Illegal Immigrants Bolstering Social Security

NYT reports Last year, Mr. Martínez paid about $2,000 toward Social Security and $450 for Medicare through payroll taxes withheld from his wages. Yet unlike most Americans, who will receive some form of a public pension in retirement and will be eligible for Medicare as soon as they turn 65, Mr. Martínez is not entitled to benefits.

He belongs to a big club. As the debate over Social Security heats up, the estimated seven million or so illegal immigrant workers in the United States are now providing the system with a subsidy of as much as $7 billion a year.

It is impossible to know exactly how many illegal immigrant workers pay taxes. But according to specialists, most of them do. Since 1986, when the Immigration Reform and Control Act set penalties for employers who knowingly hire illegal immigrants, most such workers have been forced to buy fake ID's to get a job.

Currently available for about $150 on street corners in just about any immigrant neighborhood in California, a typical fake ID package includes a green card and a Social Security card. It provides cover for employers, who, if asked, can plausibly assert that they believe all their workers are legal. It also means that workers must be paid by the book - with payroll tax deductions.

But that does not mean all of them are. Many may still be paid off the book

IRCA, as the immigration act is known, did little to deter employers from hiring illegal immigrants or to discourage them from working. But for Social Security's finances, it was a great piece of legislation....

Social Security officials do not know what fraction of the suspense file corresponds to the earnings of illegal immigrants. But they suspect that the portion is significant. "Our assumption is that about three-quarters of other-than-legal immigrants pay payroll taxes," said Stephen C. Goss, Social Security's chief actuary, using the agency's term for illegal immigration.

Illegal immigrants may not actually collect Social Security, but I would be willing to bet that more money is spent covering their health care needs and educating their children than they pay in Social Security and other taxes.

Tully @Centerfield blogged It gets even more complicated (of course). A Redstate blogger has pointed out to me the impending "totalization" act with Mexico, which could impact SS even harder than has been claimed. No good numbers yet, so more bluster than substance, but still something to think about.

There are four matters regarding "totalization before the Legislature

• [H.CON.RES.50.IH] Expressing disapproval by the Congress of the totalization agreement between the United States and Mexico signed by the Commissioner of Social Security and the Director General of the Mexican Social Security Institute on June 29, 2004.
• [H.R.858.IH] Social Security for Americans Only Act of 2005 (Introduced in House)
• [H.RES.20.IH] Expressing the disapproval of the House of Representatives of the Social Security totalization agreement between the United States and Mexico. (Introduced in House)
• [H.R.530.IH] Individual Social Security Investment Program Act of 2005 (Introduced in House)

You may want to contact your representatives regarding these items.

Nathan Newman blogged Both US and Central American labor activists are escalating their opposition to the CAFTA trade deal -- formally known as the U.S.-Dominican Republic-Central America Free Trade Agreement.

Pudentilla blogged while the media circus the so-called minutemen vigilantes on the arizona border suffers in its competition for airtime with popemania, we do note that their actions are putting our retirement plans at risk. those "economic refugees" the vigilantes pursue are pouring billions of dollars into social security and medicare (which they will never draw down) every year.

As I said above, illegal immigrants may not actually collect Social Security, but I would be willing to bet that more money is spent covering their health care needs and educating their children than they pay in Social Security and other taxes.