I have a new article up in The Family in America on one crucial element of the looming fiscal crisis — Social Security:
The Social Security program has been the subject of a nearly continual political and policy debate for the better part of fifteen years—although no significant changes to the program have been enacted since 1983. It is now almost forgotten that President Bill Clinton took initial steps toward a Social Security overhaul in the late 1990s, engaging in a series of nationwide “open forums” on the future of the program before abandoning the effort in favor of the more rhetorical—and politically safe—”Save Social Security First!” slogan. While notionally aimed at “saving” the Social Security surpluses, in the end, the Clinton Social Security effort meant little more than “Don’t Cut Taxes!”
In 2005, President George W. Bush, having campaigned on Social Security reform in the 2000 and 2004 presidential elections, attempted to put the issue on the national agenda. His proposal to introduce voluntary personal accounts set off a heated debate among reformers and program advocates, with scores of experts queuing up to advocate a politically diverse range of recommendations, with a number of these recommendations taking form as competing bills before Congress. Despite the intense level of activity, the president was never able to get traction for his ideas, as there was little momentum or consensus for reform.
With so much discussion and political debate in recent years, one might think that every possible diagnosis of and remedy for Social Security’s long-term financial challenges has been offered and debated. Yet there has been very little mention of the central issue in financing Social Security—namely, the long-term fertility rate. Indeed, if the U.S. fertility rate were expected to return to the levels seen in the 1950s and through the mid-1960s, the subject of Social Security reform would likely never come up at all. With higher birthrates, there would be no financing crisis, as the projected workforce in the decades ahead could support the growing numbers of elderly Americans. With no financing shortfall, politicians would gladly leave the program alone.
Unfortunately, fertility is not projected to rise to the levels seen in earlier eras, and, consequently, Social Security does indeed face a substantial long-term financial shortfall. As Social Security again takes center stage in the national debate, policymakers need to take time to understand the critical relationship between fertility and Social Security financing, as well as the potential implications of different reform options for indirectly improving or worsening the American fertility problem over time.
Read the full article here.