- The Washington Times - Friday, January 5, 2007

The 110th Congress convened yesterday with a new Democratic majority promising long-term solvency for Social Security.

It won’t be easy.

According to the Social Security Trustees, our nation’s Social Security Trust Funds are forecast to be completely exhausted by the year 2040 unless major changes to the system are implemented. But the crisis isn’t waiting that long to arrive — the system will have to start paying out more than it’s taking in within a decade, and it’s unclear where the money will come from.

Those in the Social Security policy world all point their finger to their favorite culprit — some blame the absence of a Social Security lockbox, others the coming crush of baby-boomer retirees, while others choose the lack of will by some lawmakers to touch the “third rail” of American politics. Those factors do play a role, but for today, they’re not the story.

Three and a half years ago, our organization submitted requests under the Freedom of Information Act to the Social Security Administration (SSA) and U.S. Department of State requesting a copy of — and all costs associated with — the U.S.-Mexico Social Security Totalization Agreement. The agreement is intended to eliminate dual taxation for people who work outside their country of origin.

Last week, the SSA finally relented a bit, and our organization became the first to see the agreement. The news isn’t good.

We may be about to give away billions of dollars in Social Security money to millions of today’s illegal Mexican workers.

At first glance, a law called the Social Security Protection Act of 2004 seems to prevent this giveaway from occurring, since it forbids illegal immigrants from claiming Social Security benefits. But a loophole in the law allows immigrants who gain valid “work authorized” Social Security numbers at some point to eventually file a claim for benefits. That means if an illegal worker becomes a citizen through guest-worker amnesty legislation or the totalization agreement, the government would use all earnings to calculate his or her retirement benefit — including money made while working in the U.S. illegally.

The high cost of such a deal is of great concern. The Social Security Administration actuaries estimated the totalization agreement with Mexico would cost the U.S. Social Security system an average of just $105 million for each of the first five years — significantly less than our existing agreement with Canada. However, when the nonpartisan Government Accountability Office (GAO) evaluated the SSA’s estimates, it bluntly stated, “The cost of such an agreement is highly uncertain,” and suggested that such a deal could cause a “measurable impact” on Social Security’s trust funds.

Despite the GAO’s three-year-old recommendation that the Social Security Administration improve cost estimates, no new estimate has been publicly released, and there is no evidence that the SSA has even conducted one.

But here’s what we know.

The SSA maintains an “earnings suspense file” that tracks the wages of people whose Social Security numbers and names can’t be matched. Unauthorized work by non-citizens is the chief cause of items being included in the file, according to the SSA’s inspector-general.

The file, which tracks wages and contains no actual money, now stands at $520 billion. A substantial portion represents wages that would potentially have to be reinstated to the new Social Security accounts of newly authorized immigrant guest workers if amnesty legislation or the totalization agreement go into effect — for work they did while in the country illegally. That amount could measure a few billion dollars, tens of billions, maybe even hundreds of billions. We have no idea, and the totalization agreement gives us no guidance. Nor does it tell us where the money would come from or who would pay for it.

The agreement also fails on another count. As Congress debates various options for dealing with illegal immigration, politicians on both sides of the aisle have wisely avoided calling on more illegal aliens to cross the border. Yet, that’s exactly what the agreement would do. According to the GAO report, an agreement would “provide additional incentive for unauthorized workers to enter the United States to work.”

Even if — and this is a big if — immigration weren’t a factor here, the totalization agreement would be bad for the U.S. Social Security system. The Unite States currently has 21 similar agreements in effect with other countries, almost all of which are developed nations in Europe and Asia with economies similar to that of the United States. But Mexico’s retirement system is radically different than that of other participating countries. Since the U.S. system is progressive, lower-wage earners get back much more than they put in, meaning illegal workers would benefit the most from our system. By contrast, Mexico’s system offers lower wage earners just what they put in, plus accrued interest.

The president’s effort to launch this agreement could begin at any time. His Social Security commissioner already signed the agreement with her Mexican counterpart two years ago, and it is now awaiting President Bush’s signature. Once Mr. Bush approves the agreement, which would be done without congressional vote, either house of Congress would have 60 days to disapprove it by voting to reject it.

Seniors have enough challenges to face every day — rising medical costs, increasing inflationary pressures and a declining annual cost of living adjustment, to name a few. They shouldn’t also have to fear watching their honestly earned retirement benefits disappear to those who illegally cut their place in line.

Shannon Benton is executive director of TREA Senior Citizens League. (Visit www.SeniorsLeague.org to read the totalization agreement.)

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