Saving Social Security system depends on raising birthate

Ever wonder why Social Security didn't crash and burn years ago? After all, for nearly all of the program's history, each generation of retirees has taken far more money out of the system than it contributed in taxes.

The answer is simple, though largely ignored in the current debate over Social Security reform. Today's retirees may not have paid anywhere near as much in taxes as today's workers do. But most contributed something far more valuable to the system: They created, raised and educated the baby boomers.

As my mother used to say, "You try doing that." Children ultimately finance Social Security and other programs for the elderly, and it's the decline in the American birthrate since the postwar "baby boom" years that most threatens the benefits of future retirees. Unfortunately, the Bush administration's plans for Social Security don't remedy that core problem. The only true solution is to ease the burdens on today's parents that are driving down birthrates, including the substantial disincentives to parenthood that Social Security itself helps to create.

Social Security as we know it depends on a growing supply of youth. Under current law, benefits go up automatically with wages, so economic growth does little or nothing to improve its long-term solvency. Linking future benefits to inflation rather than wages, as the administration is considering, makes it theoretically possible for economic growth to ease Social Security's long-term deficits — provided that aging baby boomers don't later organize and force Congress to raise benefits back up.

But as long as birthrates remain below the levels necessary to prevent rapid population aging, that still leaves fewer workers available to support each Social Security beneficiary, as well as every other cost of government, including Medicare and the mounting national debt. A relative decline in the size of the working-age population will also make it more difficult to finance the enormous levels of additional borrowing that would be needed to implement the administration's call for private retirement accounts.

The core problem remains one of human capital: As a nation, we're not producing enough children to provide us with the support we will need, and expect, in old age. Today, 18 percent of women ages 40 to 44 are childless. That's up from 10 percent in 1976.

Meanwhile, large families are disappearing. In 1976, almost 60 percent of women ages 40 to 44 had three or more children. Today, that percentage has dropped in half, to 29 percent. All told, Americans no longer have enough children to reproduce themselves, let alone finance the Social Security system.