Jan. 18 (Bloomberg) -- Tara Trent of Lake Geneva, Wisconsin, has three girls, with another child on the way in June. The 31-year- old homemaker and her husband, Ken, talk of having a fifth baby. Big families aren't unusual in the neighborhood, she says.

``Ken says we're not going to have any workforce later,'' Tara says with a laugh. ``So we've got to pump these kids out to take care of us.''

The Trents are part of a demographic phenomenon in the U.S. unmatched in any of its major trading partners: Americans are having more babies. The trend, combined with an annual inflow of immigrants that is more than the rest of the developed world combined, may undercut a key argument behind President George W. Bush's plan to allow private Social Security accounts: that the current system faces an emergency because of a sharp decline in the size of the future U.S. workforce.

Even Newt Gingrich, the Republican former speaker of the House of Representatives and a supporter of private accounts, says, ``The combination of higher birth rates and more immigration makes the United States the healthiest of developed nations. This is not a crisis.''

Broke by 2042

Bush has made demographics the centerpiece of his case for revamping the 70-year-old program. The number of working-age people supporting each retiree is set to fall to 2.1 in 2050 from 4.6 this year, according to Bill Frey, a demographer at the Washington-based Brookings Institution. Bush argues that the trend requires immediate action.

``I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now,'' Bush told an audience of several hundred people on Jan. 11 in Washington.

The Social Security Administration says the U.S. system, which in 2003 gave out $470 billion in benefits to about 15 percent of Americans, will go broke by 2042 as the American workforce dwindles.

Demographics experts, though, say the long-term numbers are by no means as definite as they sound in the current debate. ``When you start getting to people who are yet to be born, then the uncertainty starts mounting,'' said Joshua Goldstein, a professor at the Office of Population Research at Princeton University in Princeton, New Jersey. ``You don't realize you're in a baby boom until it's beginning to end.''

More Favorable

Moreover, the trends in the U.S. are far more favorable than they are in many other countries. Frey says the U.S. will have more workers to support retirees than Japan, China or the 25 nations in the European Union. By 2050, Europe's ratio of workers to retirees is set to fall to 0.9 from 3.3 today; Japan's will plunge to 0.3 from 2.3 -- or more than three people over 65 for every working-age person.

Driven by the nation's immigrants, the U.S. has the fourth- highest birthrate -- after Turkey, Iceland and Mexico -- among the 30 members of the Organization for Economic Cooperation and Development, a group of the richest countries. The U.S. is one of six OECD members whose birthrate rose in the last 25 years, and the only one of the six with a fertility level above the line needed to increase population, the United Nations says.

The U.S. birthrate is estimated to have increased to 2.11 children per woman in the five-year period ending in 2005 from 1.79 in the five years to 1980, according to the UN. Japan's birthrate is estimated at 1.32 during that period. The European Union's rate was 1.46 in 2002.

None Better?

``I can't think of any developed country that has a state pension system in better shape than the U.S.,'' says Monika Queisser, administrator of the social policy division of the Paris- based OECD. ``Social Security makes relatively generous payments at low cost. It's solvent until the middle of the century, and can be for much longer with some tweaking. And the U.S. has a growing population.''

Supporters of the president's plan to overhaul the system say that while the U.S. may be in a stronger position than other countries, it still faces a funding crunch.

``This is a good-news, bad-news scenario,'' says David John, a research fellow at the Washington-based Heritage Foundation. ``The good news is we are in a much better situation than almost every industrialized nation. The bad news is that doesn't mean we can relax. The darkness has not fallen, but it's still late afternoon.''

Bush's efforts to promote immigration may help solve the program's funding gap. The president, backed by the U.S. Chamber of Commerce, supports letting at least 8 million illegal immigrants stay in the U.S. if they have a job, in what would be the biggest shakeup of immigration law since 1986.

A `Mild' Crisis

Immigrants accounted for almost half the nation's population growth from 2000 to 2003. Even the Sept. 11 terrorist attacks barely slowed the inflow of people to the U.S. from the record 13.7 million who entered in the 1990s.

``The alleged forthcoming crisis will be mild compared to those of other modern countries,'' Ben Wattenberg, a senior fellow at the Washington-based American Enterprise Institute, wrote in his book ``Fewer: How the New Demography of Depopulation Will Shape Our Future.''

From July 2001 to July 2003 the U.S. gained a net 2.6 million people through immigration, according to the Census Bureau. Japan's entire population of foreign nationals is 1.7 million, or 1.3 percent of the population. The U.S. foreign-born population is 33 million, 11 percent of the population.

Net immigration to the European Union would have to triple to about 1.4 million people a year to counter the decline in the working-age population, PriceWaterhouseCoopers LLC estimated in a September 2000 report.

Paying Their Way

``Immigrants in the short run pay more Social Security taxes than they collect, and they may never collect any,'' says Princeton's Goldstein. ``Immigrants also make the population younger and they tend to have higher fertility.''

Steve Goss, the chief actuary for the Social Security system, says net immigration to the U.S. -- the inflow minus the outflow -- may slow in coming years because some of the people who came during the surge in the 1990s could start to leave. A drop in birthrates in Mexico, the biggest source of immigrants to the U.S., also may reduce immigration, he says.

``The potential supply of immigrants may not keep up with demand,'' Goss says. The Social Security Administration assumes that net immigration, currently 1.3 million a year, will fall to 900,000 by the year 2025.

The U.K. took in 116,000 immigrants in 2002, and politicians from both the ruling Labour and the opposition Conservative parties have proposed to curb the traffic of people into the country. The U.K.'s fertility rate fell to about 1.7 children per woman today from as high as 2.9 children in the 1960s.

Modest Changes

Italy faces one of the worst crises, with about 14 percent of gross domestic product already dedicated to funding pensions compared to 5 percent in the U.S. Italy's population is declining by 139,000 people a year, the UN says.

By contrast, the retirement system in the U.S. will be sound for decades, giving policy makers plenty of time to resolve the issue, Federal Reserve Governor Edward Gramlich said.

``There could be modest changes made to the system that would eliminate the actuarial deficit,'' Gramlich said in a Jan. 12 interview.

Gramlich is among those, including congressional Democrats, who say any attempt to create private savings accounts would be too risky for retirees' savings. Simply indexing the Social Security retirement age to life expectancy would erase much of the future shortfall, said Gramlich, who was chairman of President Bill Clinton's advisory panel on Social Security from 1994 to 1996. That would entail little more than raising the age about a year every decade, he said.

Fertility Levels

Falling birthrates aren't just affecting the wealthiest nations. China, the world's most-populous country, India and Brazil are experiencing a drop in fertility levels.

China's fertility rate is 1.86 children per woman, down from about six per woman in 1966, according to the UN. By 2050, 30 percent of the population will be over 65, compared to 25.5 percent in the U.S., according to the UN.

Some families in China are choosing not to even have the one child they are allowed by law.

``I don't think we can raise kids as well as we would like without giving up something else, such as my career,'' says Jennifer Sun, a 41-year-old lawyer in Beijing who decided along with her husband not to have children. ``We don't want to spend time and money on raising kids.''

At current fertility rates, Europe's population is set to fall from 728 million in 2000 to 597 million in 2050, an 18 percent drop, according to UN figures.

``What surprises me about these countries is that they are not more alarmist about these trends than they already are,'' says Frey of Brookings. ``It is said demography is destiny, and they don't seem to get it.''

To contact the reporters on this story: Michael Forsythe in Washington at mforsythe@Bloomberg.net Alison Fitzgerald in Washington at Afitzgerald2@bloomberg.net

Last Updated: January 18, 2005 00:36 EST