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Population Growth as Economic Stimulus?

February 27, 2017

We’ve all heard about the troubles with the Social Security program. From it being underfunded to fears of its insolvency, it’s clear there are issues that need to be addressed.

Here’s an idea to improve things – we need more babies.

The Center for Disease Control indicates the American fertility rate is down to 62.3 births for per 1,000 women aged 15 – 44, down from 62.5 a year earlier. That’s the lowest record on level since 1909!

But it’s been this way for a while. To maintain a stable population, it requires 2.1 births per child-bearing woman. But the U.S. is at 1.85 births and has been at or below the replacement fertility rate since 1972.

Demographers worry that the low birth rate will hurt the economy. They point to government transfer payments – things like Social Security, Medicare, Medicaid, unemployment insurance, public assistance and others – suffering as a result. Plus, there are less consumers and less workers in the overall pool.

The situation is potentially dire. Even if President Trump achieves more economic growth, it might not be fast enough to support the mandated 9 percent increase in entitlement spending for older Americans – at least not without more deficit spending.

The president said he wants to preserve Social Security and Medicare. Is he aware of the demographics? Perhaps not. That’s because this situation, where the demographic pyramid is inverting, has never happened before.

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