Saving Social Security system depends on raising birthate

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. 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.

Here's a possible solution. Instead of slashing benefits across the board and borrowing trillions to create a risky system of personal accounts, use the same money to offer substantial tax relief, and extra benefits, to married parents who successfully raise their children. For example, have one child, and the payroll tax you pay (and that your employer nominally pays) drops by one-third. 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.

To pay for it all, benefits to non-parents would have to be reduced, at least until birthrates rose sufficiently to increase the system's tax base and avoid rapid population aging. But to keep that in perspective, remember that today's workers are promised substantially higher benefits than today's retirees, even though they have substantially fewer kids. The only alternative way to finance these benefits is to raise taxes still more on our few children or load them up with more debt.

To those who find the world already too crowded or parents already too honored in our society, any solution that encourages a higher birthrate may seem appalling. But if you want those golden years, one way or another you're going to wind up depending on other people's children.

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Phillip Longman, a senior fellow at the New America Foundation, is author of "The Empty Cradle: How Falling Birthrates Threaten World Prosperity."