Will immigration save Social Security? July 3, 2013, 2:01 PM

By Matthew Heimer

The U.S. Senate passed a broad immigration-reform bill last week, and one group of bureaucrats is almost certainly cheering for the bill to make it across the finish line: The accountants at the Social Security Administration. By offering a route to citizenship for about 11 million immigrants now unlawfully living in the country, and overhaul would bring those people into the tax rolls. Earlier this spring, Social Security’s chief actuary, Stephen Goss, estimated that the influx of newly legal residents would result in about 6.5 million new people paying payroll tax by 2024. The financial upshot: Social Security’s battered trust fund would get about $276 billion new revenues over the next 10 years, while paying out only $33 billion in additional benefits.

AFP/Getty ImagesMore legal workers, more payroll-tax revenue.
That’s a huge fiscal win in the short term—and it’s part of a larger economic argument that holds that immigration reform will boost the economy and wear down the deficit. But as Shaila Dewan notes this week on the New York Times’s Economix blog, “10 years is a short time when you consider that a vast majority of the new and newly legalized immigrants would be paying into the system during that period and drawing out their Social Security benefits later.” Down the road, as the new citizens will start collecting from the program, the budgetary benefits of bringing them into the retirement system become much less clear. Predicting the long-term impact on Social Security, Dewan acknowledges, requires trying to predict how much bigger the overall economic pie will get as a result of different immigration standards, a subject on which there are far too many variables in play to make even an educated guess.

Dewan’s post draws attention to another interesting point: Illegal immigrants currently pay about $12 billion a year in Social Security taxes, due to fraud and loopholes in the payroll system. But the so-called Corker-Hoeven amendment, which brought more Republicans on board with the current bill, would bar immigrants who win citizenship from getting credit for Social Security for years when they worked in the country illegally.

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