Fixing Social Security

Jonathan V. Last ( What to Expect When No One’s Expecting: America’s Coming Demographic Disaster ) has a modest proposal for fixing social security: “Since the 1980s, policy wonks have been telling us that our social welfare programs are about to implode. The system is not sustainable! Either benefits or taxes must be changed – something’s got to give! And that’s all true. But this harangue ignores the root cause of why the system isn’t sustainable. Social Security and Medicare were conceived in an era of high fertility. It was only after our fertility rate collapsed that the economics of the programs became dysfunctional” (109). Given that the root cause is demographic, the programs “could be saved if Americans started having more babies.”

Problem is, Social Security and Medicare make it much harder to afford children: “Since the 1970s, young white men have seen a 40 percent decline in income relative to their fathers (young black men have seen a relative decline of 60 percent), largely because of taxes. So Social Security and Medicare have placed a serious and increasing burden on families, making it more difficult to afford the – also increasing – cost of having children” (45). Not to mention the fact that these programs mean that “children were no longer needed to look after their retired parents.”

Last suggests that Social Security be adjusted to become favorable to fertility. One suggestion is to reduce FICA tax “by one-third with the birth of their first child, by two-thirds with the birth of a second, and then eliminated completely with the third” (162).