Posted on September 13, 2004

U.S. Social Security Ties with Mexico is Bad for America

James R. Edwards, Insight on the News, Sep. 9

Those in Congress who really want to protect Social Security should put some action behind their bluster. They should add language to the Labor-Health-Education Appropriations bill prohibiting funds from being spent to carry out an expensive Social Security giveaway to Mexico.

U.S. Social Security Commissioner Jo Anne Barnhart signed an agreement June 29 that will allow Mexicans who have worked in the United States, their dependents and survivors to tap into Social Security.

This could spell trouble for American seniors and for baby boomers as they approach retirement.

To hear proponents tell it, this agreement is all about saving some 3,000 U.S. workers and their employers an estimated $140 million on taxes over five years. But actually, American taxpayers could be out hundreds of billions of dollars over coming years.

Social Security officials apparently believe their own (under)estimate that only 50,000 Mexican beneficiaries would receive benefits in the first five years. You don’t have to be a math whiz to figure out pretty quickly that that number is laughably low. A General Accounting Office report last fall devastated the Social Security Administration’s low-ball figures.

GAO concluded that the “highly uncertain” official cost estimate “does not directly consider the estimated millions of current and former unauthorized workers and family members from Mexico.” Social Security must be the last agency to know we have a huge illegal immigration problem, with almost 70 percent of illegal aliens being Mexican.

Ronald Reagan said if you want more of something, subsidize it. Entitling Mexican illegal aliens and their family members to Social Security benefits would amount to a subsidy and a huge incentive to immigrate illegally to the United States.

As the GAO put it, “The [Social Security Administration] estimate also inherently assumes that the behavior of Mexican citizens would not change and does not recognize that an agreement could create an additional incentive for unauthorized workers to enter the United States to work and maintain documentation to claim their earnings under a false identity.”

Moreover, untold numbers of illegal workers have returned to Mexico and, GAO noted, they and their families “could conceivably benefit from a totalization agreement.” While Social Security projected 300,000 Mexican beneficiaries in 2050, GAO said that figure “represents only about 6 percent of the estimated number of unauthorized Mexicans in the United States today, and thus appears relatively low.”

At a 2003 House Immigration Subcommittee hearing, investigative reporter Joel Mowbray explained that Mexicans illegally working in the United States already can qualify for Social Security benefits; the totalization agreement only makes it easier for them, plus opens up eligibility for their dependents and survivors. He also noted the “several hundred billion dollars” price tag the “progressive” Social Security structure adds when “illegal aliens from Mexico [can] get back significantly more money than the taxes they paid.”

Social Security’s track record has been poor at estimating the number of beneficiaries under totalization agreements. GAO found frequent overestimates and underestimates, “usually by more than 25 percent.” And “where the underestimates occurred, the differences were huge.” Importantly, GAO noted “the number of estimated beneficiaries for prior agreements is substantially smaller than for the proposed Mexican agreement.”

In other words, for Social Security number-crunchers to underestimate the beneficiaries for a totalization agreement with Australia or a Western European country is bad but not horrible because the totals are fairly small. However, underestimates for Mexico would have serious financial ramifications for our Social Security system.

The Mexico agreement raises the stakes for a Social Security trust fund set to run red ink starting in 2018 and go broke in 2042. Messing with Social Security, upon which some 47 million Americans rely today, doesn’t make good political sense — certainly not for any rational politician in an election year.

Fraud and abuse will only worsen under this agreement. Mexico is notorious for its culture of rampant fraud. GAO was troubled that Social Security officials failed to inspect adequately Mexico’s recordkeeping system to ensure its integrity.

Mowbray described for Congress a frightening scenario in which Mexicans could scam the system. He said Social Security’s disability insurance program “is wracked with fraud,” and millions of illegal aliens and their family members could exploit that route to start collecting payments early — and continue to collect benefits for years.

Social Security bureaucrats have addressed none of the concerns raised by GAO and others.

Congress should rein in the bureaucrats at Social Security and kill this agreement, which has all the earmarks of a costly bad deal that Americans will only regret.

Given the ridiculously low estimates on which it is being sold publicly, the unstable financial future that Social Security already faces, the incentive for runaway fraud and crime, this agreement is unwise.