Immigration And Social Security

IMMIGRATION AND SOCIAL SECURITY....Paul Krugman points out that in the 2008 report of the Social Security Trustees released today the "actuarial balance" of the system is better than it's been since 1993. Interesting! But how much better?

Click here for the answer: last year the trustees estimated that Social Security had an overall 75-year deficit of 1.95% of taxable payroll. This year it's 1.70%. That's a pretty substantial improvement. What caused it?

Click here for the answer: Table IV.B9 has only one significant change from 2007: "Methods and programmatic data." And what might that entail?

Scroll down for the answer: immigrants. To be specific, better estimates of the taxes and benefits received by illegal immigrants — or, as the trustees refer to them, "other-immigrants":

In previous reports, the other-immigrant population was projected using assumed annual numbers of net other immigrants with a static age-sex distribution. For this year's report, the annual numbers of net other immigrants are projected by explicitly modeling other immigrants and other emigrants separately.

Translation: instead of just pulling a net number out of a hat, the trustees built a model that estimated the actual demographic characteristics of both immigrants and emigrants. And guess what?

• Illegal immigrants tend to skew young. This benefits the system.
  
• Young people have more children than older people. This benefits the system.
  
• Some illegal immigrants pay taxes for a few years and then leave. This benefits the system.
  

Bottom line: "This year's report results in [...] a substantial increase in the number of working-age individuals contributing payroll taxes, but a relatively smaller increase in the number of retirement-age individuals receiving benefits in the latter half of the long-range period." Give or take a bit, it turns out that this shores up the Social Security system to the tune of around $13 billion per year. Thanks, illegal immigrants!