March 25, 2008
IMMIGRATION AND SOCIAL SECURITY....Paul Krugman points out that in the 2008 report of the Social Security Trustees released today the "actuarial balance" of the system is better than it's been since 1993. Interesting! But how much better?
Click here for the answer: 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?
Click here for the answer: Table IV.B9 has only one significant change from 2007: "Methods and programmatic data." And what might that entail?
Scroll down for the answer: 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!
—Kevin Drum 9:59 PM
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This is annecdotal from my experience working in the human services field: most illegal immigrants (at least for the cases I see)who apply for medicaid and other benefits for their natural-born citizen children are working and paying taxes using fake social security numbers. It's likely that the vast majority will never become citizens, will stay in the U.S. for a long time, and will never collect social security benefits. So all the payroll taxes they pay go into the system but do not go back out to these individuals. (And the incidence of "undocumented non-citizens" attempting to receive medicaid or other benefits for themselves is extremely low.)
Posted by: vickim on March 25, 2008 at 10:21 PM | PERMALINK
Finally, some one points this out. This has always been the corporate and federal government trump card.
Posted by: lone wolf on March 25, 2008 at 10:24 PM | PERMALINK
But if some politician or pundit declares that Social Security is in a crisis and the only way to save it is to destroy it, then they must be right.
Posted by: AJ on March 25, 2008 at 10:27 PM | PERMALINK
Dadgum illegal immigrants screwing up our plans to wreck social security. Deport them fast, so we can still have our fiscal catastrophe.
Posted by: dr2chase on March 25, 2008 at 10:30 PM | PERMALINK
We could also use some hardworking immigrants to buy up and move into some of these empty walk-away homes.
Stockton is not that far from the central Ca agricultural industry.
Posted by: Scott on March 25, 2008 at 10:30 PM | PERMALINK
$13 Bil
Devious bastards! Buying off our weaker brethren by financing my Pop's retirement. Back of the line for them!
Posted by: dennisS on March 25, 2008 at 10:32 PM | PERMALINK
LonewackoDotCom: this comment might disappear
WeShouldBeSoLucky. YouKeepPromisingButIKeepHavingToReadThisDrivel.
Posted by: thersites on March 25, 2008 at 10:53 PM | PERMALINK
this is one of the more out-of the-way analyses you have highlighted, but, in my view, one of the more socially and politically important ones.
to me it illustrates what i have observed in my city, that when immigrants, legal or illegal, leave a community,
they leave large economic potholes behind - in grocery stores, in apartment rentals, in auto and auto related stores, in clothing stores, and in medical "stores".
all of which suggests that immigrants, legal or otherwise, were playing a useful role in the nation's economic system -
something the republican, right-wing, tancredo nationalists always seems never to acknowledge in their recent infatuation with, and haste to enforce, the LAW.
looked at from a moral/legal, rather than an economic, perspective,
demands that THE LAW be enforced with respect to immigrants
strike me as demands that that the law be used as an instrument of bigotry.
Posted by: orionATL on March 25, 2008 at 11:01 PM | PERMALINK
Kevin Drum: it turns out that this shores up the Social Security system to the tune of around $13 billion per year. Thanks, illegal immigrants!
Yeah, wow, $13B ... out of an OASDI income of $784.9B. Do you realize that without those illegal immigrants we'd have to raise FICA from 6.2% to 6.3%? Imagine that, 1/1000 of your income!
Of course, depending on your line of work, you'll also have to figure out how much illegal immigration suppresses your wages. Any bets on whether it's more than 0.1%?
Posted by: alex on March 25, 2008 at 11:03 PM | PERMALINK
A lot of the comments here are unfair or dishonest. Kevin is just remarking on something, but people are putting words in his mouth and saying that Kevin is claiming that exploiting illegals or not giving immigrants adequate avenues to citizenship is somehow justified because it benefits Social Security.
Kevin didn't give us any showing that, nor did he claim that, the system wouldn't be more benefited or similarly benefited by treating the immigrants less as hunted criminals than we do now. But that doesn't mean at all that it isn't so, or that it isn't Kevin's position that it's so, or that Kevin wouldn't applaud that if things could work out that way. The people who are acting like Kevin is arguing something different are being very obviously dishonest.
Posted by: Swan on March 25, 2008 at 11:19 PM | PERMALINK
orionATL: to me it illustrates what i have observed in my city, that when immigrants, legal or illegal, leave a community
What factors would cause legal immigrants to leave that wouldn't also cause non-immigrants to leave?
all of which suggests that immigrants, legal or otherwise, were playing a useful role in the nation's economic system
Since I don't like to mix apples and oranges, I'll restrict my comment to illegal aliens: define "economically useful". Do you mean they increase GDP (meaningless) or GDP/capita? And what are the distributional effects of flooding particular areas of the labor market?
demands that THE LAW be enforced with respect to immigrants strike me as demands that that the law be used as an instrument of bigotry
Since 1965 our immigration laws have been non-discriminatory. So how is enforcing non-discriminatory laws "an instrument of bigotry"?
Posted by: alex on March 25, 2008 at 11:20 PM | PERMALINK
Nothing Kevin wrote sounded to me like an argument against liberal policy on illegal immigration. To the contrary, the data seems to refute the conservative idea that this immigrant population is a bad thing.
Posted by: Swan on March 25, 2008 at 11:21 PM | PERMALINK
Swan: not giving immigrants adequate avenues to citizenship
Legal immigrants are eligible for citizenship after 5 years of residence in the US. How is that inadequate?
treating the immigrants less as hunted criminals than we do now
How are legal immigrants treated as hunted criminals? Even illegal immigrants aren't subject to criminal prosecution for the simple act of being in this country illegally.
Posted by: alex on March 25, 2008 at 11:26 PM | PERMALINK
Hell, I've anecdotally known this for a long time.
AND, Swan, there is NO, I repeat, NO "liberal policy" on immigration.
About a year ago, the Nation rightfully got its ass flamed off for pretending there was.
Posted by: SocraticGadfly on March 25, 2008 at 11:28 PM | PERMALINK
Now we have to get them to work on Medicare.
The whole argument from the right about SS is simply wrong. What we need to work on is healthcare costs.
Posted by: TJM on March 25, 2008 at 11:42 PM | PERMALINK
"Illegal immigrants tend to skew young. This benefits the system."
In other words, we cannot afford to bring children up, so let the immigrants do it. I hear this all the time.
What is the point? Do you think immigrants like living in poverty while they and their children cover an expense they never asked for?
You solve the chain letter problem with another chain letter.
In other words, Kevin, you want to import immigrants because you spend to much. Goes right to the point, progressives will sell us down the drain to protect their stupid government programs.
This is no different than the Republican socialist system, they thrive on immigration and they expand government to such an extent that they pay for it with expanded immigration, then blame someone else for the problem.
Posted by: Matt on March 25, 2008 at 11:49 PM | PERMALINK
Swan
You say:
"Kevin didn't give us any showing that, nor did he claim that, the system wouldn't be more benefited or similarly benefited by treating the immigrants less as hunted criminals..."
Kevin has always claimed that immigrants help social security. He has directly implied it and otherwise stated its benefits before.
So, why does our retirement system rely on foreign labor? Doesn't that simply point out the plain fact that SS is out of balance?
I mean, think, we rely on the chain letter concept, when there are not payees, we import uneducated slave labor to pay for it. Is that not what Kevin has asked for and applauded for quite some time? Why should Kevin get off the hook on using slave imported labor?
Second, if importing undecutated labor helpd pay for entitlements, tthen it is up to Kevin to prove that an over bloated government causes immigration problems. He has to show both direction of the cause and effect, I do, he doesn't. That is why Kevin is a progressive, he uses your life to cover government blunders.
Work the problem in both directions, and ask, is having this much government worth becoming Mexico?
Posted by: Matt on March 26, 2008 at 12:00 AM | PERMALINK
Illegal immigrants tend to skew young. This benefits the system.
Young people have more children than older people. This benefits the system.
Illegal immigrants pay taxes for a few years and then leave. This benefits the system.
The sound you just heard is Pat Buchanan's head exploding.
Posted by: junebug on March 26, 2008 at 12:01 AM | PERMALINK
thersites: Obviously, a good little Stalinist came along and granted you your wish.
You can read the comment that KD/WM deleted from this thread here. That link also explains why you can't trust anything you read from KD/WM.
Needless to say, KD/WM will probably delete this comment too. Perhaps the moderator would be good enough to identify himself, and also indicate exactly why the comment was deleted.
Posted by: The annoying LonewackoDotCom on March 26, 2008 at 12:05 AM | PERMALINK
There is the old urban legend about the SS card that illegal aliens pass around to show their employer when they start a new job. The SS Administration computers happily collect the payroll tax as if one card holder could really be working 48 jobs. Guess it might not be a myth after all.
Posted by: fafner1 on March 26, 2008 at 12:27 AM | PERMALINK
In other words, if corruption and illegal activity benefits ME, then it's a good thing. I have friends on the police department who think like libs. If you take a bribe from a drug dealer, then it benefits ME and is therefore, for lack of a better word, GOOD!
Not to mention that the gov is totally corrupt on illegal infiltration and naturally cherry picks data they like rather than looking at real costs of illegal aliens. Similar to WMD. Not to be believed.
Posted by: Luther on March 26, 2008 at 12:32 AM | PERMALINK
Speaking only for myself, I think the only comments that should be deleted are a) spam, b) hate speech, c) incite violence, d) provide private information, e) libel a private figure, or d) are duplicate posts.
Of all the blogs I have seen moderation at, the Washington Monthly's is the most bizarre. There seems to be no rhyme nor reason to who gets on their shit list, no consistency on whether the post is completely eliminated, or just marked with a "*", and from what I can tell of the posts that are deleted, they are completely innocuous.
Posted by: jerry on March 26, 2008 at 12:44 AM | PERMALINK
Shorter Alex, Matt and Luther: No one knows the real cost of illegal immigration. But they're brown.
Posted by: vickim on March 26, 2008 at 12:47 AM | PERMALINK
Gosh Kevin, Immigrants could be the hottest new Import... Lets see how many hundreds of millions of them we can get into the USA.
Posted by: kill bill on March 26, 2008 at 1:29 AM | PERMALINK
I'm in complete agreement with jerry. The moderation on this site is arbitrary. I can always scroll past lonewacko's posts so you don't have to shield my innocent eyes from what he writes.
"If we don't believe in free speech for those we disagree with then we don't believe in free speech at all." Nome Chomsky
Posted by: Dr. Morpheus on March 26, 2008 at 1:30 AM | PERMALINK
So, that's why California's state budget is in such great shape!
Posted by: Steve Sailer on March 26, 2008 at 3:07 AM | PERMALINK
What's the impact of illegal immigration on Medicare and Medicaid?
Posted by: Steve Sailer on March 26, 2008 at 3:09 AM | PERMALINK
Assuming any improvement in the financial condition of SS is due primarily to illegal immigrants...Who are the illegal immigrants? Aren't they mostly unskilled and low paid? How can they possibly support a larger population of retirees who were, on average, better educated and had significantly higher lifetime earnings? Aren't most illegals Hispanic? Look at the average educational attainment and imprisonment rates of Hispanics. Even if we could import enough of them to permanently improve the prospects of the SS system, would it be a good thing for the country?
Posted by: eh on March 26, 2008 at 3:41 AM | PERMALINK
The truth about SS: the average middle class person who pays SS taxes gets back less in benefits than he paid in -- i.e. the return is negative. What kind of "security" is that? Forget Wall St -- you could put the contributions in an FDIC insured passbook savings account or CD and do better.
Posted by: eh on March 26, 2008 at 3:59 AM | PERMALINK
"The truth about SS: the average middle class person who pays SS taxes gets back less in benefits than he paid in -- i.e. the return is negative"
Well, duh. Did you just now figure this out?
The truth about my auto insurance (which I've been paying for 26 years) is that I've paid more in premiums than I've gotten in benefits -- i.e. my return is negative.
I devoutly hope it continues that way. Ditto for my health insurance and life insurance policies. But should past not prove to be prologue, color me glad.
SS is not a retirement plan. It is insurance that, should you lose everything at or after retirement age, you won't be penniless.
Anybody who compares it to an annuity, like eh does above, is just ignorant.
Posted by: Joel on March 26, 2008 at 7:05 AM | PERMALINK
If I remember right, McCain did support SS privatizaton. We could have had Bear Stearns managing some accounts if only we had gone along!
Posted by: bob h on March 26, 2008 at 7:40 AM | PERMALINK
My point was made against those who equate privatization with investing -- and inevitably losing -- the money in the stock market. It was only meant to show that even an extremely conservative treatment of the contributions will produce better results -- even much better results, given compounding over decades -- than the current system.
Not a retirement plan, just insurance -- what word quibbling nonsense. It's a tax. Period. The courts have definitively ruled that no one, even someone who has contributed for years, has any vested right to SS benefits. Contribution and payout levels are set by the Congress, and they can change the laws whenever they wish.
Posted by: on March 26, 2008 at 8:17 AM | PERMALINK
Thanks, illegal immigrants! It's a red herring at best to rely on immigrants, especially illegal aliens, to reverse the trend of Social Security going bankrupt. There are two reasons why this could dry up real fast.
First, as laws get tougher on those who hire illegals, those illegals who don't get deported by ICE will find it better to return to their own countries voluntarily since there will be very little places to work.
Second, the vast majority of illegals are Mexicans. One of the main reasons Mexicans come to the U.S., even chancing it by coming here illegally, is because the Mexican economy has been in the toilet for decades. However, that trend may itself be reversing as I've read where the Mexican economy is at the opening stages of booming, and employment in Mexico may be on the rise. That will give Mexicans less impetus to come to the U.S. for work, and give those here illegally a good reason to rejoin their families and compatriots south of the border, since they would be able to find work and support their families.
With both happening at the same time, all those gains in Social Security will be gone fast, and Social Security will dry up as fast (or faster) than the experts think.
Face it, Social Security needs to be reformed in a big way. And if we want to fix things properly, a long term plan to eliminate Social Security in favor of private retirement investments is the way to go. And by long-term, I mean spanning multiple administrations, including those of two-term Presidents.
Posted by: SteveIL on March 26, 2008 at 8:23 AM | PERMALINK
re: LoneWacko.
Point taken. I agree with Jerry at 12:44AM.
Posted by: thersites on March 26, 2008 at 8:31 AM | PERMALINK
What matters is the SS current account surplus (or deficit) - the point at which current payroll taxes are insufficient to pay current benefits.
Last time I checked, that had dwindled from about $175 Bil. when Bush took office, to $85 Bil. last year. After it goes negative, that's when the mythical "trust fund" is supposed to come into play.
As part of the fix recommended by Greenspan's commission in the early 80s (because there had been repeated SS current account deficits) the new, much higher FICA tax rates created a large new current account surplus, creating a "trust fund" for an anticipated shortfall. Prior to that, payroll tax rates were regularly adjusted to pay current benefits.
By 1985, as the cost of Reagan's lavish expansion of the military created huge deficits which drove the federal debt through the roof, the lure of that SS surplus was too much, and the type of bonds held in it was changed from marketable Treasuries to a special non-marketable type of security that by law can only be paid back by the same group that paid that surplus in the first place: U.S. taxpayers.
This is what some have called the 'pay-it-again-scam.'
ref.: http://www.uncle-scam.com/
How much will have to be paid again? The entire amount of the SS "trust fund" because that money has already been spent. Unless they raise only OTHER taxes (like tariffs), the same group (and in some cases, the same individuals) of taxpayers will be on the hook for the ENTIRE SS trust fund.
Once current payroll taxes are insufficient to pay current benefits, they will be confronted with these choices:
1. increase other taxes
2. increase payroll taxes (either the rate, or the ceiling)
3. issue other new debt
4. increase the money supply (increase the monetary inflation rate)
The last two of these are problematical, since they've been overused already. Also, something often overlooked is, it's easy for the highest income people to avoid payroll taxes altogether for most of their income (payroll taxes only apply to earned income like wages). So the favorite 'soak-the-rich' approach often ends up just soaking the upper middle class.
Add a recession into the mix, which will reduce payroll tax revenues, even as benefits due to be paid continues to rise, and this problem looms larger. This problem will hit long before the "trust fund" runs out. In fact, it will start to hit as soon as they need to start drawing from it.
BTW, the warnings about the '78 million' (or whatever) baby-boomers are about to retire is also misleading because that group represents fewer than 10 million above the normal population growth curve. The real problem is not the number of baby-boomer beneficiaries, but the fact that retirees are living longer.
Posted by: Elvis on March 26, 2008 at 8:36 AM | PERMALINK
re: "Methods and programmatic data." And what might that entail?
It most likely entails fiddling with the methodology to make the result more favorable. This is how they intentionally UNDERstate the CPI, to reduce Cost of Living Adjustments to government benefit programs.
refs.:
http://www.shadowstats.com/article/53
http://www.shadowstats.com/article/56
While this process started in the Reagan administration, it really started to take off during Clinton. Like he said, "it all depends on what is, is" right?
Aside from the monkey business they pull with the weighting (like dynamically reducing the weighting given to items increasing in price), this is also why we have a most-often quoted "core CPI rate" which excludes food & energy prices.
Posted by: Elvis on March 26, 2008 at 8:44 AM | PERMALINK
"We could have had Bear Stearns managing some accounts if only we had gone along!"
See, this is exactly what I was talking about: the discussion about 'privatizing' SS is dominated by hyperbole and, at times, absurdity.
Regarding people who may have decided, were it possible, to invest their SS contributions with BSC: it's called personal choice.
Posted by: eh on March 26, 2008 at 9:02 AM | PERMALINK
Elvis, the latest report is out but you don't need that to see how much more Social Security taxes collected exceed benefits paid. This fiscal year that number will be close to $200 billion.
It's true that the bonds in the trust fund have to be redeemed using general tax revenues since the gov't already spent the money. However, if you look at the middle case in the Trustees report, which consistently has understated GDP growth, at the peak, the amount of general tax revenue needed to cover unfunded benefits is 2.2% or about 11% of gov't revenue historically collected.
lat year's report noted that the FICA covers about 84% of payroll vs. the 90% target of the Greenspan fix. If the ceiling was adjusted to the target, collections would increase by around $100 billion.
How do you think increasing the money supply would fix the problem?
You overstate the problem of living longer since the other two factors, GDP growth and interest rates, are just as or more important.
SteveIL, when you say Face it, Social Security needs to be reformed in a big way. you are quite wrong. Reading the trustees report would help you a lot instead of listening to Rush or the other media talking heads who don't know what they're talking about.
The fix that's needed is Medicare. Social Security is fine, focus on the real problem, the excess cost growth issue.
Posted by: TJM on March 26, 2008 at 9:05 AM | PERMALINK
"Not a retirement plan, just insurance -- what word quibbling nonsense. It's a tax. Period."
Now look who's word quibbling. Nobody denies that SS is a tax. Your mistake is to liken it to investing money like an annuity. It is a false analogy, as you must know, since you deliberately changed the subject.
The best analogy is to an insurance policy. SS is a tax that forces Americans to pay into an insurance pool for old age.
Posted by: Joel on March 26, 2008 at 9:09 AM | PERMALINK
re: How do you think increasing the money supply would fix the problem?
Do you not understand how that works in any fiat money system? Create new money, which debases the value of the monetary unit, driving up most consumer prices. It's not a new trend. It's the flip side of understating the CPI rate to reduce COLAs.
Of course, I've seen others foolishly claim that the money in the trust fund hasn't really been spent, just "borrowed" and that the government is always good for it's debts (It isn't. Just ask the French, among others). The fact is, if those markers for value (dollars) have already been converted into services or non-redeemable goods, that money is gone.
As for your purported $200 bil. surplus, a quick check reveals that in FY2007,
SS & other payroll taxes totaled $869.6 billion, while SS spending totaled $586.1 billion,
Medicare spending totaled $394.5 billion,
for a total of $980.6 billion.
According to that, there's already a shortfall in the combined current accounts of SS & Medicare.
Maybe you're counting the interest on accrued debt that is "paid" only by more IOUs deposited into the "trust fund."
What matters is actual revenues collected from the taxpayers, and actual benefits paid (plus operational costs).
It becomes easier to conceptualize if you think of the debt instruments as promises to do something in the future, whereas taxes actually collected amount to things which have actually already been done.
Posted by: Elvis on March 26, 2008 at 9:50 AM | PERMALINK
This is from the summary section of the 2008 reort:
Total benefits paid in 2007 were $585 bilÂlion. Income was $785 billion, and assets held in special issue U.S. Treasury securities grew to $2.2 trillion.
Inflation affects costs not necessarily wages. A gold standard simply doesn't support the level of economic activity. And yes, I understand (BA-economics, MBA, 25 years in banking)
The discussion is of Social Security not Medicare but according to the OMB, both funds were in surplus in 2006.
You don't seem to understand that at most in any fiscal year from now to the horizon, the most that has to come from general tax revenue (repaying the bonds) is 2.2%
Medicare, a separate tax and benefits, will, by 2050, consume all of the current receipts of the government.
If you want to talk about SS, use the report. If you want to talk Medicare then say so. Medicare is an excess cost growth issu, not th tax per se.
Posted by: TJM on March 26, 2008 at 10:01 AM | PERMALINK
Elvis is on the right track. The political problem for social security comes before 2020 when the benefit payments annually exceed the payroll tax collections and the government needs to begin redeaming the securities in the trust fund to pay the shortfall. Right now, there is no politically acceptable way to fund that amount. Clinton tried to plan for this day by running budget surpluses (which were substantially composed of excess payroll taxes) that would pay off other government debt. Friend Grenspan was not happy with this (although it was his 1986 social security reform proposal that created the social security surpluses in the first place) and therefore supported Geo. W's tax cuts for the wealthy. At some point, all the middle class suckers who have been paying in extra money to social security each pay period will wake up to the fact that they have been subsidizing tax breaks for the wealthy all these years and will not get their money back in retirement.
Posted by: steve on March 26, 2008 at 10:17 AM | PERMALINK
I guess this becomes the new argument for illegal immigration. Let's just take down the border posts and leaflet Mexico and South America, invite 'em all here!
That seems to be the majority opinion here, so why not open advocate for it?
Posted by: zak822 on March 26, 2008 at 10:54 AM | PERMALINK
TJM: I dispute your claim of a $200 billion surplus - NO WAY is there a $200 Bil. SS surplus from current payroll tax collections. Outside of interest that will no more be paid back that the debt itself, tax revenue - either payroll taxes or other taxes - is the only source of real revenue.
If SS "income" was $785 billion as you state,
and since payroll taxes totaled $869.6 billion, while I didn't see the breakdown between SS payroll taxes and other payroll taxes, I contend that $869.6 bil total is not enough to account for a $200 Bil. surplus.
The total SS payroll tax rate is 12.4%, with a FY2007 taxable wage cap of $97,500.
The total Medicare payroll tax rate is 2.9% with no cap.
The total combined SS & Medicare tax rate is 15.3%
Even if we forget about the lack of a cap on Medicare payroll taxes, the proportional breakdown of that is 81% SS / 19% Medicare, so let's just call it 80/20.
Assuming we're essentially just looking at SS & Medicare taxes, applying that to the total payroll taxes of $869.6 bil. is $696 Bil. SS / $174 Medicare.
SS spending totaled $586.1 billion
From this back of the envelope calc., we come up with a SS current account surplus of about $110 Bil. I've read elsewhere that it was SS payroll tax surplus of somewhere around $85 Bil. Both of these are closer to one another than to $200 Bil.
In this chart:
http://www.uncle-scam.com/SocSec%20Trust/yrly-incr-07.gif
the green bar is SS payroll tax surplus ($82.4 Bil. in FY07), the red bar is the (growing) interest owed on the trust fund debt ($103.5 Bil in FY07). That interest is booked as SS income, but of course it actually isn't real revenue, but an IOU that's no better than those for the debt itself.
For you to come up with the "official" number of $200 Bil., it must include the "interest" owed ("paid" with the same non-marketable IOUs as used for the debt itself). In the end, absent other taxes paid by foreigners (like tariffs), the same group who paid the surplus in the first place - the taxpayers - will on the hook for that "interest" too.
Anybody who thinks the federal government won't default on their debts is dreaming. They just usually don't default completely. They usually just do it in small increments. They could easily do that to benefits promised, too (in fact, that what's the rigged CPI already does).
By the way, future GDP growth may or may not be more robust than the SS trustees assume. Having just completed a 25-year long economic expansion, we are entering a 12+ year economic contraction phase. How do I know? Easy. The US economy has moved in these cycles since the 1860s. The last three are easy to see - if using a constant unit of measure. Smart money says it will repeat.
Posted by: Elvis on March 26, 2008 at 11:10 AM | PERMALINK
This is nuts! Further proof that our government is complicit in promoting illegal immigration. I will expand the old saying..."if you can't do business legally, then you have no business being in business" to "if a government can't operate legally within the laws of the nation, then the government has no legitimacy and must be dissloved and reformed."
Posted by: zeezil on March 26, 2008 at 11:16 AM | PERMALINK
Social services cost LA County over $36 million.
New statistics from the Department of Public Social Services reveal that illegal aliens and their families in Los Angeles County collected over $36 million in welfare and food stamp allocations in January 2008, announced Los Angeles County Supervisor Michael D. Antonovich.
Twenty five percent of the all welfare and food stamps benefits are going directly to the children of illegal aliens. Illegals collected over $19 million in welfare assistance for January 2008 and over $16 million in monthly food stamp allocations, for a projected annual cost of $420 million.
“Illegal immigration continues to have a devastating impact Los Angeles County taxpayers,” said Antonovich. “With $220 million for public safety, $400 million for healthcare, and $420 million in welfare allocations, the total cost for illegal immigrants to County taxpayers far exceeds $1 billion a year – not including the millions of dollars for education.”
http://www.hometownstation.com/antonovich-illigal-immigrant-2008-03-17-09-52.html
Posted by: zeezil on March 26, 2008 at 11:18 AM | PERMALINK
The Social Security Report is not a policy document, instead it is an attempt to describe actual impacts of various economic and demographic factors on the system as it actually exists.
Congress and Homeland Security are perfectly free to design policy and put in place enforcement to limit illegal immigration. That may or may not effect net Social Security solvency, a lot would depend on how that spilled over into employment and real wages among legal immigrants and citizens. But lets not confuse apples and oranges.
Opponents of Social Security claim we cannot tax or grow ourselves out of crisis, that the longer we wait, the more it will cost. They are wrong on all three grounds. Every year we have delayed action on Social Security since 1997 has left the equivalent of a 2% tax cut in our wallet and a smaller fix going forward (2006 being a partial exception since adjusted away with the 2007 and 2008 Reports). The problem such as it is tends to get smaller in size and more distant in time, that is nobody's definition of crisis.
For example the payroll gap is pretty small and as we see in this years Report on balance getting smaller, do the math-we could afford to pay it, on the other hand we can afford to delay it until the gap starts increasing rather than decreasing. Too the growth numbers needed to achieve full solvency are not particularly daunting, other things tracking along ultimate Real GDP at 2.9% presents the eye popping result seen in Figure II.D6.�Long-Range OASDI Trust Fund Ratios Under Alternative Assumptions [Assets as a percentage of annual cost] We don't need a Trust Fund increasing to Ratio of 650 corresponding to a $117 trillion balance in 2085. Well that is what trend growth brings you.
Posted by: Bruce Webb on March 26, 2008 at 12:44 PM | PERMALINK
Face it, Social Security needs to be reformed in a big way. And if we want to fix things properly, a long term plan to eliminate Social Security in favor of private retirement investments is the way to go.
Steve IL: No, Social Security does not need "to be reformed in a big way." As Kevin Drum himself has noted on numerous occasions, the entire extra burden created by Social Security is likely to not exceed two or three points of GDP over the next half century. Such a gentle, gradual rise in the program's cost can be easily met by modest tax increases or modest increases in the retirement age or some modest combination of both.
Social Security ain't broke, and doesn't need to be reformed. Brownie points, though, for your honesty in admitting you think the program needs to be "eliminated."
Posted by: Jasper on March 26, 2008 at 12:45 PM | PERMALINK
"Perhaps the moderator would be good enough to identify himself, and also indicate exactly why the comment was deleted."
ROFL.... Well, mostly because the comment was moronic, I think, and hilariously wrong in its accusations, assertions, and ad hominem attacks. Personally, I'd have left it in, since it demonstrates so clearly that you cannot be taken seriously.
Posted by: PaulB on March 26, 2008 at 1:41 PM | PERMALINK
"Right now, there is no politically acceptable way to fund that amount."
Right now, there is no politically acceptable way to fail to fund that amount, or had you forgotten about "the third rail" of American politics? In any case, you're wrong, I think, since allowing most of the Bush tax cuts to expire, which I would argue is both politically feasible and very likely to happen, will help considerably.
Posted by: PaulB on March 26, 2008 at 1:45 PM | PERMALINK
PaulB: allowing most of the Bush tax cuts to expire, which I would argue is both politically feasible and very likely to happen, will help considerably.
"Help considerably" is an understatement - the long term cost of the Bush tax cuts is 3x the projected SocSec shortfall.
Apparently the wingnuts are a little confused about whether their defining slogan is "fiscal responsibility" or "tax cuts are always good".
Posted by: alex on March 26, 2008 at 4:35 PM | PERMALINK
Brojo: In future one will be able to hear Americans say things like, "Remember when there used to be fresh tomatoes available in the grocery stores?"
I'm not worried about the demise of the tomato on the American table, including fresh, locally grown ones if you so prefer.
Keith Eckel could get all the tomato pickers he needs at any time, if he's willing to pay enough. Whether the required wage would still allow him to make a profit is a business decision that depends on how much of a premium people are willing to pay for fresh, locally grown tomatoes.
Oddly enough, long before illegal aliens were numerous enough to put in the census, Americans (by which I mean legal permanent residents as well as naturalized and native born citizens) could be found working at picking tomatoes, landscaping, cleaning hotels and office buildings, meatpacking and construction. There's a catch though: you have to pay them.
Posted by: alex on March 26, 2008 at 5:01 PM | PERMALINK
My bad, I wasted some valuable time talking to true believe. Elvis, since you've gotten to the point that you believe the government is scamming you by publishing deliberately false documents, there's nothing I can say.
No mas.
Posted by: TJM on March 26, 2008 at 5:03 PM | PERMALINK
"Thanks, illegal immigrants!"
Um...you realize this doesn't take into account all the other public costs of illegal immigrants, nor does it acknowledge that someday (after you've given the illegals a "path to citizenship") they too will retire and get back whatever (and then some) they've contributed to the social security system.
Posted by: Chris on March 26, 2008 at 7:47 PM | PERMALINK
Kevin can't have it both ways. If illegal immigrants are a net benefit to the system right now, it is only because they can't draw benefits. If they are legalized as Kevin seems to want, they would be a huge drain on the system as the Social Security system is a progressive system in which low-income workers eventually receive far more in benefits than they pay in. In fact, the reason that liberals generally are against private accounts is that low-income workers would lose out because the progessivity of the system would be eliminated.
Posted by: RK on March 27, 2008 at 11:56 AM | PERMALINK
Brojo,
You are being very intellectually dishonest when you talk about Keith Eckel giving up on growing tomatoes without mentioning that Eckel is instead going to grow grain which is in high demand now and requires drastically fewer workers because it can be harvested by machines. It seems the economy will end up being a lot more productive plus the community in Pennsylvania won't have to deal with the social costs of large numbers of unskliied workers and their families.
Posted by: RK on March 27, 2008 at 12:04 PM | PERMALINK
"you'll also have to figure out how much illegal immigration suppresses your wages. Any bets on whether it's more than 0.1%?"
The good jobs and their salaries aren't being taken by immigrants entering the country across land borders so much as by those jobs being brought to people in other countries, where they live (offshoring), by people arriving by airplane and by jobs that leave via the internet. Waving the red flag just distracts.
Posted by: gadfly on March 28, 2008 at 11:06 AM | PERMALINK