were serving in the Senate at the time. That plan would give every newborn $500 in a savings account. Sen. Charles Schumer, D-N.Y., reintroduced the bill this month.

The proposal calls for creation of an account at birth with a one-time $500 government contribution. Children living in households with incomes below the national median would be eligible for an extra contribution of as much as $500 at birth as well as the opportunity to earn $500 per year in matching funds. The money could be used later for housing, education or a retirement fund. The cost to taxpayers is estimated at $3.25 billion the first year and $37.5 billion over 10 years. When recipients turn 30, they would be required to repay the initial deposit, and that would provide seed money for future accounts.

Ray Boshara, vice president of the non-partisan Washington think tank The New America Foundation, and one of the leading advocates of the bill, said he and other champions of the measure are courting the banking industry for support. "We're working on them, but we haven't yet achieved a broad coalition," he said...

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North Jersey Media Group

Ray Boshara in The Record (NJ) on Child Savings Accounts