Every Baby a Trust Fund Baby

Click here for a brief video discussion of this idea.

An American Stakeholder Account (ASA), established for every child at birth, would build a savings and ownership culture in America, promote financial literacy, and fortify the American economy for the long haul. Every child would automatically receive a $6,000 deposit into an ASA at birth -- and also be eligible for dollar-for-dollar matching funds for voluntary contributions up to $500 a year. Over time, ASAs will evolve into a broad system of saving accounts that all Americans, and especially low-income Americans, can tap to meet their asset needs throughout their lives, enabling them to invest in higher education and lifelong learning, purchase a first home, start a small business, and build a nest egg for retirement.

At present, about a quarter of all white kids and half of all other kids grow up in households with zero or negative assets, apart from possible equity in a house. This means that there are no available assets for any sort of investment. The prospects for achieving economic success of children growing up in such households are pretty dim. Therefore, imagine what it would mean for such kids to have an investment account with their name on it -- earmarked for their education, their first home, their retirement. Imagine the enormous effect such a program would have on our failed efforts to educate our kids about financial basics. And just imagine the effects on our economy: it doesn’t take an army of economists to tell us that we would reap huge rewards if virtually all young people became owners, savers, taxpayers, and entrepreneurs -- and if fewer people depended on the state, local charities, their communities, and their parents for their livelihood and well-being.

The full text of this essay is available below in PDF format. To learn more about our other Big Ideas for a New America, please click here.