Social Security 'Totalization'
Examining a Lopsided Agreement with Mexico
Panel Discussion Transcript
September 22, 2004
2226 Rayburn House Office Building
Mark Krikorian, Executive Director, Center for Immigration
Rep. Dana Rohrabacher,
Marti Dinerstein, Fellow, Center for Immigration Studies
James Huse, Former Inspector General, Social Security
KRIKORIAN: Good morning. My name is Mark Krikorian, I’m
executive director of the Center for Immigration Studies, a think tank
here in town that examines and critiques the impact of immigration on
the United States. I will get the commercial in at the beginning – all
of our work is on the web at cis.org. The report we are releasing today
will be up later today.
There has been a lot of discussion this year about this issue of a
Social Security agreement, or a potential Social Security agreement,
with Mexico. And the public discussion , at least in the press – and
also a lot of it has suffered from some confusion and frankly, even a
little bit of hyperbole – there have been a lot of people who sort of
get the idea, once you talk about Social Security, some people stop,
they sort of lose reason, and there was an idea that every illegal alien
is going to get a Social Security check – this kind of thing, and that
is not really what this is about. So what one of the things we wanted to
do is actually look at it and see what really is involved in this
so-called Totalization deal, and it turns out that it’s terrible even
without the exaggeration.
So there is plenty here to critique, there are some real problems with
it and this is what our – the paper we are releasing today is going to
address. And frankly, the very idea of such an agreement with a country
like Mexico is problematic; in other words, it’s not just a question of
the details, it’s the whole concept itself.
And another point that really is important to address is that what has
been discussed so far – the congressman has been involved in it, and
others – is the issue just of a legal status and the illegality of
people claiming Social Security benefits – that sort of thing. It’s an
extremely important issue, but it’s really only one part of this whole
issue, and that even without that whole illegality aspect, there are
some serious questions that would need to be asked about this kind of
So to talk about this whole issue of Social Security totalization with
Mexico, we have got a distinguished panel. We will start with
Congressman Rohrabacher because he has another meeting he needs to run
to. The Congressman is the sponsor of H.R. 1631, which is one of the
pieces of legislation that would address some aspects of totalization.
Let me hasten to add, the Center doesn’t endorse or oppose any
particular piece of legislation, but this is – Congressman Rohrabacher
is one of the key people on this subject, and so it’s going to be very
important to hear what he has to say.
After the Congressman’s comments, Marti Dinerstein, the author of the
report, will talk about her findings. She has written several reports
for CIS. She is a fellow at the Center, has written on issues relating
to secure identification and related issues. And then last, but by no
means least, will be James Huse, who is the recently retired Inspector
General for the Social Security Administration and has investigated this
issue as his responsibilities would entail, and will tell us something
from the inside from a Social Security perspective.
So let’s start with the Congressman, then Marti, then Mr. Huse, and then
we will take Q&A after that. Congressman?
DANA ROHRABACHER: Thank you very
much, and thanks to the Center for Immigration Studies for sponsoring
this discussion specifically on the totalization agreement with Mexico,
and CIS has of course been the premier think tank on immigration issues,
and I appreciate this because this focus on the totalization agreement –
because that is so important to the American people that it would be a
sin against them for this thing to go through without having a full
discussion of what this is all about and what the long-term implications
The politics of immigration has been a lethal mix in this country. It’s
a mix of Republican capitulation to huge corporate interests who would
want to keep wages down as well as a mix of Democrats who are looking
for a new underclass in order to justify their positions of expanding
government programs, which of course gives them political power. In both
cases, what we have is mindless pandering to a huge group of voters and
doing so in a way which is harmful to the United States of America and
harmful even to those people that they claim to be helping. Add this
factor with the Democrats looking for their new constituency, new
underclass, and the Republican business interests, if they all are
Republican – many are Democratic businesses interests as well – looking
for low- priced labor.
Add to this the new McCarthyism, I call it, which is, every time one
attempts to discuss the immigration issue in an open and honest way,
even with a loving heart, they end up being called racists, and thus,
people – honest people are afraid, and good people are afraid to even
discuss the issue of illegal immigration into this country. And I know
that when I first got involved in this – and to this day, I always go
out of my way to talk about illegal immigrants being good people. I
mean, even 90 percent of – at least – of illegal immigrants are good
people, and I go into great detail.
And I remember the very first time I talked about this, I was – I set up
a hypothetical of a man named Pedro who came from Mexico illegally, and
I went into great detail how good he was. He was good to his family,
took care of his grandparents, went to church every Sunday, was always
on the best behavior, and yet, we have to recognize that if Pedro was in
the United States illegally – if he needs a $50,000-heart bypass, he has
to go home. And the only thing the paper – I remember – quoted me was,
Pedro needs a $50,000-heart bypass, he has got to go home. They took a
hypothetical that I had tried to set up to show that we were dealing
with good people and honest people and to do so with open hearts, and
instead, turned me into the racist skinhead, Dana Rohrabacher.
That type of tactic has harmed the honest discussion of an issue that is
vitally important in this country. In fact, it’s very – the irony is
that Social Security now is something that people can talk about, but
illegal immigration is not. Thus, illegal immigration has become the
third rail of American politics because up until now, it has been Social
Security – everybody said, no one can ever talk about the possibility of
changing Social Security.
And so in this issue of the totalization agreement with Mexico, it’s not
the Social Security thing that is preventing the discussion. In fact,
what we need to ask ourselves is why is it that these senior citizens
organizations that have prided themselves on being the guardians of
Social Security abstained from having this debate, and where are they?
Where are they? They are afraid to be called racists – a lot of them are
– and some of them are part of the liberal left coalition that want to
encourage illegal immigration, and thus they are keeping their mouths
shut because it will make them – the other members of the coalition –
angry at them. This is too important for this type of politics, and I
certainly call upon those senior citizen organizations that concern
themselves with Social Security to get involved in this debate – this
So let’s take a look at what we are talking about here when we talk
about the totalization agreement. Totalization is something that can and
has served a useful purpose. Large corporations in the United States and
abroad – when they send people overseas, that is, to assignments that
last a certain number of years – those people who are overseas for these
companies end up being doubly taxed. They pay both Social Security and
the equivalent tax in their own native countries – in those countries
that they are working in – allowing Social Security in foreign agencies
to give credit to one – under one system – you know, it does – you know,
making this type of adjustment is something that sounds good and it
works if people are in the countries legally, and if they are in those
But this is not the case with Mexico. Mexico is certainly a totally
different situation. We have almost six million Mexican citizens living
illegally in the United States of America. This is not a situation like
the limited number of Swedish or Japanese executives who will work here
for several years and then go home. Not only are the Mexicans not going
to be returning to Mexico, the Mexican government encourages them to
stay in the United States. After all, if the United States is going to
pay for their healthcare bills, their education bills, and now their
retirement, why should the Mexican government be concerned about getting
them back home?
The Pollyannas and the ostriches who advocate open borders want Congress
to believe three things about the totalization agreement with Mexico –
these three things that are absolutely are not true. First, proponents
of the totalization agreement want us to believe that it will affect
only a small number of people. The Social Security Administration is
saying the agreement will only affect 50,000 people. Well, how did they
come up with that number? And – (chuckles) – it’s going to fascinate
you. They came up with that number by studying the number of Canadian
illegal immigrants. Well, this is absurd. The General Accounting Office
has said with this remarkable understatement, the Canadian experience is
not a good predicator of the experience under an agreement with Mexico.
Of course not.
The second item is that – that people want you to believe that it’s not
so – is that illegal immigrants will not be receiving Social Security
because of this agreement, and while it is true that one cannot be
illegal at the time that one would be applying for Social Security,
prior work while done while an illegal is in the country does count for
Social Security under the agreement. So if one works in the United
States illegally for nine years and there is some sort of change – the
president’s program normalizing the status, or if some kind of change of
status comes through, that work in the United States illegally then will
become an important factor in determining eligibility and amounts of
money for Social Security. And let me note, we are not just talking
about retirement benefits. The dependents’ benefits to illegal aliens
are explicitly permitted by the preliminary language in this agreement.
So we are talking about huge sums of money – not just for retirement,
but for taking care of the families of illegal immigrants. This is a
huge threat to the well-being of Social Security, and it is an
outrageous violation of our obligation to watch out for the senior
citizens of the United States of America. And I, as I say, do not
understand why every senior citizens organization in this country is not
engaged in this debate.
Now, the third aspect of totalization that the supporters want you to
believe that is not so is that giving Social Security will not have an
impact on the illegal immigration problem. Now, I don’t know if anybody
who is advocating this has taken Economics 101, but if you give more
money – if you buy something and you provide more money – more of it
will be produced. I mean, that is just it. If we spend more money and we
provide more benefits to illegal immigrants, there will be more illegal
immigrants. That is just matter of fact. And those who suggest otherwise
are either in lala-land or intentionally trying to deceive people into
doing something that is going to be harmful, not only today, but
tomorrow as well – for tomorrow’s generation. And who wouldn’t, in
Mexico, choose to come to the United States of America and having the
U.S. government back the retirement system rather than trying to stay
dependent on a corrupt and bankrupt retirement system in Mexico? There
is just no doubt about it.
Now, I have a little bit more bad news: if Congress passes any kind of
an amnesty or a guest-worker program, every illegal alien who qualifies
for amnesty will then be able to apply for Social Security as – will
then have a legal status in the United States. Any of the amnesty or
guest-worker programs that we have heard about will mean millions and
millions of illegal aliens thrown into the Social Security system just
when the baby boomers in this country are retiring. So all this time
that they have worked will then count – they have worked in the country
illegally – and if we change the status which people are talking about,
all of those years will count and all of those people will count at
exactly the time when Social Security is the most vulnerable. This is
outrageous that Americans are even thinking about doing this because it
is so contrary to the interests of America’s senior citizens.
America cannot support the whole globe, and we in Congress have an
obligation to look after our own senior citizens first. That does not
mean that we don’t care about people overseas. That does not mean we
have hard hearts. It does not mean because you want to take care of your
own family that you are hard-hearted or a mean-spirited person for not
spending the resources for the healthcare of your family to take care of
your neighbor. And yes, you may love your neighbor, but you don’t expect
your neighbor then to do the same thing for you. I mean, the idea is
love your neighbor as yourself, and not to say, love your neighbor
instead of yourself, instead of your family.
And so this is a real – a situation where this could cost us, and cost
the people that we are responsible for taking care of – we could cost
them the type of protection and services and resources that they have
been promised all of these years by their government, and that is why
they have been willing to pay into the Social Security system. And by
the way, with the Mexican totalization agreement, that is just what we
are looking at, but in terms of illegal immigration, that goes through
all of the services provided by government that our people are taxed
Congress has one option to stop this insanity. We must pass a law
specifically banning any work done by those people who are in this
country illegally, and we must make sure that any work that is done by
people who are here illegally is not a qualification and does not become
part of their qualification for Social Security. I have introduced a
bill – HR 1631 – which will prohibit the work histories of non-citizens
who are here illegally from being counted towards Social Security
earnings. If my bill, or one like it, does not pass, then the
totalization agreement with Mexico could well end up to be a disaster
for senior citizens in the United States.
And I’m very appreciative that CIS is focusing on this issue and
bringing up the legislation that we have worked out, and I just can’t
emphasize – again, I feel I have got a good heart. I really do. I feel
like I – I mean, I don’t hate or dislike anyone and I think that we need
to care about people overseas and people in other countries. I love
Mexico. I have spent – I lived with a Mexican family when I was younger,
and I have spent a lot of time in Baja, California – I’m a surfer, et
cetera. And I love Mexican culture and Mexican people, but our primary
responsibility has to be to watch out for our own families, watch out
for our own people.
This is not done in a malicious – or a way that takes away from that
love in our hearts, but we must move forward with that positive spirit,
or our own people are going to be hurt very badly, and that makes no
sense. Again, that is not an attack on our friends in Mexico, it’s
simply realizing that they have their responsibilities to watch out for
their families and we can help out, but we can’t do it at the expense of
well-being of the American people. So with that said, thank you very
MR. KRIKORIAN: Thank you,
Congressman. You are going to have to run, right?
MR. ROHRABACHER: Right.
MR. KRIKORIAN: Okay, well thanks a
lot, appreciate it. Thanks Congressman, and what we are going to do now
is have Marti Dinerstein, author of the report, sort of give the – kind
of summary of her findings, which include some of the aspects that the
Congressman just talked about – the question of legal status – but also
the other aspects, the other problems with the agreement, which are
completely apart from the issue of legal status. So, Marti?
MARTI DINERSTEIN: Thank you, Mark.
Thank all of you for coming today. This is a slightly esoteric subject –
(laughs) – and while I try to clarify it in my backgrounder, people who
read it are going to have to plow through 6,000 words. So to make up for
that, I have decided to make my remarks here today on the short side,
hoping that that will encourage a longer Q&A session.
Since the 1970s, the U.S. has entered into 20 bilateral totalization
agreements, and all were meant to accomplish two things – to secure tax
savings by eliminating duel taxation for both employees and employers
who send them to work temporarily in another country, and to guarantee
an old-age pension to workers who paid into the Social Security systems
of both countries but did not earn sufficient credits to receive full
credits from either of those countries. Under a totalization agreement,
upon reaching retirement age, workers are deemed eligible for prorated
benefits based on the amount of contributions they made to the system of
each country. These agreements have been beneficial to U.S. workers and
their employers, the associated Social Security payments to foreign
nationals have been reasonable and as such, totalization agreements have
been non-controversial. Congress has never voted to disapprove one.
But the proposed totalization agreement with Mexico is profoundly
different than prior agreements in four important ways. I’m going to
briefly list them and then cover them in more detail. First, this
agreement is a perversion of the existing total of the 20 existing
totalization agreements. Few, if any, conditions present in the other
agreements exist. Second, it is lopsided in the extreme. The benefits to
U.S. workers and their employers are miniscule compared to those that
could be received by millions of Mexican workers. Third, illegal aliens
were simply not a factor in any of the other agreements. None of the
existing totalization countries account for even 1 percent of the
illegal population in the U.S., and jointly, all 20 comprise only 4
percent of that total. Mexico, in contrast, accounts for a whopping 69
percent. Fourth, it’s extremely difficult to estimate the potential
long-term drain to the U.S. Social Security trust fund, but it has the
potential to dwarf all of the other agreements combined, and then some.
So taking the four points in order, I’m just going to highlight a few
things, and trust me, there is plenty more in the backgrounder for your
further review. First, it’s a perversion of the prior agreements because
it breaks the mold. The norm is for a corporation to ask their employers
to work abroad for a specified period of time. Both employees and
employers have been paying Social Security tax in the home country.
Employees legally enter and with appropriate work authorization and
happily leave when their temporary assignment is over. When they retire,
they collect benefits based upon the total number of years that they
worked in each country. In sharp contrast, most Mexican workers make the
decision themselves to migrate to the U.S. because they are living in
poverty and cannot support their families. Most are probably part of the
vast off-the-books economy and do not pay into Mexico’s Social Security
system. In fact, only about 40 percent of Mexico’s non-government
workers participate compared to 96 percent complaints in the U.S. plan.
The sheer size of the U.S.-Mexican born population is another anomalous
aspect of this agreement. In 2000 – I use 2000 figures throughout my
paper because there was a big report issued that allowed me to compare
statistics with all of the 20 totalization nations, which was important
to my work, so this is probably a low number now, but it’s the number I
have used consistently throughout the paper – an estimated 9.2 million
Mexicans lived in the U.S. None of the other totalization countries
account for even 1 million residents, and eight of the countries had
such tiny populations in the U.S. that the Census Bureau doesn’t even
track the numbers.
My second point is that the proposed totalization pact is one-sided in
Mexico’s favor. There is no benefit parity. Individuals vest for U.S.
Social Security in 10 years while it takes 24 years to do so in Mexico.
When one finally does vest, the financial benefits are not remotely
similar to those available in the U.S.
In Mexico, one only receives back exactly what one contributed, plus a
crude interest. In contrast, the U.S. Social Security system is
progressive with lower wage earners receiving benefits far in excess of
what they contributed. Therefore, any program that encompasses a huge
number of low-wage retired workers from a foreign country is bound to be
a big drain on the U.S. Social Security trust fund, and that would be
unfortunate, indeed, given the sorry state of our Social Security. The
SSA’s own website warns that if no action is taken, we will begin paying
out more in benefits than we collect in taxes in just 15 years.
Alan Greenspan issues quarterly warnings about the impending train
wreck, and Pete Peterson, a former U.S. Commerce Secretary, just
published a new book that aptly describes the situation: running on
empty. So clearly, the solvency of U.S. Social Security is dependent on
the government being a more prudent steward in years to come. Thus, one
thing is very clear: it would be highly irresponsible to enter into a
one-sided, bilateral totalization agreement that provides meager
benefits to U.S. workers while saddling the U.S. Social Security system
with potentially billions of dollars of annual benefit payments. Simply
put, it is impossible to know how many millions of Mexicans will be
living in the U.S. in the next decade, much less in the next century.
The variables are almost infinite.
Further complicating matters is the uncertainty of how a totalization
agreement will affect the millions of Mexicans who worked illegally
through all or a portion of their time in the U.S. Indeed, the issue of
illegal presence has dominated the limited amount of public debate on
the relative merits of the totalization agreement so far. The crux of
the issue rests on the U.S. Social Security law and how it has been
interpreted and administered. In Mr. Huse, we are fortunate to have a
respected, bona fide Social Security expert, so I have decided to do the
prudent thing and defer to him. But I did write my views on this subject
in the backgrounder, so you can find them there.
That leaves me with my fourth and last point. I believe a totalization
agreement with Mexico is going to cost a king’s ransom compared to the
total cost of all existing agreements combined. That is pretty obvious
based on the sheer number of Mexicans that have worked, are working, and
will work in the future in the United States. Last year, the General
Accounting Office undertook an analysis of a then-still exploratory
totalization agreement – at the request of the chairman of the House
Judiciary and Ways and Means Committees. The bulk of the GAO’s report
centered on the deeply flawed assumptions used to calculate the
potential costs of a totalization agreement with Mexico. Among other
shortcomings, it did not take into consideration the possibility of
future amnesties and the potential lure of U.S. Social Security benefits
to Mexicans who will not receive anything from their own government.
So my bottom line is the following: the down-size risks of a
totalization agreement with Mexico are too great. It is not in our
national interest. Long term, it could hasten the insolvency of the U.S.
Social Security trust fund and therefore the retirement security of
America’s seniors. Thank you.
MR. KRIKORIAN: Thank you, Marti. Jim
Huse, and then we will go to Q&A. Jim?
JAMES HUSE: Thank you, Marti – very
I was the Inspector General of Social Security for almost six years –
between the time I was Acting Inspector General and after my appointment
by President Clinton – until March of this past year when I became a
private citizen, and I sit before you today as a private citizen, not as
a Social Security official or executive. I have no standing at Social
Security at all other than the record I left when I left office. And I’m
not an ideologue. I don’t – just as Congressman Rohrabacher said – I’m
not mean-spirited, I’m not anti-immigration, I’m not anti-retirement
benefits. I merely held a position as a steward of accountability in the
federal government as many of the inspectors general do, and in that
time, I am asked to record over certain issues that I will share with
There were two overriding concerns when I was inspector general of
Social Security that I believed I focused on. One was the misuse of the
Social Security number as a – I think everyone accepts the fact that the
Social Security numbers are de facto national identifier, and the misuse
of that number as a key to not only identity fraud generally, but the
receipt of Social Security benefits. And secondly, I became concerned
about the law enforcement aspects of the misuse of that number. And in
so doing, I came to understand several things. One is that we do have a
significant illegal immigration situation in this country and it’s
statistically reflected and the data is examinable in the Social
Security system of records. Social Security maintains an earnings
suspense file, and the earnings suspense file is a place where Social
Security statuses – the wages and earnings of receipts from employers
all around the United States – that cannot be reconciled with an
existing valid Social Security number. When those wages and earnings
come in with whatever kind of a number is on them, whether it’s
scrambled or made up or stolen from somebody else, it goes into
Well, we found that – looking at that suspense file – that it has
undergone an astounding growth in the past – well, in the years that
Social Security has kept records – since 1937. But particularly in the
period from 1990 to the present, it has gone through an almost
exponential growth. In Marti’s report, there is a graph that shows this
quite dramatically. In any case, since 1990, that file has been growing
by approximately five million wage postings a year that can’t be
reconciled with a real number, but a growth of about $15 billion a year,
and that continues apace as we sit here today.
When I left, our office was engaged in updating a report, I think, that
you referenced. In the year 2000, we issued a report on the status of
the Earning Suspense file, and I would expect that that new report will
be out in the next six or seven months or so, and while I cannot predict
what that report will say, I would not be surprised to see it reflect
that nothing has changed. But that is just my personal opinion. We have
to wait to see what the results are. There has been nothing really to
indicate otherwise, and one reason I say that is if you follow the
reporting on our porous borders, you will understand that illegal
Now, how – if you take this extraordinary growth in the earning suspense
file by these numbers, they almost match up to the estimated numbers of
illegal immigrants working in this country. As a law enforcement person,
I can’t tell you that in the world we live in today, this is not an
acceptable status quo. So for those reasons – on the basis of illegal
immigration and homeland security – I believe that we really have a
substantial interest in doing something about this illegal immigration,
and for that, you know, I sit before you to answer any questions you
might have. Thank you.
MR. KRIKORIAN: Thank you, Mr. Huse.
You notice there is a microphone in the middle there. If anybody has any
questions, if you could please go to the mike and identify yourself. If
I could just sort of take the prerogative of the chair and ask just
procedurally, where – what is the next step for the totalization
agreement, just so people can sort of get the idea of where it is?
MR. HUSE: Well, the totalization
agreement, as I understand it, is now – has been signed – was signed
this past June, and is at the Department of State for appropriate review
and putting in formal, diplomatic modalities that would have it then
passed to the Congress for ratification and review.
MR. KRIKORIAN: And the way it works
for Congress, as I understand – Congress has a veto, but doesn’t have to
MR. HUSE: That’s correct. It only
has a veto power for this particular kind of a treaty.
MR. KRIKORIAN: Right.
MR. HUSE: So it’s virtually – unless
Congress objects, this treaty is in effect.
MR. KRIKORIAN: Well, unless the –
but I mean, the administration does have to introduce it, right? In
other words –
MR. HUSE: Right.
MR. KRIKORIAN: – nothing happens if
the White House decides not to –
MR. HUSE: But there is no – the
Congress doesn’t have to approve it, it has to reject it. There is kind
of a distinction there.
MR. KRIKORIAN: Right, okay. Any
questions? Well –
MR. HUSE: I just wanted to add one –
MR. HUSE: Just one thought about the
Earning Suspense Files because it helps. It is a file – it’s not a trust
fund. Those postings to that file – in 1999, it was about $374 billion
of wages posted in there, and that – if we figure it has grown by $15
billion each year since, it’s substantially more than that now. That is
not real dollar – those are not real dollars, those are kind of
obligations on the United States to pay those benefits if someone were
able to come in and say, those were my earnings when I had this fake
number or I had – and that does happen. That is an extremely complicated
administrative burden to do that. With this treaty, and the potential
claims on those benefits by people who are now in status, that could be
a significant workload for Social Security administration that it
doesn’t have at present.
MR. KRIKORIAN: In other words, in
figuring out who gets what –
MR. HUSE: Absolutely.
MR. KRIKORIAN: – and sorting the
whole thing out.
MR. HUSE: A workload that would be
totally dependent on the production of records and documents proving
someone’s bona fides, something of grave concern to people who follow
the false identity world today because certainly we have our own
problems inside the United States itself in terms of birth records and
systems of records of identification. But in Mexico, they are
exponentially different and more problematic since they don’t have even
the system – [the] confusing and complex system we have.
Q: Can I just take advantage and ask
a question of each of you since no one is behind me? Mr. Huse, I’m just
wondering what your view of the no-match letters that Social Security
was sending out to all employers who had a no-match problem within their
company versus only sending it to companies who have ten or more
no-matches – if you think that would help with straightening out the
Social Security system and fraudulent use. And Marti, is your view,
then, that if we were to reform current Social Security law to prohibit
illegal aliens from claiming – or to prohibit aliens from claiming
credit based on illegal work, that that would take care of the problem,
and then the totalization agreement would be okay?
MR. HUSE: Well, the no-match
letters, certainly if they were – they were sent out for a period of
time and they are effective. They are an enforcement tool – this is –
and after a period of time, it became a burden and they were suspended.
I know that there are many different techniques that can be used
administratively to help with this problem, and I also believe that
Social Security does a really fine job as an entity of the federal
government and in administering the social insurance programs it has.
But like everything else in the government, it is way over-missioned and
under-resourced so that there are choices made to take up or not to do
things, and it has many, many deferred workloads.
When I used to testify about these things to the Congress – and
especially this issue of integrity of the Social Security number and our
system of records – I would say that all of these things are influenced
by great public policy issues in this country that are left unresolved
with willful ambiguity. And I don’t think – and I’m going to make a
quick answer to this – that those can be put into Social Security for
the fix. As an entity, this isn’t just about – the Social Security
administration is just one tiny piece of it. It just happens to have the
facts that prove it all. Thank you.
MR. KRIKORIAN: Marti?
MS. DINERSTEIN: I guess that when I
started my research on this, subliminally, I think that I felt that if
the illegality issue could be addressed, that this would be an okay
thing. But as I researched further and ran the numbers – I’m talking
just about arithmetic and a little desk calculator – it became extremely
clear to me that it shouldn’t be approved because it’s not in our
national interest, that the benefits – think about the numbers of U.S.
workers that are working today in Mexico, and then think about the
number of Mexicans that are working in the United States. This is
supposed to be a totalization agreement. It is supposed to have some
relative parity for both nations. It’s supposed to be good for both
nations. This is good for Mexico; it is very, very bad for us. So, no,
that is not my view anymore.
MR. KRIKORIAN: So in other words,
regardless of the issue of legal status, it’s a problem.
MS. DINERSTEIN: Totally irrespective
of the issue of illegal presence. This totalization agreement is a
problem for the United States.
MR. KRIKORIAN: Yes, sir.
Q: (Off mike.)
MR. KRIKORIAN: Anyone else?
Q: I have got a comment, please.
MR. KRIKORIAN: Yeah, Jack, if you
could ask from up there.
Go ahead, Jane, you don’t have to wait for him.
Q: We don’t know, basically, what
the terms of this agreement are because it hasn’t been made public yet,
so this question is sort of hypothetical. My impression would be, under
this agreement, if it models similar agreements with other countries,
that monies paid into the Social Security system in the United States by
foreign workers who are subject to this agreement would be sent by the
Social Security system to their country to be credited into their Social
Security system for the eventual payment of retirement benefits to that
worker when that worker went back home.
The question is, what would happen in the case of a Mexican who came to
work in the United States under the terms of this agreement – monies
were paid into the Social Security system, those funds were sent to
Mexico under the agreement for the eventual retirement for that
individual in Mexico – what happens if that Mexican individual ends up
staying in the United States, reaching retirement age and making a claim
for Social Security in the United States, and yet there has been no
money paid into the U.S. Social Security system trust fund that has
stayed in the United States because it has been sent into Mexico?
MR. KRILORIAN: Is that the way it
MR. HUSE: I’m not – that is not my
Q: Mark – (off mike).
MS. DINERSTEIN: Do you want to go to
(Audio break, tape change.)
Q: (In progress) – either to the
worker or to the system, and my understanding is that they send the
money to the worker based on the credits that he has earned, or she has
earned, in the United States. As far as the retirement, if the worker
comes in, retires in the United States, that I don’t know about, but to
my understanding, they send it directly to the worker.
MR. KRIKORIAN: So there is no
withholding mail to Mexico or anything, it’s just – they are just
credited for a certain number of quarters –
MR. KRIKORIAN: – and then when they
retire, they sort it out.
Q: And then they work with the 35th
system, which I’m still learning about so –
MR. KRIKORIAN: Okay, thank you.
MS. DINERSTEIN: Yeah, and I was
going to answer that I have no idea. (Scattered laughter.) And, you
know, this is just yet another instance of how convoluted and complex
and detailed this is, and therefore, I think that if it should reach
Congress, that clearly, other hearings need to be held to sort of go
through these types of issues so that Congress can act or not act based
upon facts and not about unknowns.
MR. KRIKORIAN: Jane?
Q: Jane Delong (sp), I have two
questions. One, what percentage of the illegal Mexicans in this country
actually pay into Social Security? I have several questions, but I mean,
what percentage pay? There are so many of them in – and particularly in
the yard work, the low-field jobs where nothing is withheld.
MR. HUSE: Those would be people that
are employed in the underground economy and they are not –
Q: But I mean, the figure here –
there are nine, ten million illegal aliens – people in the country
working, and we know they are working hard, but I’m sort of interested
in what proportion are paying –
MR. KRIKORIAN: Jane, we actually did
a report on the fiscal costs of illegal immigration, and one aspect of
it was how much illegals are paying in taxes. And the – there are a
couple different estimates, all of which are around the range of about
half of the illegals working – are actually working on the books with
withholding, even though it’s fake numbers or stolen numbers, whereas
the other half are not working on the books and so there is no
MS. DINERSTEIN: They are off the
MR. KRIKORIAN: Roughly that, maybe
45 or 50.
Q: That’s fine. Marti, what would
you propose, or how would you propose, handling the situation with the
people who are in this country illegally in a variety of ways and do pay
in? I mean, do we even have the option to deny them Social Security?
That’s one question, and then the third question really is just sort of
an observation that we are very worried and this huge pressure
description was played that we are going to be harming American
taxpayers. The fact is that one-third of our children – an increasing
number of our children are non-white, and large portions of those are
Hispanics, and they will be paying into the Social Security system for
these people when they are working, so I mean, there may be some parity
here, I don’t know. But I’m really interested in the second question.
MS. DINERSTEIN: Okay, well, as I was
doing this research, I looked on the websites of various Hispanic
advocacy groups and I think it was National Council of Raza but I’m not
positive at this point – it was a while ago. They had a very good
analysis of how important U.S. Social Security was to their members, to
their constituency, and they went through that because a lot of legal
immigrants did not have the opportunity to get a good education in their
own countries. When they came here of necessity, they took low-wage
jobs, and the progressive nature of our Social Security system is very,
very important to them, and that needs to be preserved.
And I will follow with interest what those groups’ position is going to
be on the Mexican totalization agreement because I believe that legal
immigrants are going to – suffer might be not quite the right word, but
sitting in front of all of you with a microphone, that is the best one I
can think of right at the moment – are going to suffer because of this
agreement, if it’s passed, with the same degree that the rest of us are
going to suffer. We – I think –
Q: But what would you do? Would you
actually say that legal Mexicans are not entitled their Social Security
when legal Poles are?
MS. DINERSTEIN: Of course not. I
mean, legal immigrants that have been in the United States for 10 years
and have vested for U.S. Social Security are getting benefits now and
will get benefits in the future. This does not – what the totalization
agreement does is that it addresses a fluid situation where people work
part-time here and then went home, and it also addresses a situation
where people might not have stayed here long enough to vest here but
will – but by combining their time in Mexico could vest.
I concluded, after I finished my research, that basically I think most
Mexicans would receive almost 100 percent of their benefits from the
U.S., both because we allow them to vest faster, and if they go back to
Mexico and they go back to their home states, those states are still in
grievous economic situation and there are no jobs, and certainly no
good-paying jobs. So at the end of the day, I think that the U.S. is
going to foot the bill for so-called totalized workers.
MR. KRIKORIAN: In other words,
rather than sharing –
MS. DINERSTEIN: Yeah, rather than
MR. KRIKORIAN: – sort of evening out
a burden. It would be in a sense – our Social Security system would
become Mexico’s Social Security system.
MS. DINERSTEIN: Yeah. This is just
my hopefully educated guess. I mean, I have – only time would tell.
That’s one of the reasons why I say, this is too risky. We don’t know
what is going to happen, and some of the things that I have prophesized
might not happen, but it’s too risky to take the chance if the downside
MR. KRIKORIAN: Could I just address
a piece – sort of the implicit thinking behind that was – you know, was
a kind of assumption that in paying into Social Security – this is sort
of the way people look at it – well, illegals, for instance – just look
at the issue of legal status. Illegals are paying into Social Security,
so don’t they deserve it? Haven’t they bought something in a sense? And
the fact is, that is not what Social Security is. It’s a welfare
program. I mean, you pay into it now for people who are getting it now.
What you earn is just credits, if anything.
The – there are proposals to privatize part of Social Security where you
would put some of your money into essentially an IRA but it was
mandatory. In that sense, even an illegal would own it because you would
have a property right because it would be your money. That’s not the way
it works now and so a lot of the thinking on this just is based on a
misunderstanding of what Social Security is.
Anyone else? Yes.
Q: My question is more just a
clarification. Are you all worried that they’re going to put some sort
of amnesty into the totalization agreement, or are your concerns that in
five or six years there’s going to be an amnesty or a guest worker
program or something?
MS. DINERSTEIN: I’m worried that an
amnesty program would make the situation worse. Right now – and I am,
sorry, not a Washington person and I cannot remember the numbers of
bills, but this last year something went into effect that’s called the
Social Security Protection Act, and that took care of some of the
problem. It – what it said is that if a worker returns to his home
country and he or she is no longer going to be able to apply for U.S.
Social Security benefits from that country based upon illegal earnings.
That’s one of the things that my paper shows; that today, if you in this
country illegally, you are not entitled to Social Security benefits,
period. If you go back to your home country, you often are, and the
reason is because you are no longer illegally in the U.S. (Chuckles.) I
mean, this is bizarre.
So that law that was passed, like – prohibits that. But the law only
went part way, and what happened is that they say that if you work say –
say you were in the U.S. for six years and worked with a phony Social
Security number, and your earnings got credited to the earnings suspense
fund, comes an amnesty and you are now legal, that you have – you would
have the right to go back to Social Security and say please transfer all
of those credits that I earned while illegal into my new totally valid
Social Security number. So an amnesty would, by an order of magnitude,
increase the liability that the United States would have in terms of its
Social Security Trust Fund.
Q: But that’s going to happen either
way because, like Congressman Rohrabacher said, when they come over here
they come over here for a long time, and I assume more than just ten
years. I mean, who only works ten years and then retires? So regardless
of the totalization – and I mean, don’t get me wrong, I don’t want this
to happen any more than anyone else here but I just – I mean, I think
that a guest worker program or amnesty is going to have such a bigger
effect than this, you know? I don’t see people working here less than
MR. KRIKORIAN: It – what was your
Q: I don’t – illegals coming over
here and working here less than 10 years. I mean, does that happen? Do
you all know?
MR. HUSE: I’m sure it does.
MR. KRIKORIAN: Sure it does.
But the point is they work ten years, they vest in American Social
Security. They have to work 24 years in Mexico to vest in Mexican Social
MR. HUSE: And the U.S. Social
Security system is vastly more generous than Mexico’s. But that’s not
the issue entirely.
What Marti was referring to was a change in status. If you can prove a
change in your status from illegal to legal, whether it’s from an
amnesty or a marriage or, you know, you come back into the United States
legally – that’s another possibility – you can then make a claim on
those prior earnings that are in suspense. That’s the law today.
The only door that the Social Security Protection Act closed was being
able to reach back for those earnings that you earned illegally in the
United States now that you’re back in your home country legally. That’s
the only thing it closed.
Q: You wouldn’t charge them with
using an illegal card?
MR. KRIKORIAN: Jane. Pardon me?
Q: You wouldn’t then be liable? If I
had worked six years illegally with a phony card – (inaudible) – you all
wouldn’t charge me with a crime for using a Social Security card
MR. HUSE: Well, you’d be in another
country. We wouldn’t charge you, no.
MR. KRIKORIAN: No, no. She’s saying
that if you were to adjust your status –
Q: (Off mike) – if I came back to
the U.S. and I’m legal now, you all wouldn’t charge me for the six years
of using –
MR. HUSE: No, the slate is wiped
MR. KRIKORIAN: Yeah. That’s – that’s
really in a sense one of the ways in which being an illegal alien is
actually legally better than being legally here because there are a
whole – (laughter) – oh, I mean, I’m not joking – there are a whole
variety of crimes that in practice you are not prosecuted for that you
and I would be.
MR. HUSE: Let me just tell you about
some work we did at the Office of the Inspector General that’s closely
associated with the earnings suspense file issue and the identity of
We did a review of the top 100 employers in the United States who had
the most postings to the earnings suspense file. That’s a report. You
can find these reports, by the way, on the SSA website – ssa.gov – and
when you get the website up, over on the left-hand side is fraud, waste
and abuse. If you click on there, you’ll get into the IG’s library. And
all these audits are there.
But the top 100 employers – look for that one. And I think that one is
also being updated this year also. And you’ll see the results of that.
But in the top 100, we found that there was quite a spread of companies,
some of the largest corporations in the United States are in there that
use this workforce to, you know, keep its – keep their wages low, and in
that report you can see the impact of illegal immigration in the United
States. This is part of the schizophrenia of our government. We have
laws that say you’re not supposed to be here, but we have lures to draw
people to want to come here. I mean, this is – that’s the reason I sit
here today; not so much about a totalization treaty, just about the
absolute ambivalence and confusion we have over what’s right and what’s
wrong. Is it wrong to be in here illegally? Yes, we have criminal
statutes that say that.
One anecdote: Back in 1999, the then-Immigration and Naturalization
Service – of course all that has changed now, but – they’re in the
Department of Homeland Security – they had a program called “Operation
Vanguard” where they were trying to round up illegal alien workers. And
primarily these were in these horrific meat-packing places in – where a
lot of people were injured and working under abysmal conditions, but
whatever – they wanted us to participate with them in this endeavor.
And there was an awful lot of controversy between the Department of
Justice – and this was back in the previous administration – as to
whether they should be rounding these people up, and so on and so forth.
But their approach was not fair in the sense that they were going in
open-ended and trying to look – just assuming that the – a place had
illegal workers. So we were very diffident about involving ourselves.
And I decided that unless they had probably cause to believe that a
company had a lot of illegal alien workers, we wouldn’t participate in
Well, as an upshot to that – I mean, I just made it on the basis of our
privacy laws and – a decision, and I was backed by our counsel – I got
this unsolicited letter from the American Meat Packers Association
thanking me for my public service decision and saving Thanksgiving.
(Laughter.) I mean, that’s true. I actually got this letter.
But, I mean, it just gives you some sense of how important these cheap
labor dollars are to these – some of these entities. We have a real mess
on our hands in the country.
MR. KRIKORIAN: Thank you, Jim.
If there’s nobody else, we can wrap it up. I’m sure the speakers will be
happy to be accosted by you afterwards if you have other questions. This
report will be on our site pretty soon this afternoon probably at the
latest at cis.org. And thanks for coming.