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Social Security 'Totalization'
Examining a Lopsided Agreement with Mexico
Panel Discussion Transcript*
September 22, 2004
Moderator:
Mark Krikorian, Executive Director, Center for Immigration Studies
Panelists:
Rep. Dana Rohrabacher, (R-CA)
Marti Dinerstein, Fellow, Center for Immigration Studies
James Huse, Former Inspector General, Social Security Administration
MR. KRIKORIAN:
Good morning. My name is
Mark Krikorian, I’m executive director of the Center for Immigration Studies, a
think tank here in town that examines and critiques the impact of immigration on
the United States. I will get the commercial in at the beginning – all of our
work is on the web at cis.org. The report we are releasing today will be up
later today.
There has been a lot of discussion this year about this issue of a Social
Security agreement, or a potential Social Security agreement, with Mexico. And
the public discussion , at least in the press – and also a lot of it has
suffered from some confusion and frankly, even a little bit of hyperbole – there
have been a lot of people who sort of get the idea, once you talk about Social
Security, some people stop, they sort of lose reason, and there was an idea that
every illegal alien is going to get a Social Security check – this kind of
thing, and that is not really what this is about. So what one of the things we
wanted to do is actually look at it and see what really is involved in this
so-called Totalization deal, and it turns out that it’s terrible even without
the exaggeration.
So there is plenty here to critique, there are some real problems with it and
this is what our – the paper we are releasing today is going to address. And
frankly, the very idea of such an agreement with a country like Mexico is
problematic; in other words, it’s not just a question of the details, it’s the
whole concept itself.
And another point that really is important to address is that what has been
discussed so far – the congressman has been involved in it, and others – is the
issue just of a legal status and the illegality of people claiming Social
Security benefits – that sort of thing. It’s an extremely important issue, but
it’s really only one part of this whole issue, and that even without that whole
illegality aspect, there are some serious questions that would need to be asked
about this kind of agreement.
So to talk about this whole issue of Social Security totalization with Mexico,
we have got a distinguished panel. We will start with Congressman Rohrabacher
because he has another meeting he needs to run to. The Congressman is the
sponsor of H.R. 1631, which is one of the pieces of legislation that would
address some aspects of totalization. Let me hasten to add, the Center doesn’t
endorse or oppose any particular piece of legislation, but this is – Congressman
Rohrabacher is one of the key people on this subject, and so it’s going to be
very important to hear what he has to say.
After the Congressman’s comments, Marti Dinerstein, the author of the report,
will talk about her findings. She has written several reports for CIS. She is a
fellow at the Center, has written on issues relating to secure identification
and related issues. And then last, but by no means least, will be James Huse,
who is the recently retired Inspector General for the Social Security
Administration and has investigated this issue as his responsibilities would
entail, and will tell us something from the inside from a Social Security
perspective.
So let’s start with the Congressman, then Marti, then Mr. Huse, and then we will
take Q&A after that. Congressman?
DANA ROHRABACHER:
Thank you very much, and thanks to the Center for Immigration Studies for
sponsoring this discussion specifically on the totalization agreement with
Mexico, and CIS has of course been the premier think tank on immigration issues,
and I appreciate this because this focus on the totalization agreement – because
that is so important to the American people that it would be a sin against them
for this thing to go through without having a full discussion of what this is
all about and what the long-term implications are.
The politics of immigration has been a lethal mix in this country. It’s a mix of
Republican capitulation to huge corporate interests who would want to keep wages
down as well as a mix of Democrats who are looking for a new underclass in order
to justify their positions of expanding government programs, which of course
gives them political power. In both cases, what we have is mindless pandering to
a huge group of voters and doing so in a way which is harmful to the United
States of America and harmful even to those people that they claim to be
helping. Add this factor with the Democrats looking for their new constituency,
new underclass, and the Republican business interests, if they all are
Republican – many are Democratic businesses interests as well – looking for low-
priced labor.
Add to this the new McCarthyism, I call it, which is, every time one attempts to
discuss the immigration issue in an open and honest way, even with a loving
heart, they end up being called racists, and thus, people – honest people are
afraid, and good people are afraid to even discuss the issue of illegal
immigration into this country. And I know that when I first got involved in this
– and to this day, I always go out of my way to talk about illegal immigrants
being good people. I mean, even 90 percent of – at least – of illegal immigrants
are good people, and I go into great detail.
And I remember the very first time I talked about this, I was – I set up a
hypothetical of a man named Pedro who came from Mexico illegally, and I went
into great detail how good he was. He was good to his family, took care of his
grandparents, went to church every Sunday, was always on the best behavior, and
yet, we have to recognize that if Pedro was in the United States illegally – if
he needs a $50,000-heart bypass, he has to go home. And the only thing the paper
– I remember – quoted me was, Pedro needs a $50,000-heart bypass, he has got to
go home. They took a hypothetical that I had tried to set up to show that we
were dealing with good people and honest people and to do so with open hearts,
and instead, turned me into the racist skinhead, Dana Rohrabacher.
That type of tactic has harmed the honest discussion of an issue that is vitally
important in this country. In fact, it’s very – the irony is that Social
Security now is something that people can talk about, but illegal immigration is
not. Thus, illegal immigration has become the third rail of American politics
because up until now, it has been Social Security – everybody said, no one can
ever talk about the possibility of changing Social Security.
And so in this issue of the totalization agreement with Mexico, it’s not the
Social Security thing that is preventing the discussion. In fact, what we need
to ask ourselves is why is it that these senior citizens organizations that have
prided themselves on being the guardians of Social Security abstained from
having this debate, and where are they? Where are they? They are afraid to be
called racists – a lot of them are – and some of them are part of the liberal
left coalition that want to encourage illegal immigration, and thus they are
keeping their mouths shut because it will make them – the other members of the
coalition – angry at them. This is too important for this type of politics, and
I certainly call upon those senior citizen organizations that concern themselves
with Social Security to get involved in this debate – this issue.
So let’s take a look at what we are talking about here when we talk about the
totalization agreement. Totalization is something that can and has served a
useful purpose. Large corporations in the United States and abroad – when they
send people overseas, that is, to assignments that last a certain number of
years – those people who are overseas for these companies end up being doubly
taxed. They pay both Social Security and the equivalent tax in their own native
countries – in those countries that they are working in – allowing Social
Security in foreign agencies to give credit to one – under one system – you
know, it does – you know, making this type of adjustment is something that
sounds good and it works if people are in the countries legally, and if they are
in those countries temporarily.
But this is not the case with Mexico. Mexico is certainly a totally different
situation. We have almost six million Mexican citizens living illegally in the
United States of America. This is not a situation like the limited number of
Swedish or Japanese executives who will work here for several years and then go
home. Not only are the Mexicans not going to be returning to Mexico, the Mexican
government encourages them to stay in the United States. After all, if the
United States is going to pay for their healthcare bills, their education bills,
and now their retirement, why should the Mexican government be concerned about
getting them back home?
The Pollyannas and the ostriches who advocate open borders want Congress to
believe three things about the totalization agreement with Mexico – these three
things that are absolutely are not true. First, proponents of the totalization
agreement want us to believe that it will affect only a small number of people.
The Social Security Administration is saying the agreement will only affect
50,000 people. Well, how did they come up with that number? And – (chuckles) –
it’s going to fascinate you. They came up with that number by studying the
number of Canadian illegal immigrants. Well, this is absurd. The General
Accounting Office has said with this remarkable understatement, the Canadian
experience is not a good predicator of the experience under an agreement with
Mexico. Of course not.
The second item is that – that people want you to believe that it’s not so – is
that illegal immigrants will not be receiving Social Security because of this
agreement, and while it is true that one cannot be illegal at the time that one
would be applying for Social Security, prior work while done while an illegal is
in the country does count for Social Security under the agreement. So if one
works in the United States illegally for nine years and there is some sort of
change – the president’s program normalizing the status, or if some kind of
change of status comes through, that work in the United States illegally then
will become an important factor in determining eligibility and amounts of money
for Social Security. And let me note, we are not just talking about retirement
benefits. The dependents’ benefits to illegal aliens are explicitly permitted by
the preliminary language in this agreement.
So we are talking about huge sums of money – not just for retirement, but for
taking care of the families of illegal immigrants. This is a huge threat to the
well-being of Social Security, and it is an outrageous violation of our
obligation to watch out for the senior citizens of the United States of America.
And I, as I say, do not understand why every senior citizens organization in
this country is not engaged in this debate.
Now, the third aspect of totalization that the supporters want you to believe
that is not so is that giving Social Security will not have an impact on the
illegal immigration problem. Now, I don’t know if anybody who is advocating this
has taken Economics 101, but if you give more money – if you buy something and
you provide more money – more of it will be produced. I mean, that is just it.
If we spend more money and we provide more benefits to illegal immigrants, there
will be more illegal immigrants. That is just matter of fact. And those who
suggest otherwise are either in lala-land or intentionally trying to deceive
people into doing something that is going to be harmful, not only today, but
tomorrow as well – for tomorrow’s generation. And who wouldn’t, in Mexico,
choose to come to the United States of America and having the U.S. government
back the retirement system rather than trying to stay dependent on a corrupt and
bankrupt retirement system in Mexico? There is just no doubt about it.
Now, I have a little bit more bad news: if Congress passes any kind of an
amnesty or a guest-worker program, every illegal alien who qualifies for amnesty
will then be able to apply for Social Security as – will then have a legal
status in the United States. Any of the amnesty or guest-worker programs that we
have heard about will mean millions and millions of illegal aliens thrown into
the Social Security system just when the baby boomers in this country are
retiring. So all this time that they have worked will then count – they have
worked in the country illegally – and if we change the status which people are
talking about, all of those years will count and all of those people will count
at exactly the time when Social Security is the most vulnerable. This is
outrageous that Americans are even thinking about doing this because it is so
contrary to the interests of America’s senior citizens.
America cannot support the whole globe, and we in Congress have an obligation to
look after our own senior citizens first. That does not mean that we don’t care
about people overseas. That does not mean we have hard hearts. It does not mean
because you want to take care of your own family that you are hard-hearted or a
mean-spirited person for not spending the resources for the healthcare of your
family to take care of your neighbor. And yes, you may love your neighbor, but
you don’t expect your neighbor then to do the same thing for you. I mean, the
idea is love your neighbor as yourself, and not to say, love your neighbor
instead of yourself, instead of your family.
And so this is a real – a situation where this could cost us, and cost the
people that we are responsible for taking care of – we could cost them the type
of protection and services and resources that they have been promised all of
these years by their government, and that is why they have been willing to pay
into the Social Security system. And by the way, with the Mexican totalization
agreement, that is just what we are looking at, but in terms of illegal
immigration, that goes through all of the services provided by government that
our people are taxed for.
Congress has one option to stop this insanity. We must pass a law specifically
banning any work done by those people who are in this country illegally, and we
must make sure that any work that is done by people who are here illegally is
not a qualification and does not become part of their qualification for Social
Security. I have introduced a bill – HR 1631 – which will prohibit the work
histories of non-citizens who are here illegally from being counted towards
Social Security earnings. If my bill, or one like it, does not pass, then the
totalization agreement with Mexico could well end up to be a disaster for senior
citizens in the United States.
And I’m very appreciative that CIS is focusing on this issue and bringing up the
legislation that we have worked out, and I just can’t emphasize – again, I feel
I have got a good heart. I really do. I feel like I – I mean, I don’t hate or
dislike anyone and I think that we need to care about people overseas and people
in other countries. I love Mexico. I have spent – I lived with a Mexican family
when I was younger, and I have spent a lot of time in Baja, California – I’m a
surfer, et cetera. And I love Mexican culture and Mexican people, but our
primary responsibility has to be to watch out for our own families, watch out
for our own people.
This is not done in a malicious – or a way that takes away from that love in our
hearts, but we must move forward with that positive spirit, or our own people
are going to be hurt very badly, and that makes no sense. Again, that is not an
attack on our friends in Mexico, it’s simply realizing that they have their
responsibilities to watch out for their families and we can help out, but we
can’t do it at the expense of well-being of the American people. So with that
said, thank you very much.
MR. KRIKORIAN: Thank you, Congressman. You
are going to have to run, right?
MR. ROHRABACHER: Right.
MR. KRIKORIAN: Okay, well thanks a lot,
appreciate it. Thanks Congressman, and what we are going to do now is have Marti
Dinerstein, author of the report, sort of give the – kind of summary of her
findings, which include some of the aspects that the Congressman just talked
about – the question of legal status – but also the other aspects, the other
problems with the agreement, which are completely apart from the issue of legal
status. So, Marti?
MARTI DINERSTEIN:
Thank you, Mark. Thank all of you for coming today. This is a
slightly esoteric subject – (laughs) – and while I try to clarify it in my
backgrounder, people who read it are going to have to plow through 6,000 words.
So to make up for that, I have decided to make my remarks here today on the
short side, hoping that that will encourage a longer Q&A session.
Since the 1970s, the U.S. has entered into 20 bilateral totalization agreements,
and all were meant to accomplish two things – to secure tax savings by
eliminating duel taxation for both employees and employers who send them to work
temporarily in another country, and to guarantee an old-age pension to workers
who paid into the Social Security systems of both countries but did not earn
sufficient credits to receive full credits from either of those countries. Under
a totalization agreement, upon reaching retirement age, workers are deemed
eligible for prorated benefits based on the amount of contributions they made to
the system of each country. These agreements have been beneficial to U.S.
workers and their employers, the associated Social Security payments to foreign
nationals have been reasonable and as such, totalization agreements have been
non-controversial. Congress has never voted to disapprove one.
But the proposed totalization agreement with Mexico is profoundly different than
prior agreements in four important ways. I’m going to briefly list them and then
cover them in more detail. First, this agreement is a perversion of the existing
total of the 20 existing totalization agreements. Few, if any, conditions
present in the other agreements exist. Second, it is lopsided in the extreme.
The benefits to U.S. workers and their employers are miniscule compared to those
that could be received by millions of Mexican workers. Third, illegal aliens
were simply not a factor in any of the other agreements. None of the existing
totalization countries account for even 1 percent of the illegal population in
the U.S., and jointly, all 20 comprise only 4 percent of that total. Mexico, in
contrast, accounts for a whopping 69 percent. Fourth, it’s extremely difficult
to estimate the potential long-term drain to the U.S. Social Security trust
fund, but it has the potential to dwarf all of the other agreements combined,
and then some.
So taking the four points in order, I’m just going to highlight a few things,
and trust me, there is plenty more in the backgrounder for your further review.
First, it’s a perversion of the prior agreements because it breaks the mold. The
norm is for a corporation to ask their employers to work abroad for a specified
period of time. Both employees and employers have been paying Social Security
tax in the home country. Employees legally enter and with appropriate work
authorization and happily leave when their temporary assignment is over. When
they retire, they collect benefits based upon the total number of years that
they worked in each country. In sharp contrast, most Mexican workers make the
decision themselves to migrate to the U.S. because they are living in poverty
and cannot support their families. Most are probably part of the vast
off-the-books economy and do not pay into Mexico’s Social Security system. In
fact, only about 40 percent of Mexico’s non-government workers participate
compared to 96 percent complaints in the U.S. plan.
The sheer size of the U.S.-Mexican born population is another anomalous aspect
of this agreement. In 2000 – I use 2000 figures throughout my paper because
there was a big report issued that allowed me to compare statistics with all of
the 20 totalization nations, which was important to my work, so this is probably
a low number now, but it’s the number I have used consistently throughout the
paper – an estimated 9.2 million Mexicans lived in the U.S. None of the other
totalization countries account for even 1 million residents, and eight of the
countries had such tiny populations in the U.S. that the Census Bureau doesn’t
even track the numbers.
My second point is that the proposed totalization pact is one-sided in Mexico’s
favor. There is no benefit parity. Individuals vest for U.S. Social Security in
10 years while it takes 24 years to do so in Mexico. When one finally does vest,
the financial benefits are not remotely similar to those available in the U.S.
In Mexico, one only receives back exactly what one contributed, plus a crude
interest. In contrast, the U.S. Social Security system is progressive with lower
wage earners receiving benefits far in excess of what they contributed.
Therefore, any program that encompasses a huge number of low-wage retired
workers from a foreign country is bound to be a big drain on the U.S. Social
Security trust fund, and that would be unfortunate, indeed, given the sorry
state of our Social Security. The SSA’s own website warns that if no action is
taken, we will begin paying out more in benefits than we collect in taxes in
just 15 years.
Alan Greenspan issues quarterly warnings about the impending train wreck, and
Pete Peterson, a former U.S. Commerce Secretary, just published a new book that
aptly describes the situation: running on empty. So clearly, the solvency of
U.S. Social Security is dependent on the government being a more prudent steward
in years to come. Thus, one thing is very clear: it would be highly
irresponsible to enter into a one-sided, bilateral totalization agreement that
provides meager benefits to U.S. workers while saddling the U.S. Social Security
system with potentially billions of dollars of annual benefit payments. Simply
put, it is impossible to know how many millions of Mexicans will be living in
the U.S. in the next decade, much less in the next century. The variables are
almost infinite.
Further complicating matters is the uncertainty of how a totalization agreement
will affect the millions of Mexicans who worked illegally through all or a
portion of their time in the U.S. Indeed, the issue of illegal presence has
dominated the limited amount of public debate on the relative merits of the
totalization agreement so far. The crux of the issue rests on the U.S. Social
Security law and how it has been interpreted and administered. In Mr. Huse, we
are fortunate to have a respected, bona fide Social Security expert, so I have
decided to do the prudent thing and defer to him. But I did write my views on
this subject in the backgrounder, so you can find them there.
That leaves me with my fourth and last point. I believe a totalization agreement
with Mexico is going to cost a king’s ransom compared to the total cost of all
existing agreements combined. That is pretty obvious based on the sheer number
of Mexicans that have worked, are working, and will work in the future in the
United States. Last year, the General Accounting Office undertook an analysis of
a then-still exploratory totalization agreement – at the request of the chairman
of the House Judiciary and Ways and Means Committees. The bulk of the GAO’s
report centered on the deeply flawed assumptions used to calculate the potential
costs of a totalization agreement with Mexico. Among other shortcomings, it did
not take into consideration the possibility of future amnesties and the
potential lure of U.S. Social Security benefits to Mexicans who will not receive
anything from their own government.
So my bottom line is the following: the down-size risks of a totalization
agreement with Mexico are too great. It is not in our national interest. Long
term, it could hasten the insolvency of the U.S. Social Security trust fund and
therefore the retirement security of America’s seniors. Thank you.
MR. KRIKORIAN: Thank you, Marti. Jim Huse,
and then we will go to Q&A. Jim?
JAMES HUSE:
Thank
you, Marti – very good report.
I was the Inspector General of Social Security for almost six years – between
the time I was Acting Inspector General and after my appointment by President
Clinton – until March of this past year when I became a private citizen, and I
sit before you today as a private citizen, not as a Social Security official or
executive. I have no standing at Social Security at all other than the record I
left when I left office. And I’m not an ideologue. I don’t – just as Congressman
Rohrabacher said – I’m not mean-spirited, I’m not anti-immigration, I’m not
anti-retirement benefits. I merely held a position as a steward of
accountability in the federal government as many of the inspectors general do,
and in that time, I am asked to record over certain issues that I will share
with you today.
There were two overriding concerns when I was inspector general of Social
Security that I believed I focused on. One was the misuse of the Social Security
number as a – I think everyone accepts the fact that the Social Security numbers
are de facto national identifier, and the misuse of that number as a key to not
only identity fraud generally, but the receipt of Social Security benefits. And
secondly, I became concerned about the law enforcement aspects of the misuse of
that number. And in so doing, I came to understand several things. One is that
we do have a significant illegal immigration situation in this country and it’s
statistically reflected and the data is examinable in the Social Security system
of records. Social Security maintains an earnings suspense file, and the
earnings suspense file is a place where Social Security statuses – the wages and
earnings of receipts from employers all around the United States – that cannot
be reconciled with an existing valid Social Security number. When those wages
and earnings come in with whatever kind of a number is on them, whether it’s
scrambled or made up or stolen from somebody else, it goes into suspense.
Well, we found that – looking at that suspense file – that it has undergone an
astounding growth in the past – well, in the years that Social Security has kept
records – since 1937. But particularly in the period from 1990 to the present,
it has gone through an almost exponential growth. In Marti’s report, there is a
graph that shows this quite dramatically. In any case, since 1990, that file has
been growing by approximately five million wage postings a year that can’t be
reconciled with a real number, but a growth of about $15 billion a year, and
that continues apace as we sit here today.
When I left, our office was engaged in updating a report, I think, that you
referenced. In the year 2000, we issued a report on the status of the Earning
Suspense file, and I would expect that that new report will be out in the next
six or seven months or so, and while I cannot predict what that report will say,
I would not be surprised to see it reflect that nothing has changed. But that is
just my personal opinion. We have to wait to see what the results are. There has
been nothing really to indicate otherwise, and one reason I say that is if you
follow the reporting on our porous borders, you will understand that illegal
immigration continues.
Now, how – if you take this extraordinary growth in the earning suspense file by
these numbers, they almost match up to the estimated numbers of illegal
immigrants working in this country. As a law enforcement person, I can’t tell
you that in the world we live in today, this is not an acceptable status quo. So
for those reasons – on the basis of illegal immigration and homeland security –
I believe that we really have a substantial interest in doing something about
this illegal immigration, and for that, you know, I sit before you to answer any
questions you might have. Thank you.
MR. KRIKORIAN: Thank you, Mr. Huse. You
notice there is a microphone in the middle there. If anybody has any questions,
if you could please go to the mike and identify yourself. If I could just sort
of take the prerogative of the chair and ask just procedurally, where – what is
the next step for the totalization agreement, just so people can sort of get the
idea of where it is?
MR. HUSE: Well, the totalization agreement,
as I understand it, is now – has been signed – was signed this past June, and is
at the Department of State for appropriate review and putting in formal,
diplomatic modalities that would have it then passed to the Congress for
ratification and review.
MR. KRIKORIAN: And the way it works for
Congress, as I understand – Congress has a veto, but doesn’t have to approve it.
MR. HUSE: That’s correct. It only has a veto
power for this particular kind of a treaty.
MR. KRIKORIAN: Right.
MR. HUSE: So it’s virtually – unless
Congress objects, this treaty is in effect.
MR. KRIKORIAN: Well, unless the – but I
mean, the administration does have to introduce it, right? In other words –
MR. HUSE: Right.
MR. KRIKORIAN: – nothing happens if the
White House decides not to –
MR. HUSE: But there is no – the Congress
doesn’t have to approve it, it has to reject it. There is kind of a distinction
there.
MR. KRIKORIAN: Right, okay. Any questions?
Well –
MR. HUSE: I just wanted to add one –
MR. HUSE: Just one thought about the Earning
Suspense Files because it helps. It is a file – it’s not a trust fund. Those
postings to that file – in 1999, it was about $374 billion of wages posted in
there, and that – if we figure it has grown by $15 billion each year since, it’s
substantially more than that now. That is not real dollar – those are not real
dollars, those are kind of obligations on the United States to pay those
benefits if someone were able to come in and say, those were my earnings when I
had this fake number or I had – and that does happen. That is an extremely
complicated administrative burden to do that. With this treaty, and the
potential claims on those benefits by people who are now in status, that could
be a significant workload for Social Security administration that it doesn’t
have at present.
MR. KRIKORIAN: In other words, in figuring
out who gets what –
MR. HUSE: Absolutely.
MR. KRIKORIAN: – and sorting the whole thing
out.
MR. HUSE: A workload that would be totally
dependent on the production of records and documents proving someone’s bona
fides, something of grave concern to people who follow the false identity world
today because certainly we have our own problems inside the United States itself
in terms of birth records and systems of records of identification. But in
Mexico, they are exponentially different and more problematic since they don’t
have even the system – [the] confusing and complex system we have.
Q: Can I just take advantage and ask a
question of each of you since no one is behind me? Mr. Huse, I’m just wondering
what your view of the no-match letters that Social Security was sending out to
all employers who had a no-match problem within their company versus only
sending it to companies who have ten or more no-matches – if you think that
would help with straightening out the Social Security system and fraudulent use.
And Marti, is your view, then, that if we were to reform current Social Security
law to prohibit illegal aliens from claiming – or to prohibit aliens from
claiming credit based on illegal work, that that would take care of the problem,
and then the totalization agreement would be okay?
MR. HUSE: Well, the no-match letters,
certainly if they were – they were sent out for a period of time and they are
effective. They are an enforcement tool – this is – and after a period of time,
it became a burden and they were suspended. I know that there are many different
techniques that can be used administratively to help with this problem, and I
also believe that Social Security does a really fine job as an entity of the
federal government and in administering the social insurance programs it has.
But like everything else in the government, it is way over-missioned and
under-resourced so that there are choices made to take up or not to do things,
and it has many, many deferred workloads.
When I used to testify about these things to the Congress – and especially this
issue of integrity of the Social Security number and our system of records – I
would say that all of these things are influenced by great public policy issues
in this country that are left unresolved with willful ambiguity. And I don’t
think – and I’m going to make a quick answer to this – that those can be put
into Social Security for the fix. As an entity, this isn’t just about – the
Social Security administration is just one tiny piece of it. It just happens to
have the facts that prove it all. Thank you.
MR. KRIKORIAN: Marti?
MS. DINERSTEIN: I guess that when I started
my research on this, subliminally, I think that I felt that if the illegality
issue could be addressed, that this would be an okay thing. But as I researched
further and ran the numbers – I’m talking just about arithmetic and a little
desk calculator – it became extremely clear to me that it shouldn’t be approved
because it’s not in our national interest, that the benefits – think about the
numbers of U.S. workers that are working today in Mexico, and then think about
the number of Mexicans that are working in the United States. This is supposed
to be a totalization agreement. It is supposed to have some relative parity for
both nations. It’s supposed to be good for both nations. This is good for
Mexico; it is very, very bad for us. So, no, that is not my view anymore.
MR. KRIKORIAN: So in other words, regardless
of the issue of legal status, it’s a problem.
MS. DINERSTEIN: Totally irrespective of the
issue of illegal presence. This totalization agreement is a problem for the
United States.
MR. KRIKORIAN: Yes, sir.
Q: (Off mike.)
MR. KRIKORIAN: Anyone else?
Q: I have got a comment, please.
MR. KRIKORIAN: Yeah, Jack, if you could ask
from up there.
Go ahead, Jane, you don’t have to wait for him.
Q: We don’t know, basically, what the terms
of this agreement are because it hasn’t been made public yet, so this question
is sort of hypothetical. My impression would be, under this agreement, if it
models similar agreements with other countries, that monies paid into the Social
Security system in the United States by foreign workers who are subject to this
agreement would be sent by the Social Security system to their country to be
credited into their Social Security system for the eventual payment of
retirement benefits to that worker when that worker went back home.
The question is, what would happen in the case of a Mexican who came to work in
the United States under the terms of this agreement – monies were paid into the
Social Security system, those funds were sent to Mexico under the agreement for
the eventual retirement for that individual in Mexico – what happens if that
Mexican individual ends up staying in the United States, reaching retirement age
and making a claim for Social Security in the United States, and yet there has
been no money paid into the U.S. Social Security system trust fund that has
stayed in the United States because it has been sent into Mexico?
MR. KRILORIAN: Is that the way it works?
MR. HUSE: I’m not – that is not my question.
(Laughter.)
Q: Mark – (off mike).
MS. DINERSTEIN: Do you want to go to the
microphone?
(Audio break, tape change.)
Q: (In progress) – either to the worker or
to the system, and my understanding is that they send the money to the worker
based on the credits that he has earned, or she has earned, in the United
States. As far as the retirement, if the worker comes in, retires in the United
States, that I don’t know about, but to my understanding, they send it directly
to the worker.
MR. KRIKORIAN: So there is no withholding
mail to Mexico or anything, it’s just – they are just credited for a certain
number of quarters –
Q: Right.
MR. KRIKORIAN: – and then when they retire,
they sort it out.
Q: And then they work with the 35th system,
which I’m still learning about so –
MR. KRIKORIAN: Okay, thank you.
MS. DINERSTEIN: Yeah, and I was going to
answer that I have no idea. (Scattered laughter.) And, you know, this is just
yet another instance of how convoluted and complex and detailed this is, and
therefore, I think that if it should reach Congress, that clearly, other
hearings need to be held to sort of go through these types of issues so that
Congress can act or not act based upon facts and not about unknowns.
MR. KRIKORIAN: Jane?
Q: Jane Delong (sp), I have two questions.
One, what percentage of the illegal Mexicans in this country actually pay into
Social Security? I have several questions, but I mean, what percentage pay?
There are so many of them in – and particularly in the yard work, the low-field
jobs where nothing is withheld.
MR. HUSE: Those would be people that are
employed in the underground economy and they are not –
Q: But I mean, the figure here – there are
nine, ten million illegal aliens – people in the country working, and we know
they are working hard, but I’m sort of interested in what proportion are paying
–
MR. KRIKORIAN: Jane, we actually did a
report on the fiscal costs of illegal immigration, and one aspect of it was how
much illegals are paying in taxes. And the – there are a couple different
estimates, all of which are around the range of about half of the illegals
working – are actually working on the books with withholding, even though it’s
fake numbers or stolen numbers, whereas the other half are not working on the
books and so there is no withholding.
MS. DINERSTEIN: They are off the books.
MR. KRIKORIAN: Roughly that, maybe 45 or 50.
Q: That’s fine. Marti, what would you
propose, or how would you propose, handling the situation with the people who
are in this country illegally in a variety of ways and do pay in? I mean, do we
even have the option to deny them Social Security? That’s one question, and then
the third question really is just sort of an observation that we are very
worried and this huge pressure description was played that we are going to be
harming American taxpayers. The fact is that one-third of our children – an
increasing number of our children are non-white, and large portions of those are
Hispanics, and they will be paying into the Social Security system for these
people when they are working, so I mean, there may be some parity here, I don’t
know. But I’m really interested in the second question.
MS. DINERSTEIN: Okay, well, as I was doing
this research, I looked on the websites of various Hispanic advocacy groups and
I think it was National Council of Raza but I’m not positive at this point – it
was a while ago. They had a very good analysis of how important U.S. Social
Security was to their members, to their constituency, and they went through that
because a lot of legal immigrants did not have the opportunity to get a good
education in their own countries. When they came here of necessity, they took
low-wage jobs, and the progressive nature of our Social Security system is very,
very important to them, and that needs to be preserved.
And I will follow with interest what those groups’ position is going to be on
the Mexican totalization agreement because I believe that legal immigrants are
going to – suffer might be not quite the right word, but sitting in front of all
of you with a microphone, that is the best one I can think of right at the
moment – are going to suffer because of this agreement, if it’s passed, with the
same degree that the rest of us are going to suffer. We – I think –
Q: But what would you do? Would you actually
say that legal Mexicans are not entitled their Social Security when legal Poles
are?
MS. DINERSTEIN: Of course not. I mean, legal
immigrants that have been in the United States for 10 years and have vested for
U.S. Social Security are getting benefits now and will get benefits in the
future. This does not – what the totalization agreement does is that it
addresses a fluid situation where people work part-time here and then went home,
and it also addresses a situation where people might not have stayed here long
enough to vest here but will – but by combining their time in Mexico could vest.
I concluded, after I finished my research, that basically I think most Mexicans
would receive almost 100 percent of their benefits from the U.S., both because
we allow them to vest faster, and if they go back to Mexico and they go back to
their home states, those states are still in grievous economic situation and
there are no jobs, and certainly no good-paying jobs. So at the end of the day,
I think that the U.S. is going to foot the bill for so-called totalized workers.
MR. KRIKORIAN: In other words, rather than
sharing –
MS. DINERSTEIN: Yeah, rather than sharing.
MR. KRIKORIAN: – sort of evening out a
burden. It would be in a sense – our Social Security system would become
Mexico’s Social Security system.
MS. DINERSTEIN: Yeah. This is just my
hopefully educated guess. I mean, I have – only time would tell. That’s one of
the reasons why I say, this is too risky. We don’t know what is going to happen,
and some of the things that I have prophesized might not happen, but it’s too
risky to take the chance if the downside is enormous.
MR. KRIKORIAN: Could I just address a piece
– sort of the implicit thinking behind that was – you know, was a kind of
assumption that in paying into Social Security – this is sort of the way people
look at it – well, illegals, for instance – just look at the issue of legal
status. Illegals are paying into Social Security, so don’t they deserve it?
Haven’t they bought something in a sense? And the fact is, that is not what
Social Security is. It’s a welfare program. I mean, you pay into it now for
people who are getting it now. What you earn is just credits, if anything.
The – there are proposals to privatize part of Social Security where you would
put some of your money into essentially an IRA but it was mandatory. In that
sense, even an illegal would own it because you would have a property right
because it would be your money. That’s not the way it works now and so a lot of
the thinking on this just is based on a misunderstanding of what Social Security
is.
Anyone else? Yes.
Q: My question is more just a clarification.
Are you all worried that they’re going to put some sort of amnesty into the
totalization agreement, or are your concerns that in five or six years there’s
going to be an amnesty or a guest worker program or something?
MS. DINERSTEIN: I’m worried that an amnesty
program would make the situation worse. Right now – and I am, sorry, not a
Washington person and I cannot remember the numbers of bills, but this last year
something went into effect that’s called the Social Security Protection Act, and
that took care of some of the problem. It – what it said is that if a worker
returns to his home country and he or she is no longer going to be able to apply
for U.S. Social Security benefits from that country based upon illegal earnings.
That’s one of the things that my paper shows; that today, if you in this country
illegally, you are not entitled to Social Security benefits, period. If you go
back to your home country, you often are, and the reason is because you are no
longer illegally in the U.S. (Chuckles.) I mean, this is bizarre.
So that law that was passed, like – prohibits that. But the law only went part
way, and what happened is that they say that if you work say – say you were in
the U.S. for six years and worked with a phony Social Security number, and your
earnings got credited to the earnings suspense fund, comes an amnesty and you
are now legal, that you have – you would have the right to go back to Social
Security and say please transfer all of those credits that I earned while
illegal into my new totally valid Social Security number. So an amnesty would,
by an order of magnitude, increase the liability that the United States would
have in terms of its Social Security Trust Fund.
Q: But that’s going to happen either way
because, like Congressman Rohrabacher said, when they come over here they come
over here for a long time, and I assume more than just ten years. I mean, who
only works ten years and then retires? So regardless of the totalization – and I
mean, don’t get me wrong, I don’t want this to happen any more than anyone else
here but I just – I mean, I think that a guest worker program or amnesty is
going to have such a bigger effect than this, you know? I don’t see people
working here less than ten years.
MR. KRIKORIAN: It – what was your last
statement?
Q: I don’t – illegals coming over here and
working here less than 10 years. I mean, does that happen? Do you all know?
MR. HUSE: I’m sure it does.
MR. KRIKORIAN: Sure it does.
But the point is they work ten years, they vest in American Social Security.
They have to work 24 years in Mexico to vest in Mexican Social Security.
MR. HUSE: And the U.S. Social Security
system is vastly more generous than Mexico’s. But that’s not the issue entirely.
What Marti was referring to was a change in status. If you can prove a change in
your status from illegal to legal, whether it’s from an amnesty or a marriage
or, you know, you come back into the United States legally – that’s another
possibility – you can then make a claim on those prior earnings that are in
suspense. That’s the law today.
The only door that the Social Security Protection Act closed was being able to
reach back for those earnings that you earned illegally in the United States now
that you’re back in your home country legally. That’s the only thing it closed.
Q: You wouldn’t charge them with using an
illegal card?
MR. KRIKORIAN: Jane. Pardon me?
Q: You wouldn’t then be liable? If I had
worked six years illegally with a phony card – (inaudible) – you all wouldn’t
charge me with a crime for using a Social Security card illegally?
MR. HUSE: Well, you’d be in another country.
We wouldn’t charge you, no.
MR. KRIKORIAN: No, no. She’s saying that if
you were to adjust your status –
Q: (Off mike) – if I came back to the U.S.
and I’m legal now, you all wouldn’t charge me for the six years of using –
MR. HUSE: No, the slate is wiped clean.
MR. KRIKORIAN: Yeah. That’s – that’s really
in a sense one of the ways in which being an illegal alien is actually legally
better than being legally here because there are a whole – (laughter) – oh, I
mean, I’m not joking – there are a whole variety of crimes that in practice you
are not prosecuted for that you and I would be.
MR. HUSE: Let me just tell you about some
work we did at the Office of the Inspector General that’s closely associated
with the earnings suspense file issue and the identity of fraud issue.
We did a review of the top 100 employers in the United States who had the most
postings to the earnings suspense file. That’s a report. You can find these
reports, by the way, on the SSA website – ssa.gov – and when you get the website
up, over on the left-hand side is fraud, waste and abuse. If you click on there,
you’ll get into the IG’s library. And all these audits are there.
But the top 100 employers – look for that one. And I think that one is also
being updated this year also. And you’ll see the results of that.
But in the top 100, we found that there was quite a spread of companies, some of
the largest corporations in the United States are in there that use this
workforce to, you know, keep its – keep their wages low, and in that report you
can see the impact of illegal immigration in the United States. This is part of
the schizophrenia of our government. We have laws that say you’re not supposed
to be here, but we have lures to draw people to want to come here. I mean, this
is – that’s the reason I sit here today; not so much about a totalization
treaty, just about the absolute ambivalence and confusion we have over what’s
right and what’s wrong. Is it wrong to be in here illegally? Yes, we have
criminal statutes that say that.
One anecdote: Back in 1999, the then-Immigration and Naturalization Service – of
course all that has changed now, but – they’re in the Department of Homeland
Security – they had a program called “Operation Vanguard” where they were trying
to round up illegal alien workers. And primarily these were in these horrific
meat-packing places in – where a lot of people were injured and working under
abysmal conditions, but whatever – they wanted us to participate with them in
this endeavor.
And there was an awful lot of controversy between the Department of Justice –
and this was back in the previous administration – as to whether they should be
rounding these people up, and so on and so forth. But their approach was not
fair in the sense that they were going in open-ended and trying to look – just
assuming that the – a place had illegal workers. So we were very diffident about
involving ourselves. And I decided that unless they had probably cause to
believe that a company had a lot of illegal alien workers, we wouldn’t
participate in that.
Well, as an upshot to that – I mean, I just made it on the basis of our privacy
laws and – a decision, and I was backed by our counsel – I got this unsolicited
letter from the American Meat Packers Association thanking me for my public
service decision and saving Thanksgiving. (Laughter.) I mean, that’s true. I
actually got this letter.
But, I mean, it just gives you some sense of how important these cheap labor
dollars are to these – some of these entities. We have a real mess on our hands
in the country.
MR. KRIKORIAN: Thank you, Jim.
If there’s nobody else, we can wrap it up. I’m sure the speakers will be happy
to be accosted by you afterwards if you have other questions. This report will
be on our site pretty soon this afternoon probably at the latest at cis.org. And
thanks for coming.
_____
* Courtesy of the Center for Immigration Studies.
Presented at
Washington, D.C., September 22, 2004
2226 Rayburn House Office Building
Mark Krikorian, Executive Director
Center for Immigration Studies
1522 K Street N.W., Suite 820
Washington, DC 20005
See original at < http://www.cis.org/articles/2004/totalizationtranscript.html
>.
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