Sen. Ron Wyden, (D-OR) is intending to draft a law that would entitle every child born in the United States to a $500 savings account of their own. Wyden stated that if there were universal savings accounts for newborns, it would “really put a dent in the poverty rate.”
Wyden will soon head the Senate Finance Committee, as the six Senators who were in line before him seemed to magically drift away. Blanche Lincoln (D-AR) lost her reelection, Kent Conrad (D-ND), Jeff Bingaman (DNM) and Jay Rockefeller (D-WV) retired, John Kerry was named secretary of State, and Chairman Max Baucus was named ambassador to China.
His statements about the children’s savings accounts came from a speech at Southern California School of Law and the Urban-Brookings Tax Policy Center. He added that the U.S. tax code is a “dysfunctional, rotten mess of a carcass.”
Wyden said a 2009 proposal by Sen. Charles Schumer (D-NY) was one method he might emulate to implement his idea. There are already state and local versions of Wyden’s plan; in San Francisco every kindergartner in the city school district is supposed to have a $50 college savings account that is in a trust fund under the city’s name. Low-income children often receive up to $100 in their trust fund.
The San Francisco plan lets the children’s families add funds to the account but only withdraw funds for educational purposes once their child is in college. If the child eschews college or secondary education, the account dissolves when the child is 25. All the personal funds are returned to the child while matching funds return to the city program. Roughly 7,500 children have these accounts.
State officials in Hawaii are planning to consider a similar program later this year; there is a state Senate proposal in the works.
Wyden intends for children’s savings accounts to have $500; according to the College Board, the average cost for a year of college tuition at an in-state public college for the 2013-2014 academic year averaged $22,826; a private college averaged $44,750.