Hillary Clinton and TIME magazine have suggested giving every American newborn a $5000 baby bond. In concept this is a great idea. Republican Grinch’s will protest the cost but they have no credibility. They are willing to spend a couple of trillion prosecuting a war that should never have been fought so how do they protest investing $20 billion a year in the education of the kids whose incomes will pay for future Social Security commitments?

The biggest problem with the amount is that it is too small. Invest $5000 at a compound average growth rate of 5% and you would have only $12,000 18 years later. A better amount would be $10,000 which would yield $24,000. You might actually be able to pay for a year of college at a middling state school in 2025 for that amount. And that total would be $40 billion a year out of a $13+ trillion economy or a nearly $3 trillion Federal budget – chump change.

But let’s move beyond the concept stage and go on a devil hunt among the details.

First, who exactly would get this bond? Hillary and TIME say everyone but the poverty warriors will decry handing out five grand to newborns whose parents are millionaires. OK but where do you draw the line? The Robin Hoods would probably suggest my kid shouldn’t qualify either and I can’t see a million from Pikes Peak on a clear day. And the fact a newborn’s parents are millionaires today may or may not mean anything 18 years from now. The only way to pass it will be to deal everyone in.

Everyone? Does that include babies born to illegal aliens? If not you will have to require proof of citizenship from the parents of newborns. The open borders crowd will suggest that requirement would keep illegal’s out of hospitals and create a grave risk for innocent babies. It would also create a staggering demand for forged documents. And let’s face it most white and black kids are born to US citizens. So racial profiling at the hospitals would be inevitable and directed at Hispanics.

Then there are the practical questions: What would be done with the $5,000? Would it simply be a government IOU paid out by taxpayers in 18 years? Or would you physically take $10,000 and invest it where it might actually earn some real return; if the latter who would do the investing? Do we really want the government buying $40 billion a year in stock? Presumably the Baby America Fund would be handled like retirement funds are handled now. But what would be the rules? How many political caveats would Congress place on fund managers? Would the government guarantee a minimum return?

Hillary and TIME suggested the cash be restricted to paying for post-high school education or a down payment on a new home. How do you enforce restrictions? Do you give an 18-year old cash and tell them the rules, or do you make direct payments for qualified purposes. What would the qualified purpose be? Could the cash be used to pay for tuition and books alone or also pizza and lodging? Could you use them for a technical school or just college? Can you spell S-C-A-M?

Using the cash for home purchases will surely garner the support of some important lobbies like homebuilders and real estate brokers but other industries have lobbyists too and it is likely they will soon be pestering Congress to expand the list of Baby Bond uses for all sorts of wonderful purposes. Oh, and if Baby America, and her parents, hit some hard times before the magic age shouldn’t they be allowed to tap the fund?

In short, it would be only a few years before the Baby America Bond would amount to nothing more than a hand out to be spent on almost anything at almost any time with a massive bureaucracy to monitor countless loopholes.

Beyond the concept and the reality yawns the chasm.

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