Liberal Politicians, Booker and Pressley, Mock the Have-Nots with 21st Century Alms for the Poor

These politicians now join the billionaires in treating the have-nots like dirt

Alms for the poor, the old-fashioned way.

Alms for the poor, the 21st century way:

The full article about these ‘baby bonds’ is here from Senator Cory Booker’s website. It shows that a child from the poorest category of family would have an account worth $46,215 when he or she turns 18. The 18 year old, Senator Booker gushes, “will only be able to use the funds for allowable uses like homeownership and higher education — the kind of human and financial capital investments that changes life trajectories.”

Oh come on, Senator Booker! “Change a life trajectory?” “Tackle wealth inequality”?

Will the baby-bond let a poor person become a college graduate without being an abject debt-slave? Not exactly.

A planning and investment expert writes, “That kid born today should prepare for a private college annual cost of about $137,000 and a public college annual cost of $66,000.” Those are ANNUAL costs, so multiply them by 4 to get the cost of actually graduating! Let’s forget about a private college (those are just for rich kids) and consider this eighteen year old looking at a public college that will cost $66,000 times 4 = $264,000 to graduate from. But thanks to the wonderful magnificence of the modern day alms givers, this youngster can subtract $46,215 from that cost and only have to come up now with $217,785. The eighteen year old will, of course, have to take out a student loan to pay this tuition, and then will join the ranks of the student debt slaves that NPR talks about below:

The Hill has an opinion piece that spells out what this kind of debt really is:

Will a baby-bond will let a poor person buy a house? Not exactly.

Regarding Senator Booker’s and Representative Pressley’s claim, with a straight face, that their 21st century alms for the poor, a.k.a. baby-bonds, will “change a life trajectory” by providing a poor baby with some money to attain “homeownership,” let’s look at some numbers. According to condocontrol.com, here are the prices TODAY (we’ll look at the likely prices in 22 years when the baby born today might have graduated with a bachelor’s degree next) for a one-bedroom condo in some selected cities:

• New York: $1.1 million

• Los Angeles: $575,000

• Chicago: $350,000

• Houston: $200,000

• Philadelphia: $337,000

Now let’s see what these prices will likely be when our baby is ready to “cash in” on his/her baby bond 22 years in the future. Let’s see what inflation will likely be, from one source here:

Let’s assume the average inflation rate for the next 22 years is just 2%. Then the costs shown above of buying a one bedroom condo today should be increased 2% a year for 22 years to get a reasonable guess for the cost our baby-bond youth, when 22 years old, will have to pay to join the ranks of the homeowner class. Those costs would be, respectively, $1.7 million; $889,000; $541,000; $309,000; $521,000.

Let’s say our twenty-two year old decides to purchase a one-bedroom condo for a very modest $309,000 (in low-cost Houston perhaps).

According to this source:

“Let’s say you have $200,000 in student loans at 6% interest on a 10-year repayment term. Your monthly payments would be $2,220. If you can manage an additional $200 a month, you could save a total of $7,796 while trimming a year off your repayment plan.”

According to this source,

“On a $300,000 mortgage with a 6% APR, you’d pay $2,531.57 per month on a 15-year loan and $1,798.65 on a 30-year loan, not including escrow. Escrow costs vary depending on your home’s location, insurer, and other details.”

Pretending that our young hopeful homeowner-to-be has a student loan debt of only $200,000 (instead of the actual $217,785) and pretending that the condo only costs $300,000 (instead of the actual $309,000), then it turns out that this youth will need to come up with at least $2,220 (for the student loan payment) and $1,798.65 (for the mortgage payment), or a total of $4,019 per month for the first ten years and then $1,798.65 per month for the next 20 years.

How much is our baby-bond youth with the “changed life trajectory” likely to be earning? Today the average college graduate starts earning $58,862 per year. Above we assumed 2% annual inflation, so if earnings are inflated 2% per year, then when our baby-bond baby (born today) is 22 years old the starting pay for a college graduate will be inflated by 22 years at 2% each; so it will be about $91,000 annually, or $7583 per month, gross. But about 12.4% of this gross will be taxed, leaving a net monthly income of $6,643.

If our aspiring homeowner pays $4019 each month in student loan and mortgage debt payments, that would be 60.5% of his/her net monthly income, leaving just 39.5%—$2624 per month—for everything else.

According to this source, the average cost for a single person in the U.S. is the following for the listed key items:

The total monthly expenses TODAY ($5,172) minus housing come to $3,388. In 22 years these non-housing expenses would be inflated to about $5238. But our twenty-two-year old homeowner, after paying his/her mortgage and student loan monthly debt payments would only have $2,624 left to spend each month for these non-housing items, which is only 50% of the average cost for a single person. In other words, after receiving the baby-bond alms, the lucky recipient, when a 22 year old college graduate trying to become a homeowner, would have to live as a single person on only 50% of what average single people in the United States live on. This means seriously abject poverty!

Will the baby-bond college graduate’s “changed life trajectory” include marriage and children?

Not likely. If our baby-bond college graduate wants to marry and have a child or two and live in a house with more than just one bedroom and support a spouse who stays home to care for the children and do community activities (or have both parents work part time), well this would be absolutely impossible financially! This is the “life changing trajectory” that the baby-bond hype is really all about—good old fashioned working class poverty!

Booker and Pressley are MOCKING the have-nots

Senator Booker and Representative Pressley are essentially mocking have-not people by telling them that the baby bond will let them pay for a college education and become a homeowner and thereby “change their life trajectory.” By promoting their baby-bond stunt, these politicians’ are doing the same thing as if the rich woman in the drawing at the top of this article told the beggar, “With this coin I’m giving you, you will now be able to join the same class I’m in. Spend it wisely on education and homeownership!”

By mocking the have-nots this way, by telling them that all they need in order to escape from the obscene class inequality in our dictatorship of the rich is some 21st century alms, liberal politicians join with the billionaires in treating the have-nots like dirt.

Will these liberal politicians (or any others for that matter) ever propose a bill in Congress to REALLY change the life trajectories of the have-nots? Will they call for making our society one in which those who contribute reasonably according to ability (which includes going to school, caring for children, etc.) have thereby the right to take for free what they need or reasonably desire (with scarce things equitably rationed according to need)? Will they make it a crime for a Jeff Bezos or a Bill Gates or an Elon Musk or anybody else to hog wealth far beyond what they need or reasonably desire, thereby depriving others of what they deserve? Obviously not! This would offend the billionaire class to which they are beholden.

This is why we need to remove the rich from power to have real, not fake, democracy with no rich and no poor. I suggest how we can actually begin the process of making this egalitarian revolution happen here.