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July 26, 2019

Rep. Pressley, Senator Booker Reintroduce “Baby Bonds” Legislation to Combat Wealth Inequality

WASHINGTON – Today, Congresswoman Ayanna Pressley (D-MA) and Senator Cory Booker (D-NJ) legislation aimed at leveling the playing field by giving all American children an opportunity to generate wealth.


The American Opportunity Accounts Act, also known as “baby bonds”, would give every American child a fairer chance at economic mobility by creating a seed savings account of $1,000 at birth. The funds would sit in an interest-bearing account that would receive additional deposits each year depending on family income. At age 18, account holders could access the funds in the account for allowable uses like buying a home or paying for educational expenses. The legislation is fully paid for by making common sense reforms to federal estate and inheritance taxes, including restoring the estate tax to 2009 levels.


“The Massachusetts 7th Congressional District is one of the most diverse and unequal districts in the country, and for too many of my constituents, that inequity begins before birth,” said Congresswoman Pressley. “In order to fulfill the true promise of the American dream, we must take bold steps to address the systemic inequities that have long denied low-income families and communities of color a fair chance at upward mobility. The American Opportunity Accounts Act would guarantee every child an equal opportunity to pursue higher education, purchase a home, and build wealth for generations to come.”


“Wealth inequality is at its highest point in decades—and because household wealth shapes opportunity, extreme wealth inequality in America is undermining equal opportunity,” said Senator Booker. “We know this growing gap has been driven in part by federal policies and a federal tax code that subsidizes asset building for some Americans but fails to extend and expand that opportunity for all Americans. This bill would start to level the playing field. In a country as wealthy as ours, every kid should have an opportunity to build assets, create wealth, and achieve upward mobility. The American Opportunity Accounts Act represents an ambitious, evidence-based, and practical approach to building a foundation for wealth-building and opportunity for all Americans.”


Wealth is primarily passed down from one generation to the next, and our history and laws deepen rather than shrink wealth inequality. Generations of subsidizing the richest households have entrenched an extraordinary wealth gap, especially by race.


The gap in wealth between the richest Americans and the middle class has grown dramatically in the past 50 years. In 1963, families near the top had six times the wealth of families in the middle; by 2016, they had 12 times the wealth. There is also a pernicious racial wealth gap in America. In 2016, the median black family had about $17,000 in wealth compared to the typical white family who had about $170,000.


Specifics of the American Opportunity Accounts Act:

At birth, every American child would be given an “American Opportunity Account” seeded with $1,000. Each year, children would receive up to an additional $2,000 deposit into their American Opportunity Account, depending on family income. These funds would sit in a federally insured account managed by the Treasury Department, achieving roughly 3 percent interest. Account holders may not access the money until they reach age 18 and will only be able to use the funds for allowable uses like homeownership and higher education — the kind of human and financial capital investments that changes life trajectories.


Estimated of size of American Opportunity Account at Maturity, by household income


Income for family of 4

Supplemental payment amount

Est. account balance for 18-year old ($2019)

<100% of FPL




125% of FPL




175% of FPL




225% of FPL




325% of FPL




500% of FPL







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