Thursday, December 30, 2004

Immigrants and Social Security

Phyllis Schlafly writes about the threat to Social Security posed by illegal immigrants from Mexico:

The threat comes from a Bush administration plan to load illegal immigrants into the Social Security system, an idea that would skyrocket costs and bankrupt the system at the same time baby boomers flood into their benefit years.

The code word for this racket is "totalization." The United States has totalization agreements with 20 countries, which have been reasonable and uncontroversial, but totalization with Mexico is TOTALLY different.

The idea behind totalization with other countries is to ensure a pension to those few individuals who work legally in two countries by "totalizing" their payments into the pension systems of both countries. All existing totalization agreements are with developed nations whose retirement benefits are on par with U.S. benefits, and the affected employees work for companies that have been paying taxes into the other countries' retirement systems.

Workers from those other 20 countries come with employer documents verifying that they are authorized to work in the United States. Only a minuscule fraction of Mexicans enter with such documents.

The legitimate goal of totalization with other countries is to avoid double taxation for retirement when employers assign their employees to work temporarily in another country. Reciprocity works because there is rough parity between the number of U.S. workers in the 20 other countries and the foreigners from those countries who work in the United States.

But this goal has no relevance to Mexico. There is no parity between the number of Mexicans working in the United States and the number of U.S. citizens working in Mexico, and absolutely no parity in the social security systems of the two countries.

Mexican benefits are not remotely equal to U.S. benefits. Americans receive benefits after working for 10 years, but Mexicans have to work 24 years before receiving benefits.

Mexican workers receive back in retirement only what they actually paid in, plus interest, whereas the U.S. Social Security system is skewed to give lower-wage earners benefits greatly in excess of what they and their employers contributed.

Mexico has two different retirement programs, one for public-sector employees, which is draining the national treasury, and one for private-sector workers, which is estimated to cover only 40 percent of the work force. The remaining workers are in the off-the-record economy euphemistically called the "informal" sector.

The 10 million Mexicans who have illegally entered the United States previously lived in poverty, did not pay social security taxes in Mexico and did not work for employers who paid taxes into a retirement plan. If they were working at all, it was in the off-the-record economy.

Illegality is no issue with the countries where the United States has existing totalization agreements because none of them accounts for even 1 percent of the U.S illegal population. On the other hand, Mexico provides more than two-thirds of the illegal immigrants in the United States.

The Bush totalization plan would pay out billions in Social Security benefits to Mexicans for work they did in the United States using fraudulent Social Security numbers, something Americans would be jailed for doing. It would pay Social Security disability benefits to Mexicans who worked in the United States as little as three years.

The Bush totalization plan would lure even more Mexicans into the United States illegally in the hope of amnesty and eligibility for Social Security benefits. The Bush plan would even cover spouses and dependents of Mexican illegal immigrants who mighty never have lived in the United States.

Because few if any of the illegal immigrants have built up any equity in the Mexican retirement system, what is there to totalize? Totalization is a plan for U.S. taxpayers to end up assuming the entire burden.

4 Comments:

At 5:02 PM, Anonymous Anonymous said...

My idea of Statehood for Mexico would solve the Social Security problem, for both countries!Millions of Mexicans are already here working, getting paid in ca$h. Tens of millions more of the youngest workers would come with statehood, funding the SS system.
The biggest benefit to NorteAmericanos would be being able to purchase land in Mexico. Most of the country is underused, with the majority of the populace packed into Mexico City. Miguel Mena

 
At 11:22 AM, Blogger Adam Lawson said...

I think that your suggestion would result in Mexico's economic problems being imported into the United States.

 
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