Of course, the idea of making the federal government something like everybody’s rich uncle, endowing every baby with a $1,000 savings account with annual deposits at taxpayer expense, strikes all the wrong chords for a conservative like me. The details of legislation that U.S. Senator Cory Booker (D, New Jersey) has submitted don’t really help:
The accounts would be federally insured, and the funds could only be used for homeownership and “human and financial capital investments that [change] life trajectories,” according to the summary. …
The program would cost roughly $60 billion if implemented in 2019, a Booker aide told The Hill, and would be funded by increasing the capital gains tax rate by 4.2 points, increasing the estate tax to its 2009 level and raising taxes on multimillion-dollar inheritances.
So, the federal government would create and help fund individual investment accounts and then pay for it by increasing the cost of investing as well as taxing those who are able to change their “life trajectories” enough to ensure that their own children don’t need rich Uncle Sam. That doesn’t sound like the most efficient policy design.
All of that said, Booker’s concept does have some similar features to my long-standing proposal for health care: Set everybody up with a health savings account, which government could use as its Medicaid/Medicare mechanism, which employers could use to provide their health care benefits, which charities could use to offer assistance to the poor, and which would bring market mechanisms into health care.
That would be a better use of money than buying houses. Moreover, some significant part of the funding could be found in government health care savings (as all of the funding for any new program should be found in the existing budget).