The Social Security Administration says that the immigration bill passed by the Senate would help its coffers, adding $276 billion in revenue over the next 10 years while costing only $33 billion.

Immigration Divide

Weighing the economic claims in the Congressional debate.

But 10 years is a short time when you consider that a vast majority of the new and newly legalized immigrants would be paying into the system during that period and drawing out their Social Security benefits later. That is the problem with attempts to determine the effect of immigration on Social Security in the long haul — every study is going to have some sort of end point, after which people who have paid in are going to start drawing out.

The Social Security Administration’s chief actuary, Stephen C. Goss, says he believes that even 75 years out, there will be a net gain from immigrants, as he wrote in May. That is because their withdrawals will be offset by their children’s contributions.

Such estimates are based on a lot of assumptions, says Paul N. Van de Water, a senior fellow at the Center on Budget and Policy Priorities, like how many children the newcomers are likely to have (higher birth rates among immigrants taper off with time), how many are low-skilled versus high-skilled (low-skilled workers tend to cost the system more, while high-skilled workers pay in more than they get out) and just how many new immigrants are admitted under the bill, all of which are open questions.

“It’s amazing that the actuaries have said it would be positive in the long run,” Mr. Van de Water said. “It’s a lot of moving parts.”

Economists who have studied the issue tend to agree that more immigration is better, but that the effect is small. “There are other better reasons to be for or against more immigration, besides its effect on Social Security,” Mr. Van de Water said.

James P. Smith, an expert on labor markets at the RAND Corporation, added that it was misleading to consider the effect of immigration on Social Security alone. “Immigrants contribute on net to Social Security and health care,” he said. “They’re a drain on state and local budgets, largely because of education. So isolating one program is always a mistake.” (Again, it is hard to estimate the long-term effects even of a drain on education budgets because having more educated workers helps the economy.)

There are also two separate pools to consider — unauthorized immigrants who are here already, about a third of whom pay Social Security taxes, according to government estimates, and the additional immigrants who will arrive through new legal channels. The Center for American Progress, a supporter of immigration reform, says if 70 percent of illegal immigrants are eligible for legal status under the bill, they will contribute $500 billion on net in 36 years — the period that the baby boomers will put a strain on the system.

It does not include the period in which those immigrants themselves begin to draw more heavily on the system. But Adriana Kugler, a former chief economist at the Labor Department and the lead author of that study, said it did not take into account projections that an influx of immigrants would result in higher wages for everyone, nor did it calculate the contributions of offspring. “You could look at a longer horizon, but then the benefit is even greater,” she said.

Republicans have tried to clamp down on the amount that illegal immigrants who paid into the system will be able to withdraw. The Social Security Administration estimates that in 2010 illegal immigrants paid a net contribution of $12 billion, either by working under a fraudulent Social Security number or by using a legitimate Social Security number after overstaying a visa or otherwise losing permission to work. Currently, if such immigrants obtain legal status and can prove their earnings with pay stubs or W-2 forms, they can get credit for those contributions. But the Corker-Hoeven amendment to the Senate bill, which paved the way for passage, would bar them from getting credit for the previous decade’s worth of payments even if they obtain legal status.

“To some extent, it’s a taking by the federal government,” said Marielena Hincapié, the executive director of the National Immigration Law Center. “The people who are going to be most severely impacted by this are going to be low-income immigrants.”

A version of this article appeared in print on 07/03/2013, on page A17 of the NewYork edition with the headline: Calculating the Effect On Social Security.

Article source: http://economix.blogs.nytimes.com/2013/07/02/immigration-and-social-security/?partner=rss&emc=rss