Fresh off of pushing for an expansion of S-CHIP into the middle class and adding tens of billions of dollars on insurance subsidies, Hillary Clinton decided to create another entitlement program for her cradle-to-grave nanny state vision. In her address to the Congressional Black Caucus, Hillary said she'd like to spend $20 billion each year on checks to newborn infants: Quote: Democratic presidential candidate Hillary Rodham Clinton said Friday that every child born in the United States should get a $5,000 "baby bond" from the government to help pay for future costs of college or buying a home. Clinton, her party's front-runner in the 2008 race, made the suggestion during a forum hosted by the Congressional Black Caucus. "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. The US has had over 4 million births per year since 2000. The calculation is easy. In 2004, with 4,121,000 births, that would mean $20,605,000,000 dollars ... for just one year. Where does Hillary plan to get that money? It's easy to talk about writing checks, but the federal budget already runs in the red, especially on entitlements. If we talk about spending even more money that we don't have, why stop at $5,000? John McCain wondered aloud in his blogger conference call whether $100,000 wouldn't sound more compassionate, as long as we didn't talk about how we plan to pay for the program. This represents pandering politics at its worst. Want to get votes for an election? Promise to buy people off with free money! It takes the worst instincts of Norman Hsu to suggest yet another entitlement Ponzi scheme to get elected to office. The company Hillary keeps has started to rub off on her. Read Philip Klein for more. UPDATE & BUMP, 3:40 PM: Teresa in the comments claims that Clinton's remarks were taken out of context. "Clinton was responding to a program suggested by Time Magazine in which the gov't would set up this program, but kids could only withdraw the money IF they served in the military or some other national service organization first." Unfortunately, to take advantage of the 18 years of compounded interest Hillary thinks will pay for a college education or a new home, the government has to buy the bonds at birth -- which means the money gets outlaid right from the start, and we're paying $20 billion a year for this entitlement. Either that, or the government has to calculate the compounded interest for 18 years at the point of that decision and write a check -- which makes this an unfunded mandate, a liability that won't even get accounting until the lump sums start getting paid. Either way, it's an irresponsible fiscal disaster.

Originally Posted by micfranklin $5000 per baby born? As good as it sounds that would bankrupt the country even further.

Just for perspective, assuming a $5,000 bond was issued at birth to each baby and interest was paid monthly. The value would be as follows after 18 years at the following annual interest rates:

3%: $8,574
4%: $10,260
5%: $12,275
6%: $14,684
7%: $17,563

In any case, it would not be all that substantial. In the meantime, federal debt would be accumulating from the issuance of the bonds and interest that would accrue on such bonds. The cost might be reduced if the federal government deposited cash into a private CD, as the federal government would not be accruing an interest obligation. However, with fiscal responsibility lacking at present, the federal government would be borrowing funds to make such a transaction even if the funds were deposited into the private accounts, hence, the federal government would still be accumulating interest charges.

In my opinion, given that the account would not be all that substantial (relative to likely tuition rates and/or housing prices in the future) and a greater need for the federal government to begin to develop a comprehensive approach to reducing its long-term unfunded liabilities, I don't believe that such a program would be a very good idea.

Originally Posted by patriotsblade But we can afford 2 billion a week in Iraq? Congressional analysis puts cost of Iraq war at $2 billion a week - The Boston Globe With this plan of hers the money gains interest and is used for college, which means better educated people, which means you get a return on your investment.

Originally Posted by patriotsblade But we can afford 2 billion a week in Iraq? Congressional analysis puts cost of Iraq war at $2 billion a week - The Boston Globe With this plan of hers the money gains interest and is used for college, which means better educated people, which means you get a return on your investment.