The Student News Site of University of Arizona

The Daily Wildcat

102° Tucson, AZ

The Daily Wildcat

The Daily Wildcat

 

    Born into debt: California’s debt slavings plan

    The alleged twenty-first century version of the Homestead Act or G.I. Bill really marks the birth of a generation bound to institutionalized debt and the big lie that anyone can get something for nothing.

    The California Kids Investment and Development Savings Account Act (KIDS Act), authored by California state Sen. Darrell Steinberg, D-Sacramento, would create a $500 savings account for every one of the 560,000 or so babies (and climbing) born in the state every year.

    This money would be held in trust by the state until the child turns 18, at which point this financial “”head start”” of $500 would have to be repaid.

    While the legislation is bad enough because of all its holes – such as the fact that the specific kind of account (regular savings, IRA, etc.) is not defined in the legislation – the bill’s greatest weaknesses are due to the false promises it relies on.

    The writers declare that “”instead of democratizing access to land (like the Homestead Act), it will democratize access to financial assets.””

    But the KIDS program is not a new and improved version of the Homestead Act or the G.I. Bill. It is just a re-packaged throwback to the legislators’ free-love living during the ’60s and ’70s when communism was still in vogue.

    Both the Homestead Act and the G.I. Bill differ in a few small but very significant ways to California’s proposed experiment in legislative disaster.

    To begin with, the GI. Bill and Homestead Act were both voluntary programs that consenting adults could participate in. No one was forced by the government to move out to the western frontier, build a house and live off the land for five years.

    Another point the KIDS account proponents conveniently overlook is that the G.I. Bill’s “”magic carpet for the middle class”” was not some cheap throw rug rolled out for anyone.

    People who wanted to receive the benefits of these programs earned the right to participate in them through hard work, like going to war or building a house in the Wild West and living off the land for five years. Painful as it may be, the act of being born does not count as hard work worthy of some form of monetary compensation by the government.

    Painful as it may be, the act of being born does not count as hard work worthy of some form of monetary compensation by the government.

    Finally, this is a debt-ridden society without California politicians insisting that every newborn in the state be shackled to a $500 I.O.U. due on his or her 18th birthday.

    “”The national savings rate is at its lowest point since the Great Depression and Americans are carrying record levels of debt,”” acknowledges the New America Foundation, an organization that supports the KIDS account.

    But the New America Foundation, and other people who support this bill, refuse to acknowledge that these accounts create more, not fewer, debt-ridden people. A whole generation in fact.

    There is something perverse about bearing a child into debt before that child can even count or understand the value of money, especially when that child is forced to take it and spend it in government-approved ways.

    It is one thing (one bad, bad thing) for the government to indiscriminately present its citizens with a gift. It is another for it to “”give”” gifts that have to be paid back.

    Around the 18th birthday is one of the times – especially for those abiding by the KIDS account’s intent of purchasing a new home or starting higher education – that people can least afford to fork over $500.

    That kind of money could purchase about 3,571 packets of Ramen noodles, or enough meals to feed someone through college, even at California prices.

    And while the goal of teaching children financial literacy and the value of saving is a noble one, perhaps California legislators should look for ways to fix their own ballooning $32 billion deficit (like reigning in spending on new social programs) before trying to teach this lesson to children.

    Hopefully this bill is killed in committee before it is exported to our state or adopted nation-wide. After the government’s fiscally irresponsible handling of Social Security, there is little doubt that the KIDS account would be treated with the same spendthriftness and lack of oversight.

    Kara Karlson is a journalism senior. She can be reached at letters@wildcat.arizona.edu

    More to Discover
    Activate Search