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Right question, wrong answer.(the Digest: Summaries of important new research)(Brief article)

The American Enterprise

| May 01, 2006 | Bosworth, Brandon | COPYRIGHT 2006 The American Enterprise, a national magazine of politics, business and culture (TEAmag.com). This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Jagadeesh Gokhale and Michael Tanner, "KidSave: Real Problem, Wrong Solution" Cato Institute, January 2006 (cato.org)

There is growing bipartisan support for some sort of federally funded grant specifically for children. One possible plan would deposit $2,000 into an account for every newborn child. Families could then contribute $500 annually to the accounts, which would grow on a tax-free basis. This type of program attempts to rectify the problem of low-income Americans failing to save for their own and their children's futures. In reality, argue Jagadeesh Gokhale and Michael Tanner, the touted "KidSave" accounts would simply be a massive new federal entitlement netting no real positive outcome.

The cost of KidSave accounts would be high; some estimates show the program costing $266 billion over the next 75 years. If the program were to cover all children, not just newborns, the costs could soar to over $400 billion.

And KidSave could cause parents to "offset their own saving for their children's ...

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