That was the first iteration of the plan, but they mention a second later on in the article. I'm sure they'd come up with another, more current, plan if introduced again. Either way, the government would be giving free money to people that didn't do anything to earn it, and then expecting them to handle it wisely (be it through qualified early withdrawals or in retirement). That's a pretty tall order. Almost as tall as me expecting the government to handle the funds wisely while in their "care."
It is called KidSave, and it was devised in the 1990s by then-Sen. Bob Kerrey of Nebraska, with then-Sen. Joe Lieberman as cosponsor. The first iteration of KidSave, in simple terms, was this: Each year, for every one of the 4 million newborns in America, the federal government would put $1,000 in a designated savings account. The payment would be financed by using 1 percent of annual payroll-tax revenues. Then, for the first five years of a child's life, the $500 child tax credit would be added to that account, with a subsidy for poor people who pay no income. The accounts would be administered the same way as the federal employees' Thrift Savings Plan, with three options—low-, medium-, and high-risk—using broad-based stock and bond funds. Under the initial KidSave proposal, the funds could not be withdrawn until age 65, when, through the miracle of compound interest, they would represent a hefty nest egg. At 5 percent annual growth, an individual would have almost $700,000.