Hillary Clinton's $20 Billion Baby Bond Plan
While out campaigning on Friday, Hillary Clinton unveiled a new plan of hers to provide every American newborn with a $5,000 "baby bond", which would cost taxpayers $20 billion each year. The idea behind the proposal is that by the time each child grows up, they would have $5,000 set aside to help them with the cost of college.
However, if Clinton got her way, there wouldn't be any kind of stipulations that would require them to spend the $5,000 on college. Clinton sees the plan as a way of building up a stronger U.S. economy by encouraing people to save money in light of rising college and housing costs.
Regarding the proposal, Clinton said:
"I like the idea of giving every baby born in America a $5,000 account that would grow over time, so when that young person turns 18, if they have finished high school, they would be able to access it to go to college. "Every person born in this country would be given that kind of account because we want to make an investment in America's young people."
If lieu of spending the $5,000 on college, they could also use the funds to put in a down payment on a home.
If the $5,000 were left to sit in an account, untouched, for the full time, earning 3 percent interest, the $5,000 would grow to approx. $8,512 by the time they turned 18.
Clinton failed however to discuss any details about how the program would be paid for, what it would cost, or how it would be applied or enforced. But quick figures of around 4 million babies born in the U.S. each year, multiplied by $5,000 each, would give us at least a cost of $20 billion a year.
Clinton's campaign spokesman, Blake Jeff, said that right now, the plan "is not a firm policy proposal, but an idea under consideration."
Comments
Flawed
Clinton's idea is flawed.
It creates too much control over families. She only mentioned requiring highschool graduation. I don't think an implanted RFID for baby will be a requirement for a few years, but there definitely will be constraints on educational choices. There have been some suggestions of requiring service before the money can be used. Couples who refuse the bond for their baby might called "negelectful" by the government.
This idea lacks accountability. Most of the impacts such as bad bonds, fraud, additional control, and payoff will be long after Clinton's reign. Clinton can create whatever paper she wants and others are left holding the bag.
This idea will create a lot of red tape and will be expensive to administer.
The payoff is expensive.
This opens the doors to all kinds of shenaigans involving the treasury, the Fed and the bankers.
The cost of education is increasing too fast for this to work for education. Inflation is much higher than the government admits. Ron Paul has cited estimates by some economists at 8%, but warns that some populations see closer to 12%.
Inflation will water down the value of the bond, perhaps making it lose money.
This puts a future heavy tax burden on baby.
Perhaps "flawed" is too weak of a word.
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