POINT OF VIEW: Social Security, Medicare funding woes
Published: July 27, 2009
Immigration — legal and illegal — works against repairing Social Security and Medicare.
Medicare and Social Security trustees recently announced the trust funds will be insolvent sooner than previously reported — by 2017 and 2037, respectively. In response, several proponents for illegal alien amnesty began beating the drum that amnesty was the solution for insolvency. In fact, amnesty would ultimately compound the problems.
Social Security and Medicare are structured like giant Ponzi schemes where today’s workers support today’s retirees.
In 1950, there were 16 workers paying taxes into the Social Security and Medicare systems for every retiree; in 2005, there were only three workers for every retiree. Instead of correcting the pyramid scheme nature of these programs, advocates of illegal immigrants as a cure are hoping we will just “kick the can” down the road. Ultimately this approach will fail for the same reason all pyramid schemes collapse. It is mathematically impossible for enough workers to enter the system to support retirees.
In truth, the only way to permanently fix Social Security and Medicare is to emphasize programs that would reduce U.S. population and encourage higher skill levels of U.S. citizens. In turn, through the dynamics of supply and demand, higher incomes would be generated. Programs could then be put in place to encourage additional savings to supplement lower payments under Social Security.
Alan Greenspan, a co-creator of the housing, asset and credit bubbles, indicated in 2009 that increasing immigration “would lower wage premiums of skilled over lesser skilled” workers. In other words, increasing immigration would decrease the income of a large part of the working class — Americans Greenspan calls the “privileged elite whose incomes are being supported at noncompetitively high rates by immigration quotas.”
An immigration advocate, Greenspan seems to believe the Social Security and Medicare funding problems can be repaired by lowering the average worker’s compensation.
A Heritage Foundation report concluded that taxpayers would be on the hook for more than $2.6 trillion for net retirement costs if amnesty were granted to 10 million adult illegal immigrants. (The actual number under an amnesty might be closer to 20 million per studies by Californians for Population Stabilization.)
With about 16 percent of American citizens either unemployed or working part time but looking for full-time positions, legalizing illegal aliens would put substantial additional burden on the various agencies and programs that are attempting to provide benefits to unemployed Americans.
Amnesty for illegal aliens and increased legal immigration would not solve Social Security and Medicare funding problems, but instead would result in lower wages, and strained agencies and programs that are attempting to provide for unemployed American workers. As well, Social Security and Medicare would have significant unfunded liabilities potentially greater than $2.6 trillion dollars.
Legalizing illegal aliens and increasing legal immigration clearly are ill-conceived ideas.
Fotopoulos is a senior writing fellow with Californians for Population Stabilization (capsweb.org).
Amnesty for illegal aliens and increased legal immigration would not solve Social Security and Medicare funding problems, but instead would result in lower wages.