Thursday, July 09, 2009

NEWBORN SAVINGS ACCOUNTS


Having a baby? If Sen. Chuck Schumer gets his way, the Federal Government will create a savings account at a local bank under your child's name. How much? How-bout a $500 initial deposit for each newborn U.S. citizen?

Schumer unveiled his plan this week to help children save money starting the day they are born. The American Saving for Personal Investment Act is one of the few initiatives that Schumer and Gingrich agree on. Newt had suggested something similar many years back.

According to the AP: The Fed will deposit $500 annually, but additional deposits can be made as well. Up to $2,000/year.

There are programs in our schools and now through television programs encouraging our kids to save money with the intent to teach them early. Having an account started when they are born should boost that effort tremendously.

As the proposal advances, it will be determined if it will be part of a larger Soc Sec Reform bill or introduced on it's own. Either way, we should watch this one.

6 comments:

Anonymous said...

I have mixed feelings about this program. I am not sure how putting money into an account for a new born will teach that child how to save. I would be more agreeable to a program that either matches a portion of deposits older children make into approved savings accounts or guarantees a higher interest rate in approved savings accounts for children.

If the government simply gives the money to the children without effort on their part, it seems to me that it will only teach them that there is free money to be had from the government.

Anonymous said...

Schumer starting to scare me. Where does the funding come from.. Maybe the government can take the funds used from those that pass away prior to reaching age 65....just jokin' But seriously, one of the reasons that banks stopped giving away gifts of $5-25.00 for new borns was that the parents took the money or never added any funding to the existing accounts. Thus maintaining a savings account for a minimum balance not profitable and thus became the new umbrella concept- Maintain a small savings a/c with a balance of $5 or $50.00 which is now $100.00 in some banks allowed you to have a free checking.
The irony is that it appears that good ole Newt and Chuck be on the same side- not to often this happens
oh well- my three peso's
Shelly Z

Mike Madsen said...

Looking up some points I missed, there is an incentive. The $500 limit on the FEDs annual deposit is contingent on a match of $500 to $2,000 made by the family/child.

It turns out to be very similar to many of the programs we engage on the city and county level.

Hope that clears up the "enabling gift" issue.

Anonymous said...

Mike,

If I read this right - including your last post - this is going to - if passed - turn into another economic - and possibly even sectarian - injustice issue.

People that have a baby and $500-$2000 (or whatever) of "matching funds" will be yet another step ahead of people that have a baby and cannot come up (this is not unusual...) with these kinds of matching funds!

No wonder Newt likes it!

This (if passed...) also has the potential to put loads of money (on behalf of the children...) into the bank accounts of some right-wing religious groups (those that have access to - are wealthy enough - to provide the "matching funds") that don't believe in women's rights and/or birth control and/or freedom of choice
--- and thus (covertly or overtly) encourage thier (these issues vary by group affiliation and other factors) female members to have large (the Mormons in Utah, the last I knew, had the highest rate of children in the U.S. - way beyond the rest of us...) broods of children...

Most of whom, if this were to be passed ... and one follows the dots..... would have a nice little nutegg for Joshua, Jerimiah, Mary, etc., etc., etc., etc. to start college with (Pat Roberton's University?????) - whilst the poorer children from the poorer families (often a result of teen pregnancies, abuse situations, date rape, etc... / inclusive of a lot of female-head-of family situations / and also disproportionately affecting minority groups....) that aren't able to grab onto this opportunity will be stuck in the same old "too bad for you, eh..."

Perhaps I'm not reading it right or understanding it all?

Whatever the case, I surely agree with your statement...

"[We] should watch this one."

But not so much for the same reasons (although some valid concerns have been raised on that end as well) that your other writers have provided!

NS

Anonymous said...

Mike,

Just so you know, I continued exploring this issue (along with some other / related women's issues) over on my blog at http://www.flingingtowardsthesun.blogspot.com

I also encouraged my readers to check in here to read your full posting and the various responses...

Thank You for Posting This!

I have a lot of thougths in this department - having been a teen parent [If any children need this boost it is the children (Don't let the parents touch it!) of teen parents!] and such!

N.S.

Robin Yess said...

I posted on this subject on my own blog. It's a financially irresponsible idea. Reality - the Federal government doesn't have 10 cents no less $500 to give away to anybody. Balance the checkbook, pay off the debt and then you can talk about free giveaways. Let's face it the Fed is the worst example of sound fiscal policy and shouldn't be trying to give advice on saving until they resolve their own financial nightmare!