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June 13, 2023

Pressley Presses Secretary Yellen on Support for Baby Bonds to Address Racial Wealth Gap

Baby bonds are the kinds of investments that break cycles of generational poverty and systemic economic oppression.”

Video (YouTube)

WASHINGTON – Today, in a House Financial Services Committee hearing, Congresswoman Ayanna Pressley (MA-07) highlighted the widening racial wealth gap in the United States and urged Treasury Secretary Yellen to support the use of baby bonds as a tool to address wealth inequality.

Congresswoman Pressley is the lead sponsor, along with Senator Cory Booker (D-NJ), of 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. In March, the lawmakers wrote to the Treasury Advisory Committee on Racial Equity urging it to study the merits of the baby bonds proposal in advancing racial equity and consider including the findings in  upcoming reports to the Treasury Department.

A video of her exchange with Secretary Yellen can be found here, and a transcript is available below.

Transcript: Pressley Presses Secretary Yellen on Support for Baby Bonds to Address Racial Wealth Gap

June 13, 2023

House Financial Services Committee

REP. PRESSLEY: Thank you, Secretary Yellen, for joining us today.

I represent the Massachusetts 7th Congressional District. Vibrant, dynamic, diverse, unequal. And I’m sure my colleagues have grown tired of my numerating these damning statistics but imagine how tired people are of actually living them.

In a 3-mile radius, from Cambridge to Roxbury, median household income drops by $50,000. Federal Reserve of Boston put out a Color of Wealth report which cites that the average wealth for a Black Boston family is $8, whereas as for a white family it is $250,000.

So I’m going to use my time with you to discuss an issue that is paramount that we tackle. It’s a national problem, and that is the racial wealth gap. The racial wealth gap in the United States is over $10 trillion. That’s trillion with a T. Truly a shameful reality for the American economy.

Secretary Yellen, do you agree that we have a colossal racial wealth gap in our country?

SEC. YELLEN: Of course. You cited statistics that show how significant that is, and President Biden is committed to doing all that he possibly can. And I’m committed as well to take meaningful steps.

REP. PRESSLEY: Thank you. And of course, we know that this racial wealth gap didn’t just appear out of nowhere. Black Americans in this country have been systematically stripped of our wealth.

First, there was nearly 250 years of enslavement followed by a century of Jim Crow segregation, economic exploitation, state sanctioned violence. And to this day, Black Americans are still being excluded from and facing barriers to public programs that promote homeownership and higher education along with discriminatory home appraisals, resistant redlining.

Only bold, transformative, precise economic policies can address the impact of compounded racism and exploitation. We are heading into Juneteenth – grateful that that is now a federal holiday – but policy is my love language. I believe we need federal reparations to close the racial wealth gap once and for all.

Secretary Yellen, under your leadership, you have established that Treasury Advisory Committee on racial equity.  This truly represents a historic opportunity to center racial justice in our economic agenda. Can you speak to some toplines of the work of this committee?

SEC. YELLEN: We formed, as you said, TACRE as an advisory committee to help us evaluate every area in which Treasury has responsibility, where we need to recognize if discrimination may take place, and we should be changing our policies to make Treasury itself more diverse, and more responsive to be able to address structural racism.

REP. PRESSLEY: Thank you, Secretary Yellen. I’m running out of time.

So, I did want to just bring to your attention – and I’m grateful for the work of the committee. I look forward to learning more about that. But myself and Senator Cory Booker have introduced the American Opportunity Accounts Act. If passed into law, this would represent the most ambitious federal effort to directly address wealth inequality.

At birth, every child will receive $1,000 in a savings account managed by the Treasury Department. Children from low-income families receive deposits every year, and once they reach the age of 18, they can use the funds they’ve saved for specific purchases, such as buying a home pursuing higher education.

There’s growing momentum around the country for our baby bonds legislation from Massachusetts, California, Connecticut, New York, Washington, DC. Do you agree that the Treasury Department should further look into baby bonds as a tool to address wealth inequality in our country?

SEC. YELLEN: Well, certainly this is a key priority of the Biden Administration, and not just a Treasury matter, but I think it’s a very constructive suggestion. As you know, President Biden has proposed many policies that would be complementary, including extending the Child Tax Credit, and making sure that it’s refundable, which did succeed in cutting poverty by 50%.

REP. PRESSLEY: Absolutely. Thank you. Secretary Yellen. I do see baby bonds as the kind of investments that will break cycles of generational poverty and systemic economic oppression and put us one step towards closing the racial wealth gap. Thank you.