Mexico/United States Social Security 'Totalization' Agreement

Chuck Baldwin
Mexico/United States Social Security `Totalization` Agreement
Sun Dec 31, 2006 15:04

 
“It appears someone needs to remind Mr. Bush that he is the President of the United States, not Mexico. Then again, do national boundaries even matter to this administration? Perhaps not.” — “Bush Planning Social Security Benefits for Mexicans,” Chuck Baldwin, The Covenant News, January 7, 2003, http://www.covenantnews.com/baldwin030107.htm

Mexico/United States Social Security `Totalization` Agreement
http://www.tscl.org/NewContent/101801.asp

Q: What is a Social Security “totalization agreement?”
A totalization agreement is an accord between two countries to eliminate dual taxation for persons who work outside of their “country of origin.” People who work in other countries may find themselves obligated to pay Social Security taxes under both countries simultaneously for the same work. Yet workers who have divided their working careers between two countries can sometimes fail to qualify for Social Security benefits from either country because they have not worked long enough or recently enough to meet the minimum eligibility requirements.

No totalization agreement currently exists between Mexico and the U.S. Under a totalization agreement, Mexican citizens would be allowed to count the time they worked in the U.S. and in Mexico to qualify for benefits under one of those country’s systems.

For example, to qualify for U.S. Social Security, a person who attains age 62 in 1991 or later generally needs 10 years of work to be insured for retirement benefits. Under a totalization agreement, a Mexican citizen working in the U.S. would only need a minimum of 18 months of coverage under the U.S. system. The Social Security Administration would also count periods of coverage that the worker earned under the Mexican Social Security system towards eligibility for U.S. benefits. The Mexican Social Security system would be obligated in the same way for U.S. citizens working in Mexico though a relatively tiny number of U.S. citizens would benefit from this.

Source: “U.S. International Social Security Agreements,” Social Security Administration, September 10, 2002. www.ssa.gov/international/totalization_agreements.html

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Q: Does the U.S. have these kinds of agreements with other countries?
Yes. The United States has totalization agreements with some 20 foreign countries that have added 94,022 beneficiaries living abroad to the Social Security rolls. Because benefits average only $162.80 a month, the annual cost until now has been relatively low—about $183 million. If Mexico and the U.S. sign a totalization agreement, the number of Mexican citizens drawing Social Security benefits will quickly dwarf the combined total of beneficiaries from all 20 countries with which the U.S. currently has agreements.

In addition, because the 20 existing agreements are with industrialized countries such as those in Europe, there is a fair balance between the number of U.S. citizens who take advantage of the agreement and the number of foreign nationals who use it. Thus, a burden is not placed on the Social Security Trust Fund. In the case of developing countries such as Mexico, the agreement is more one-sided. Says Mark Krikorian of the Center for Immigration Studies, “There are far more Mexicans wanting U.S. retirement benefits than Americans who seek Mexican retirement benefits.”

The government started negotiating totalization agreements in the late 1970s. The first agreement, with Italy, became effective November 1, 1978—just one year after Congress enacted the 1977 law changes that ultimately created the Social Security Notch. At that time the Social Security Trust Fund was projected to become insolvent within a four-year period.

Source: Source: “U.S. International Social Security Agreements,” Social Security Administration, September 10, 2002. www.ssa.gov/international/totalization_agreements.html
“Social Security Plan Would Aid Mexicans,” James Gerstenzang, The Los Angeles Times, December 20, 2002.
“U.S. — Mexico Social Security Pact Eyed,” Sharyn Obsatz and Sandra Baltazar Martinez, The Press Enterprise, January 17, 2003.

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Q: What is the cost of a totalization agreement with Mexico?
The Mexican pact would be the largest of any totalization agreement to date. In the first five years, at least 162,000 new people would be added to the rolls. According to a recent story in The Washington Post, the cost is estimated to be much higher than all 20 of the existing accords—$720 million a year within five years of implementation based on U.S. and Mexican statistics.

But that estimate is likely to be understated. “If the new beneficiaries in Mexico received payments equal to the average $8,100 benefit that Mexican-born retirees in the U.S. now receive, the total could easily surpass $1 billion per year,” says Steven A. Camarota, director of research at the Center for Immigration Studies, a nonpartisan research organization.

For example, a recent Washington Times article states that “$345 billion—or more—could be siphoned from the Social Security ‘trust fund’ over the next couple of decades, mostly to pay benefits to Mexican citizens who worked illegally in the United States.”

Sources: “ U.S. Social Security May Reach to Mexico,” Jonathan Weisman, The Washington Post, December 19, 2002. “Siphoning off Social Security,” Joel Mowbray, The Washington Times, January 9, 2003.

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Q: Is it true Mexicans who worked illegally in the U.S. would be covered?
Yes. As reported in The Washington Times and elsewhere, an internal Social Security Administration memo indicates that the pact will allow illegal aliens to qualify for Social Security benefits. “Mexican nationals working illegally in the U.S. can currently become entitled to benefits if they have made payments to the Trust Fund that meet the vesting requirements,” the article states. “The Totalization Agreement would include this population of Mexican workers within the overall population of workers covered by this agreement.” The Washington Times article continues, “With anywhere from 7 to 11 million illegal aliens in the U.S., the majority of whom are from Mexico, including illegals in the pact would cost many more billions of dollars per year.”

Source: Siphoning off Social Security,” Joel Mowbray, The Washington Times, “January 9, 2003.

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Q: Is it true the Mexican government wants a “back payment” of $50 million?
Yes. A 1996 immigration reform law abolished Social Security benefits to aliens not legally residing in the United States, unless their home countries were subject to a treaty. The Washington Post says that according to a Mexican government document, “those beneficiaries alone are owed nearly $50 million in 1998.”

Source: “ U.S. Social Security May Reach to Mexico,” Jonathan Weisman, The Washington Post, December 19, 2002.

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Q: Can the Social Security Trust Fund afford to pay out this money?
No. Legal immigrants known as “resident aliens” are required by law to pay Social Security taxes just like working U.S. citizens. They should be entitled to collect benefits. But changing the rules allowing illegal immigrants from Mexico or from any other country to collect benefits is a terrible mistake.

According to a recent policy brief from the Congressional Budget Office (CBO), long range projections by the Social Security Trustees show Social Security Trust Fund surpluses totaling $5.9 trillion from 2003 through 2026. However the CBO warns that 60% of the so-called surplus is “merely paper transactions among government accounts, or credits from one account to another.” The estimates do not represent real cash revenues. The CBO further states that if the credits “that the trust funds receive from the general fund are excluded, Social Security surpluses would disappear in 2017, and for the 2003 through 2026 period as a whole, the program would run a cumulative deficit of $ 0.7 trillion.” The CBO brief concludes by stating that the choices that policymakers have to address deficits are to “raise taxes or constrain spending.”

Source: “The Impact of Social Security and Medicare on the Federal Budget,” Congressional Budget Office, November 14, 2002.

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Q: What will the effect of totalization be on illegal immigration?
Allowing persons to collect Social Security who have broken the law by entering the country illegally and used a false Social Security number to work would provide a huge incentive for illegal immigration and the criminals who smuggle them into the U.S.

Illegal immigration from Central and South America, as well as other countries, would likely skyrocket as more persons cross our borders in search of lifetime security.

Heads of other governments, like Mexican President Vicente Fox, are unlikely to share a concern that their citizens are entering the U.S illegally. On the contrary, Mexican President Vincente Fox, for example, is a staunch open borders advocate. A major reason is economic.

According to The Pew Hispanic Center, a research organization in Washington, Mexican immigrants are one of the best sources of Mexico’s foreign revenue—second only to oil exports. In 2002, Mexican immigrants working in the U.S. sent a record $10 billion to relatives back home. The Mexican economy and privatized Mexican Social Security system is in even worse shape than the U.S. economy, leaving many Mexicans desperate for money. Mexican immigrants in the U.S., legally or illegally are critically important to the Mexican economy.

Source: “Mexico Immigrants Sending More Money Home, Sandra Marquez, The Associated Press, December 31, 2002.”

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Q: What are others saying about totalization with Mexico?
“Under totalization, a foreigner who came to the United States illegally could work fewer than the required number of years, return to Mexico for the rest of his working years, and collect full U.S. Social Security benefits while living in Mexico.” — Representative Ron Paul, (R-TX) from his web site http://www.house.gov/paul/tst/tst2003/tst010603.htm

“Talk about an incentive for illegal immigration! How many more would break the law to come to this country if promised U.S. government paychecks for life?” — Representative Ron Paul, (R-TX) from his web site http://www.house.gov/paul/tst/tst2003/tst010603.htm

“I think this sends a terrible message with regard to immigration policy in this country. Here we are in a time when we are fighting a war on terror and trying to get control of our borders. Are we going to send a message that it is OK to break our laws, commit Social Security fraud and then get benefits back?” — Michelle Malkin, Fox News Analyst, segment from the December 28, 2002 edition of Fox Wire w/ Rita Cosby, http://www.foxnews.com/story/0,2933,74157,00.html

“It seems to be getting off to a fast track. There is going to be some sort of Social Security reform, I would think, and this might be one of the issues that is going to be included.” — Ricardo Inzunza, Former Deputy Immigration & Naturalization Service Commissioner, segment from the December 28, 2002 edition of Fox Wire w/ Rita Cosby, http://www.foxnews.com/story/0,2933,74157,00.html

“This idea would be very costly to U.S. taxpayers. It’s bad politics, it undermines the rule of law and it invites a new wave of illegals to come across our border in search of taxpayer benefits.” — columnist Phyllis Schlafly, “U.S. Social Security for Mexicans?” Copely News Service, http://www.eagleforum.org/column/2003/jan03/03-01-15.shtml Schlafly

“All of the (totalization) deals before this have been non-controversial and low-cost. This could be dramatically different in all kinds of ways.” — an unidentified House Republican expert on Social Security from “U.S. Social Security May Reach to Mexico,” Jonathan Weisman, The Washington Post, December 19, 2002.

“Our actuaries are working on the numbers,” Jim Courtney, spokesman for the Social Security Administration, quote appearing in “Social Security Plan Would Aid Mexicans, James Gerstenzang, The LA Times, December 20, 2002.

“An estimated 4 million to 5 million Mexicans work illegally in the United States, supplying non-existent Social Security numbers to their employers.” quote appearing in “Social Security Plan Would Aid Mexicans, James Gerstenzang, The LA Times, December 20, 2002.

“It appears someone needs to remind Mr. Bush that he is the President of the United States, not Mexico. Then again, do national boundaries even matter to this administration? Perhaps not.” — “Bush Planning Social Security Benefits for Mexicans,” Chuck Baldwin, The Covenant News, January 7, 2003, http://www.covenantnews.com/baldwin030107.htm

909 N. Washington St., #300 Alexandria, VA 22314 (800) 333-8725
http://www.tscl.org/NewContent/101801.asp

S.2611
Title: A bill to provide for comprehensive immigration reform and for other purposes.
Sponsor: Sen Specter, Arlen [PA] (introduced 4/7/2006) Cosponsors (6)
Related Bills: H.R.4437, S.2454, S.2612
Latest Major Action: 5/25/2006 Passed/agreed to in Senate. Status: Passed Senate with amendments by Yea-Nay Vote. 62 - 36. Record Vote Number: 157.
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SN02611:

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