Looking for our new site?

The Ladder

A Blog from New America's Asset Building Program

America Saves Week: What if every baby began saving at birth?

Published:  February 25, 2009

In light of America Saves Week, I can't help but highlight President Barack Obama's nod to "universal accounts" during his remarks last night's to a joint session of Congress:

"To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans."

So if we're going to talk about universal savings accounts, why not start at birth?

This month's Boston Globe article, for example-which cited the New America Foundation's work around Lifetime Savings Accounts (LSAs)-is evidence that more are taking notice (take a look at Reid Cramer's piece about the article on The Ladder, as well.) In order to address wealth inequalities that afflict even a prosperous nation like the U.S., the ideology behind LSAs is that all citizens should be given the opportunity to build up assets-and the best time to start is at birth.

Given the present financial crisis, the concept of LSAs underscores the importance of saving early. As Asset Building Program director Ray Boshara noted, "One of the lessons of the current crisis is that there are limits on what we can borrow. We need to start saving again as a nation. The only way to do that is to start with kids."

Based on the work of the Asset Building Program, in October 2007, a bipartisan coalition in Congress introduced the ASPIRE Act, which would set up an account at birth for every child in America which they can later use to pursue post-secondary education, buy their first home, or build up a nest-egg for retirement. Primarily benefiting low-income children, the accounts would be endowed with a one-time $500 contribution, with children from families below the national median income receiving an additional $500 and the opportunity for matched savings. And in the case of the latter, families that qualify for the matching component could save more than $20,000 by the time the child turns 18.

As the article notes, the appeal of children's savings accounts runs across ideological lines: supporters include Vice President Joe Biden, White House Chief of Staff Rahm Emmanuel, former Republican senator Rick Santorum, and columnist David Brooks.

As the 111th Congress continues forward and attempts to improve the long-term economic health of the nation, they should consider ways to help people save and invest money-and there's no better time than at birth.

Join the Conversation

Please log in below through Disqus, Twitter or Facebook to participate in the conversation. Your email address, which is required for a Disqus account, will not be publicly displayed. If you sign in with Twitter or Facebook, you have the option of publishing your comments in those streams as well.

Related Programs