A word of thanks to Nathan Abbott for encouraging and motivating me to take this passing theory to the internet.
The following is the result of this theory transforming it's self into a English Research Paper for Prof. Robert Zackowski's English Composition class at HGTC.
The United States is currently undergoing the least understood economic and social demographic shift in the country’s 232-year history. Multiple converging factors are presenting a unique challenge that will ultimately define the new economic, social and political policies of the United States in the 21st century.
“As you know, the aging of the population in the United States will have significant effects on our fiscal situation. In particular, it makes our social security and Medicare programs unsustainable in the long run, short of a major increase in immigration rates, a dramatic acceleration in productivity growth well beyond historical experience, a significant increase in the age of eligibility for benefits, or the use of general revenues to fund benefits” (Greenspan).
Is the United States Government’s refusal to enforce U.S. immigration laws an orchestrated maneuver designed to avoid the economically crippling effects of a declining and aging population? Are the intentions of allowing an unrestricted influx of illegal immigrants aligned with the financial challenges of guaranteeing the future prosperity of our economy and entitlement programs?
The population of the U.S. is aging at an unprecedented rate. Currently there are 38 million older persons (defined as those 65 and older) in the U.S. That figure is expected to more than double by 2030 to 89 million as the last of the Baby Boomer generation reaches the age of 65. Similarly, the 85 and older population is expected to more than triple, from 5.4 million to 19 million between 2008 and 2050 (Edwards). The overall population is expected to increase from 305 million in 2007 to 438 million in 2050 with a projection of 25% or 109.5 million being 65 or older. The net population gain due to native born non Hispanic whites during this period is 4 million. As our nation’s aging population accelerates over the next two decades, it will place an enormous financial burden on the federal budget and social entitlements program.
The historic level of sub replacement fertility rates the U.S. is currently experiencing, 1.864 births per 1000 non-Hispanic white women (Brady E. Hamilton, Joyce S. Martin and Stephanie J. Ventura) can be traced back to the rise of higher educational rates that began back in the 1950’s. As the United States became more developed and industrialized the economy transitioned from an agricultural base to a manufacturing base. This transition alleviated the need of higher birth rates that were traditionally needed to maintain productivity in the rural landscape of the 19th and early 20th century. As the manufacturing economy accelerated and jobs shifted to major metropolitan areas, the onetime asset of a high fertility rate was exposed as an economic liability and was naturally modulated to balance the labor needs of the times. This modulation received further fine tuning during the latter half of the 20th century as Manufacturing jobs were exported to developing countries with lower education rates that could produce the same goods for less. As the educational rates in the U.S. exploded towards the end of the 20th century it was evident that the manufacturing jobs had been exchanged for the higher margins that exist in the Information Technology sector of the economy. The Service sector of the economy, while not academically oriented, has also seen greatly increased traction in the last 50 years due mainly to servicing the needs of an aging population. The resulting decline in Total Fertility Rates is what has led us to our current aging population and potential future financial crisis.
THE 2008 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS INSURANCE AND FEDERAL DISABILITY INSURANCE TRUST FUNDS states almost 50 million people were receiving benefits in 2007. One hundred and sixty three million people had their earnings covered by Social Security payroll taxes. Income was $785 billion and benefits paid were $585 billion, resulting in a $200 billion surplus in addition to $2.2 trillion in assets held in special U.S. Treasury issues (Goss). According to Harvard Professor Howell E. Jackson, “Unfortunately, these glowing reports are a cash flow illusion, revealing only the differences between the system’s annual cash receipts and its yearly payments for benefits and administrative expenses” (Jackson). He further reveals the harsh reality of this common accounting trick that is an unacceptable form of accounting under United States G.A.A.P. “Were the finances of the Social Security system restated under principles of accrual accounting, the Social Security trust funds would have had to report a loss of several hundred billion dollars in 2002” (Jackson). The current outstanding liability for Social Security under U.S. G.A.A.P. for all future obligations to date is roughly $15 trillion. Another advantage of the current law and practice of cash flow accounting allows the U.S. Treasury to include any annual Social Security surplus into the general federal budget thereby fiscally obscuring transparency and reducing the appearance of any accumulated federal deficit. This practice of reducing federal budget deficits or inflating federal budget surpluses does more than misrepresent the federal budget. It reallocates future obligations into general federal budget funds, thereby giving a false sense of security to tens of millions of Americans who are not only expecting entitlement benefits, but are counting on them for income during their retirement. Multiple theories that contain solutions to the financial solvency of Social Security are routinely commissioned in an attempt to avert the economic crisis that looms on the horizon. Thus far only four have gained any solid credibility and a combination of all four is generally the most subscribed to method of treatment. A long term solution to Social Security entitlements would have to combine a substantial increase in income, an increase in age related eligibility, a reduction in beneficiary expenditures, and the massive influx of a working age population to offset the financial liabilities of a rapidly accelerating “dependency ratio” that will accompany the Baby Boomers into retirement. While there are significant challenges in bringing the fiscal imbalances of the Social Security system back into long term balance, they pale in comparison to the financial obstacles in the way of finding a solution to the dire straits that the Medicare program has been relegated to.
During the next decade Health Insurance expenditures are expected to grow 7.4% per year while estimated income is projected to grow 4.5% during this same period. Total benefits paid in 2007 were $425 billion. Income was $462 billion, expenditures were $432 billion, and assets held in special issue U.S. Treasury securities grew to $369 billion. The Health Insurance annual cost rate is projected to increase from 3.11 % of taxable payroll in 2007 to 11.40 % in 2082—8.02 % of taxable payroll more than the projected income rate for 2082 (Henry M. Paulson). The different demographic and economic factors that are used to calculate the cost of providing benefits encompasses a wide spectrum of key statistics ranging from fertility rates, immigration, and changes in the labor force to unemployment, inflation, and productivity. Without a substantially adequate working age population in place to relieve the economic pressures that an aging population will inherently put on the economy, the act of increasing income in conjunction with a reduction in benefit expenditures will almost assuredly have a similar financial effect as that of economic asphyxiation.
Immigration advocates such as Muzaffar Chishti claim that it is for this reason that immigration is an absolutely essential component to a sustained and prosperous economic future of the United States. Mr. Chishti cites, among other things, the benefits in productivity. “The US economy is creating more jobs than can be filled by native-born workers. The country has depended heavily on immigrant workers, both legal and illegal, for labor force growth in recent decades. About 50 % of the growth in the U.S. labor force between 1990 and 2000 was due to new immigrants, a share that increased to 60 % between 2000 and 2004” (Chishti). While no one will dispute the growth Hispanic labor has had on a percentage basis in respect to the labor force, the actual numbers of that labor force and the inaccuracies in the methods of collecting the data have been disputed by a different group of researchers. Robert Justich and Betty Ng (formerly) of Bear Stearns Asset Management, contend that the “U.S. Census does not capture the total number of illegal immigrants or the increasingly concealed economic impact they have on the below market labor supply” nor do they disclose the exaggerated effect of capturing the full output of millions of illegal aliens while omitting their full labor input (Ng). Official U.S. estimates as well as the Pew Research Center have the total number of unauthorized immigrants around 12 million (Pew Research Center). The Pew Research Center estimates the total number of immigrants of Hispanic decent entering the United States, both legal and illegal, to approach 1.4 million people annually and to increase at a rate of 1% per year reaching 2.1 million people annually by 2050 (Pew Research Center). Justich and Ng assert that through various channel checks and background research into gateway school registration, immigrants, local business owners, realtors, police officers, border patrol agents, tax collections, and remittance records that this number is very soft and misconstrues the true magnitude of the number of immigrants that enter this country each year. The net effect of the U.S Census Bureau, C.P.S., Urban Institute and the former I.N.S. methods of collecting data consist of consent given by those being surveyed. It is a formula that relies on a singular method of collecting inaccurate statistics that give the impression of independent, multiple verifications. A recent study by the Migration Research Unit, University College London, a wide range of methods have been used to measure immigration flows, which by definition eludes registration and statistical coverage. Studies of the methods used to calculate the illegal populations have concluded that no existing method “provides a well-founded or rigorous method by which to measure the illegal population” (Charles Pinkerton). Justich and Ng have concluded based off their statistical analysis that the total number of illegal immigrants in the United States is near 29 million as of 2008. While the official number of illegal immigrants crossing the border each year varies by which statistical reporting agency you subscribed to, the average number falls in the 700,000 – 850,000 per year range, officially (Pew Research Center). This number also represents the unofficial shallow end of the illegal entry pool. Donald L. Barlett and James B. Steele, one of the most widely acclaimed investigative reporting teams in American journalism reported in 2004 for Time that the number of illegal aliens flooding into the U.S. in 2004 will total 3 million (Steele). It is becoming very clear that official numbers and investigative numbers vary by a very large margin, with official and institutional numbers always residing on the low end of the scale and financial and investigative numbers perpetually on the high side. While the true numbers will actually never be known, a bias has emerged that has created a chasm between governmental and policy institutions and that of private financial concerns. Can the truth be ascertained from either? Or does it perhaps lie somewhere in the middle?
At different times during this country’s history, there have been immigration movements relative to the size of the overall population that could draw a comparison to the onslaught of legal and illegal immigration currently taking place. Also drawing on historical precedents, there have been periods in this country’s history where immigration was not only an unsettling and divisive issue but was legislatively prohibited, banned and strictly enforced. The Chinese exclusion act of 1892 was the first significant piece of legislation to restrict immigration in the history of the United States and it excluded them under penalty of imprisonment and deportation (Congress). This was not the only time in our short 232 year history where we have been intolerant when faced with the presence of a large foreign population influx.
In addition to effectively halting fascism, legions of World War two soldiers endowed to the country a onetime generational population explosion that became the largest and most productive work force in our history. A subsequent declining fertility rate induced through increasingly obtainable levels of higher education has left our nation without a suitable future work force to confront the financial challenges imposed by the previous wartime generation. As the Baby Boomer generation begins to enter into retirement and begins the financially draining process of drawing on the entitlement benefits program that accompanies it, the perceived solutions narrow and more clearly come into focus. Without the massive infiltration of an outside population stimulus, the financial weight of an underfunded system would collapse on its self. This collapse, while economically devastating the elderly population, would plunge the country into a financial crisis that it has never experienced before nor could it effectively prepare for. Ninety-one percent of the over 65 population receives entitlement benefits, and the poverty rate among those receiving benefits is 10.1 %. If the level of Social Security were to diminish or the benefit level were to be negatively impacted by insolvency, according to some estimates, the poverty rate among the over 65 population would rise to 46 % due to the fact that benefits received from Social Security represent 41 percent of all income for people 65 and older. The potential choices to fix this problem are limited and the ones that have a logical chance of succeeding are even fewer.
The immigrant population appears to have the one financial asset that can combat the problem of an aging population in the absence of an adequate native born labor force, numbers. The sheer number of legal and illegal immigrants and their descendents projected to reside in the United States over the next 42 years is 138 million. If the United States Government were to strictly enforce immigration legislation that has been enacted and effectively eliminate illegal immigration into the U.S. and deport those here illegally, it would consume a vast amount of public resources. Likewise if they were to grant amnesty or construct a path toward the legalization of those who were already here illegally and attempt to assimilate them into society, the amount of public resources needed would likely strain the system beyond capacity. It appears when viewed through a cost vs. benefit model of allowing legal entry or excusing the lawlessness of illegal entry in respect to the future benefits of a population boom, the benefits far outweigh the cost associated with legally assimilating a large foreign population. Concerned citizens have voiced their opinions regarding the unauthorized entry and utter lack of fortitude the government has had in enforcing the legislation passed by congress that expressly prohibits the unauthorized entry into the United States. In the shadows of September 11, 2001, the rise in illegal immigration is counter intuitive in contrast to the new era of national security that spends hundreds of billions of dollars on securing national borders and fighting a few tribal desert factions in an isolated part of the world. The non-enforcement of anti-terrorism and unauthorized entry laws that routinely take place in the United States gives one reason to pause and question the true intentions of the United States Congress.
When asked about the reason for unauthorized, undocumented illegal entry into the United States, most will respond with an answer that more or less revolves around one aspect or another of the beneficial cheap labor to private American companies. While there is validity to this argument and the below market wages paid to undocumented workers in the absence of employment contracts and regulations, the aspect of cheap labor is generally a surface generated reaction to an inadequate native born work force that already has a predisposition to be employed in this kind of work. The majority of the work performed by the immigrant population subsists of low skill, low education, and manually oriented labor with the ability to perform hard work and endure substandard treatment in a variety of low wage paying jobs. The actual native born earnings that are impacted by the occupations that illegal immigrants congregate in are estimated to be between 3-6 %. There are substantial costs involved in regards to social programs that legal and illegal immigrants are entitled to under the laws of the United States. The additional strains placed on municipalities that in effect are required by law to serve an illegal population, that in many cases were not included in their budgets, increases the likelihood of the services rendered being unable to meet the challenges of providing the minimum amount required to fulfill the needs of the community. Also due to a 1982 Supreme Court ruling, all children regardless of their immigration status are legally entitled to an education at public schools in the United States. In addition to free education, it is expressly prohibited by federal law to refuse medical treatment to an immigrant based on their legal status.
It would be fair to assume by all reasonable measures from the brief information contained in the preceding pages that the United States Government has an unwritten policy to exercise non-enforcement of immigration legislation. What is the benefit of allowing an unrestricted massive influx of undocumented immigrants into a country that spends billions of dollars every year on anti-immigration legislation, Home Land Security initiatives, border patrol agency directives, biometric deterrents and countless other funded operations expressly to secure our borders from unauthorized entry? The answer to such a question will most likely remain the subject of speculation rather than an outright admission of any covert or clandestine operation. Never the less, the hard facts surrounding the costs and benefits of legal and illegal immigration cannot be disputed. The outward appearance of the inability of the United States Government to effectively enforce immigration laws at home, in light of their enormous economic effort to stabilize the Middle East, makes one question the sincerity of the rhetoric contained in the anti-immigration legislation routinely considered before congress. Could the actual disclosure of the economic peril that confronts our society in regards to the declining fertility rate and aging population cause discontent with American citizens with the knowledge that salvation lies in increased acceptance of immigration? Would American people accept the need of increased immigration for further economic prosperity? The cost associated with the growing undocumented Hispanic population on the resources of this country is staggering and absolutely unacceptable in the absence of any return on the investment. While the quantifiable measure of the absolute cost of assimilating the undocumented immigrants may be undeterminable, the cost associated with a failed entitlements program coupled with a sub-replacement fertility rate would likely equate to an economic implosion. The ensuing economic catastrophe would effectively strip away the layers of security that have insolated the economy from just such a tragedy.
During the last economic depression this country experienced, the government took note of the travesty the financial effects had on the aging citizens of this country. In an attempt to avert any future calamity of this magnitude, the democratic president Franklin Delano Roosevelt established The Committee on Economic Security on June 29th, 1934, by authority of The National Industrial Recovery Act. The committee studied problems relating to the economic security of the citizens of this country. The programs enlisted as a backstop in the event of a future economic depression are now at risk of failing due to an unprecedented demographic shift that exposes the weaknesses in the core of our societal obligations. In a culture of restricted domain, the interest of America is entangled in a bureaucratic web of hiding the truth and exposing the need. The great melting pot that is America has always harbored ambivalence towards the future generations of immigrants, but the population assimilated under the American flag is a testament to the type of Government that exist. It is a population that is a direct representation of a Government that is dutifully bound to protect and defend the constitution of the union from threats both foreign and domestic at all cost.