New Mexico Pushes for Baby Bonds to Tackle Child Poverty Amid Growing State Interest

Child welfare advocates are pushing New Mexico to create state-funded savings accounts for children born into poverty, aiming to tackle the economic disparities that many young residents face. As the state with the largest Latino population in the United States, New Mexico also has one of the highest child poverty rates. About 28% of children under age five and a quarter of all minors financially vulnerable households—well above the national average of 11.1%.

Axios reports that the concept of "baby bonds," which would provide financial grants for children to access when they turn 18, is gaining traction across the country. In fact, about a quarter of U.S. states are considering similar programs, according to the Harvard Kennedy School.

Baby bond proposals have been approved in Washington, D.C., Connecticut and California, and filed at the federal level as well as in eight other states. The goal of these initiatives is to provide young adults with funds that can be used to start a business, buy a home, pursue higher education, or save for retirement.

New Mexico's State Treasurer, Laura Montoya, told Axios that such a program could be transformative for the state, where 75% of children (or 92,842 minors) are born into families receiving Medicaid. Depending on legislative decisions, the state could allocate between $500 and $2,000 to a savings account for each child at birth, accessible when they reach adulthood. Montoya believes baby bonds could also serve as a stepping stone to improving financial literacy in the state.

In comparison, Connecticut's statewide baby bonds program, launched in June 2023, starts with a $3,200 deposit for each child, while Washington, D.C., contributes $500 at birth, with additional yearly deposits for low-income families.

The idea of baby bonds dates back to Thomas Paine's 1797 pamphlet Agrarian Justice, but has seen renewed interest in recent years. In 2007, Hillary Clinton proposed a $5,000 bond for every newborn in the U.S., and Senator Cory Booker highlighted the idea in his 2019 presidential campaign as part of a plan to address racial and economic inequality. Momentum for the policy grew further in the wake of George Floyd's murder in 2020.

Despite its potential impact, it is uncertain whether Montoya and advocates can secure legislative support for baby bonds in New Mexico, especially given the difficulty they faced in pushing for mandatory financial literacy education, which was eventually passed as an elective.