A proposed bill that would give each American baby a $500 savings account rubs a lot of people the wrong way: After my recent story on the legislation, dozens of readers wrote in to express their dismay. Sam from Massachusetts wrote, "Enough is enough. This would be insanity. Who gives the government the right to tax us all and pay for this." Katie of Missouri agreed: "What happened to supporting your own family? This is outrageous and I would like the names of the Republicans that support such idiocracy."
George from California dubbed it a socialist policy; Seth from South Carolina preferred the term "nanny state." Even Jay Leno got in a jab at the bill during his monologue last night. He joked that illegal immigrants would be lining up to give birth in this country if each baby received $500.
Lost amid much of this superficial debate is the research behind the proposal. As I wrote in my article, studies have found that even an amount as little as $500 can get people started on a path towards savings. People who receive such a savings account at birth are more likely to save more money and invest in their own futures, as well as feel more in control of their lives. They are more likely to participate in civic activities, earn more money, and achieve more in school. There's also evidence that holding assets, paired with financial lessons in school, leads people to have a better grasp of basic money concepts, which can serve them well for the rest of their lives.
Of course, the cost of the program—an estimated $37.5 billion for the first 10 years—is a sticking point. At a time of such concern over the federal deficit, it's hard to make the case that we should be spending even more money on an experimental program. The verdict is still out on how it would work on a large scale, but because Great Britain started a similar program in 2002, we won't have to wait too long for answers. The bill's supporters, though, are hoping that Americans will get behind it later this year, instead of waiting to see how it works out in Britain.
What do you think—should newborns receive $500? Do you think it would help set them on a path towards savings and education?
Here is a video from ABC News Now of me discussing the proposal:
For more, see: "Coming Soon: $500 for Every Newborn?"