Obama Edict undercuts Social Security, US College Grads in a single blow

By David North on November 24, 2014

If you read the fine print of the detailed Obama administration's edict on immigration you will find hidden body blows to both the Social Security and Medicare Trust Funds, as well as to U.S. college grads looking for their first post-campus employment.

But you have to look hard, and read between the lines, because these twin bits of bad news are almost completely hidden, even in one of those detailed documents that are supposed to flesh out the president's generally vague statements in his speech.

That document is a memo from the Secretary of Homeland Security, Jeh Johnson, to his underlings entitled "Policies Supporting U.S. High-Skilled Businesses and Workers": it should be titled "Policies Supporting U.S. High-Skilled Businesses and Foreign Workers."

It deals with, among other things, the Optional Practical Training Program, which is, in fact, a technique to provide post-graduation jobs to alien college graduates, any training is merely coincidental. (It is an extension of F-1 foreign student status.) Many students and employers use OPT as a bridge from college to H-1B status.

How does OPT relate to the Social Security and Medicare Trust Funds?

Since by administrative fiat college graduates have been defined as college students in OPT, and since by law college students and their employers do not have to pay payroll taxes, this means that if an employer fills a job with an OPT alien neither the employer nor the worker has to pay into the Social Security and the Medicare Trust Funds.

The tax break is 7.65 percent for the employer, and a little less for the worker. We calculated in a previous CIS report that the OPT program thus deprives these trust funds of $1 billion a year.

What the administration wants to do is to extend still further the length of time that these college grads can continue the fiction that they are college students; any such extension would be hard on our already suffering trust funds.

Industry, needless to say, loves the program – employers can save as much as $10,000 in taxes by hiring an OPT student instead of an American worker at the same basic salary. So the OPT program hurts both new American college grads and the funding systems that support Social Security and Medicare.

Bear in mind that most foreign students study STEM subjects, i.e., science, technology, engineering and math. Alien alumni with those majors get 29 months in OPT status after graduation under the current regulations; non-STEM grads get only 12 months of OPT. The document cited says that the administration is contemplating how to "extend the time period and the use of OPT for foreign STEM students and graduates ..."

That such extensions would be extremely hurtful to the Trust Funds, and to U.S. STEM graduates, somehow does not get mentioned.