Booker’s ambitious proposal to close the racial wealth gap
As he ponders mounting a campaign for the White House in 2020, Sen. Cory Booker (D-NJ) is preparing to introduce radical and ambitious legislation aimed at narrowing the persistent black-white wealth gap. His idea — commonly described with the catchy monicker, “baby bonds” — is a proposal to grant at birth every American a cash account that could be used in adulthood to climb the ladder of economic success.
If the baby bonds concept catches public support, as Booker hopes it will, the audaciously ambitious policy might well strike down two of his personal goals in a single blow — reducing wealth inequality between blacks and whites and supplying his potential run for the Oval Office with populist fuel.
Booker’s legislation aims to reverse the long and dispiriting history of U.S. policies that assist the wealthy at the expense of the poor, especially black Americans and other minority group members who have been excluded from federally-backed wealth-building programs such as home mortgage and inheritance tax policies.
The racial wealth gap, which hasn’t been a topic of discussion on the campaign trail of late, is a near-permanent, negative fixture of the nation’s economy — a yawning gap of median net worth for white Americans that is nearly 10 times that of black Americans. Worse nearly 20 percent of black households have zero or negative net worth, which is twice the rate of white households.
This disparity has existed through good and bad times. For example, by 2013 white households had largely rebounded from the Great Recession, but black and Latino households are still climbing from beneath the economic damage of yesteryear. Net worth declined about 30 percent for all Americans, regardless of race, during the recession, but black and Latino households suffered an additional 20 percent decline even as wealth began to level off for white families.
As Valerie Wilson, director of the Economic Policy Institute’s policy on race and the economy, noted in a Washington Post interview, white Americans typically have more financial capital to begin with, and economic downturns have comparatively less of an impact on their well-being than they do black and Latino households with far fewer resources.
“White households had a head start in rebuilding wealth relative to black and Hispanic households,” Wilson said. “Black and Hispanic households see larger percentage gains simply because they were starting from a lower level.”
In announcing last month his intention to introduce the legislation, Booker argued the idea behind baby bonds is to give “every American child a fair shot at economic mobility.” But, in doing so, he made clear that his legislation would heavily assist poorer and minority households more than white and wealthy families.
“This proposal is about helping families break through barriers that keep so many Americans from wealth-creating opportunities like higher education and home ownership,” Booker said in a statement accompanying the announcement of the proposed legislation. “Combined with other tax policy changes, like an expansion of the earned income tax credit, this bill will help level the playing field in our country to ensure that every child has a chance to live their version of the American dream.”
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