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Amnesty and Entitlements

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What will be the financial impact of President Obama’s executive order concerning nearly 5 million undocumented immigrants? The White House has acknowledged that these newly legalized workers will contribute to Social Security and Medicare. Will this help us with our current crisis of entitlements or make the problem worse?

There are some that believe it will help us since we will have millions more paying into Social Security and Medicare. I even had one caller suggest that this might be a way to deal with problem created by abortion. We have aborted millions of unborn children who could have been taxpayers paying into the system as millions of Baby Boomers are retiring. He thought these new immigrants might replace those lost to abortion.

Dr. Merrill Matthews runs the numbers and shows that there might be an initial benefit, but that will be followed by a financial unbalance that will make the problem much worse. The long-term unfunded liabilities of Social Security and Medicare are at $49 trillion. We already have a problem because people retiring and receiving these benefits will receive more in benefits from the two programs than they paid into the system.

The newly legalized immigrants will be paying into the system even less, for two reasons. First, their likely income will be less than the average worker. And second, they will be paying into the system for a shorter time. Most of the newly legalized are working-age adults with children already in their 40s who would only pay FICA taxes for perhaps 15 to 20 years. They may help the government trust fund initially (assuming they all quickly find good paying jobs here in America). But they will be fully eligible for these government programs when they retire.

Using one simulation model, Dr. Matthews estimates that the government will receive about $500 billion in payroll tax revenue. And the government could expect to pay out some $2 trillion in benefits over several decades. In other words, if you do the math you see that this executive order will make the entitlement crisis even worse.

Viewpoints by Kerby Anderson

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