Bill Comes as Baby Bonds Programs Gain Traction in Cities and States Nationwide

Bill Text | Bill Summary

WASHINGTON – Today, Congresswoman Ayanna Pressley (MA-07) and Senator Cory Booker (D-NJ) reintroduced the American Opportunity Accounts Act, legislation that would create a federally-funded savings account for every American child in order to make economic opportunity a birthright for every child and help close the racial wealth gap. The lawmakers’ bill comes as baby bonds programs gain traction in cities and states nationwide.

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 racial wealth gap in America is the result of generations of precise and intentional policy violence, so we must be as intentional and as precise about advancing policies that address it head on,” said Representative Pressley. “Baby Bonds are one of the most effective tools we have for closing the racial wealth gap and breaking the cycles of poverty and trauma that have prevented Black and brown folks from thriving in this country, so it is no surprise that this idea has gained traction in states across the country. Black lives and Black wealth matter, which is why Congress must pass our bill without delay.”

“Americans today are having a harder time accessing homeownership, higher education, and a secure retirement than their parents did just a generation before them,” said Senator Booker. “This is due in part to our upside-down tax code, which is great at preserving and building wealth for corporations and wealthy families, but fails Americans who are barely getting by and are unable to afford long-term investments to get ahead. ‘Baby Bonds’ would fix our broken tax code by providing every American child with startup capital for their life, and helping to drive down the wealth inequality that holds American families back from their full potential. With more cities and states across the country establishing their own ‘Baby Bonds’ programs, I’m excited for the potential of American Opportunity Accounts to build a foundation for economic opportunity for all Americans, while breaking the generational cycles of poverty for underserved communities in the process.”

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	Income for family of 4	Supplemental payment amount	Est. account balance for 18-year old ($2019)
<100% of FPL	<$25,100	$2,000	$46,215
125% of FPL	$31,375	$1,500	$35,081
175% of FPL	$43,925	$1,000	$23,948
225% of FPL	$56,475	$500	$12,815
325% of FPL	$81,575	$250	$7,248
500% of FPL	$125,751	$0	$1,681

Joining Rep. Pressley and Sen. Booker in introducing the Baby Bonds legislation are Representatives Rashida Tlaib (MI-12), Bonnie Watson Coleman (NJ-12), Joyce Beatty (OH-03), Jake Auchincloss (MA-04), Troy A. Carter Sr. (LA-02), Barbara Lee (CA-12), Pramila Jayapal (WA-07), Jamaal Bowman (NY-16), Eleanor Holmes Norton (D.C.), Danny K. Davis (IL-07), Dwight Evans (PA-03), Earl Blumenauer (OR-03), Ilhan Omar (MN-05), Seth Moulton (MA-06), Grace Meng (NY-06), John B. Larson (CT-01), Andre Carson (IN-07), Bennie Thompson (MS-02), Emanuel Cleaver II (MO-05), Yvette D. Clarke (NY-09), Rosa L. DeLauro (CT-03), Jan Schakowsky (IL-09), Sara Jacobs (CA-51), Cori Bush (MO-01), Jasmine Crockett (TX-30), Joe Courtney (CT-02), Nanette Diaz Barragán (CA-44), Greg Casar (TX-35), Alexandria Ocasio-Cortez (NY-14), and Summer Lee (PA-12).

Rep. Pressley has consistently advocated for race-conscious policies to help close the racial wealth gap in America, including Baby Bonds.

Rep. Pressley has been a leading voice in Congress urging President Biden to cancel student debt. Following years of advocacy by Rep. Pressley—in partnership with colleagues, borrowers, and advocates like the NAACP—the Biden-Harris Administration announced a historic plan to cancel student debt that stands to benefit over 40 million people.

In June 2021, Rep. Pressley and then-House Financial Services Committee Chairwoman Maxine Waters (D-CA) introduced the Downpayment Toward Equity Act of 2021, bold legislation to help address the U.S. racial wealth and homeownership gaps by providing $100 billion toward downpayment and other financial assistance for first-generation homebuyers to purchase their first home.

In May 2020, she introduced the Saving Our Street Act with then-Senator Kamala Harris (D-CA) to provide economic relief to small businesses with less than 10 employees, with a specific focus on Black and brown-owned businesses.

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