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SSTF - Steve Goss’s Bombshell – What Could it Mean?
I have written often on the status of SS. I also have some understanding
of illegal aliens working in the US. I have sponsored four over the
course of many years. I don’t hire them. But I pay many companies that
do. The employers know they are illegal, but the workers have SS cards
(fake) and so long as the PR taxes are collected no one seems to care.
These two interests of mine dovetail. SS has been collecting money from
illegal aliens for years. They will keep the money they have collected
and they will not pay out any benefits (except fraud) in the future. So
this money is “free”. I have often wondered how big the numbers on this
are. Now we know. The numbers are enormous. Without the Free Money coming in from illegal aliens SS would look much different than we "think" it does.
The WaPo had
an article on this today. They had hard numbers (sort of) in the
article. I was absolutely stunned that the source of this information
was Steve Goss, the chief actuary of the SSTF. Some thoughts/numbers:
-Steve Goss does not reveal information of this significance unless he
has a political agenda of his own, or he was told to. I am of the
opinion that it was the latter and the WaPo/Goss story was a way for the
Administration to get the illegal alien issue spun in a different
light. Because of high unemployment the illegal story is getting
traction and anger is boiling. What is happening in Arizona is the tip
of an anti-immigration movement that is brewing in America. This is not
healthy for society. Police profiling is not the American way. Except in
2010.
-This information is an unmitigated disaster for SS. It comes a month
after the release to Congress of their annual report that suggested that
things had actually improved for SS over the past 12 months. The report
did not highlight the fact that over $300b of assets held by the Fund
were in fact contributions from illegal aliens. As much as 13% of the
Funds holdings are tainted. Without this funny money the Fund would
today be running substantial deficits. That red ink would force major
changes in both payouts and taxes.
-Goss provided a range of the cumulative impact to SS of $120-240b (as
of 2007). He said that the overstatement was $12b in 2007. Those numbers
do no not add up in my opinion. We know that the illegal population
exploded from 2000 on. If the excess payroll income was only $12b in
2007, then it had to be a much smaller number ten-years earlier. There
is no way it could add up to Goss’s minimum number of $120b. I think
that when Goss was suggesting that the cumulative impact was 120-240b he
was implying that the range of impact for 2007 would have been $12-24
billion.
Goss said that as many as 67% of all illegals are working with either a
phony SS card or one that was no longer valid. Take this information
together with a Pew report that
put the number of illegal workers today at 11.1mm. This implies that
there are 7,400,000 illegal workers contributing to SS. Most of this
income is regular weekly pay. The average number for this in the US is
$30K. About $100 per day. That comes to a total payroll of $225 billion!
The SS tax on this is 12.4%, or $27b in just 2010. This analysis is how
Goss got to the $240b 2007 topside estimate. Add three years to that at
$25b a year plus interest on the whole nut and you get ~$350b.
I won’t (now) go into the longer-term impacts to SS of having overstated
its surplus by $350b. That number is 13.5% of the assets of the Fund. I
will say that this is a sea change event for how we look at SS. All
prior analysis and all future expectations must now be revisited. I
assure you that the results after excluding the illegal taxes will be
will prove to be a major blow to the solvency of the Fund. It will
change the debate on SS. It is that significant. Mr. Goss on this:
"If for
example we had not had other-than-legal immigrants in the country over
the past, then these numbers suggest that we would have entered
persistent shortfall of tax revenue to cover [payouts] starting [in]
2009, or six years earlier than estimated under the 2010 Trustees Report."
-We know that the actuaries at the Fund have been aware of the magnitude
of this issue for a very long time. The question I have is, “What did they do about it?” We need to understand what this means in terms of anticipated future benefit payments. There are two possibilities:
(1) The Fund knew the money was from illegal workers but chose to close
their eyes. For the purposes of calculating future liabilities they
assumed that everyone, including the illegal workers, would someday get
benefits. But they won’t. This would imply that the future liabilities
of the Fund are much smaller than has been projected. This “good” news
would have to be offset with the reality that the “true” assets of the
fund are significantly overstated.
(2) The Fund knew all along that the benefits that are associated with
these illegal receipts are never going to be paid and therefore it has
reduced the liabilities associated with this to some degree. This would
essentially make a fraud of all of the SS accounting. I doubt (hope)
that this is not the case. To restate both assets and liabilities would
create a very big credibility gap for SS.
I have said repeated that nothing happens in D.C. by chance. That every
nuance must be looked at closely. They all have meaning. In my opinion
the WaPo article shines a very bright light on SS. They have been
knowingly overstating assets and financial conditions for years. What
possible motive could be behind this Labor Day weekend bombshell? My
guess:
The Administration will use the Goss revelation to prove to the American
people that illegal workers have made a major contribution to the US
economy via the taxes they paid to SS. This will be done to blunt the
growing tide of ire among those who actually live here. There could be
another chapter to this story. It could be the ticket whereby some
illegals get legal. The cost for a Green Card would be that the
applicant would have to (among other things) agree to give up their
rights to any future SS benefits based on prior contributions made to
SS. They would be entitled to benefits based solely on what they were
taxed in future years. Any previous contributions (both employer and
worker) would be given up as a penalty. This thinking would set up the
possibility for two extraordinary outcomes.
(I) If SS eliminated the future liabilities associated with the
estimated $320b of excess contributions and they were allowed to keep
those tainted contributions SS would be transformed overnight to an
overfunded position of significant proportions. It would be so
significant that the Fund could reduce the current 12.4% PR tax by
20-30% for the next three to four years. That would have a meaningful
impact on the economy.
(II) America would get paid $350b (P+I) for allowing a significant
number of workers to become legal. Many would still gripe. But the
tradeoff of a partial tax holiday for 150mm workers and their employers
would shut down much of the opposition.
The Administration needs a win-win on the economy and immigration. Steve
Goss at the Trust Fund may have given them the opportunity to do that.
Stay tuned. It does not get much weirder than this.
Just a question. Has SS been aiding and abetting illegal workers? They
have taken in over $300b. They understood what they were doing. Without
the SS "wink and a nod" employers could not have hired them. Who’s abusing whom?
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EXCELLLENT POINT! The reamiander balance should then be paid to the survivors. That is the same logic this ginned up story is taking.
Those POOR ILLEGALS!!
How about thos POOR DEAD AMERICAN CITIZENS that never get the amount of their benefits???
Man this one chaps my ass.
I think your SS benefits go to your spouse or children if you die early.
or in some cases grandchildren, stepchildren or dependent parents. chapped ass or no.
Sometimes yes, sometimes no. It all depends. There are many cases when no survivor benefits are paid at all.
Without this funny money the Fund would today be running substantial deficits. That red ink would force major changes in both payouts and taxes.
Without illegal aliens, the source of the funny money, the employers that employ the illegals would be employing likely higher-paid natives instead. So instead of running substantial deficits, the Fund would likely be running larger surpluses in the absence of said funny moolah. The hypothetical natives would of course be entitled to benefits in the future, at which point the Fund's balance of payments may be worse than it otherwise would have been.
Once again, an intelligent Zerohedge poster applies superior logic to destroy and obliterate Loosie Brucie.
A most frequent occurrence.
"The hypothetical natives would of course be entitled to benefits in the future, at which point the Fund's balance of payments may be worse than it otherwise would have been."
The hypothetical natives will get stiffed same as everybody else. I'm 45 y.o. and am not counting on a dime of SS payout come 20 years from now. IMO anybody who is ~ 58 or younger and is thinking they can lean on SS is a chump...
While I appreciate the reportage, this situation (if not the precise magnitude) has been obvious to me for years – I distinctly remember bringing it up in arguments with a troglodyte friend, long ago. And SS is just one case: The eeevil for'ners have been providing crucial boosts all through society, desperately needed oil for a failing engine.
These people have been harvesting our crops, building our homes, mowing our lawns, and in some cases raising our children for us, for half a century . . . and suddenly, they're the enemy?! THEY didn't drop a building on us. In fact, THEY could be said to effectively protect our southern border, as the difference in culture is something Al Queda has apparently yet to figure out how to deal with.
@Jasper M
There's nothing sudden about this situation. This has been an issue for 30 years. The citizens of the USA have been subjected to decades of broken promises by DC on this issue - by both parties.
I don't hold a grudge against people who come here to make a life. I can understand why they choose to sneak in rather than wait to be 'approved'. But at the same time, their crappy country is not my fault or problem and I won't apologize for thinking that it's perfectly ok for the USA to exercise normal control over its borders.
Why don't you try to sneak into Mexico? See first hand how most countries deal with illegal immigrants. Please do this - as I'd rather have someone as confused as you in a Mexican prison rather than a voting booth in the USA.
"Why don't you try to sneak into Mexico?"
I'm not sure how gringos from the U.S. or Canada could sneak in. Everytime I go to Mexico, the crossing follows this complex pattern:
1. Approach Mexican border crossing.
2. Drive across.
3. If Mexican border agents are present, return their smiles and waves. (They will not bother to get up from their folding chairs.)
4. If no Mexican border agents are present, omit the smiles and waves. Bienvenidos a Mexico!
If for some reason you want to declare something or get a vehicle sticker for your car, you will have to hunt for Aduana or Banjercito offices. They're not about to come looking for you.
It has been obvious to many for a long time. The number I was working with was ~$50b. A big number, but all our numbers are big. But I tell you my jaw dropped when I read that Goss put the number as high as 240b back in 07.
Never suggested anyone was the enemy. I know a lot of illegals. I like them. Some are friends. If I needed help they would be there. I wish this problem was not the issue that it is.
I've known some wonderful illegals, but unfortunately I've also come in contact, and at other times am aware of, vile psycho illegals from many different countries and continents whom I'd rather not be here, we've got plenty enough of them already.
I'm also aware that the economic pressures which may drive them here stem from the existence of evil oligarchs in both the US and Mexico.
This is the real issue which should be addressed.....
screw illegas jackoff - let us all dick over taxes then
nice talk
Really? They have been a great financial contribution to our country? Ok, so riddle me this. If 20 million illegal Mexicans contribute so much wealth to our country, how come with 100 million Mexicans left in Mexico, Mexico is not an economic superpower? Perhaps that is precisely why their country is falling apart. The 20 million productive Mexicans moved to the US. No wait, they do send most of their salaries back to Mexico, so they are contributing to Mexico's economy. Hmm, but now I'm confused. If part of their salaries (SS Taxes) contribute such a critical portion of our economy, shouldn't we be kind to our neighbors to the south and send their productive citizens back? After all, all those SS taxes would surely elevate Mexico to economic powerhouse status!!!
Please!!!! for every dollar in SS contribution they cost 3 on free medical, public schooling, welfare payments, etc. Not to mention the very large population of Mexican gang members been jailed in the US. Plus the societal costs of the violent crime which causes additional expenditures in police and EMS services.
And since none of them pay income tax, either to the state or to the Federal government (too little income to pay) their actual cost is much larger than the amount they contribute to SS.
The basic point is that the SS fund is broke. A ponzi scheme that can not be continued. I will not see a cent from it. Neither will you. Time to end it
+100,000, goldsaver.
I suspect this is another obfuscation post, meant to confuse the only-partially informed.
Great post, Goldsaver.
It's gets a little tiresome with Bruce always wanting to show his humanity with these sorts of treacly posts of his.
He forgot to mention that these rats fill our prisons, poison our schools, and contaminate every corner of society. They turn a civilized nation into the same kind of inhuman hellhole from which they were bred.
So they get dinged on their social security. So what.
And remember, Bruce, the SS trust fund is a myth. There ain't nuthin in there, Mexican tortilla taxes, or not.
Rainmaker,
As I read your post I was reminded of this story about Republicans (you could substitute Tea Party, or Libertarian if applicable). Oh, and the last Junk was from me... it is hate that "turns a civilized nation into some kind of inhuman hell hole."
A DAY IN THE LIFE OF A Republican
REPUBLICAN gets up at 6:00am to prepare his morning coffee. He fills his pot
full of good clean drinking water because some liberal fought for
minimum water quality standards.
He takes his daily medication with his first swallow of coffee. His
medications are safe to take because some liberal fought to insure
their safety and work as advertised.
All but $10.00 of his medications are paid for by his employers
medical plan because some liberal union workers fought their
employers for paid medical insurance, now REPUBLICAN gets it too. He prepares
his morning breakfast, bacon and eggs this day. REPUBLICAN's bacon is safe to
eat because some liberal fought for laws to regulate the meat packing
industry.
REPUBLICAN takes his morning shower reaching for his shampoo; His bottle is
properly labeled with every ingredient and the amount of its contents
because some liberal fought for his right to know what he was putting
on his body and how much it contained. REPUBLICAN dresses, walks outside and
takes a deep breath. The air he breathes is clean because some tree-
hugging liberal fought for laws to stop industries from polluting our
air.
He walks to the subway station for his government subsidized ride to
work; it saves him considerable money in parking and transportation
fees. You see, some liberal fought for affordable public
transportation, which gives everyone the opportunity to be a
contributor.
REPUBLICAN begins his work day; he has a good job with excellent pay,
medicals benefits, retirement, paid holidays and vacation because some
liberal union members fought and died for these working standards.
REPUBLICAN's employer pays these standards because REPUBLICAN's employer doesn't
want his employees to call the union.
If REPUBLICAN is hurt on the job or becomes unemployed he'll get a worker
compensation or unemployment check because some liberal didn't think
he should loose his home because of his temporary misfortune.
It's noon time, REPUBLICAN needs to make a Bank Deposit so he can pay some
bills. REPUBLICAN's deposit is federally insured by the FSLIC because some
liberal wanted to protect REPUBLICAN's money from unscrupulous bankers who
ruined the banking system before the depression.
REPUBLICAN has to pay his Fannie Mae underwritten Mortgage and his below
market federal student loan because some stupid liberal decided that
REPUBLICAN and the government would be better off if he was educated and
earned more money over his lifetime.
REPUBLICAN is home from work, he plans to visit his father this evening at
his farm home in the country. He gets in his car for the drive to
dad's; his car is among the safest in the world because some liberal
fought for car safety standards.
He arrives at his boyhood home. He was the third generation to live
in the house financed by Farmers Home Administration because bankers
didn't want to make rural loans. The house didn't have electric until
some big government liberal stuck his nose where it didn't belong and
demanded rural electrification. (Those rural Republicans would still
be sitting in the dark)
He is happy to see his dad who is now retired. His dad lives on Social
Security and his union pension because some liberal made sure he could
take care of himself so REPUBLICAN wouldn't have to. After his visit with dad
he gets back in his car for the ride home.
He turns on a radio talk show, the host keeps saying that liberals
are bad and conservatives are good (He doesn't tell REPUBLICAN that his
beloved Republicans have fought against every protection and benefit
REPUBLICAN enjoys throughout his day). REPUBLICAN agrees, "We don't need those big
government liberals ruining our lives; after all, I'm a self-made man
who believes everyone should take care of themselves, just like I
have."
That's great - the view from the alternate reality where competition and market choice never enter the equation. All that is good comes from the benevolent nanny state. Take that away and even water turns to poison.
Your words, not mine... you guys just make this stuff up (who said "competition and market choice never enter the equation")... and the Tea Party crowd just eat it up! The point is, the hypocrisy of the 'Right' view that all government actions harm the economy... yet they have no problem at all benefiting personally from those actions. Also curious (to me) is how this view only applies to Democrat controlled governments... somehow these 'evil' actions are acceptable with Republicans in power ("Obamacare" is comparable to the Gingrich health care proposal in the 90s, yet it's described as some kind of communist plot by the Right).
Oh well... why change course at this point... it's a tried and true way to stir up the base to "fight those evil commie liberals." Just another shameless, selfish power grab, without thought of consequences... I'm sure life will be much better with Boehner and his little buddy Cantor in charge... and Palin / Beck directing the charge.
Ever feel like you're on the losing team?
You may be interested to know that Mexico is the number one retirement destination for Americans. What started as a trickle is now a flood as retirees escape the hellhole of spiralling inflation, corruption, hatemongering, out of control health care costs and crime that is the US today.
Better to spend your golden years in a peaceful city amongst happy, hard working, honest people.
"He forgot to mention that these rats fill our prisons, poison our schools, and contaminate every corner of society. They turn a civilized nation into the same kind of inhuman hellhole from which they were bred."
I imagine similar ignorant remarks were made about the Irish, and the Italians, and the Polish, and so on, and so on, and so on.
Not to forget the genocidal Anglos who founded this country and almost totally exterminated the native population.
Go back to your beer - you offer nothing of value.
no tiresome humanity surely
Y'know, it's entirely possible to make your point without using the words "rats", "poison", "contaminate", and "inhuman hellhole"...
I completely agree with your POV otherwise...
Yeah, but then how can you accurately describe your week in Detroit?
"Eeuw"
"Go Lions"???
After all we kicked their butts out of Texas and California back in the 1840s, how dare they show up now and destroy SS!
sloat and wool, bitchez
I personally know a guy who has been living here for 15 years after immigrating on a student visa. He pays his taxes via his temp social security #. Runs his own biz, employs a dozen or so illegals. Has a few rental properties. How they handle their taxes or how he pays them I have no idea.
The numbers may be larger than everyone thinks.
He doesn't have a ss# he has a tin (tax id number) for income tax (i.e. 1040 form)
"The IRS also has been issuing Individual Taxpayer Identification Numbers, or ITINs, for 12 years to foreigners without a Social Security number. It's believed that many workers who seek the ITINs are in the country illegally, and the IRS reported that there were 2.5 million tax returns filed with an ITIN in 2004.
In 2006, then IRS Commission Mark Everson told Congress that "many illegal aliens, utilizing ITINs, have been reporting tax liability to the tune of almost $50 billion from 1996 to 2003."
http://www.usatoday.com/money/perfi/taxes/2008-04-10-immigrantstaxes_N.htm
Do you truly believe that any of these socialists in DC would deny their "rightfully earned" SS benefits" to illegals. Ha. I can see them using this argument to legalize them and then paying benefits even if they move back to Mexico. Vote buying on steroids.
"Steve Goss’s Bombshell – What Could it Mean?"
As we're seeing everywhere in the economy and society, it means the elites disregard the law (it's for the little people) and the views of the People and then send out the Media to explain to us why we should be listening to our betters.
Oh, and it also means it's election season.
How does this even delay the inevitable "default" of sorts Social Security must go through to remain viable? It's a drop in the bucket, SS is a massive unfunded liability. Additionally, every illegal alien I've encountered has always wanted me to pay them in cash. 40% of the transactions in LA County are cash based, think those fund Social Security?
Yes, that's what I'm thinking. Even $250 Billion doesn't mean much when you consider that SSA/Medicare (or "government liabilities") currently register over $60 TRILLION. Its all a moot point: I would predict that no one under age 40 is going to get any of benefits, anyway.
According to the SSA's own website and its "inflated dollars" button, the government is "promising" me $10,066 a month! Yeah right! I wrote about it here: http://banksterreport.blogspot.com/2010/04/ssa-promises-bankster-report-10066.html.
Newsflash: We have something very much in common with illegal workers: we're not going to get "our" benefits either. Consider your SSA/Medicare deductions to be a contribution to our elders.
thats correct - H1Bs that return to home countries do not have a way to claim back their money unless they aquire Green cards or citizenship - free money for SS the way I see it.
Excellent point that I've never seen made in the mainstream media. Very good, Bruce.
Your statement that this revenue would not have occurred had illegals not been working in this country is likely wrong. Probably citizens and "legals" would have gotten the jobs otherwise, probably at higher wages (and therefore higher SS payments). Furthermore, my understanding is that SS security payments ARE being made to citizens of Mexico in substantial quantities, pursuant to an agreement between Bush and Fox several years ago.
Your drift seems to be that it is beneficial to have floods of aliens taking away jobs and ignoring the laws of the United States, along with their employers. The history of the world suggests that you are dead wrong, and certainly no other civilized countries allow such a hypocritical and lawless situation.
Bingo!
+1,000
are you missing krasting's point intentionally, so as to make others you like better? if, in your example, citizens and legals had gotten the jobs and paid into ss, they would have been owed benefits. the illegals are not. the reference you make to payments to mexican citizens never involved illegals and if it ever actually got ratified (i am having a tough time finding out; most discussions from google are right wing blogs concerned about the possibility of such back some years ago) would join some twenty other agreements with other countries regarding individuals who divide their working careers (legally) between two countries.
Not sure about Krastings points?
How do you find the bad guy? Lottery?
Jimmy Carter gave away SS to illegal immigrants during his term.
Ask Obama's Auntie in Boston, she gets housing, food stamps and a check, God Bless Amerika.
As I understand, it is more a matter of collecting benefits.
huh?? this is filled with holes
using the $30k avg to compute for illegals?? are you crazy?? That is WHY they are illegal so they don't get any real scratch
also, what about the point of just getting rid of illegals so 100% not 67% pay into SS??
the chior is sucked right into this one.. regardless of the prose
But ignored is all those cumulative costs which are covered -- major hospital and ER costs, criminal costs and court system costs galore.
Far too many variables not being considered here.
Always analyze all the variables!
Another inflow into SS is via the other infamous Guest Worker program, H1 visas. These are Hi-tech workers that average $70,000 a year and aksed to return back to their country after 6 years with no way to get the benefits of their contributions when they retire. Since the late 90s,on an average 80,000 H1 visas were issued each year ( during the peak of dot com years, the limits were raised from 65,000 to over 110,000). $33,600,000,000 in salaries over 6 years, 12.4% SS tax on this works out to $4,166,400,000
Yeah right!!!!
4 billion over 15 years
GM CEO made that amt of money after a flight to washington in his private jet!!
Bingo. "Illegal" and "alien" is the politicization of Treasury fraud.
Yea, I worked in America for a year on an H1B visa, paying SS every month and was not allowed to claim it back at the end.