Sunday, January 16, 2005

Save Social Security by... having more kids?

Grabbing a valid point and stretching it to absurdity today is Phillip Longman of the New America Foundation:
"There are many reasons birthrates are falling, but Social Security itself is likely a major cause because of the raw deal it creates for parents and the enormous subsidies it provides to non-parents. By raising and educating their children, parents provide the system with essential human capital. The cost of this contribution, in both direct expenses and forgone wages, is often measured in the millions.
"Yet parents get no compensation from Social Security, nor from the wider economy, for the investments they make in their children. Instead, Social Security pays the same benefits, and often more, to people who avoid the burdens of parenthood. So long as Social Security effectively penalizes people for having the very children the system requires, it contributes to a downward spiral of falling birthrates leading to higher and higher tax rates."

There is some truth to saying that people cannot derive as much benefit from having children in a land of child labor laws. There is some foundation of truth in Longman's argument. But then he goes off the deep end.
"Here's a possible solution. Instead of slashing benefits across the board and borrowing trillions to create a risky system of personal accounts, use the same money to offer substantial tax relief, and extra benefits, to married parents who successfully raise their children. For example, have one child, and the payroll tax you pay (and that your employer nominally pays) drops by one-third. A second child would be worth a two-thirds reduction in payroll taxes. Have three or more children and you wouldn't have any payroll taxes again until your youngest child turned 18.
"When it came time to retire, your Social Security benefit (and your spouse's) would be calculated just as if you had both been contributing the maximum Social Security tax during the period in which you were raising children, provided that all your children graduate from high school."

So let me get this straight. Investing money you earn to support yourself in retirement is "risky" while having children (while not paying money into the system) and betting that they will a) live to age 18 and b) graduate from high school is not risky? What parent can guarantee that their children will not die or not drop out of school due to circumstances beyond the parents' control?
Longman suggests that people will be motivated to become parents because of the tax break they would receive. First off, I think the government is already doing a lot of this incentive with the $1000 per child tax credit. Second, I think that any child born in to a home where he is only welcome because of a tax credit is starting out at a disadvantage in life. Most people I know who are having children would do it with or without financial incentives from the government.
An article of faith for me pertaining to welfare is that a person is first responsible to himself. If he cannot help himself, he should turn to his family. If he cannot turn to his family, he can turn to his community, which for me is church first and government last. Longman suggests that retirement should be welfare to which we turn to the government first. This turns the hierarchy of responsibility precisely on its head. Why would we want to do that?

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