Social Security and Medicare Trust Funds Would Suffer
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Amnesty Would Cost the Social Security and Medicare Trust Funds Hundreds of Billions of Dollars ([link removed])
Washington, D.C. (February 23, 2021) – A Center for Immigration Studies preliminary analysis ([link removed]) shows that an amnesty of illegal immigrants in the United States as put forth in the Biden-Menendez immigration bill would cost hundreds of billions of dollars. Illegal immigration generates one benefit — free contributions to our Social Security and Medicare trust funds. Amnesty would transform those contributions into costs totaling hundreds of billions of dollars.
Jason Richwine, a Center resident scholar, said, “An amnesty would come with a large price tag. The net cost associated with the Medicare and Social Security trust funds could easily reach into the hundreds of billions of dollars – and this is just a rough estimate. We are currently working on a detailed model that will provide more precise costs for both Social Security and Medicare.”
The reasoning for the cost is simple. Under current law, most illegal immigrants cannot access Social Security or Medicare benefits even when they reach retirement age. Nevertheless, roughly half of illegal immigrants do have payroll taxes deducted from their wages while they are working. These payroll tax contributions are generally “free” to American taxpayers because they bolster the trust funds without creating any new benefit obligations. However, amnesty would qualify recipients for Social Security and Medicare, converting future contributions into large IOUs from the federal government.
“Lawmakers need to be aware of the full, long-term costs of any amnesty legislation,” said Richwine. “Unfortunately, the Congressional Budget Office usually projects budgetary impacts only 10 years into the future, meaning it will not capture most of the Social Security and Medicare costs associated with amnesty. But those costs will inevitably include hundreds of billions of dollars charged to the Social Security and Medicare trust funds.”
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