Panel Transcript: Social Security 'Totalization'

Examining a Lopsided Agreement with Mexico

September 22, 2004
2226 Rayburn House Office Building
Washington, D.C.


Mark Krikorian, Executive Director, Center for Immigration Studies
Rep. Dana Rohrabacher, (R-CA)
Marti Dinerstein, Fellow, Center for Immigration Studies
James Huse, Former Inspector General, Social Security Administration
MR. 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 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 agreement.

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 lets 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 are.

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 issue.

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 countries temporarily.

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 for.

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 much.

MR. KRIKORIAN: Thank you, Congressman. You are going to have to run, 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 Americas 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 good report.

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 you today.

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 suspense.

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 immigration continues.

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 approve it.

MR. HUSE: That's correct. It only has a veto power for this particular kind of a treaty.


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.


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 works?

MR. HUSE: I'm not that is not my question. (Laughter.)

Q: Mark (off mike).

MS. DINERSTEIN: Do you want to go to the microphone?

(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

Q: Right.

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.


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 withholding.

MS. DINERSTEIN: They are off the books.

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 sharing.

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 is enormous.

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 ten years.

MR. KRIKORIAN: It what was your last statement?

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 Security.

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 illegally?

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 clean.

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 fraud issue.

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 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 that.

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 And thanks for coming.