Senator Cory Booker of New Jersey has introduced federal legislation to create a national program under which children would receive a $1,000 present at birth, plus annual contributions of up to $2,000 a year based on family income. We have previously endorsed Mr. Bookers plan, which deals in numbers large enough to make a real difference. Some children would get more than $40,000 when they turned 18.
Mr. Murphy is proposing to start small. New Jersey would give newborns a one-time payment of $1,000, with no commitment of more, although he has suggested that hed like to do more.
The New Jersey nest eggs wouldnt mature into game-changing sums without additional state contributions. The average cost of a year of community college in New Jersey is $6,125. The median home price last year topped $300,000.
But its much easier for a federal program to provide the big bucks. The real value of the New Jersey program may be in the work of hammering out the details, and the trial-and-error of implementation, which can provide lessons for creating a larger initiative.
One key question is how to invest the money. The magic of compound interest put some money in a pot and watch it grow isnt so magical these days. At current rates, $1,000 invested in 30-year Treasuries for 18 years would amount to less than $1,500.
Mr. Murphys proposal has drawn fire from Republican legislators who argue that New Jersey cannot afford the roughly $80 million annual price tag. They note that Mr. Murphy is proposing sharp spending cuts, tax increases and borrowing to deal with the fiscal effects of the coronavirus pandemic, which has hit New Jersey harder than any other state.
Some conservatives also warn that children would be spoiled by the state gifts a concern that oddly has not led those critics to demand the revival of estate taxation.read more
Give Money to Babies
