This is the worst thing I think I have ever heard a candidate offer as a reason to elect that politician. Hillary Clinton:
"I like the idea of giving every baby born in America a $5,000 account that will grow over time, so that when that young person turns 18 if they have finished high school they will be able to access it to go to college or maybe they will be able to make that downpayment on their first home," she said.
The New York senator did not offer any estimate of the total cost of such a program or how she would pay for it. Approximately 4 million babies are born each year in the United States.
Well, this is easy, isn't it? The magic number is 20. As in $20,000,000,000. Twenty billion dollars. If she wins and enacts this, that would be 80 billion in one term. If she plays a bit of smoke and mirrors and issues a "baby bond" that earns compound interest at only 5% annually – to be paid out in 18 years, the $5,000 becomes just under $11,500. That would pass an unfunded liability to the next generation of almost $46 billion for the first year or $183 billion for a full four year term.
Buying votes with populist insanity – and total fiscal stupidity - will bankrupt this country.
UPDATE: Wow. I had completely forgotten this debacle from 1972:
George McGovern, who was crushed by Richard Nixon in a landslide in 1972, has gone down in history as one of our most feckless Presidential candidates. McGovern ran on a far-left platform that included a proposal that at the time was deemed risible–the "demogrant." The demogrant program was simple: the federal government would write a check for $1,000 to every American. In 1972, that idea was so widely ridiculed as over-the-top pandering, as well as economically pointless–even Hubert Humphrey savaged it–that McGovern quietly abandoned the idea.
The Powerline guys calculated the inflation out – and the "Demogrant" of $1,000 in 1972 dollars becomes almost exactly the "Hillarygrant" of $5,000 in 2007 dollars. Everything old is new again. Bad ideas never die, they just get a coat of new paint every now and then.
$5000 is almost .. well it ain’t enough.
The cost of a college eduation is running about twice inflation, so if you had a child today .. what could you get for an inflation-adjusted $2500 today ? Not much. The best schools are now running almost $50,000 a year now for the full package .. tuition, room, board, fees, books. A clid born today will need about $350,000 to $500,000 a year for the same.
Worse yet, colleges are a demand service, so as the market of college bound students show up with more money, the colleges will raise their prices to absorb it all, while serving the same number of students. That in a nutshell is why college costs aren’t tax deductable. There is no point. It won’t help anybody except the schools themselves.
We need better pandering. I’d suggest $50,000 as a start.
This is the same economic logic that Bobby Mugabe uses. Everyone a millionaire!
Cost of a cup of coffee: $1 million.
Sounds like a bargain to me. $20 billion is approximately what the U.S. spends in Iraq every week.
Don’t dismiss the idea out-of-hand. A few minor compromises and alterations would make it tolerable to conservatives, to wit: Instead of awarding at birth, start a fund when the infant gets his/her first job, take a few bucks out of every paycheck, replacing the FICA “contributions” method and withdraw it at anytime before retirement, by virtue of the steady input, the vested amount would be greater than the single $5000 savings account deposit. It could be put in government bonds if private securities are anathema, the only requirements should be that it accumulates decent interest and that the contributor has full equity. It might even prove unnecessary over time for the government to match the employees “contributions”. Makes much more economic sense, and as long as you don’t call it a Social Security privatization maybe even Hillary! would see the value. She could even take credit for its brilliance. I don’t demand the credit, just the equity.
Is there really any difference between Hiliary’s plan and Bush’s plan for partial privatization of Social Security ?
Both take money from the public coffers and put it aside in private accounts outside of the public system. Both create the sense that there is a safety-net to the safety-net.
This would be an unmitigated disaster, imagine how many illegals would flood in from all over the world to have babies and collect the 5 grand?
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