CIS: The Impact of Immigration on Social Security and Medicare

The Center for Immigration Studies recently examined the impact of immigration policy on the solvency of the Social Security and Medicare programs in a new analysis.

The Center explains, “Rather than offer dollar estimates for the future, the new report instead explains conceptually the differing effects of different immigration policies.”

The recently released 2023 Trustees Report on the projected financial status of the programs has caused some stir in Washington as lawmakers consider actions that might extend the programs’ life and avoid substantial benefit cuts.

Unfortunately, all too commonly, immigration is suggested as an easy boost to the programs’ finances, but the reality is much more complicated.

CIS makes it a point to note that “Toleration of illegal immigration, amnesty for illegal immigrants, and increased legal immigration are distinct policy choices that should not be conflated because they have very different effects on the trust funds.”

According to Jason Richwine, the Center’s resident scholar, and author of the report, it is arguable whether some of these options have positive impacts on the solvency of these programs, but they are no substitute for “for hard-headed fiscal reforms.”

Mr. Richwine concluded, “Rather than looking to immigration as an outside fix for the fiscal imbalances faced by Social Security and Medicare, policymakers should acknowledge that any practical solution will primarily involve a combination of tax increases and benefit reductions that encourage Americans to live within their means.”

The analysis had four key conclusions:

• Illegal immigration unambiguously benefits the Social Security and Medicare trust funds, but amnesty (legalization) would reverse those gains and add extra costs.
• The impact of legal immigration depends largely on age of arrival and income. Immigrants who arrive young and have high earnings will be net contributors to the trust funds, while later-arriving and lower-earning immigrants will be net drains.
• Recent declines in fertility imply that legal immigrants who are net drains in their own lifetimes will not have enough children to make up the difference in the next generation.
• A continuous inflow of working-age immigrants could appear to have a positive effect on the trust funds even as the immigrants are lifetime net drains. However, this Ponzi-style funding strategy would be difficult to sustain.

You can read the complete analysis at the Center for Immigration Studies website.