'Baby Bond' proposal would benefit nearly half of all WA newborns
The wealth gap in Washington state continues to grow. A report by the group Prosperity Now says households of color are 1.5 times more likely to have zero, or less than zero, net worth than white households. That can put the children of those families at a lifelong disadvantage they can rarely make up.
Some Washington state lawmakers are considering a plan to address that gap. Their proposal for a Washington Future Fund would establish a trust for every child born under Apple Health, the state’s Medicaid program. Washington state Sen. Yasmin Trudeau, D-Tacoma, has sponsored this proposal. KUOW’s Kim Malcolm spoke with Trudeau. You might hear her infant daughter in the background.
This interview has been edited for clarity.
Kim Malcolm: Senator, where did this idea come from?
Sen. Yasmin Trudeau: This idea was actually brought to me by our state treasurer (Mike Pellicciotti), who is looking for creative opportunities to address issues around the wealth gap. He's someone who also knows my background and my passion for the same issue. When he brought the bill to me, I was really excited about the idea, and I jumped on it.
What kind of impact are you looking for with this proposal?
I think a lot of times there is a focus on the issue of how to address poverty as it exists right now. And I think it's really important to not lose sight that the services available to folks who need them immediately are really important. But for me, it's about not just surviving, but an opportunity to thrive. And I think when you look at things like generational wealth, those are barriers to folks really being able to thrive because they’re not able to go beyond that survival mode.
Give us the idea in a nutshell, how is this going to work?
What it does is it creates a pool for kids that are accessing Medicaid services within the first year of their life. As the bill stands right now, $4,000 would be invested in this pool for each child born. That initial amount will be invested by the state investment board, which is led by the state treasurer, and those dollars will grow. They can access it anywhere from 18 to 35 years old. They would be able to use it for either housing, or to start a business, or they can use it for higher education purposes.
That's pretty broad to make sure that we're accommodating what folks would like to see in terms of their future opportunities. The idea is that we wanted it to be focused, and we wanted it to be supported. There is language in the bill that says that there will be asset-specific counseling along with these funds. But we really looked at these three areas that have been found to be game changers when it comes to accessing capital.
What are your projections of how large this fund could be?
If we are able to get a constitutional amendment to allow the treasurer's office to more aggressively invest, we are looking at the potential for a much higher number. Without the constitutional amendment, I think we're looking at anywhere from about $15,000 to $20,000 per individual who would qualify.
Some people may be concerned about the cost of this program, with lots of competition for budget dollars, and concerns about a possible recession coming. What do you say to people who are worried about that?
I would say it is proven that when you invest in an individual, you are actually reducing costs for the state in the long term. I use myself as an example. Once I was able to stabilize and purchase my home and then help other folks in my family that still needed state assistance, that actually alleviated a number of individuals that were then going to the state for services. I think we need to flip that narrative and think about how it is that we can actually reduce costs for the state with this program.
How much do you project it will cost the Legislature to start this up?
I think we're looking at about $150 million over a biennium. That sounds like a really big number, but if you compare that to other social service programs, it is not a large number.
The session hasn't started yet, but how do you assess your chances of this passing?
I think we have a really good chance. I think there are going to be a lot of conversations about how much we have available now, and what we anticipate in the future. My hope is that we don't make a short-term decision that's going to impact the long-term gains of this, but I am deferential to the budget writers. I understand the constraints my colleagues on both sides of the aisle are under, and I just look forward to making the argument for them so that they can see that this really serves value to folks, and will have impacts beyond just the individual who will be assisted through this program.
Listen to the interview by clicking the play button above.