The Lutheran position would be that since faith is a gift (Ephesians 2:8) which is given through the Word (Romans 10:17), then Word and Sacrament actually and efficaciously give faith. The baptized infant has a "personal" faith, because like all of us faith is not an innate property of fallen man, but the supernatural gift of God by His grace. So there is no qualitative difference between the faith of the newborn infant and the faith of an elderly man--faith is faith, and through faith we are freely justified, "For I am not ashamed of the Gospel for it is the power of God to save all who believe, the Jew first and also the Gentile. Through it the justice of God is revealed from faith to faith, as it is written, 'The just shall live by faith.'" (Romans 1:16-17). Thus the baptized infant is a believer in Jesus Christ, because one is not a believer through the fallen natural powers of sinful man, but rather one is a believer by the power and work of God.
The parents and the Church together come together not to substitute our faith for the child's; but rather to stand in confirmation and confession of our common faith; and to commit ourselves altogether as God's people to raising and lifting the child up to God. The child therefore has been born again by God's grace, received the Holy Spirit, become a member of the household of faith, is a child of God, and a member of Christ's Holy Body, the Church. No different than anyone else.
This is also why Lutherans tend to be critical of taking children away from the Service, because as full members of Christ's Body they are to receive the same Word and gifts as all the rest of God's Faithful.
This is also why many Lutherans have been reevaluating whether or not it should be acceptable to withhold the Eucharist from infants and small children--and in some cases have adopted the ancient and still common practice in the East to commune infants and children. Withholding the Eucharist from small children and infants became common in the West because of the Western practice of Confirmation--in antiquity (and in the East) Confirmation/Chrismation immediately proceeded Baptism. However at some point in late antiquity and early middle ages Western practice began to separate Baptism and Confirmation, and as such children would not receive Confirmation until they were much older.
Lutherans continued to have Confirmation, though did not regard it as a Sacrament like Catholicism did. The influence of this long-standing Western practice continued among Lutherans. However, Eastern Christians never separated Confirmation (what they call Chrismation) from Baptism, and as such the time between Baptism and First Communion was immediate.
As such there has arisen debate among Lutherans over whether to commune infants or to wait. Personally, I would be on the side of communing infants using intinction, probably in the standard Orthodox manner of using a spoon.
-CryptoLutheran
