Right-Wing Media Get Immigration Reform's Impact On Social Security Wrong

››› ››› SOLANGE UWIMANA

Right-wing media are rejecting the Congressional Budget Office (CBO) analysis of the Senate immigration reform proposal, claiming that the CBO's conclusion that the proposal reduces the deficit is "false" because immigrants' reliance on Social Security as citizens would eventually outweigh their contributions. In fact, the myth that the legalization of undocumented immigrants would negatively impact Social Security has repeatedly been discredited by the Social Security Administration.

CBO: Senate Immigration Reform Bill Reduces Deficit

CBO: Senate Immigration Proposal Would "Decrease Federal Budget Deficits By $197 Billion." In a June 18 cost analysis of the Senate immigration reform proposal, CBO found that it would reduce the federal deficit by $197 billion in the 10-year period immediately following implementation and by $700 billion in the second decade:

On balance, the economic impacts not included in the cost estimate would have no significant net effect on federal budget deficits during the coming decade and would reduce deficits during the following decade. Taking into account a limited set of economic effects, the cost estimate shows that changes in direct spending and revenues under the legislation would decrease federal budget deficits by $197 billion over the 2014-2023 period and by roughly $700 billion over the 2024-2033 period.

The cost estimate also shows that implementing the legislation would result in net discretionary costs of $22 billion over the 2014-2023 period and $20 billion to $25 billion over the 2024-2033 period, assuming appropriation of the amounts authorized or otherwise needed to implement the legislation.

According to CBO's central estimates (within a range that reflects the uncertainty about two key economic relationships in CBO's analysis), the economic impacts not included in the cost estimate would have no further net effect on budget deficits over the 2014-2023 period and would further reduce deficits (relative to the effects reported in the cost estimate) by about $300 billion over the 2024-2033 period. [Congressional Budget Office, 6/18/13]

Conservative Media Reject CBO Analysis, Claim Immigrants Drain Social Security

Investor's Business Daily Op-Ed Argues That CBO Score Of Immigration Bill Has "False Surplus." In an Investor's Business Daily (IBD) op-ed titled, "The CBO's Immigration Study And Its False Surplus," Hoover Institution fellow and Forbes contributor Paul Gregory claimed that the CBO's finding that the Senate immigration proposal decreases the deficit is a "flawed conclusion." He argued that the surplus is "false" by claiming that newly legalized immigrants would draw far more from Social Security than they would contribute:

Now let's turn to the CBO's flawed conclusion that the Senate immigration bill will produce a budgetary surplus in its first decade. (I will not even discuss its projection for the second decade because we cannot predict the composition of immigrant families 20 years hence.)

The source of the CBO's projected surplus is that legalized immigrants will pay Social Security taxes over the first 10 years while receiving virtually no benefits. Only "0.5% (of foreign-born individuals) would qualify (for Social Security) by the end of their 10th year," CBO says.

But the CBO ignores the fact that the immigration reform bill makes Social Security an even worse pyramid scheme than it already is. It counts each year's Social Security contributions by immigrants in the positive column without making provisions for future benefits, which will be about twice what the immigrants contributed over the long term. [Investor's Business Daily, 6/21/13]

Breitbart.com Parrots IBD Op-Ed: "CBO Calculation Error Explodes Immigration Surplus Claim." In a post headlined, "CBO Calculation Error Explodes Immigration Surplus Claim," Breitbart.com highlighted the IBD op-ed and wrote that Gregory's analysis proved that it is false that the Senate immigration bill will decrease the deficit, "due to inaccurate calculations of Social Security inputs by immigrants." The post continued:

The CBO's projections are based on the assumption that immigrants will pay Social Security taxes for the first 10 years and receive no benefits. But as scholar Paul Gregory points out in Investor's Business Daily, the CBO incorrectly "counts each year's Social Security contributions by immigrants in the positive column without making provisions for future benefits, which will be about twice what the immigrants contributed over the long term." [Breitbart.com, 6/24/13]

CBO Found Immigrants' Contributions To Social Security Improve The Program's Finances

CBO: Revenue From Social Security Payroll Taxes Would Increase By At Least $214 Billion Over 10 Years. In a June 18 cost analysis of the Senate immigration reform proposal, the CBO estimated that over the first 10-year period following enactment, increased revenue from newly legalized immigrants paying Social Security taxes would total at least $214 billion. From the study:

Enacting S. 744 would have a wide range of effects on federal revenues, including changes in collections of income and payroll taxes, certain visa fees that are classified as revenues, and various fines and penalties. Taken together, those effects would increase revenues by $459 billion over the 2014-2023 period, according to estimates by JCT and CBO. For that 10-year period, off-budget receipts (of Social Security payroll taxes) would rise by an estimated $214 billion, and on-budget receipts would rise by an estimated $245 billion. [Congressional Budget Office, 6/18/13]

CBO: Second Decade Would See Increase In Revenue From Payroll Taxes Paid By New Legal Immigrants Entering The Country. The CBO also found that new legal immigrants entering the country throughout the second decade starting in 2024 would boost revenue through additional payments in payroll taxes:

The revenue increase would be greater in the second decade than in the 2014-2023 period, mostly reflecting additional income and payroll taxes paid by new legal immigrants entering the country throughout the next 20 years. The added revenues would grow at a rate averaging close to 9 percent per year from 2024 through 2033, and would be increasing slightly faster than added spending at the end of that decade. [Congressional Budget Office, 6/18/13]

CBO: Increase In Spending On Social Security And Medicare Would Have Negligible Impact on Deficit. CBO found that while the growth in spending on Social Security and Medicare would exceed 20 percent annually in the second decade because of immigration reform, that overall increase would increase the deficit by less than 0.2 percent of GDP. From the analysis:

As the people making up the increase in the U.S. population under S. 744 get older and establish a sufficient work history to qualify for Social Security and Medicare, the spending for those two programs would be significantly higher in the second decade after enactment. The increase in spending for Social Security and Medicare in that second decade would account for almost 10 percent of the increase in direct spending, compared with about 1 percent in the first decade.

By the end of the second decade, the annual growth in additional spending for Social Security and Medicare would be slowing, but would still exceed 20 percent.  [Congressional Budget Office,6/18/13

Social Security Administration Also Found That Immigration Has Positive Impact On Program

Social Security Administration: Senate Immigration Bill Will Improve Social Security's Long-Term Solvency. In a letter to Sen. Marco Rubio (R-FL) outlining the effects of the Senate immigration proposal on Social Security, chief actuary Stephen Goss wrote that a Social Security Administration analysis found that "[o]verall, we anticipate that the net effect of this bill on the long-range OASDI actuarial balance will be positive." The analysis estimated that the proposal would result in an increase of 3.2 million jobs over a decade and boost GDP by 1.63 percent. From the letter:

Please note that these estimates are preliminary and are subject to change in the future as we further develop our estimates. In particular, we are working to develop full 75-year estimates of the implications of the bill as quickly as possible. Over this longer time frame, benefits will become more significant for those with additional earnings taxed and credited. However, over this same longer time frame, the additional births for the increased population under this bill will have substantial positive effects. Overall, we anticipate that the net effect of this bill on the long-range OASDI actuarial balance will be positive. [Office of the Chief Actuary, Social Security Administration, 5/8/13]

Social Security Trustees Report: "When Net Immigration Increases, The Cost Rate [Of The Program] Decreases." In their 2013 report, the Social Security trustees assumed that net immigration would average from 800,000 to 1.4 million people over three different periods and concluded that for all three -- 25, 50, and 75 years -- "when net immigration increases, the cost rate decreases":

For the 25-year period, the cost rate decreases from 16.18 percent of taxable payroll (for average annual net immigration of 800,000 persons) to 15.90 percent (for average annual net immigration of 1,400,000 persons). For the 50-year period, it decreases from 16.55 percent to 16.13 percent, and for the 75-year period, it decreases from 16.86 percent to 16.37 percent. The actuarial balance increases from -1.38 to -1.16 percent for the 25-year period, from -2.45 to -2.08 percent for the 50-year period, and from -2.95 to -2.53 percent for the 75-year period.

The cost rate decreases with an increase in net immigration because immigration occurs at relatively young ages, thereby increasing the numbers of covered workers earlier than the numbers of beneficiaries. Increasing average annual net immigration by 100,000 persons improves the long-range actuarial balance by about 0.07 percent of taxable payroll. [Social Security Administration,5/31/13]

For more on the economic benefits of immigration reform, click here

Posted In
Immigration, Immigration Reform
Network/Outlet
Investor's Business Daily, Breitbart.com
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