Template-Type: ReDIF-Paper 1.0
Title: Low Fertility and Fiscal Sustainability: The Effects of Past and Future Fertility Rates on the US Federal Budget Outlook
Author-Name: Lisa Dettling, Luke Pardue
Abstract: Low fertility and population aging have shaped the U.S. federal
  government’s spending and revenue patterns, contributing in large part
  to the growing federal debt. This paper examines the role of these
  trends in shaping America’s current fiscal position and the potential
  for a reversal of these trends to relieve domestic fiscal pressures. The
  authors find that the dramatic rise in fertility rates during the Baby
  Boom has led to a marked rise in old-age entitlement spending, as this
  cohort entered retirement. Rising life expectancies have also been a
  significant driver of increased entitlement spending and will continue
  to place pressure on federal deficits and debt in the coming decades.
  This paper then evaluates how near-term fertility trends would affect
  the federal budget under a baseline scenario of continued low fertility
  and an alternative scenario in which the US returns to a
  replacement-level total fertility rate in 2026. Under both scenarios,
  deficits and debt are projected to remain on an unsustainable path
  through 2055, as changes in the fertility rate today would take multiple
  decades to meaningfully impact the size of the working-age population.
  In fact, the budget outlook is somewhat worse under the replacement
  fertility scenario, and demonstrably so if we factor in the costs of
  pronatalist policies that might be needed to achieve replacement
  fertility. In the outlook beyond 30 years, higher fertility would
  gradually improve the fiscal position. However, given the current
  unsustainable trajectory of the US federal debt, it is possible that
  changes in tax or spending policy would need to occur before the fiscal
  benefits of higher fertility rates could be realized.
Creation-Date: 2026-02-01
Keywords: public finance, demographics
File-URL: https://www.economicstrategygroup.org/wp-content/uploads/2026/06/Low-Fertility-and-Fiscal-Sustainability-4.pdf
File-Format: Application/PDF
Handle: RePEc:cxx:wpaper:low-fertility-and-fiscal-sustainability-4