Social Security, Medicare and Immigration Reform

Apr 25th, 2010 | By Sharon Shaw Elrod MSW EdD | Category: Social Security & Medicare

Baby Boomers and their offspring are concerned about Social Security and Medicare being around when the offspring reach retirement age.  Projections about the balance in both funds look rather dismal for 20-25 years out.  Both programs are on the way to zero balances sooner rather than later.  And if the funds go bust, they won’t be there when our offspring are ready to retire.

This year, 2010, Social Security will pay out more in benefits than it will receive in payroll taxes.  That’s earlier than projected a few years ago because the market crash of September 2008 kicked so many people off payrolls. 

This week, Ben Bernanke (Chairman of the Federal Reserve) outlined the choices facing our nation.  To avoid large and unsustainable budget deficits, we must choose from among the following:

  • higher taxes
  • modifications to entitlement programs such as Social Security and Medicare
  • spend less on everything else from education to defense, or
  • some combination of the above.

Robert Reich, Professor of Public Policy, University of California at Berkeley has another suggestion:  Immigration.

Reich says, “You see, the biggest reason Social Security is in trouble, and Medicare as well, is because America is aging so fast. It’s not just that so many boomers are retiring. It’s also that seniors are living longer. And families are having fewer children.

Add it all up and the number of people who are working relative to the number who are retired keeps shrinking.

Forty years ago there were five workers for every retiree. Now there are three. Within a couple of decades, there will be only two workers per retiree. There’s no way just two workers will be able or willing to pay enough payroll taxes to keep benefits flowing to every retiree.

This is where immigration comes in. Most immigrants are young because the impoverished countries they come from are demographically the opposite of rich countries. Rather than aging populations, their populations are bursting with young people.

Yes, I know: There aren’t enough jobs right now even for Americans who want and need them. But once the American economy recovers, there will be. Take a long-term view and most new immigrants to the U.S. will be working for many decades. 

Reich suggests a logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree, and the simplest way to do that is to allow more immigrants into the United States.

He concludes:  Immigration reform and entitlement reform have a lot to do with one another.

We agree. 

Your comments are welcomed!



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