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McClintock Speaks Out Against New Bill

Baby Bonds…

By Senator Tom McClintock

A “bi-partisan” – pardon me, “post-partisan” – bill was introduced in the State Senate last week as SB 752 by Democrat Darrell Steinberg and Republican Bob Dutton to give $500 to every baby born in California as an “incentive” for the next generation to begin saving from an early age.  The sponsors assure us that it will create a society where all Californians will have the means and incentive to save and invest.

Tom McClintock With Carl Goldman

They promise that at five percent interest, the taxpayers’ $500 contribution – oh, and one little detail – plus another $10,800 contributed by the family over 18 years – would produce $17,500 for the child on his or her 18th birthday. The government will invest that money for them, and restrict its use to buying a first home, setting up a retirement account, or going to college.

The problems I have with this measure go far beyond the initial annual price tag of $288 million at a time when the state is running the biggest deficit in its history.  And they even transcend the additional $500-per-baby incentive this creates for a new wave of illegal immigration at a time when our prisons, hospitals and schools are being overwhelmed.

There is also the oft-neglected law of unintended consequences.  This is not a private savings account – it is a social security-type fund owned and administered by the state government.  Once the entitlement is enacted, the claims on the fund will grow exponentially from those seeking to expand both benefits and beneficiaries – claims that politicians will be hard-pressed to resist.  For openers, how do you deny the entitlement to a child born the day before the law takes effect – and what do you tell these new 18-year olds who have been promised a new house or college education when they discover that $17,500 barely makes a dent in a down-payment or tuition?

And I doubt that it will be very long before government requires individuals to “contribute” to their “accounts.”  After all, what the measure proposes is something that people are free and able to do for themselves right now.  What happens when families who already don’t save their money continue not to save it?  We all know the answer: government will subsidize savings for some and mandate it for others.

But here’s what I find the most disturbing: it is another big step toward redefining government as not merely the protector of our rights, but as the provider of our needs and as the parent of our families – roles that are inimical to freedom.  Boiled to its fundamentals, this legislation says: people don’t save enough, therefore government will open savings accounts for them, deposit other people’s money in them, make their investment decisions and dictate how they can spend that money once they withdraw it.   It is quite consistent with recently proposed legislation to mandate what health insurance people must purchase, how they may discipline their children, what light bulbs they may choose and what foods they may eat. 

McClintock Speaks Out Against New Bill

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