Posted on 02/04/2013 6:39:40 AM PST by SeekAndFind
Our major public policies are based on the assumption that America will continue to enjoy growth — economic growth and population growth.
Through most of our history, this assumption has proved to be correct. These days, not so much.
Last week, the Commerce Department announced that the gross domestic product shrank by 0.1 percent in the fourth quarter of 2012. And the Census Bureau reported that the U.S. birth rate in 2011 was 63.2 per 1,000 women ages 15 to 44, the lowest ever recorded.
Slow economic growth and low population growth threaten to undermine entitlement programs such as Social Security and Medicare. Despite contrary rhetoric, they are programs in which working-age people pay for pensions and medical care for the elderly.
When Medicare was established in 1965 and when Social Security was vastly expanded in 1972, America was accustomed to the high birth rates of the post–World War II Baby Boom. It was widely assumed that the Baby Boomers would soon produce a new baby boom of their own.
Oops. The birth rate fell from the peak of 122.7 in 1957 to 68.8 in 1973 and hovered around that level until 2007. The Baby Boom, we now see, was an exception to the general rule that people tend to have fewer babies as their societies become more affluent and urbanized.
Social Security had to be tweaked in 1983 when it became clear there weren’t enough working-age people to fund benefits promised to the elderly. It needs tweaking again today for the same reason. Medicare presents even greater problems. Health-care costs have generally been rising at rates above economic growth.
By themselves, these are not necessarily problems. Economic growth and market competition have enabled Americans to spend smaller percentages of their incomes on food and clothing, with more left over to spend on other things. Spending more on health care is a sensible thing for an affluent society to do — especially as new medical procedures and drugs mean that health care can deliver more than it used to.
But in a society in which the elderly are an increasing share of the population and working-age people are a decreasing share, it becomes increasingly difficult to fund these programs. These problems are exacerbated when the economy fails to grow as rapidly as the working-age population.
Birth rates fell sharply during the Depression of the 1930s. They have fallen significantly since the housing collapse, from 69.3 in 2007 to 63.2 in 2011. The steepest decline in births since 2007 has been among Hispanic immigrants, who were also hit hard by housing foreclosures. We don’t know whether this trend will continue. But if it does, the consequences will resemble the subtitle of Jonathan Last’s newly published book, What to Expect When No One’s Expecting: America’s Coming Demographic Disaster. Last points out that our fertility rate — the number of children a woman has over a lifetime — has been below the replacement level of 2.1. Over time, a below-replacement-level fertility rate means population decline.
To see what that means, look at Japan: Its fertility rate is 1.4, its population is declining, and it has had essentially zero economic growth since 1990. We are not in such a bad position, yet.
Since the end of the recession in June 2009, quarterly GDP growth has averaged 2.1 percent. That has left job growth way below the historic trend line. Four years ago, the incoming Obama administration’s economists promised that by now we would be heading back up to the trend line, with unemployment down to a little above 5 percent. Instead, the unemployment rate was 7.9 percent in January, and that’s with millions of people no longer even looking for work. Labor-force participation is the lowest it’s been since 1981.
The danger is that all this can come to seem the new normal. Low birth rates, as Last argues, can persuade others to want fewer children. Low economic growth or even decline can shape expectations and become a self-fulfilling prophecy. “An economic recovery has begun,” Obama said in his inaugural speech last month. The implication: This is all you’re going to get.
In the 1990s, Canada and Sweden faced economic crises similar to ours. In response, they sharply cut public spending. Their economies have done well since, and their governments have been running budget surpluses.
We did something like the opposite. The consequences could be enduring.
— Michael Barone is senior political analyst for the Washington Examiner.
More babies...in this dying country? Really??
Immigration drives 75% of our population growth. We will add 125 million to our population by 2050, three-quarters due to immigration. One in eight residents of this country is foreign-born compared to one in 21 in 1970. By 2050 one in five will be foreign born.
More babies? Not so fast. If the babies are brought up to hate this country, its customs, its Judaism and Christianity-based moral and ethic system, its laws and language, then we don’t want those babies.
All ponzi schemes eventually run out of investors. I have seen and participated in some very heated threads here on social security.
Fact - Most “conservatives” refuse to acknowledge that social security now represents generational theft on a grand scale. Watch the comments on this thread or read the comments on others. They are going to get theirs because they paid into the system and bought the promise.
Fact - Most “conservatives” think its more important that the crappy politicians they put into office promised them the benefit and that is more important than the reality that my wife and I - our children - and our grandchildren will all be saddled with their debt after they are dead. They will get their benefit in most cases far beyond what they contributed. We will get the bill.
I am in my mid-40’s and pay the maximum. I won’t receive social security when I retire. Theft. They will borrow the money and debase our currency to pay our elderly. Theft. Me and my kids will suffer the consequences.
Social Security was never designed for people to retire and 65 and collect until they were 75 - much less 85 or 95. Social Security was never designed to pay out a check to children with ADHD - a diagnosis that can give a single mom on public assistance another check each month despite the fact that neither she or her child paid into the system and they are highly unlikely to ever pay into the system.
Social Security is generational theft. The politicians lied to us. The government did not invest the money - they spent it. I know.... you voted and they promised.
They lied. I am not going to hang around for the heated debate - I have to go to work, but watch the responses.
Robbery is defined as the taking of one’s property by another through the use of force or the implied or threatened use of force.
It’s too late to fix the system or abolish it. Woe to the politician or party that acknowledges reality and scraps the ponzi scheme.
That’d be... whose babies? Not mine. Hopefully not yours.
The author, Jonathan V. Last, was on C-Span's BookTV over the weekend. He said fertility rates are collapsing all over the world including Latin America and Latinos in the USA. One of his points were that populations that don't exceed replacement rate don't emigrate elsewhere.
Not according to this video which claimed fertility rates are collapsing.
I watched it over the weekend.
Factor in abortion, birth control and groups like Zero Population Growth and its pretty easy to see the Ponzi Scheme fall apart.
I’m looking to Retire from my career in Hi-Tech Engineering soon, real soon.
I’m sick & tired of funding these social programs, so I will do my part to Starve the Beast, live well off my savings and pay little tax.
Screw ‘em.
You giving ponzi schemes a bad name. They are voluntary. Socialist Security is not!
If I understand what you are saying, I am in agreement. Why would anyone want to bring a child into this kind of world? But, then again, there are optimists among us. I just am not one of them.
“Fact - Most “conservatives” refuse to acknowledge that social security now represents generational theft on a grand scale. Watch the comments on this thread or read the comments on others. They are going to get theirs because they paid into the system and bought the promise.”
Very true. I tell people... Madoff’s “investors” paid in too.
People will ignore it until there is a tangible crash
Neither am I. Fifteen years ago, I'd have thought differently, but I think America has tipped too far to recover. It's going to be a dangerous place in the future.
I don’t know. While social security is not voluntary for all it was put in place and allowed to continue by the politicians we elected.
There is one group who will bear the biggest burden of all for social security - my children. They can’t vote nor do they understand the consequences placed on them by their grandparents.
We are enslaving our children and grandchildren with debt and while many seem to understand this, few of our leaders do anything about it because they would be swept out of power immediately. They would be replaced by the party of “yes we can.”
Sad. Immoral. Unethical. Selfish. Unconstitutional.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.