Saturday, June 02, 2007

The Cost of The Immigration Bill--Totalization's worse than you think.

If you've never heard of "Totalization," get familiar with the term.

...President Bush wants to add a few million people to the rolls of Social Security.

These pacts,... are called “totalization agreements.” They permit an American living abroad, or foreign worker living here, to escape the double taxation that would occur if he paid into each country’s government retirement plan. As well, the agreement permits a person to “totalize” his social security payments into each country’s program if he never worked in one country long enough to qualify for benefits from either.

The United States maintains totalization agreements with many countries, almost all of them European. Now, the president wants to sign a totalization agreement with Mexico. Problem is, the relationship between the United States and Mexico is of a different breed than that between the United States and Europe.

Social Security already views some illegal aliens as it does any other American, as the Center for Immigration Studies (CIS) reports. The Social Security Administration “permits foreign nationals to work many years illegally with one or more fraudulently obtained Social Security numbers, acquire legal status (e.g. through an amnesty or marriage to a U.S. citizen), obtain a valid SSN, and then request that his or her prior earnings credits be moved to the new number.”

In the "normal" totalization concept, it's different:

...a pact with Mexico undermines even the concept of totalization, which assumes that a foreign corporation sends a worker to the United States, and that the foreign corporation and workers have contributed to the person’s home-country social security account. “After working a limited number of years abroad,” CIS observes, “workers return to their home country and resume paying social security taxes, eventually vesting for benefits based upon their combined work history in both countries. In almost all of the existing totalization agreements, U.S. workers and their employers benefit as much or more than those in the counterpart nation.”

Only about 40% of Mexicans participate in the Mexican SocSec system--one must work for 24 years to be eligible. AND--by the way--the Mexican system only pays out what the worker put in--unlike the US system, which pays for lifetime.

GAO estimated that totalization would cost the SocSec system around $78 million in Year One, and rise to $650 million/year by 2050.

But their estimate has some false assumptions:

Reported CIS, “The SSA did not take into account the millions of unauthorized Mexican workers currently in the United States who could gain legal status through an amnesty. Not only they but their families — who may never have lived in the United States — could be eligible to receive U.S. Social Security benefits after the worker returned to Mexico. Nor did SSA factor in the possibility that the promise of Social Security benefits would lure even more Mexicans to enter the United States illegally.” Those Mexicans, of course, would smuggle in their families.

Thus, Bush's amnesty bill would add 12 million (or so) workers (and their dependents) to the Social Security rolls--not to mention any additional illegals who show up, attracted by the Totalization Magnet of G W Bush.

1 comment:

Anonymous said...

What you do not realize is that this totalizaion HAS ALREADY BEEN SIGNED WITH MEXICO IN 2004 by or wonderful president Mr. Grudge Bush. If these 12-20 million get legaization, thus a ss number they will be vested in the ss system in 18 months, YES 18 months. It take the american worker 10 years to get this done. Face it we are just screwed as a nation if this gets done !!!!!!!!!!!!!