Apres moi - le Deluge

The debt ceiling talks have made all the interest groups come out to the 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:

(Louis XV)

BK translation: After I’m dead things can go to hell.

Excuse the rant.