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A whole generation of trust-fund babies

By Josh Richman
Wednesday, February 28th, 2007 at 3:28 pm in California State Senate, General, Sacramento, U.S. House, U.S. Senate.

State Senators Darrell Steinberg, D-Sacramento, and Robert Dutton, R-Riverside, introduced a bill last week called the California Kids Investment and Development Savings (KIDS) Account Act which would create a $500 state-sponsored savings account for every baby born in California on or after Jan. 1, 2008.

As the national savings rate is at its lowest point since the Great Depression and Americans are carrying record levels of debt, “KIDS Accounts will serve as the springboard for building a culture of savings and financial literacy for all young Californians” says Anne Stuhldreher, a fellow at the New America Foundation, which sponsored SB 752. “First, it will create a platform for lifelong savings for every Californian. Second, it will provide a powerful financial education tool that families can use to teach their children the power and importance of saving.”

The state would open each account with $500, and the children’s families could then contribute throughout childhood. No withdrawals could be made until the child turns 18, when the money could be used to pay for a two- or four-year college, technical, or trade school; for a down payment on a home; or for a retirement savings account. Take it out earlier or for any other purpose, and you’d have to pay $500 back to the state.

Great Britain launch a similar Child Trust Fund program in September 2002 for each of the 700,000 children born there each year. Since then, the percentage of those who electronically deposit monthly savings in bank accounts for children has since doubled, from 20 percent to 40 percent. A similar bill to implement such a program across the United States, the ASPIRE Act, was introduced in Congress in 2005; alas, neither of the lawmakers who carried it — U.S. Sen. Rick Santorum, R-Pa., and Rep. Harold Ford Jr., D-Tenn. — are still in office.

California’s bill puts the price tag for taxpayers at $270,000,000 per year; it notes that this is less than half of 1 percent of the state’s $100 billion annual budget. But it ain’t chicken feed, either. It’s hard to say whether lawmakers — especially Republicans — will be pleased by the idea of giving taxpayer money back to taxpayers’ kids, or irate at a $270 million-per-year budget hit. And at least a few are sure to have a problem with children of illegal immigrants getting the money.

On the plus side, having the next generation of Californians learn the importance of savings would be great; perhaps some of them will grow up, be elected to public office and get the state out of the fiscal bind we’ve put them in with budget deficits, bond debt and unfunded pension liabilities.

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  • ann myers

    Ya think? A few might well be more than a little upset with a plan that provides a savings account for the children of illegal immigrants. Lets see we already provide welfare and health care for each child from birth, about a hundred thousand dollars in k-8 education per child, we are paying through the nose due to the supply shortage in housing (including subsidizing their families housing), the stress on our infrastructure, prison costs (even the latest “immigrants are really good for you” study admits their children commit crimes at a higher than average rate) and on and on. Thats not even mentioning the costs to our system as this giant poorly educated (both parents and the kids we fail despite that giant expenditure that keeps our teachers and administrators fat and happy) ages. You think SSI and Medicare look bad now?

  • Sequoia

    Why would any parents in California pay for $500 to be put into the account of some other parents kids, when they can just open a bank account for thier own kid on the day their children are born?
    The state of California does not have $270 million to spare, we are already operating in the red.
    Where are the cuts going to be made?
    If no cuts, there will be a hefty raise in taxes.
    So who gets taxed to pay for this boondoggle?
    Here in California, we have illegal aliens dropping babies in our hospitals at an alarming rate, and most of the babies born in this state are illegal aliens, which the taxpayers end uop have to pay for. This is just another give away program to “poor pablo” the illegal alien.
    It would cost far less than $270 million to deport every illegal alien out of the state, back to their respective homelands, and the state would be saving double that next year, when not only do we, the taxpayers NOT have to pay $500 for every baby born to illegals, but we wont have to pay for their hospital bills, their welfare checks, their aid to “immigrants”, their food stamps, their WIC, their HUD housing, their free breakfast, lunch and dinner programs, their free traslator services, their free medical care, their free legal services, and the cost of educating thier anchor baby brats for the next 13 to 17 years.

    I say use the money more constructively, deport all illegals and save the state BILLIONS.