States to trial 'baby bonds' as way to break poverty cycle

States to trial 'baby bonds' as way to break poverty cycle At least eight U.S. states have discussed introducing a "baby bond" investment program that would see the government deposit a few thousand dollars into a trust account for each infant born to parents below a designated income level. As adults, the beneficiaries can use the money—plus investment returns—to help pay for education or a home. Baby bonds were first envisioned by economists Darrick Hamilton of The New School, and Duke University’s William Darity Jr., although they already exist in other nations around the world. “The most critical ingredient to generate wealth is wealth itself,” Mr. Hamilton said. “All the financial literacy in the world is useful and valuable, but limited if you have no finances to manage.” Connecticut was the first state to approved baby bonds, in 2021, but still hasn’t funded the $600m initiative. If implemented, Connecticut’s proposal would be by far the biggest in the country, six times the size of one now under way in California. It would create a $3,500 investment account per eligible child who, at 18, would be able to complete a financial literacy course and use the money to start or invest in a Connecticut business, buy a home in the state, pay for higher education or save for retirement. A first time family could qualify for eligibility under the state’s public health insurance with an income of $23,000.