The White House recently conceded that President Obamas executive order effectively legalizing an estimated 5 million undocumented immigrants means that newly legalized workers will contribute to Social Security and Medicare and be eligible for benefits. Does the president have any idea how much money his action could cost the country — i.e., taxpayers? While Obamas executive order creates a three-year temporary permit, he surely thinks that Republicans wouldnt dare repeal it. Thus, responsible economists and policy experts must consider the long-term costs of his newly imposed financial threat to the Social Security and Medicare programs. We do not yet know what the demographics of the 5 million will be, though estimates are that more than 4 million will be of working age. What we do know is that both Social Security and Medicare are already falling off a fiscal cliff. The Social Security and Medicare Trust Fund trustees estimate the two programs combined long-term unfunded liabilities — the estimated amount the government will have to pay in benefits above what it expects to receive — at about $49 trillion. Obamas amnesty action greatly exacerbates the problem, because retirees get back far more than they pay in. For example, Urban Institute tax economist Eugene Steuerle estimates a married couple — both of whom earned the average income ($44,800 in 2013 dollars) over their working careers and who retire at 65 in 2030 — will pay in about $1 million in payroll taxes over their working careers and receive $1.35 million in benefits from the two programs ($712,000 from Social Security and $638,000 from Medicare). If there is only one worker in the family the taxes paid are significantly less, but the benefits received are only a little less, since one eligible spouse qualifies both for the benefits. Steuerle estimates that a one-earner family making the average wage will pay in $502,000, but receive $1.2 million in benefits ($570,000 for Social Security and $638,000 for Medicare) for both family members. Thus a working couple with both making the average income retiring in 2030 can expect to net about $350,000 more in benefits than they pay in payroll taxes. And a one-earner couple would receive $700,000 more. Because the U.S. pays hundreds of thousands of dollars in retirement benefits, on average, for each new retiree, whether part of Obamas amnesty program or not, the president has just vastly worsened the long-term financial condition of the countrys two primary retirement safety nets. Read More At Investors Business Daily: news.investors/ibd-editorials-perspective/120114-728560-amnesty-recipients-will-get-a-windfall-in-welfare-benefits.htm#ixzz3KhDsEMo1 Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook
Posted on: Tue, 02 Dec 2014 01:23:37 +0000
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