Fewer babies, bigger crisis: The demographic trap threatening the United States

The falling birth rate in the United States represents a structural change with serious socioeconomic and political implications. The latest data from the CDC situate the fertility rate by 2025 at 1.57 children per woman, a level that brings the country closer to what demographers call a "low-fertility trap," where the decline feeds back and becomes increasingly complicated to reverse.

Moreover, according to an analysis from City Journal (CJ), the fact that the median age of Americans is already approaching 40, five years older than in 2001, and a drop from four contributors per pensioner in the 1960s to just 2.7 today, has meant that an economic model designed for a young and expanding society is beginning to show clear signs of decline.

This imbalance is generating increasing pressure on two of the most important pillars of public spending: Social Security and Medicare. Today, with fewer taxpayers and more beneficiaries, these programs have become the main drivers of the deficit and public debt.

Most policy solutions to address this mismatch, such as cutting welfare spending, increasing immigration or raising the retirement age, lack feasibility or face strong bipartisan opposition.

Smaller families, bigger state: A political trap

Seniors represent an increasingly influential voting bloc that politicians do not want to alienate, and so neither Democrats nor Republicans seem willing to bear the political cost of cutting benefits or introducing deep adjustments, creating what the FT calls a powerful "gerontocracy."

Trump understands all too well that older voters are key, and, as such, he has gone out of his way to alienate austerity advocates from his party. Since this group relies heavily on public programs, any politician who proposes cuts loses support.

Over time, the persistently low birthrate "deepens reliance on the welfare state," especially with regard to care for the elderly. As traditional family support networks weaken, "the government increasingly assumes the role of surrogate caregiver."

The unpopular retirement reform

One possible solution to alleviate the growing pressure on public spending could be to raise the retirement age. However, the measure has proven to be very costly in political terms.

Recent experience in Europe, with mass protests in countries such as France, after French President Macron signed an unpopular law to raise the retirement age from 62 to 64 years old, illustrates the social cost of such reforms. In the hexagon, the proposal had the support of 36% of the population. In the United States, citizen support is only 17%, making this avenue unfeasible in the short term.

Increasing immigration: Temporary relief with strong resistance

Other alternatives are not easy either. Increasing immigration could temporarily alleviate the demographic imbalance, but it would require much higher levels than at present and meets with growing social and political resistance.

According to an analysis conducted in 2024 by the Penn Wharton Budget Model, restoring the current ratio of workers to retirees would require an annual immigration rate 3.5 times higher than in 2024. However, following the severe border crisis unleashed by the Biden Administration, conservatives have opted for a tough stance against an open-door policy.

Likewise, the National Immigration Forum (NIF) reported in 2024 that the country needed an increase of 37% in net immigration over projected 2020 levels "to prevent the U.S. from falling into demographic deficit and socioeconomic decline."

The report also stated that "shrinking local tax bases could devastate local communities, impacting their capacity to provide basic infrastructure and adequate job opportunities to their residents."

From immigration to taxes: Solutions that don't solve the crisis

Faced with this impasse, an apparently simpler solution is beginning to gain ground: raising taxes. What is striking is that this idea is beginning to find support on both sides of the political spectrum, including conservative sectors that traditionally opposed it.

"As much as 70 percent of Republicans now believe that the rich should pay higher taxes, up from 62 percent in 2019."

However, economic evidence suggests that this path could be counterproductive if it ends up slowing growth and shrinking the tax base. As economists warned in a 2018 IMF publication cited by the CJ: "If a surplus is increased by raising taxes, the downturn in growth may be so large that it raises rather than reduces the debt-to-GDP ratio."

Bottom line, all these responses share a limitation: they address the symptoms, but not the cause. The real challenge lies in the falling birth rate, a complex phenomenon linked to cultural, economic and social factors. The question we must ask ourselves is how to get Americans to have more children?