Commonsense Immigration Reform Will Strengthen Social Security
On Friday, we got even more proof of the high costs of inaction on bipartisan commonsense immigration reform.
In a letter to Senator Rubio released on Friday, the independent Social Security Office of the Chief Actuary provided a long-term analysis of the bipartisan Senate-passed Immigration Reform bill, demonstrating that commonsense immigration reform will strengthen Social Security over the long-term. Reform will ensure full Social Security solvency through 2035 and reduce Social Security unfunded liabilities by nearly half a trillion dollars through 2087.
The Social Security long-term report follows the recent analysis from the nonpartisan Congressional Budget Office that showed commonsense immigration reform is good for the budget and good for economic growth. The new Social Security report confirms that the bipartisan Senate-passed Immigration Reform Bill is also good for Social Security. The Senate-passed bill will strengthen the solvency of the Social Security Trust Fund in the short run and the long run by reforming the legal immigration system and by allowing undocumented workers to work above-board and thus ensuring that they pay payroll taxes.
The Actuary’s long-term report confirms that the net effect of the bipartisan Senate-passed Immigration Reform Bill is to strengthen Social Security solvency. The Actuary found that the Senate-passed immigration reform bill will keep the Social Security Trust Fund fully solvent through 2035. (Without reform, the Social Security Actuary and Trustees expect the Social Security Trust Fund to be depleted by 2033.) The Chief Actuary notes that, “Even after depletion of the trust fund reserves, however, the actuarial status of the program is improved because continuing income would be sufficient to pay a higher percentage of scheduled benefits than under current law.” In fact, the Senate-passed bill will reduce the 75-year Social Security shortfall by nearly half a trillion dollars, in present value terms.
The Senate-passed Immigration Reform Bill will begin to strengthen Social Security immediately, as many more new and current immigrants begin to pay payroll taxes. Over the next decade, the Senate-passed bill will boost the asset reserves in the Social Security Trust Fund by $284 billion and continue to provide net revenue to the Social Security Trust Fund for decades to come. A significant portion of the increase in revenue is from currently undocumented workers who will start to pay their share of payroll taxes once they leave the underground economy. In fact, in his May 8th letter to Senator Rubio, the Social Security Chief Actuary estimated that about half of the total increase in the Social Security Trust Fund over the next decade that would result from enactment of the bill would come from currently undocumented immigrants through increased payroll tax revenues.
Immigration helps balance out an aging population. Because most immigrants are young, additional immigration helps balance out the increase in retirees-per-worker that will occur as the Baby Boom generation retires. As a recently-published analysis in Health Affairs concluded, “Encouraging a steady flow of young immigrants would help offset the aging of the U.S. population and the health care financing challenge that it presents.”
Moreover, the improvements in Social Security solvency will come on top of the other major benefits from building a 21st century immigration system: growing our economy, spurring job creation, promoting innovation, strengthening our national security, and ensuring that America maintains its leadership position in having the most talented workforce in the world. We have a unique opportunity to fix our broken system in a way that upholds our traditions as a nation of laws and a nation of immigrants – and also contributes to ensuring that Social Security continues to provide future generations of seniors with the retirement security they have earned and deserve.
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