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Opinion: Columnists

Immigration reform won't make Social Security solvent

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Politics,Congress,Byron York,Columnists,Immigration,Marco Rubio,Federal Budget,Entitlement Reform,Social Security

Advocates of comprehensive immigration reform give many reasons for their effort. They want to fix the nation's "broken" immigration system. They want to secure the border. They want to bring 11 million illegal immigrants "out of the shadows."

But there are other reasons that don't receive as much attention. For example, during the recent Senate debate, reform supporters expressed hope that a new generation of immigrants would pay for the Baby Boomers' golden years -- and get the nation out of a huge fiscal jam.

"Eighty million Baby Boomers are going to retire in the next 40 years," said Sen. Lindsey Graham, a Republican member of the Gang of Eight. "We are going to need a lot more legal immigration than is in this bill. Who is going to take care of the Baby Boomers when we retire?"

"Our changing demographics have put a strain on our Social Security system," added Democratic Sen. Al Franken. "More young workers paying into the Social Security system will help ease that, and that is precisely what this bill will provide."

"They pay in for ten years, and ... they cannot receive any benefits for ten years," said Republican Sen. Bob Corker. "We have this huge amount of money that's going to be coming into the Social Security program and coming into the Medicare program, which candidly helps people in this nation because it makes those programs more solvent."

Although it hasn't received much attention, Social Security is crucial to the fiscal picture of immigration reform. The Congressional Budget Office found that the Gang of Eight bill would increase the deficit by about $14 billion in its first decade. But it would also result in $211 billion in new Social Security tax revenues from legalized immigrants who would be paying taxes but not collecting benefits. It is those new Social Security tax revenues -- which theoretically are supposed to go toward paying for Social Security -- that allow the Gang to claim their bill reduces the deficit by $197 billion.

On May 8, the chief actuary of Social Security, Stephen Goss, sent a letter to Republican Gang of Eight leader Marco Rubio saying reform would have a positive effect on Social Security's finances in the next ten years. But that was easy. Most immigrants are well below retirement age; they won't collect Social Security benefits for many years. All they'll do for a long time is pay into the system.

But what about the long term? Goss promised to develop a 75-year analysis of the legislation "as quickly as possible." As it turned out, Goss delivered that long-term estimate on June 28, which just happened to be the day after the Senate passed the bill. It was never part of the debate.

According to Goss, the bill's long-term benefits are also positive -- but just barely, and not in a way that will strengthen the Social Security system as Graham and others claim.

The Social Security Administration's most recent estimate says the system will become insolvent in 2033. Under the Gang bill, according to Goss' estimate, even with all those new immigrants paying taxes, the system will become insolvent in 2035. Not much difference there. And after that, when the immigrants hit retirement age and begin collecting benefits, they will increase Social Security's deficit.

Of course, the immigrants will have children, who will also pay into the system. Put it all together, according to Goss, and immigration reform will add about $2 trillion in tax revenues in the next 75 years, while costing about $1.5 trillion in benefits. That's a net plus, but not much of a boon, since it is stretched out over more than seven decades -- and certainly not when one considers the tendency of federal programs to grow in cost.

So even with reform, the nation's entitlement programs are on as shaky ground as before. "This means immigration reform doesn't make entitlement reform any less necessary -- it just puts off the depletion date by two years," says conservative analyst Yuval Levin. "And it's important to understand that this two-year difference basically amounts to nothing, since projections of the depletion date change by that much every couple of years now."

It's understandable that Democrats who have long resisted entitlement reform might hope to solve the nation's coming entitlement crisis simply by importing new taxpayers. But it's less easy to understand why Republicans who advocate entitlement reform would hope to solve the problem by bringing in a new generation to prop up the system -- a generation of workers who will, of course, put their own burdens on entitlement programs as they age.

In any event, it won't solve the Boomers' problem.

Byron York, the Washington Examiner's chief political correspondent, can be contacted at byork@washingtonexaminer.com. His column appears on Tuesday and Friday on washingtonexaminer.com.

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Byron York

Chief Political Correspondent
The Washington Examiner