[4] In Hungary, babies born after December 31, 2005 receive a tax-free savings bond with a value of approximately 40,000 forints ($185 in 2005), which is kept in a special bank account until the child turns 18.
[12] The root cause of the racial wealth gap is debated within the academic literature, with income inequality and differences in savings and homeownership rates being offered as potential causes.
[13] Maury Gittleman and Edward Wolff, in a 2004 study that analyzed wealth accumulation over the period of a decade, found that once income is controlled, there is not a significant racial difference in savings.
[14] Multiple studies, including articles authored by Darity and Hamilton, have cited intergenerational money transfers and inheritances as the largest contributors to the racial wealth gap.
Notably, the bill explicitly states that amounts in AO accounts could not be considered when determining eligibility for any federal benefit or service, including financial aid for education.
[18] In an examination of the American Opportunity Accounts Act, Morningstar determined that "Baby bonds would cut the racial wealth gap in half in terms of resources available per child at age 18".
The plan would provide a one-time transfer of $1,000 to newborn children whose families make 500% or less of the federal poverty level, without the annual additions present in Booker's proposal.
[25][26] Darity and Hamilton's 2010 article discussed at length the notion of a post-racial America, explaining that race-specific policies, including reparations, were not politically viable at the time.
[1] Cassidy et al. clarify the distinction and reiterate the need for race-specific policies to address the racial wealth gap, in order to close the shortcomings of a race-neutral program, as noted above.
[27] Darity and Kirsten Mullen, in their 2020 book From Here to Equality, cite the calculations of Craemer et al. when proposing reparations policies, including a government trust fund similar in structure to baby bonds, but with seed amounts of $250,000 for all eligible recipients, rather than just newborns.
Cassidy et al. conclude that while additional programs (e.g. reparations) are necessary to close the racial wealth gap, baby bonds will have substantial positive impacts on education levels and home ownership for young Americans.