alien & sedition.
Wednesday, May 02, 2007
  "Saving" Social Security, One Uterus at a Time

If defenders of Social Security have won the fight against privatization -- and it looks as though, for the time being, they have -- there still remains the important debate over how exactly to head off the revenue shortfalls predicted to occur beginning in 2041. Even progressives agree that, as the Economic Policy Institute explains, we will have to consider options including "tax increases, new government debt issues, or benefit cuts." Writing in the Weekly Standard, former OMB official James Capretta develops a conservative line of argument in this discussion. Capretta, now affiliated with the right-wing Ethics and Public Policy Center, puts American fertility rates at the center of his analysis.

Capretta draws on the work of Swedish economist Gunnar Myrdal to argue that social insurance programs reduce the incentive for people to have more children, since there is less need for offspring to contribute to a family's economic security -- for instance, by taking care of their parents in old age. This in itself isn't a particularly controversial statement (it's a basic assumption for those who argue that shared prosperity in developing nations will reduce birthrates there), and Capretta isn't using it as an argument against Social Security. On the contrary, he opposes privatization, preferring instead to make the case that a focus on fertility rates can be part of a strategy to stablize Social Security's finances without raising payroll taxes:
The starting point for a sensible reform of Social Security should be opposition to any proposal that would increase the program's current size--including proposals to initiate personal savings accounts with "add-on" contributions. The current Social Security payroll tax rate and wage base--12.4 percent of wages up to $97,500 in 2007--should be ceilings (the taxable wage limit is already indexed to increase with average wage growth each year). The temptation among some Republicans to accept a tax hike to get a bipartisan Social Security deal should be resisted; it would only lead to further pressure on the birth rate. Social Security's financing gap will need to be closed with benefit adjustments, such as increases in the retirement age and reductions in the benefit formula for higher wage earners.

But reform should not stop there. Today, two workers with identical wage histories pay the same contributions and get the same retirement benefits, even if one of them has numerous children--with all of the expense that entails--and the other has none. That's not fair or prudent, as it undervalues the program's need for investment in human capital. Longman, Carlson, and others have suggested reforms that would begin to correct this flawed accounting. These proposals would give workers who are raising a family either a payroll or income tax break or a boost in their retirement benefit to compensate for the costs of investing in future taxpayers.
Christian Weller of the Center for American Progress has reported on why raising the retirement age is a problematic idea -- it would create unequal burdens and would fail to account for the fact that, "while gains in life expectancy have accelerated, health improvements for those near the current retirement age appear to have slowed."

But what about the fertility argument? One response would be that immigration and productivity are more likely to help counter the shortfall than schemes to encourage more babymaking. While the Social Security Trustees are rather pessimistic about the potential for immigration to make up much more than about 5 percent of the program's 75-year actuarial deficit (largely because they forecast declining immigration rates and lower fertility among those who do immigrate), Northwestern University economist Robert Gordon argues that the Trustees are being far too cautious. Gordon forecasts a higher productivity rate and a significantly more gradual decline in immigration rates than do the Trustees. He also expresses confidence that the United States will maintain its current fertility rate, thanks in part to our flexible labor market, which makes it easier for American women "to combine work and childbearing" (and on this note, one might suggest that if you worry about American fertility rates, you should support policies like family leave guarantees and subsidized day care, the better to maintain this flexibility).

And here, as we begin to discuss the people at the center of the fertility question -- women -- we come to the other, rather obvious aspect of Capretta's agenda. The watchdog site Right Web points out that the EPPC is a distinctly social conservative think tank, whose self-described mission is "to clarify and reinforce the bond between the Judeo-Christian moral tradition and the public debate over domestic and foreign policy issues." A look at some of the Center's publications gives some idea where its intellectuals stand on gender-related issues: several decades in the past. Capretta himself mentions, almost in passing, that "my Ethics and Public Policy Center colleague John Mueller has noted that higher fertility accompanies more frequent religious practice." Mueller also argues that abortion is bad for the economy -- in large part because it lowers the birth rate.

I don't want to put words in Capretta's mouth, but one can certainly imagine how well his plan to fix Social Security would dovetail with an anti-feminist, socially conservative agenda. It promises to solve a major, looming crisis by asserting the role of public policy in influencing women's decisions about their bodies (and their careers). It avoids icky tax increases by making each woman's uterus a concern of the state. Like many fusionist conservative strategies, it's both elegantly designed and highly pernicious.

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