An Inheritance for All—A Commentary by Bruce Ackerman ’67 and Anne Alstott ’87
An Inheritance for All
By Bruce Ackerman ’67 and Anne Alstott ’87
Perhaps Hillary Clinton is a risk-taker after all.
In a forum sponsored by the Congressional Black Caucus, she pushed beyond the banalities of campaign rhetoric to offer a bold idea: Every child should have the right to share in the inherited wealth created by preceding generations. Whether the child of a single mom or a pair of yuppies, the kid remains an American. As a citizen, he or she should receive a baby bond of $5,000 that represents an inheritance from the wealth created by his predecessors.
By the time the child reaches 18, this bond will grow to $10,000 or more, depending on the interest rate, providing a citizen inheritance at a crucial moment of transition to adult life -- helping with the costs of college or job training, saving for a home or creating a rainy-day fund. Provided that the bond-holder has graduated from high school, it will be up to him or her to control the use of the money. That's what being a grown-up is all about -- taking responsibility for your choices. Some will blow away their inheritance, but millions will exercise their freedom wisely, and grow in the process.
Clinton's proposal has a rich history. In 1797, Tom Paine argued that a free republic shouldn't merely give its citizens an equal vote. It should provide women, as well as men, with a cash grant to foster economic independence as they begin adult life. Over the past decade, Paine's idea has enjoyed a renaissance among policy wonks here and abroad.
But it was Tony Blair who put citizenship inheritance on the map. Thanks to him, every Briton born on or after September 1, 2002 now gets a baby bond of up to 500 pounds at birth, and a similar bond at the age of seven, with funds accumulating till the age of 18. Blair's effort to transform every citizen into a property-owner was so attractive that the Conservative Party voted for his proposal in parliament, giving bipartisan support to the initiative.
Trial balloons on this side of the Atlantic have also suggested broad support. Though it went nowhere in the last session of Congress, a Blair-style bill gained approval from conservatives like Senator Rick Santorum.
But a presidential campaign isn't the best time for bipartisanship. Rudy Giuliani, in an interview with Sean Hannity, has already denounced Clinton's initiative as "stupid." Before rushing to the microphones, he should have consulted with leading conservative thinkers like Charles Murray, who recently joined the broadening intellectual consensus in favor of capital grants to young adults.
The Clinton proposal deserves a serious debate. As with most campaign proposals, she did not discuss the crucial question of financing. There are more than four million babies born in America each year, so the annual budgetary cost will exceed $20 billion dollars. The place to look for the money is the inheritance tax.
In its campaign against estate taxes, the Bush administration convinced the Republican-controlled Congress to kill the federal inheritance tax in 2010, but it lacked the strength to kill it forever. Instead, existing law provides that the tax will return in full force in 2011, raising nearly $40 billion annually -- more than enough to fund a substantial citizen inheritance. If the Democrats win the presidency and Congress in 2009, a baby bond bill will provide them with the tools they need to sustain political support for a reinvigorated estate tax. Why should we repeal the tax, and allow the richest kids in America to inherit even more money, when the $40 billion fund could provide the overwhelming majority with a fairer start in life?
America hasn't only been built by stockbrokers and computer geeks, but by schoolteachers and truck drivers. They know that it won't be easy for them to give their kids financial help when they're starting out in life and need it most. If Democrats make this point forcefully, most Americans will support a substantial baby bond for their children and grandchildren and reject the misleading campaign against the estate tax.
Like her or not, Clinton deserves credit for taking a risk in raising a bold idea that could well contribute to a better America. If we ignore such acts of leadership, we will have only ourselves to blame when we complain that the candidates are boring us to distraction.
Bruce Ackerman is Sterling Professor of Law and Political Science at Yale University. His books include Before the Next Attack: Preserving Civil Liberties in an Age of Terrorism , The Failure of the Founding Fathers: Jefferson, Marshall, and the Rise of Presidential Democracy and Social Justice in the Liberal State. He is co-author, with Anne Alstott, of The Stakeholder Society.
Anne Alstott holds the position of Jacquin D. Bierman Professor of Taxation at Yale Law School. She is co-author, with Bruce Ackerman, of The Stakeholder Society.