Dear Colleague:

What kind of Social Security reform should pro-lifers support?  One that
reduces the fertility disincentives contained in the structure of Social
Security itself, and encourages Americans to bear more children.  More
children now means more taxpaying workers later to help the system avoid
bankruptcy.  For the politically minded, it also means a more pro-life
America.
 
Steven W. Mosher
President

PRI Weekly Briefing
14 January 2005
Vol. 7 / No. 2

Get Government Out of the Way of Children: Another Option for Social
Security Reform
By Joseph A. D'Agostino

President Bush has made Social Security reform a top goal for this
Congress, and now every politician and pundit in America is offering
suggestions on how to go about it.  Congratulations to the Washington Post
for printing an op-ed advocating a reform proposal that could go a long
way toward increasing the solvency of Social Security by removing some of
the obstacles that Social Security has put in the way of people who want
to have more children.  In all the talk about tax increases, benefit cuts
(including the upward adjustment of the retirement age), and investments
in stocks and bonds, we should not lose sight of a more fundamental way to
save Social Security:  Increasing the birthrate.

There are many obstacles to achieving higher birthrates, including
sky-high taxation levels that take 40% of the average family's income,
degenerate public schools that force conscientious parents to pay for
private schooling, and even Social Security itself.  Social Security
financially punishes those who have children by transferring some of their
wealth to retirees who are childless or who have only one child.  "There
are many reasons birthrates are falling, but Social Security itself is
likely a major cause because of the raw deal it creates for parents and
the enormous subsidies it provides to non-parents," wrote Phillip Longman
in an op-ed published in the Post on Sunday, January 9.  "By raising and
educating their children, parents provide the system with essential human
capital.  The cost of this contribution, in both direct expenses and
forgone wages, is often measured in the millions.  Yet parents get no
compensation from Social Security, nor from the wider economy, for the
investments they make in their children.  Instead, Social Security pays
the same benefits, and often more, to people who avoid the burdens of
parenthood.  So long as Social Security effectively penalizes people for
having the very children the system requires, it contributes to a downward
spiral of falling birthrates leading to higher and higher tax rates."

Experts agree that the rapid decline in childbearing has led to the
upcoming Social Security crisis.  Longman, author of The Empty Cradle: How
Falling Birthrates Threaten World Prosperity and What to Do About It,
suggests eliminating Social Security taxes for families who are expending
financial-and other-capital on raising future workers and taxpayers.
"Have one child, and the payroll tax you pay (and that your employer
nominally pays) drops by one-third," Longman wrote.  "A second child would
be worth a two-thirds reduction in payroll taxes.  Have three or more
children and you wouldn't have any payroll taxes again until your youngest
child turned 18.  When it came time to retire, your Social Security
benefit (and your spouse's) would be calculated just as if you had both
been contributing the maximum Social Security tax during the period in
which you were raising children, provided that all your children graduate
from high school."

Given the dramatic drop in American birthrates since the '60s, letting
married adults keep more of their own money in order to spend it on
children, if they wish, could go a long way toward putting Social Security
on a solid footing.  Conservative and pro-life Americans should also note
that married people with children are much more likely than others to hold
conservative beliefs and vote for conservative candidates, as Steve Sailer
has argued so well (see the Dec. 30, 2004, "Weekly Briefing").

Federal Reserve Board Chairman Alan Greenspan in a speech given Aug. 27,
2004, noted the challenge to Social Security posed by declining
birthrates.  "The growth rate of the working-age population in the United
States is anticipated to slow from about 1% per year today to about 1/4%
per year by 2035," he said.  "At the same time, the percentage of the
population that is over 65 is poised to rise markedly-from about 12% today
to perhaps 20% by 2035.  These anticipated changes in the age structure of
the population and workforces of developed countries are largely a
consequence of the decline in birth rates that occurred after the birth of
the baby-boom generation."  This is partly a result of the ongoing
abortion of about one out of every three babies conceived in the United
States.

PRI has been among those who have been talking about Social Security from
this angle.  Only a small increase in our current total fertility rate of
2.0 children per woman could help keep Social Security in the black,
according to an official report from the trustees of Social Security.
"Social Security's 'low cost' assumptions, which delay the collapse of the
trust fund indefinitely, 'save' the system by assuming that fertility
increases by 10%, to 2.2 children per woman, and does that immediately,"
wrote W. Patrick Cunningham in the March-April 2004 PRI Review.  (The
report also makes other rosy assumptions to reach that conclusion, but
acknowledged that they may not hold true.)

Bush's proposal to give Americans personal retirement accounts could also
encourage people not only to save more money, but to have more children as
well.  The more of their wealth people can leave to people they love-their
children-rather than to the government, the greater their incentive to
save.  Unlike the current system, personal retirement accounts will allow
people to look forward to leaving more money to their offspring.

Making the payroll tax fairer for families combined with a plan allowing a
small portion of the payroll tax to be invested conservatively-the only
plan that is likely to pass the current Congress-could rescue the Social
Security system.  And it could do it without painful tax increases or
benefit cuts.

Joseph A. D'Agostino is Vice President for Communications at the
Population Research Institute.

PRI
P.O. Box 1559
Front Royal, VA 22630
USA

Phone: (540) 622-5240 Fax: (540) 622-2728
Email: jad@pop.org
Media Contact: Joseph A. D'Agostino
(540) 622-5240, ext. 204
_________
© 2005 Population Research Institute. Permission to reprint granted.
Redistribute widely. Credit required.
_________
If you would like to make a tax-deductible donation to PRI, please go to
https://pop.org/donate.cfm. All donations (of any size) are welcomed and
appreciated.
_________
To subscribe to the Weekly Briefing, send an email to:
JOIN-PRI@Pluto.Sparklist.com or email pri@pop.org and say "Add me to your
Weekly Briefing."
__________
The Population Research Institute is dedicated to ending human rights
abuses committed in the name of "family planning," and to ending
counter-productive social and economic paradigms premised on the myth of
"overpopulation."