« Filling in the Pieces of the Yield Curve Puzzle | Main | Calling Bush’s Bluff on Tax Cuts »

Saturday, August 06, 2005

Here’s a Small Token of Appreciation for Your Many Years of Service

This is a touchy subject.  I’m going to comment anyway.  The general issue is immigration policy and the particular issue is how illegal immigrants who are too old to work any longer and remain in the U.S. will affect the Social Security system:

Mexicans at Home Abroad, By Eduardo Porter and Elisabeth Malkin, NY Times:  In recent decades, millions of working-age Mexicans have entered the United States. … a new question is beginning to worry some analysts and policy makers on both sides of the border: What will happen when the 10 million Mexicans living in the United States become too old to work? Will they retire in the United States or will they return to Mexico? … the United States is … unprepared to deal with millions of poor, aging immigrants, eking out a living without recourse to Social Security, Medicare, Medicaid or most other forms of federal assistance.  … "If all these people that came here are going to stay, then there is a question of what will be the social cost," said Roberto Suro, director of the Pew Hispanic Center in Washington. "If they're only here for their working life, it's a bargain." …

So what is the cost?  Michael Tanner of Cato has estimates from a government study that say the cost is very small:

Mexicans pose Social Security drain, By Stephen Dinan, Washington Times:  Allowing Mexicans who pay into U.S. Social Security to collect benefits would place a long-term drain on the system since Mexican workers are less-educated and tend to have more dependents, according to a new congressional report. The report … by the Congressional Research Service (CRS), looks at the effects of a "totalization" agreement with Mexico. Right now Mexican workers who are in the United States temporarily must pay into both the U.S. and Mexican systems but cannot get U.S. benefits. Totalization would allow them to pay into just one system, and collect benefits based on the time they paid into the U.S. system. … While in the short term that may mean more money coming in, "it's a net long-term drain," said Joe Eule, chief of staff for Rep. J.D. Hayworth, an Arizona Republican who is sponsoring a resolution to block totalization. The debate lies at the intersection of two of the most contentious issues facing Congress: immigration policy and Social Security's impending financial problems. … But Michael Tanner, director of health and welfare studies at the Cato Institute, said the amount of a drain is likely to be very small. One government study puts the cost at $78 million the first year and $650 million by 2050. "It's a drop in the ocean given Social Security's problems," Mr. Tanner said. He also said that the question should not be whether a Mexican agreement is a drain, but rather what is fair.

There are high cost and low cost ways to deal with this problem.  Retired illegal immigrants are going to use social services.  For example, will retired illegal workers be shunted by legislation towards high cost alternatives like emergency room treatment or towards lower cost healthcare programs?  Also, illegal immigrants, unless they are paid under the table, have paid into the Social Security system.  So a lot of what they take out is money they have paid into the system.  Is it fair to keep this “illegal alien tax” as a means of helping with solvency?  The net drain of $650 million by 2050, even if largely underestimated, is small compared to the value added to our economy by these workers over their working lives.  Yes, as the article notes their salaries were low and that limited the amount many paid into the system, but doesn’t that argument penalize these workers for being forced through circumstance to accept wages below the minimum acceptable level?  Doesn’t it penalize them for producing goods for us at very low cost?  Would we be better off if we had paid them twice as much?  Like Michael Tanner, I see this as an issue of fairness.  I believe allowing these workers to collect Social Security is the decent thing to do, but opinion does not win policy debates.  Saving money does.  Will the total cost really be smaller if retired illegal workers, who as a group struggle to survive while they are able to work, are, for example, relegated to emergency room healthcare, made worse through homelessness and poor nutrition brought about by poverty?  After decades of working in our factories, mowing our lawns, cleaning our houses, and bringing us food to eat at very low cost, is it right to turn our backs on these workers?  More importantly to many, is it smart economically?

I find myself in agreement with Cato on this issue.  Since that's unusual, have I missed something important?  Is this really about the politics of immigration rather than the narrower issue of Social Security?

    Posted by on Saturday, August 6, 2005 at 09:27 AM in Economics, Politics, Social Security | Permalink  TrackBack (0)  Comments (17)

    TrackBack

    TrackBack URL for this entry:
    https://www.typepad.com/services/trackback/6a00d83451b33869e200d83451aff253ef

    Listed below are links to weblogs that reference Here’s a Small Token of Appreciation for Your Many Years of Service:


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.