Preparing Newborns for Future Debt

Remember when Hillary Clinton campaigned on giving every newborn in the US a $500 savings account to get them on their way?  Who knew it was an actual bill.  The America Saving for Personal Investment, Retirement, and Education Act (or ASPIRE, investment was thrown in there just to make a nice acronym.  We all know investing is evil.) would give every newborn a $500 savings account that theoretically would grow and be used in the future to pay for college, a Mustang to drive while in college, or some other necessary thing.  That’s the bill’s intention anyway.

I figured we would run the numbers.  Current CD rates are at 2.9%.  That is a safe investment right now, so let’s take your $500 and put it in a CD for 18 years.  Compounded daily, the future value of this $500 at current safe CD rates is $842.67.  Nevermind the Mustang, maybe you can buy your first semester textbooks with it.  Is it worth the $35 billion this plan will cost US taxpayers?

Nevermind, taxpayers won’t be paying for this.  We stopped paying for things back in May.  Now China pays for everything.  Consider this: this year alone the US has already paid $383 billion in interest on our national debt.  That’s three times what universal healthcare is going to cost us.  Let’s look at that $500 savings account another way.  Currently the US is paying 3.5% on long-term treasury notes (what the Government sells to finance it’s debt).  So when you turn 18, you can cash in your $500 ASPIRE savings account to pay off the $500 in debt plus interest it took to open your savings account at birth. That comes to a total of $938.77.

Happy 18th birthday, you still owe China $96.10.

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