Declining Population
To the Editor:
Our nation is experiencing many headwinds, including birth-rate decline. Current population projections predict there will be 1.62 births per woman, less than the 2.1 rate needed to produce stable population growth. In addition, if millions of immigrants are deported, the drop in citizen birth-rate will complicate government and business planning, including income tax, jobs, and product and service marketing. However, a dropping birthrate could reduce the public cost of education.
Couples, especially influenced by women, are postponing, even avoiding, having a family for many reasons, including financial affordability and healthcare. The cost of raising a child to age 18 ranges from $174,000 to $310,000. Kids are not cheap, made more costly by health insurance, healthcare protocols, and daycare. Economists project that the current tariff plan may cost an additional $1,500 to $2,500 per family per year. Adding college costs brings the total to “an arm and a leg,” another $100,000 to $250,000.
Other countries that experience dropping birthrates have addressed this problem. One solution, which seems to not work, is a “baby bonus,” paying parents to have children. The Baby Bill part of the BBBill seeks to change demographics and family planning. Fox News, for instance, explains that this part of the BBB will “give American babies a financial head start for their future,” which is applauded by Goldman Sachs and other wealth management companies.
When the baby bonus plan was announced, the easy way to implement it seemed be to give each newborn a $1,000 US savings bond which would appreciate to $2,000 by age 18, guaranteed at 6% and not taxed. But, as designed by the junior Senator from Texas, each baby’s $1,000 bonus would be put into a private market account where kids could learn about and enjoy the free market system. Supporters tout that with this plan parents could add to each child’s account over time so it would help with college and a first home. Is this pie in the sky? Would those parents have to pay a management fee for handling the money? If they are worried about coming up with enough money to clothe, feed, and shelter a child, how many could and would add to their child’s account? Headline News recently reported that an AP-NORC Poll found that “the vast majority of US adults are stressed about grocery costs.”
If the government uses savings bonds, the money would not leave the Treasury for 18 years. If the money goes to private wealth management companies, it flows immediately.
Currently, about 3.6 million US citizen parents’ babies are born each year, which when multiplied by $1000 per child is a major infusion into wealth management companies (annually.) One can assume that the management fees would make the managers smile, but will they make young families smile? Any other tricks? Scott Bessent, US Secretary of the Treasury, said the Trump baby accounts are a “backdoor for privatizing Social Security,” but backtracked under White House pressure. If young families have even more children that might be a marginal economic benefit to them, but a substantial benefit to wealth managers.
Bob Heath Carmine