President Obama wants Americans to believe that amnesty for illegal immigrants will reduce the deficit. His fiscal year 2016 budget claims, "We will also put our Nation on a more sustainable fiscal path by achieving $1.8 trillion in deficit reduction, primarily from reforms in health programs, our tax code, and immigration. ... The Congress can also help grow the economy, reduce deficits, and strengthen Social Security by passing comprehensive immigration reform."
Asked to explain how amnesty "strengthens Social Security," White House Office of Management and Budget Director Shaun Donovan told reporters yesterday:
Specifically, on Social Security Trust Fund, one of the fundamental problems we're facing is that the number of workers that we have relative to the number of retirees that are supported by Social Security has been shrinking. And so comprehensive immigration reform is actually one of the most critical things that we can do to shore up the long-term solvency of Social Security, and as a result, to improve our deficit challenges in the long run.
And in fact, you might have seen last week that just from the executive actions that the President took late last year, there is a positive impact on the Social Security Trust Fund because of additional payments that come into that. And so comprehensive immigration reform on a much larger scale would improve that.
CBO’s numbers are that comprehensive immigration reform -- and that's what we reflect in our budget -- in the first decade is about $160 billion of deficit reduction; in the second decade, it's almost $700 billion of deficit reduction. So it grows over time as more workers come into the country, pay taxes, and pay into the Social Security Trust Fund.
Here are the two CBO reports referenced by Donovan. The first, a letter sent by CBO Director Doug Elmendorf to Sen. Thad Cochran (R-MS) just last week about the benefits of undoing Obama's executive amnesty through the Department of Homeland Security funding bill, and second a cost estimate of the 2013 Senate amnesty bill.
Both documents do show that giving illegal immigrants work permits and Social Security numbers would result in higher revenues, almost entirely through higher payroll tax payments. Specifically, Obama's executive amnesty would lead to $22.3 billion in more taxes, $14. 9 billion in more spending, and $7.5 billion in lower deficits through 2025. The Senate amnesty bill would increase spending by $262 billion, increase revenues by $459 billion, and lower deficits by $197 billion through 2023.
But the CBO only achieves this deficit reduction by assuming the Social Security Trust Fund does not exist. The CBO is assuming that all Social Security and Medicare payroll taxes just go into the general fund and are used to pay for normal government spending right now.
If the Social Security Trust Fund does exist, in other words, if the Social Security payroll taxes of amnestied immigrants are deposited into the Social Security Trust Fund so they can be used to pay for Social Security benefits later, as law requires, then all of a sudden amnesty is a huge deficit creator.
According to the CBO, if the payroll tax dollars of the immigrants who gain work permits through Obama's amnesty are deposited in the Social Security Trust Fund, as law requires, other "on-budget" revenues will only increase by $5.2 billion through 2025, spending would increase $14 billion, for a net addition of $8.8 billion to deficits.
Under the Senate amnesty bill, "on-budget" spending would increase $259 billion, taxes would increase $245 billion, for a $14 billion net deficit.
Now it is true: if amnestied immigrants payroll tax dollars do go to the Social Security Trust Fund, instead of the federal government's general fund, then the date that the Social Security Trust Fund is scheduled to grow broke is pushed back. But Social Security would by no means be saved. People who pay into Social Security still get far more in benefits out then payments put in. This is equally true of immigrants.
So how many more years would amnesty push back the bankruptcy of the Social Security Trust Fund? A whole two years (2035 instead of 2033), according to the Chief Actuary of Social Security.
The bottom line: Obama and his amnesty activist allies can't count the increased payroll taxes from amnestied immigrants twice. Amnesty either increases the deficit by billions of dollars and increases the life span of the Social Security Trust Fund by two whole years, or amnesty decreases deficits now but only by stealing the Social Security benefits of every American who has paid into the system.
Obama can't have it both ways. Amnesty does not magically allow Social Security payroll taxes to be counted twice.