The Middletown Press (Middletown, CT)
Conn. should keep promise on baby bonds
We often think of wealth as an outcome, but its true essence is as an input: what it can do for you — what it affords you. It is the catalyst for true economic mobility, the difference between surviving financial hardship and economic ruin. This is certainly true in Connecticut, where there is profound wealth inequality, among the worst in the nation, especially by race. While this inequity clouds the state’s economic future, there is absolutely something we can do about it.
In 2021, Connecticut became the first state in the nation to pass a baby bonds initiative. Named CT Baby Bonds, the program would invest $3,200 for each baby born into poverty. Those investments would grow along with each child, becoming available at the time of young adulthood for wealth-building purposes.
Through my academic work, I helped design the concept of baby bonds as a means of granting financial independence — a tool for individuals to escape the iterative confines of systemic asset poverty. Yet as some states put the policy into practice, the economic impact of baby bonds is extending beyond individuals, touching families, communities, and the state as a whole.
Here’s how it works: Between the ages of 18 and 30, after completing financial education, participants would be able to access the realized returns of their CT Baby Bonds investment (estimated at $11,000 to $24,000) to help buy a home in Connecticut, start or invest in a Connecticut business, pay for college or other postsecondary education or training, or save for their own retirement.
Not only does this reduce the transmission of economic disadvantage across generations, it also promotes upward mobility and economic security to young adults, inclusive of race, ZIP code and the financial circumstance in which the child is born. It is a tool to spread the benefit of economic access across the state and overcome the longstanding barriers to wealth that many children born into poverty encounter.
Young adults from households with limited or no wealth — spanning Connecticut’s 169 towns and cities — will be eligible. Without initial seed capital to begin their adult lives, these young adults will be starting far behind, missing the critical ingredient of capital needed to build wealth over their lifetimes.
I recently visited Connecticut to speak with legislators, Treasurer Erick Russell and policymakers in the governor’s administration. I told them that passing CT Baby Bonds has positioned the state as a vanguard for justice, and a national leader in tackling wealth inequality. Now other states are watching and racing to follow.
Connecticut’s program is now law and was celebrated as a historic accomplishment. It’s in the process of being implemented. But it has not been funded.
Gov. Ned Lamont has made clear that he will not use his authority to approve the planned seed investments, opting instead for short-term relief programs, which will be limited in addressing the state’s grave wealth inequality. Those assistance measures are useful, but do not adequately address the underlying lack of resources and opportunity that are causing intergenerational hardship in the first place.
Connecticut needs to fulfill its promise, and it needs to start now. CT Baby Bonds is set to start enrolling eligible babies in July. If funding is not secured, the state will miss the opportunity to begin investing on behalf of those kids — and more kids each year until funding is finally provided.
As the state budget is written, it is critical that lawmakers pair the urgent needs of residents with smart long-term investments, including funding for CT Baby Bonds. Failing to do so would be damaging to the state’s reputation, and what’s more, an enormous missed opportunity that reneges on promised resources for babies born into poverty — nearly half of all births in Connecticut.
The state should not forfeit this opportunity. Not only will this transform what the future can look like for thousands of Connecticut children, it signals to everyone that its government keeps its promises and aspires to build and resource an economic future that includes all of our neighbors.