Clinton Floats $5,000 Baby Bond

Clinton proposal intended to pay for child's future college or housing costs.

ByABC News
September 28, 2007, 11:43 PM

Sept. 28, 2007 — -- Sen. Hillary Clinton, D-N.Y., floated the idea Friday of giving every child born in America a $5,000 "baby bond" from the government to help pay for future costs of college or buying a home.

"I like the idea of giving every baby born in America a $5,000 account that will grow over time," said Clinton, "so when that young person turns 18 if they have finished high school they will be able to access it to go to college or maybe they will be able to put that down payment on their first home, or go into business."

Clinton's Friday remarks to the Congressional Black Caucus were not the first time that she has voiced her support for the concept of using the power of compound interest to close the country's asset gap.

While speaking to the centrist Democratic Leadership Council in 2006, she discussed the idea of giving every child born in America $500.

Today was, however, the first time that she has floated the idea of giving every child born in America the larger sum of $5,000.

Asked if she had now settled on a larger "baby bond," Clinton campaign spokesman Phil Singer said, "It's not a formal policy proposal but an idea under consideration."

Presuming that approximately 4 million children are born in the United States each year, a $500 "baby bond" would only cost roughly $2 billion per year. A $5,000 "baby bond" would cost the government $20 billion per year.

The idea floated by Clinton was rebuked Friday by the Republican National Committee, which called it a "budget busting baby fund," and by Republican presidential candidate Rudy Giuliani who called it evidence that Clinton is running a campaign "based on pandering."

The idea, however, has strong support from those who believe that economic disparities in the United States must be addressed by focusing on assets and not solely wages.

The vice president of a Washington, D.C., think tank at the forefront of pushing the "baby bond" concept welcomed Clinton's Friday remarks.

"I'm pleased that Sen. Clinton keeps talking about 'baby bonds,' whether $500 or $5,000 at birth," said Ray Boshara, the vice president of the New America Foundation.