Social Security Heading South of the Border
1/11/2003 12:00:00 AM - Joel Mowbray
If top officials at the State Department and Social Security Administration have their way, up to $345 billion—or more—could be siphoned from the Social Security “trust fund” over the couple decades, mostly to pay benefits to Mexican citizens who worked illegally in the United States.
The ill-conceived plan was hatched as part of an accord currently being negotiated with Mexico to help align its social-security system with America’s. The U.S. already has similar agreements with 20 nations, mostly in Europe, known as Totalization Agreements. “Totalization” is government-speak for combining, or "totalizing", the Social Security taxes paid into America’s and a foreign country’s respective systems—which allows people who split their careers between two countries to get a harmonized retirement benefit from the two governments.
When media reports of the Mexico pact surfaced last month, the cost was pegged at hundreds of millions of dollars per year, to be paid out to roughly 37,000 Mexican citizens living legally in the U.S. But not mentioned is how the accord with Mexico, as now written, would differ from existing agreements in one key respect: illegal aliens from Mexico would also become eligible for Social Security benefits, which would force costs to skyrocket.
Under current law, people who worked illegally in the United States can only receive Social Security benefits based on taxes paid during that time by becoming citizens or permanent legal residents. Once living lawfully in the U.S., though, someone can receive benefits based on work performed while in the country illegally. The Totalization Agreement with Mexico, however, would make illegal aliens from that country eligible for the same treatment under Social Security as U.S. citizens—without ever becoming legal residents or citizens.
Although the press office from the Social Security Administration (SSA) cautions, “Discussions are still in the preliminary stages,” government sources familiar with the negotiations say that there has been agreement on most significant issues—including the expansion of eligibility for illegal aliens.
An internal SSA memo also indicates that the pact will allow illegal aliens to qualify for Social Security benefits: “Mexican nationals working illegally in the U.S. can currently become entitled to benefits if they have made payments to the Trust Fund that meet the vesting requirements. The Totalization Agreement would include this population of Mexican workers within the overall population of workers covered by this agreement.”
With anywhere from 7 to 11 million illegal aliens in the U.S.—the majority of whom are from Mexico—including illegals in the pact would cost many more billions of dollars per year. The best indicator of how much illegals would receive in benefits would be the amount they have paid in over the years.
Since 1990, the amount of Social Security taxes paid into the Earnings Suspense File (ESF)—which consists mostly of sums contributed by illegal aliens—has been increasing rapidly, for a total of nearly $300 billion during that time span, according to SSA's own figures. (Like all government “trust funds,” there’s no money in the ESF, just an accounting of money.) In Social Security's entire history, some $345 billion in Social Security taxes have been paid under bogus or non-work Social Security numbers, the hallmark of taxes paid by illegal aliens.
Some argue that illegal aliens deserve benefits since they already pay Social Security taxes, the fact is that allowing illegals to tap into the entitlement—aside from rewarding illegal behavior—substantially undermine the financial ability to “pay” for a transition to personal account-based reform if the money that would have gone to the accounts is instead funneled to illegal aliens because of the Totalization Agreement.
Finals negotiations—which are overseen by State, but handled on the ground by technocrats from SSA—could be finalized next month, according to an internal SSA memo. And an internal State Department memo indicates that the accord could be implemented as early as this fall. Although the White House would no doubt love to shower Mexico with affection, officials there are not aware of the true size and scope of the agreement—nor is Congress, which has the final say.
A Totalization Agreement with Mexico similar to the others—meaning no inclusion of illegals—would actually be a wise move. Such a deal would allow Mexican citizens who play by the rules to take full advantage of Social Security taxes paid both here and south of the border. But as things stand right now, it is officials at State and SSA who are not playing by the rules—and Congress and the White House should not play along.