Immigration and Social Security

Kevin Drum:

The Washington Monthly: Last year the trustees estimated that Social Security had an overall 75-year deficit of 1.95% of taxable payroll. This year it's 1.70%. That's a pretty substantial improvement. What caused it?... Table IV.B9 has only one significant change from 2007: "Methods and programmatic data." And what might that entail?... immigrants. To be specific, better estimates of the taxes and benefits received by illegal immigrants -- or, as the trustees refer to them, "other-immigrants":

In previous reports, the other-immigrant population was projected using assumed annual numbers of net other immigrants with a static age-sex distribution. For this year's report, the annual numbers of net other immigrants are projected by explicitly modeling other immigrants and other emigrants separately.

Translation: instead of just pulling a net number out of a hat, the trustees built a model that estimated the actual demographic characteristics of both immigrants and emigrants. And guess what?

• Illegal immigrants tend to skew young. This benefits the system.
• Young people have more children than older people. This benefits the system.
• Some illegal immigrants pay taxes for a few years and then leave. This benefits the system.

Bottom line:

This year's report results in [...] a substantial increase in the number of working-age individuals contributing payroll taxes, but a relatively smaller increase in the number of retirement-age individuals receiving benefits in the latter half of the long-range period.

Give or take a bit, it turns out that this shores up the Social Security system to the tune of around $13 billion per year. Thanks, illegal immigrants!

Comments

[banerjee]

Or legal immigrants who leave the country after working several years and paying taxes. Or most H1-B workers who work 6 years before returning to their home countries. I should assume that these make up a significant amount of the contributors.

[zeno2vonnegut]

I've foolishly stated before on this site that economic aruments for free trade are even stronger economic rationales for freer immigration. First the disparate freight or construction costs of relocating factories versus the moving costs of workers. Second the freight cost of shipping the manufactures back. There may be good reasons to moderate immigration, but any argument for free trade which allows an export of jobs must symmetrically discuss an input of workers.

Both China and India are are expected to surpass US GNP. As a US patriot, let's open the borders to delay our loss of preeminence. As a world citizen, shouldn't we be lowering borders to maximize utility for humanity?

[Neal]

And the on the report is...

CNN News

Paulson: Social Security fix needed
Treasury Secretary says program is 'financially unsustainable.' Trustee report says government will have to pay back what it owes starting in 2017.

(end quote)

[PQuincy]

Thanks to zeno2 for capturing currend administration mendacity:

Memo to Paulson: That's not a bug, it's a feature, remember....we stock up the trust fund in the 80s and 90s and 00s to prepare for the Boomers' retirement, then run the trust fund down until they stop collecting, and the system can be back in equilibrium.

But as commentors elsewhere keep insisting, the government 'never intended' to pay back all the debt. T-bill holders beware!

[John Emerson]

Will Hillary be the new Nader?

Hillary's meeting with Richard Scaife, perhaps the slimiest of the Republican media lords (and the one who most enthusiastically promoted fact-free smears of Bill Clinton) makes one suspect that the rumors are true, and that she has decided that, while she can't win the Democratic nomination, at least she can hurt Obama badly enough that he can't win, leaving Clinton a clear shot in 2012.

You know -- "The worse, the better". (Though based on what she and her beloved husband have been saying, it's by no means certain that she is bothered by the prospect of a McCain Presidency.)

Someone has to convince that Clintons that it's now or never for her. If neither she nor Obama is elected President this year, it will be time for us to look for someone new. If a broad range of Democrats tell her that she'll cut her own throat if she sabotages Obama, maybe she'll decide to retire with a little dignity left. And one doubts that Bill Clinton wants the destruction of Barack Obama and the election of John McCain to be his legacy.

If Clinton plays scorched earth politics against Obama now, she should know that the rest of us will play it against her four years from now.

[John Emerson]

Bonus Off-topic comment:

Someone should wash Carville's mouth out with soap

“Mr. Richardson’s endorsement came right around the anniversary of the day when Judas sold out for 30 pieces of silver, so I think the timing is appropriate, if ironic,” Mr. Carville said, referring to Holy Week.

Carville is a mercenary, and he's a specialist in the kind of personal-loyalty racketeer politics that the Bush machine also specializes in. Whenever possible he'll double-cross the majority of rank and file Democrats in order to cut a deal, in the same way that the Bush administration is always willing to betray Republican principles for the sake of a little graft. To Carville everything is deals and payoffs, so when Richardson dared to defy the family that had made him, Carville decided he was a traitor who must be smeared. Thank God that Richardson has more smarts than the average gangbanger.

Carville's lovely wife, Mary Matalin, is part of Dick Cheney's inner circle. Why would anyone ever trust the guy? Whoever washes his filthy mouth out should also swab it for second-hand Cheney semen.

[anonymous]

immigrants may be good for housing market in US as well - not sure. any data or studies on this?

[tinbox]

If John Emerson's got plenty of time to comment here, maybe he can tell us more about his vote for Nader in 2000. Just to give us some context on his excellent thoughts about how people who sabotage Democratic campaigns should be treated.

[John Emerson]

Tinbox, as I say at my link, I got flung a remendous amount of shit for my Nader vote, and it rankles me to see the same people who were flinging the shit following the Nader strategy.

[Richard Cownie]

Or looking at it another way, illegal immigrants pay for a couple of weeks of the
Iraq occupation each year. Gracias, amigos.

[JRossi]

The economic pros and cons of immigration (legal and illegal) are of course a legitimate topic for this economics blog. I do care about its effects on social security, but I care more about its effects on the land. The main arguments against immigration are environmental. Too many damn people. Too many damn people in my ex-state, California. Too many damn people back east. Too much traffic, too much pollution, too much concrete, too many buildings and roads, not enough open country. Where does it end? Western Europe's levels of crowding-- East Asia's? Not a future I'd like to see, even if someone funded me a nice retirement.

[John Emerson]

JRossi, those are more quality-of-life than environmental issues. European levels of crowding would be fine with me.

There's lots of open space in North Dakota, and you can buy a livable house there for $10,000 or so (check Elgin), but no one wants to live there because lots of good things come with crowding.

[Joe]

Is this really just illegal immigrants? I thought one of the big flaws in the trustee's report last year was that it assumed that the U.S. would reduce legal immigration to a trickle relative to its current level.

[Kelly]

I'm with JRossi. And if you understand anything about the environment, there is NOT lots of space. The Uglala reservoir under Texas to Nebraska is almost gone, and there's not a lot of people there.
But getting back to the illegal immigration issue. Do we actually think it's a good thing to get something for nothing? Are we OK with taking money from people that will get no benefit from it, just to shore up a system that we want?
And looking at the article, I see that SOME people pay in and leave. That implies SOME don't. Do we honestly believe that in 50 years we're gonna just let all those people do without? Live on the street and beg?
Or is the plan to hunt them down and ship 'em to Mexico when they're too old to contribute? Or make their families support them 100%.
This is an insane economic policy and I can't believe any person who professes to support Obama would endorse it.

[John Emerson]

Kelly: JRossi was not talking about any real environmental issue, but about his subjective feeling of crowding. The Oglala reservoir was drained by building cities in the desert and by irrigating with well water, not by crowding. And the environmental issue is global, and not substantially affected by migration.

[save_the_rustbelt]

Based on a couple of years of research, illegals and their employers are choking SSA with millions of phony or stolen Social Security numbers, many illegals are totally off the books so no tax is collected, and some employers are collecting the employee portion and pocketing some or all of it, and then filing phony F941s.

The use of stolen SSNs is particularly nasty, as 4 year olds and dead people are getting sued by bill collectors and etc.

And neither DOJ or the IRS can provide me any statistics on crimes by illegals, as neither bothers to keep statistics (which I find curious at best).

When the federal government decides to ignore the law, there are consequences.

[LibertyGuard]

JRossi -
I agree with you too - there are too many people on this earth, busy making cheap plastic toys for your kids and designing cheaper computer chips for your computers in crowded rooms in crowded countries with little or no access to health care and utilities.
Why don't you be the first to go off the face of the earth? That would be a start to reducing the demand for these goods and services and immigrants wouldn't have to work here or there to meet your needs. There's just too many of 'you' - 'you', 5% of the world's population, consume 80% of the world's resources and dare to complain there's too many of 'them'!

[John Emerson]

Clinton is now talking to Scaife and circulating American Spectator articles, Tinbox. She'll probably be courting Limbaugh next. I don't see how much lower she can go.

That's what I was talking about. You've thrown everything you can think of back at me without addressing what I said. Give it up.

[Kelly]

John;
Fair enough. Who lives in cities? Why are crops grown? The answer to both those questions involves why the water disappeared. I live in Texas. We are actively trying to build reservoirs in various areas of the state that are fighting us tooth and nail because they don't want their environment ruined or their land covered with water. We are also suing the state of Oklahoma to FORCE them to let us have their water.
And by the way, Texas and Kansas and Nebraska are not deserts. Check it out.
There is no question that we have come to the end of our ability to absorb more people. I have a hard time with educated people that look at a map and assume that because it looks real big, or they fly over it and assume that, then it just makes sense that you can cram in more people.
Of course one alternative is to just everyone get by on less and less so there can be more and more people. What I wonder is why that makes any sense to anyone. Why is that a good idea? Is it just taken on faith?

[John Emerson]

Kelly, there are questions about absolute population, standard of living, and the efficient use of resources. None of these things have anything to do with JRossi's feelings of being crowded by too much density caused by immigraion. If anything, he's diametrically wrong: dense urbanization is less wasteful of space than is suburbanization, which turns potential agricultural land into water-wasting lawns.

[JRossi]

John Emerson, If European levels of crowding would be ok with you, you and I have so little in common on this issue that further discussion is pointless. Nevertheless, other posters with eyes to see realize that qol and environmental issues are closely related. We like open space and so do members of many other species. BYW, dense urbanization, in areas dense lost to development, is fine with me. I don't like suburbs and lawns much either.
LibertyGuard, So your solution is let more people become rapacious Americans, ad infinitum? Not too sure about your thinking there. When you find yourself in a deep hole, bud, you stop diggin'.

[Barkley Rosser]

Whether one likes immigrants or not, even after this attempt to start accounting for illegal ones, the intermediate projection of the SS Trustees continues to be ridiculously low balling the likely future number of them. It has the rate of immigration dropping substantially in the near future, even after allowing that there may be some illegal ones in there also.