The American Opportunity Accounts Act: How Baby Bonds Can Transform the Racial Wealth Gap

March 2022

The American Opportunity Accounts Act (or “baby bonds”) has the potential to substantially narrow the racial wealth gap as it stands today. Combined with a long history of institutional racism omitting and/or targeting Black individuals, traditional forms of wealth-building such as homeownership have widened the racial wealth gap. By shifting the focus of wealth-building mechanisms away from individual responsibility and towards institutional accountability, the United States can begin to tackle the racial wealth gap and its associated negative externalities. The American Opportunity Accounts Act is not faultless; for example, its focus on household income over total wealth fails to capture the full extent of the economic inequality present in today’s society. Nonetheless, it is a crucial first step forward that may pave the road for similar policies down the line. Baby bonds are innovative, feasible, and above all vital for a more equitable and sustainable future.