Saturday, September 11, 2010

Are Illegal Immigrants Propping Up the Social Security System?

I've written in other posts on this blog how Social Security is little more than a government sponsored Ponzi scheme where earlier "investors" get paid off by the contributions of late "investors."  And how Congress has turned it into a giant slush fund to tap into as an additional spending source, and their IOUs to the fund are kept in a binder in Parkersburg, WV.  Anyone who thinks Social Security works like a 401k where their money is set aside in an account just for them and the government is looking out for their best interests really needs to take the time to understand how the program works.

It's also no secret to anyone who has been paying attention to such issues over the past 30 or more years that Social Security is in trouble due to changing demographics (less people working, more people retired), longer average lifespans, longer retirements, and more generous benefits than previous generations received.  To deal with these issues it is very likely that the retirement age will have to be raised in the future and benefits frozen or cut to keep the program solvent.

To make matters even worse, an article this week in the Washington Post of all places reveals that an internal Social Security Administration study has determined in 2007 illegal immigrants contributed somewhere between 5.4% to 10.7% of the trust fund's total assets of $2.24 trillion that year.  Many of them are using a Social Security number tied to an invented name or one that belonged to someone else. Of the rest, many got legal cards when they entered the country under a temporary work visa. They stayed illegally after their visas expired.

Can you imagine what condition Social Security would be in without illegal immigrants?  As one Social Security official puts it: "If for example we had not had other-than-legal immigrants in the country over the past, then these numbers suggest that we would have entered persistent shortfall of tax revenue to cover [payouts] starting [in] 2009, or six years earlier than estimated under the 2010 Trustees Report."

The irony here, according to the Post and the Feds, is that illegal immigrants tend to pay Social Security taxes but don’t collect benefits, while legal immigrants tend to collect more in Social Security benefits than they pay in taxes.  This begs the question, are illegal immigrants necessary to keep the social safety net of the US Government solvent?  Is that why the Feds seem to turn a blind eye to illegal immigration?

The other irony is that granting amnesty to illegal immigrants would eliminate these gains to Social Security by allowing them to collect Social Security benefits in exchange for their taxes.  A classic Catch-22 situation that has no easy answer.

What do you think?  Should we just keep ignoring illegal immigration and collecting their tax dollars to prop up the faltering Social Security system?


  1. Biz of life,

    What is the basis of this statement - "while legal immigrants tend to collect more in benefits than they pay in taxes"? Just curious.

    As a legal immigrant, I beg to differ (or at least know how to do what you just said :) ). Last year I paid 42% in taxes (its everything combined federal+state+medicate+SS). I have collected $0 in any benefits. I didn't need it, but if I needed it, anywhere from DMV to even the local community college the first thing I get asked is my legal papers (even though I have stayed in the US for the last 8 yrs patiently after applying for Green Card we have to pay out of state fees, not even the subsidized in state fee). In H1b visa (work visa) you cannot collect unemployment, unemployment benefits has a condition that you should be available to work for anyone offering you a job and you should be actively looking. H1b folks CANNOT work for anyone because the visa is tied to the company that brought them to the US (or hired out of school in the US like they did for me). So we are NOT eligible for unemployment even though we pay in. H1b has a max of 6 yr validity. Unless we apply for our permanent residency, we cannot claim social security. We definitely cannot claim Medicare. I have applied for PR and all my adult life I have spent in the US (studying/working), so this is my home now, so I will stay here until and after my retirement 30 yrs from now. But I don't see how generally all legal immigrants get more benefits than paying in. We cannot be in public welfare. Period. It will violate the visa. So everywhere from hospitals to colleges, I pay full price. As far as I know citizens have a proper benefits system (instate, welfare, unemployment), illegal immigrants have a different system I suppose because I hear they don't have to pay the full price for college tuition, hospitals due to their income (but this is hearsay so I might be wrong here)), legal immigrants, working in work visa, I don't know of any system that gives us benefits. Just my 2c.

  2. Typo missed that "would love to" phrase - As a legal immigrant, I beg to differ (or at least "would love to " know how to do what you just said :) )

  3. Sorry for too many comments :) This is just a touchy subject so I want to make somethings clear.

    1) I am not regretting the system. I choose to come here, so I will play by the rules, however long it might take.
    2) When I said I received $0 in benefits, I meant something like SS, unemployment etc. I am using all the roads, parks, libraries... So I am using the tax dollars, just not getting any hard cold cash back :) thats what I meant.

    I will stop here :) Happy weekend!

  4. I see I hit a nerve with this post. I am all for legal immigration and work with many legal immigrants who are first-rate people.

    I found this article interesting because it basically said illegals working in the country help keep Social Security from being in worse financial shape than it already is because they contribute but never collect benefits.

    The Washington Post and the Feds (not The Grouch) say as a generalization based on the statistics they've analyzed that legal immigrants get more from Social Security than they pay in. That generalization certainly doesn't apply in all cases and to all people.

    I pay about the same percent in taxes as you and certainly don't get benefits from the government anywhere close to what I pay in. I haven't collected a single dollar in benefits from any government programs. But I hope Social Security is still there when I go to collect at 65...67... 70, whatever the age is at that time.