Social Security and the illegal alien problem

Many complain that jobs are being taken from U.S. citizens by cheap foreign illegal labor. It is a political hot potato and a new report adds fuel to the fire. Bruce Krasting says it’s Social Security Trust Fund’s Labor Day Bombshell.

SS has been collecting money from illegal aliens for years. They will keep the money they have collected and they will not pay out any benefits (except fraud) in the future. So this money is “free”. I have often wondered how big the numbers on this are. Now we know. The numbers are enormous. Without the Free Money coming in from illegal aliens SS would look much different than we “think” it does.

The illegal alien workforce may be contributing as much as 13.5% of the Social Security taxes. Most reporting about the status of Social Security have assumed that all who contribute will receive benefits. When there is such a large amount that will not, as of now, have to be paid to its contributors, it means that those reports have significantly overstated the liabilities versus the benefits.

In some respects this is nice because it is ‘free’ money for the government program. Krasting points out that this sort of thing is also political hay that appears to be used to support questionable positions.

The Administration will use the Goss revelation to prove to the American people that illegal workers have made a major contribution to the US economy via the taxes they paid to SS. This will be done to blunt the growing tide of ire among those who actually live here.

But what’s wrong with ‘free’ money? There is, of course, the dishonesty involved in taxing some folks with a false promise, even if they made false representation about who they were. Much more important though, is in how Social Security security is viewed and considered.

I will say that this is a sea change event for how we look at SS. All prior analysis and all future expectations must now be revisited. I assure you that the results after excluding the illegal taxes will be will prove to be a major blow to the solvency of the Fund.

Things just aren’t as simple as they seem, sometimes. This source of Social Security funds is also not the only questionable source. There is also the interest rates on the Treasury bonds behind the funds that is worth some consideration. When you get to mangling the books, all sorts of interesting things can happen.

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