Bill to give $500 investment to babies

[Lorah]

Hve you guys read this? What do you think?

Article published - Mar 1, 2007
Bill to give $500 investment to babies
Tax money would be used for long-term accounts that grow until child is 18

By JIM SANDERS
SACRAMENTO BEE

SACRAMENTO - Happy birthday, baby, here's $500 - courtesy of California taxpayers.
Legislation unveiled Wednesday would provide a tax-free, long-term investment account to every baby born in California, regardless of their parents' financial or immigration status.
Senate Bill 752 is meant to persuade more families to invest for the future, beginning when their children are infants.
"If we ask people to invest in California, California must invest in its people," said state Sen. Darrell Steinberg, D-Sacramento, who is co-authoring the bill with Republican state Sen. Bob Dutton of Rancho Cucamonga.
"Every child ought to grow up knowing that they are worth investing in, from birth on," Steinberg said.
The proposed account, called Kids Investment and Development Savings, or KIDS, is meant to grow until the child turns 18 and could withdraw the money for a house, education, vocational training or to roll over into a retirement account.
But critics of SB 752 claim the state has more critical needs than padding accounts for children too young to say thanks.
State Sen. George Runner, R-Lancaster, said it's hard to support giving $500 to every newborn at a time when the state claims it doesn't have enough money to build more prisons.
Gov. Arnold Schwarzenegger has taken no position on SB 752, which needs support from two-thirds of each legislative house - meaning Democrats and Republicans - to pass.
The bill is sponsored by New America Foundation, a nonprofit and nonpartisan group.
The savings program would cost taxpayers more than $283 million per year. California has about 566,000 births annually.
Steinberg said the $500-per-baby seed money would promote lifelong savings and financial literacy.
Parents, relatives, friends and others would be encouraged, but not required, to make regular contributions to the accounts.
Interest rates are not predictable, but if the account averaged 5 percent annually, a $500 state investment supplemented by $50 per month in family contributions would total nearly $17,500 after 18 years, Steinberg said.
Last changed: Mar 1, 2007 © The Press Democrat.

[CMT]

great in theory but i have a feeling it'll never happen

[Lorah]

I too like most of the idea. I have not looked any deeper than this article, but I am wondering exactly what limitation would be placed on the money.

"KIDS, is meant to grow until the child turns 18 and could withdraw the money for a house, education, vocational training or to roll over into a retirement account."

There could be so many requirements and limitations in the fine print potentially it seems to me.

I do like the basic idea of starting an account....It might be a good thing because as it seems Social Security output is looking sadder and sadder each year that passes. This might be a way to ensure our kids actually get something down the road.

[CMT]

the thing that makes me sad is that people who are inclined to save money for their kids are going to do it with or without this 500$ nestegg.
and frankly, i don't think it's prompts the rest of the CA population (who wouldn't have invested money in a savings acct for their kids in the first place) to learn good saving habits. I think it tells them "here, you can't manage your money, so we'll do it for you" (not in the big brother sense of they will handle your money, but they will give you money to put in savings if you can't discepline yourself enough to do it).
Plus we all know there are lots of parents out there who will cash that $$ in when their kid turns 18 anyways and keep it for themselves.

[Lorah]

Plus we all know there are lots of parents out there who will cash that $$ in when their kid turns 18 anyways and keep it for themselves.

OHHHHH! I hope something would be written in to the Bill so that parents wouldn't do that! It is a very sore spot with us as Travis' mom passed when he was 6 and his dad and stepmom years later used all of the SS money from his mom to pay off debt when it SHOULD have gone to pay for Travis' college etc.

I agree that some will just hold out there hands and not even say thanks...which is very very sad. And I also agree that those who would save will save regardless.

I kind of like the idea in theory because we do not have much right now and so we cannot save for Mav or any other kids we may have in the near future. So it would be nice....BUT once we do have $$$ we will be saving. It would just provided for him a buffer for what we do not have right now. But then, we both did fine paying our ways in college and beyond...Mav probably would be too. It would teach him he has to work for whathe wants too.

I wonder where people come up with this stuff. Sometimes the Bills have some surface qualities that seem to be great, but the hidden text is quirky at the best.

[CMT]

yeah, there's always an alterior motive.
Watch, the fine print states "50% of all interest accrued must be donated to a political party" lol
shady politicians. :lol

Yeah, we have family money issues too, stemming from Jr's family.
Including a Credit card we just found on Jr's credit report that was maxed out to $2,400 and written off as bad debt and we can't figure out who got it under Jr's name... his mom or dad... neither will give us a straight answer.
Sometimes I think we should abscond with Brendan and only ever talk to my parents.

[Lorah]

Ohhhh Bad stuff on the credit report is BAD news! Lame they won't give a straight answer.

[CMT]

the funny thing is that i check my CR every year (with that free on they offer) and jr doesn't. So he hasn't known this has been on his credit report for quite a while (like 6 years) and never bothered to check b/c he doesn't have credit cards. He's not the kind of person who thinks "well, what if someone else is putting things under my name"... which i'm paranoid about.
luckily my credit is good enough that it kind of "compensates" for it.

[justamom]

I don't like the idea, I think there are better ways to spend California Taxpayers money. As parents we should be taking the initiative to save for our kids. Bad saving habits unfortunately are rampant and passed down through the generations.

Perhaps a more effective way to deal with improving this is through educating parents. They say if you give a man a fish he will not be hungry for a day, if you teach a man to fish he will not be hungry for a lifetime. The $500 may or may not teach the child to save either, as they are still learning their savings habits from parents.

[My3sonsplus1]

I also see Mexican citizens crossing the border to birth here for the $ since it said immigration status would not be counted in eligability.

[CMT]

oooooooooooh gp

[Lynette]

I actually think this could benefit the state in a big way because if the money is invested and they lose track of the family (esp ones who might not be citizens) that when the investment matures the banks will be forced to hand it over to the state as unclaimed property. With compound interest that could end up being a *lot* of money, kind of like the state's own savings plan IMO....

[CMT]

i wonder how they'll work it though. I mean, if they put the money in savings and lose track of the family, it could be generations before that money is ever turned over.

[Lynette]

i wonder how they'll work it though. I mean, if they put the money in savings and lose track of the family, it could be generations before that money is ever turned over.

That's the thing, there is a time limit before it is considered unclaimed so if the bank can't reach you in say 5 years it is considered abandonded and has to sit with the state for awhile before they can claim it. It is not like years down the line someone's great grandkid could come claim the money and all its compound interest, it is long gone.

[Lorah]

Travis and I were talking about it last night...the more I thought about it, the more quirks came up with it...we thought of a lot of the ones posted here...and I just can't see it happening right now...there would need to be some sort of huge brainstorming session and a long bit of text to spell out everything.