On the campaign trail, Gov. Charlie Crist has suggested that a path to citizenship for illegal immigrants could offer the United States an escape hatch from an increasingly unsustainable Social Security ledger.
“We can make the federal budget much more solvent and accountable by having that many more people participating in our American economy in a productive way,” Crist told the Orlando Sentinel editorial board. “If we have those 11 to 14 million people productively participating in the American economy and paying the payroll taxes that would be attended to it, that would help Social Security,” he said at a south Florida retirement community. “That’s a pretty darn bold idea that I don’t think anybody’s talked about,” he told the Miami Herald editorial board earlier this summer.
Wrong on all counts, governor.
Whatever the arguments for a path to citizenship, adding millions of primarily low-skill workers to the citizenry is anything but a fiscal fix, as studies and think tanks have shown for years. The numbers are a bit messy since they’re projections for revenues and expenditures decades out, and because the details depend on how such an amnesty program would be implemented — the logical argument first, then:
Estimates show that somewhere between 75 and 85 percent of illegal immigrants have a high-school diploma or less, which means, as a population, their income potential is limited, and they would rely on the social support system more than they would bolster it.
“I was always taught in economics, just exaggerate what you’re saying a little bit and see if it makes any sense,” Robert Rector, senior research fellow at the Heritage Foundation, told Battle ’10. “If it’s true that granting access to government programs to high-school dropouts from abroad is really good for our fiscal picture, then the more of these that you do should be better, right? Why don’t we go out and get another 30 million high school dropouts?”
Here’s the fallacy of Crist’s thinking, by the numbers:
About 50 percent of illegal immigrants already pay Social Security taxes, because their wages are “on the books.” The Social Security Administration estimates that illegals pay as much as $7 billion into the program on a yearly basis. Since they’re not eligible for the benefits, this is an inflow of money without any future corresponding outflow.
If Social Security’s numbers are the only consideration, keeping illegal immigrants illegal has its advantages.
Amnesty would bring the other half of current illegals into the fold of payroll taxes, and increase Social Security receipts in the short term. But it would also make all of these individuals eligible for the program upon retirement — essentially turning today’s one-way cash flow into a two-way street.
“It is true that they will pay small amounts into the Social Security and Medicare systems for, say, the next two or three decades, but once they retire, they will draw down $2.7 trillion in benefits from Social Security and Medicare alone,” Rector said.
Rector calculated the figure during the 2007 consideration of amnesty, based on an estimate of 10 million adult illegal immigrants.
Their retirements wouldn’t be timed well, either. Crist has invoked the years 2037 and 2041 as the point where Social Security’s solvency becomes a problem. Steven A. Camarota, director of research at the Center for Immigration Studies, told Battle ‘10 that the average age of illegal immigrants is approximately 28, which means a large portion of them will be hitting retirement age approximately 30 years from now, during the period Crist indicates is perilous.
“They would start to retire on Social Security and Medicare at precisely the point of the greatest financial crisis in those systems,” Rector said.
If the federal budget is considered as a whole, even the short-term benefit of increased Social Security receipts disappears.
“Amnesty renders the illegals eligible for 71 different means-tested welfare programs,” Rector said.
One of the programs many of these households would qualify for, the Earned Income Tax Credit, was specifically designed, according to the IRS, to compensate for the Social Security payroll taxes withheld from low-income workers. Although increased employer contributions would not be negated, taxpayers’ right hand would, through the EITC, directly offset much of the additional revenue collected by the left hand.
Rector said that if all government programs are taken into account, the average low-skill immigrant family receives about $20,000 of government benefits in excess of what it pays in taxes.
“You’re not adding people who are average, you’re adding people who are well below average in income, educational attainment, and tax revenue,” Camarota said. “So they’re a drain on the rest of the public treasury right from the get go.”
Crist also suggests that amnesty could help change the age structure of society and bolster Social Security by having more workers for each retiree.
Though illegal immigrants are generally younger and have more children than the native population, the differences aren’t big enough to make an impact, especially since illegals represent such a tiny fraction of the entire population — between three and four percent, if the population total of 10 million is assumed.
The same is true of immigrants on the whole, Camarota said.
“They would need to have many more children, and they would have to be more numerous,” Camarota said. “They’re not that much younger when they arrive, they age like everyone else, they don’t have that many more children — though there’s a statistically significant difference between [immigrants and native-born citizens], like 2 children on average versus like 2.6, so that matters. But it’s not enough.”
The merits of offering a path to citizenship for illegal aliens can be debated on many levels, but a potential solution to the Social Security problem isn’t one of them. Luckily, Crist is willing to consider other options.
“I’m open to anything that would be reasonable to help us get to a place that we don’t have such a deficit,” Crist told the Herald.
Taking two steps back on amnesty would be a logical place to start.