forefront to defend and generally shout about what they consider
important. I have seen some pretty insane logic put forth by one side or
the other. We have guys like Paul Krugman screaming that we absolutely
have to be spending more and running up the deficit/debt to Warren
Buffet who thinks that the growth in debt should be limited to no more
than 3% of GDP.
The problem is that EVERYONE is talking his or her book. I think very
few are making any sense at all. An interesting example comes from Scott
Hochberg (Strengthen Social Security Campaign) who wrote an article for the Huffington Post about illegal workers and why the country should not tighten up the E-Verify standards.
What possible reason could Mr. Hochberg give for defending the status
quo where we have 8 million illegal workers in the country at a time of
record unemployment? Answer: It would be a disaster for Social Security.
I have a very difficult time with the idiocy of this position. To make
matters worse Hochberg has his facts wrong. From the article:
E-Verify is a tool designed to prevent the employment of undocumented workers in the United States.
BK: This is correct.
E-verify
would remove millions of taxpayers from the pool that pays into Social
Security, thus weakening the solvency of the Trust Fund.
BK: This is where I go nuts. The argument put forward is that the
illegal workers contribute to SS and that without them SS is bankrupt. Yes, that is true. Without illegal worker’s contribution SS would be in deep deep trouble today. But does that mean we have to sustain illegal workers? Some numbers:
Of the
approximately 8 million undocumented workers, it is estimated that about
two-thirds of them pay payroll taxes into the Social Security Trust
Fund, accounting for $12 billion in 2007.
Undocumented workers have contributed somewhere between $120 and $240 billion to the Trust Fund, accounting for 5.4 to 10.7 percent of its total assets.
The numbers used here come from a very significant source, the head of
SSA, Mr. Goss. I wrote about this when he first made the remarks last
September (link).
Note:
I think the numbers have to be higher than what has been indicated by
Mr. Goss. If the number is (only) $12b in 2007 it implies that the
average earnings of the illegal workers is less than $20,000 per year. I
think it is closer to $35k, which would put the annual number for
improper tax receipts closer to $20 billion annually!
The article goes on to describe how serious things would be if we did not have the illegal workers contributing to the till:
According
to the chief actuary of SSA, without the contributions of undocumented
workers, the Trust Fund would run out of assets six years earlier than
estimated in the 2010 Trustees Report.
BK: I think it would be much more than six years. If SS backed
out all of the illegal contributions that have been made it would be
busted today.
Here’s the sentence that took me over the top:
Any undocumented worker that pays taxes provides a net gain to the system (since they don't collect benefits).
BK: This is complete and utter bullshit. I don’t know if Mr.
Hochberg is lying to us or if he is just ignorant of the facts. The
reality of this crazy situation is that illegal workers who contribute
to SS have the same rights as any natural citizen to receive retirement
or disability benefits. The only difference is that the illegal worker
MUST receive their monthly benefit checks outside of the country. One ex
SS worker clarified these facts at the Angry Bear blog. Her words:
I was the manager of the SS office in Northern Santa Barbara County.
Once
a person returns to his country of origin, s/he may apply for SS
benefits and receive them abroad at any American embassy or consulate.
He just can't receive SS benefits inside the US. This is well known and
is commonly done. Also, even if the worker never receives a dime in SS
benefits, his wife/widow and any children legally here can receive
benefits. SSA has a large component which processes such claims.
BK: I promise you this is correct. I have independently confirmed this. If an illegal worker pays into SS for the required number of years, they get benefits. Period. Mr. Hochberg is flat out wrong on the facts.
Consider the lunacy of the position taken by the defenders of Social Security. Another way to state their position could be:
We
consider Social Security to be the number one priority in the country.
We think that no changes should be made to this system regardless of all
of the evidence that it is now out of control. We choose to ignore the
laws of the land when it comes to illegal immigration. We choose to
ignore the consequences to the unemployed in America that illegal
workers are contributing to. We think if we keep up the status quo
(where 8 millions workers contribute hundreds of billions of illegal tax
receipts) Social Security will be able to keep the checks going a few
years longer. We are prepared to lie about the facts to achieve our
ends. We don’t give a damn about fairness. We are defending our narrow
interests. We don’t care about the huge inter-generational transfer of
wealth that SS is bringing us. Our narrow goal is to protect the
interests of the Boomers. Our motto is:
BK translation: After I’m dead things can go to hell.
Excuse the rant.
ha ha.. the politicians want the sheeple thinking like you. If they really wanted to control illegal immigration, all they needed to do is fine the employers. but no one talks about that in the media. Guess why.
the problem is the American Government doesn't give 1 peso/cent about American citizens, unless they are the CEO of a multinational corporation or own a bank. The best we can hope for is benign neglect versus outright malevolence.
Investing while not an exact science is exacting is it not? Making it a policy to blow up banks strikes me as a bad start. Kinda like "moving the starting blocks back 50 feet" for your hundred yard dash. Here's what we really need:
http://www.youtube.com/watch?v=8ApeH_ynA8Q&feature=player_detailpage
Even when presented with the above facts from Bruce, you will just be excused as a racist/teabagger/etc. There is no more sane debate in this country, so why even bother?
You mean like when incoherent Marxists launch ad hominem attacks on writers of subjects they care not to understand, because they already know it is evil?
http://lewrockwell.com/woods/woods173.html
Care to put a number on how much illegals have actually collected in bennies, BK?
I think it is bigger than you think, but don't have the numbers to prove it. One thing for sure, what ever has been paid is a pittance compared to the actual obligations that must be paid in the future.
You are trying to defend this bad logic. "We should continue to allow illegal workers because they make contributions and later they do not get benefits". (they have not worked the required 40 quarters.)
You don't see how flawed that thinking is? What you are encouraging is that more illegals will stay here longer in order to get the benefits.
Look at the big picture. Yes, there is some net benefit to SS. But the rest of the society and the economy has to pay a big price. So really, what is the cost of SS?
Answer: Much greater than we are told.
One thing for sure, what ever has been paid is a pittance compared to the actual obligations that must be paid in the future.
---------
This puzzles me. I own a business. I spend about 60% of gross revenues on raw materials. Let's say I sell about $10m/year. Am I to assume I have $60m of "unfunded ingredients" over the next 10 years? That sounds bad doesn't it? But it doesn't account for all the revenue I'll be generating to pay for all of it.
What's stupid is knowing what your obligations will be, then lowering revenues to purposely run deficits.
It would seem the assumption is that undocumented workers using "fake" or unissued SS#s somehow are unable to collect benefits, but the comments from the SSA official would refute that assumption, as long as the benefits are received outside the US, or are received by a surviving spouse/children. If/since this is the case, yes the overall future cost will be staggering, as benefit recipients, regardless of citizenship status, invariably receive far more in benefits than they have paid into the SS system. Which, of course, essentially describes any Ponzi scheme, including SS, which is in the process of ending badly due to the declining number of workers per retiree.
I don't understand logistically how any of these workers (or their survivors) could ever file a claim without a valid SSN, especially if they shared one with a few dozen other people.
Then again, since it is a political (read: criminal) organization, perhaps they do it on purpose in order to get kickbacks, etc.
They produce a bunch of pay slips and an affidavit that it was indeed them who did the work and paid the FICA.
What's to prevent someone from doing this fraudulently? Could I do this multiple times using various Latin American names? It sure could help with the margarita bill.
since the illegals dont seem to have any rights, the pols will surely make it so that they only pay in and not take out.. eventhough it may be making those payments today.
I couldn't fathom that such rights existed already. If one didn't have a green card or citizenship, how could you have a valid claim?
But another thought on your point above: let's imagine that these checks are "designated" for Mr Illegal Worker in some other country. Who's to say that those checks (outside the US banking system) are not being "cashed" by someone other than the worker/beneficiaries? I'm suggesting that it's a money laundering scheme used by pols or other favored groups to enrich personal fortunes or to finance "other activities" that would be frowned upon were they to see the light of day.
I'll handle this one. The answer is (drum roll, please): too much.
Nice article, Bruce.
We learn something every day. This thing about SS abroad is news to me.
Bruce, I think you know why SS defenders say what they say, right?
It's because assholes in DC don't want to make SS solvent by raising the cap, the only logical and decent solution.
Oh well! But I agree with the gist of your post; everyone is talking their book...which is why the Prez isn't listening to anyone save a VERY restricted group of people. Said people are also talking their book too.
Such a cluster of fucks!
They can only collect if they have a genuine social security #, many undocumented workers use fake ss cards. What happens to the money paid into the fake accounts?
You know the entire point that both bright bulbs in this article miss completely is that Social Security contributions would remain the same if American workers were doing the jobs now being done by illegal immigrants.
The entire article, the entire premise that Social Security would suffer a loss in funding is essentially wrong. The American workers doing the jobs being done by illegal immigrants would contribute essentially the same amount of money to Social Security tax.
Can I make this more plain?
....maybe the author was assuming Amerikans wouldn't do these jobs???
That's exactly right. This guy assumes these jobs would just disappear, along with their SS contributions, overnight, which is utter nonsense. SS is one system that we should keep. It has not added a penny to the debt and wouldn't be in any trouble today if Reagan and his successors kept their fucking hands off the trust fund. Today all it would take is a small increase in payroll deductions to make it solvent for decades.
The people who don't need SS don't want to pay for it, and they never did. And the people above who say we should just get rid of it, or support young people, are probably 20 year olds who haven't paid into the program for 40 years.
Thanks to our greedy healthcare and insurance providers, medicare is a shithole, but there is no reason SS has to be cut or eliminated.
Started as a workable system but outsourcing and
demographic changes, along with payments of benefits
for non retirement related expenses killed its viability.
Robbing the high earners to pay retirements of low
eearners by removing the cap amount to extortion.
The high earner/payer should then be 'entitled' to
much higher payouts. 'Entitlements' work both ways.
Since we cant keep corrupt politicians from robbing it
Ergoas you mentioned, this is another reason why it should be eliminated.
Yeah, but you are kind of ignoring the "fact" that Americans won't do those jobs any more. The work won't be done, and we will all die of bacterial infections from sitting on unclean toilets while our food lays rotting in the fields.
A country that thinks it can lift itself to prosperity by bringing in millions of low-skilled, low-wage workers is doomed to failure.
Americans would do those jobs if they paid.
Bingo. Interesting that the "free market pricing mechanism" crowd doesn't like that notion. Of course, many of them--most of all--benefit from the cheap labor. It would cut their profit margins, of course . . . rather than cursing the working class for this, however, perhaps it would behoove them to turn their ire to the unproductive financial class that siphons off the lion's share of capital in the system as it currently stands.
Something has to give . . . and I'm thinking the working class has lost enough. And they're reaching the point where they will effectively assert the same, imo.
Call it the "dark side" of democracy, if you like. Or call it an expression of the collective conscience.
Raise the cap, raise the contribution, and means-test the benefits and if you really want to have some fun: allow opt-out with a lower contribution (no, zero is not a mathematically viable option).
All good suggestions, save the "raise the contribution".
Current workers do not need another payroll tax. Workers (of all incomes) are ging to be paying more taxes to the IRS to fund the rest of the government as a result of what is coming. To add an increase in FICA is just bad economics. It is also VERY regressive.
You really want that?
removing the cap on FICA for over 100k earnings is less regressive
tax guys and economists who are not in the bag of a partisan think tanks can tells us the best ( for common wealth) way to collect revenues...non-regressive forms of consumption taxes that don't get into business to business transactions are the least volatile...taxes on high incomes are more progressive but volatile...ask Cali
"Workers (of all incomes) are going to be paying more taxes to the IRS to fund the rest of the government as a result of what is coming."
There is a belief that if only SS could be eliminated, Gens X & Y could pocket the money. Nothing could be further from the truth. Gens X and Y are going to pay more taxes, period. Should it go to the military industrial complex, the bankers, big Pharma or SS?
"[FICA] is also VERY regressive."
Remove the wage cap. Problems solved.
Raise the cap is just more wealth transfer bullshit.
How about 'throw out the illegals in 12 mo, and scrap SS
in 5 years. Everyone gets to the dollar what they put in.
Paid for by one last QE. End of SS. End off SS problem,
unless youre retired with no other income. Then
youre screwed. Wont be the first or last time a govt
has screwed it citizens. At least that problem would
be resolved. The good news is that once the final
QE is over, the dollar should strengthen because
a large source of the deficit is eliminated.
What's the point? In a year, maybe two, the dollar, financial system, will have collapsed. The whole thing will be starting over.
The system should be completely eliminated. We should be subsidizing the young and productive, not dreaming up more and more expensive ways to allow old people to cling to this mortal coil.
I would like to junk your junker. We should be subsidizing the young and the productive.
Why? If we don't then those that have a lot to lose (boomers) will suffer the greatest loss.
It's in the Boomers best interest to do as you say. But you'll never convince them of that until it's too late.
Bruce, your whole post deserves junking for your use of the term, "trust fund". As Geithner has already *admitted*, there is no trust fund or "lock box" with social security funds in it. The money collected and distributed by SS is done so in realtime. Nothing is saved or put aside. Furthermore, it is NOT DEBT. Let me repeat: It is NOT DEBT. Ie: There is no trust fund of any kind. Social Security is a promise backed by nothing other than the flimsy words of a few politicians. Those promises can and will be broken. The term "trust fund" is part of a propaganda campaign to make Americans believe that the money is actually sitting somewhere. IT IS NOT.
You are correct. There is something called a Trust Fund. But there is nothing in it. It is just and accounting gimmick.
But I'm curious about one thing. Where/when did Geithner say something to that effect?
As T Sec, Geithner is the head of the board for the SSTF. He signs the annual report to congress. I can't imagine he said that. Can you give me a link?
tks.
Bruce, once and for all:
What exactly is in the SST? Is it "nothing" . . . or is it "non-marketable" treasury debt instruments?
I'm tired of hearing lies and willful ignorance on this most fundamental of all issues.
And it's either yours or mine, in this case. Please correct one of us.
Perhaps you would be well advised to consider the SSTF's statement on the matter:
http://www.ssa.gov/oact/progdata/specialissues.html
This meme that there's "nothing" in the SSTF is one of the most malignant cons I've ever heard . . . it's an implicit campaign for a covert selective US Govt debt default. Why are so many so giddy to advance this cause? And why are so many of them in the finance industry, of all possible places? One would think them incapable of comprehending either debt or math.
Misguided sophistry. It certainly is debt, whether "secured" by non-marketable treasury debt instruments or not. You can play with the notions of "trust" and "lock boxes", etc., but you're simply talking your own prurient "book" in condemning the putative ignorance of people who are so naive as to believe that our government should make good on its debts--all of its debts, including those owed to its own citizens.
Play with whatever words you like to describe the situation, but the reality is that its but a cheap hussle--regardless of the "enlightened" applause it generates--meant to cover a selective debt default by the US Government on the backs of people who have forcibly "invested" money in the system.
What's broke is a "system" where looting retirement funds receives some sort of amnesty under the guise of "being serious adults" . . . the clap-trap about "ponzies" and cries that "the money is gone" notwithstanding.
Perhaps your trust has been violated by the choir you have so passionately embraced.
Some of us old farts like holding on to our mortal coils as long as possible even though it often costs a bunch. We believe we earned that right.
Every time I read "it's about the boomers," it tells me how little people know and understand about the generations and the SS system: It is "The Silent Generation," those too young to be drafted into WWII yet older than the first Boomers, that have received the oh so sweet deal, fully inflated SS payments based on their best 10 years. Boomers? Those born after 1950 will receive a check based on the best 30 years. The difference will astound people. For those who worked their way up it will be a bitter experience. For the docs and attorneys who made partner at 32 (or the equivalent), not such a problem.
What does "subsidize" mean, Bruce? Sounds a bit too governmental hands-on to me.
sub·si·dize/Verb1. Support (an organization or activity) financially.
2. Pay part of the cost of producing (something) to reduce prices for the buyer.
Good education/healthcare from 0-18. How about that?
Yes, that would reduce costs. It would pay dividends.
Formative years, Bruce. Get 'em used to the hand-out mentality. Great plan.
Yeah, more money for the state indoctrination system and the teachers union racketeers--that's the ticket. Change you can believe in!
Thats what family/parents are for.