Mike Gerson to President-elect Obama: How about KIDS Accounts?

In a pseudo-memo to President-elect Obama today, Michael Gerson (former speechwriter/policy advisor to President Bush and current Washington Post columnist) has this interesting hypothetical:

“Political indifference to durable poverty in our midst has long been a scandal; from Obama it would be a tragedy. America does need to ‘spread the wealth’ — but not in the simply redistributionist sense. The racial divide in our country is widest when it comes to assets. The median net worth of white and Asian Americans in 2004 was $142,700. The median net worth of African Americans was $20,400. There are many reasons for this massive disparity, including what Lincoln called centuries of ‘unrequited toil.’ Reparations are a politically self-destructive dead end. But what if President Obama, for example, proposed to set up tax-free savings accounts for every poor child at birth and seeded those accounts with a few thousand dollars? Addressing the wealth gap through the miracle of compound interest would be a lasting contribution to the justice of our country.”

Here in the Asset Building Program, we couldn’t agree more.

Gerson’s proposal is generally compatible with the ASPIRE Act, which currently sits in both the House and Senate. Interestingly, Gerson calls for tax-free savings accounts for every poor child at birth, while the ASPIRE Act would set up an account for every child born in the United States. On the other hand, he throws out “a few thousand dollars” as an initial deposit for the accounts. Current legislation would also seed the accounts, but at a lower initial sum of $500 (while children in households earning below the national median would be eligible for an additional contribution of up to $500).

Minor differences aside, it is incredibly heartening to see opinion leaders on both sides of the aisle come to the same conclusion about the burgeoning wealth gap in this country, as well as see the asset-building opportunity that child savings accounts could create.