A new report warns that a side effect of the Trump administration’s push to crack down on illegal immigration could further weaken Social Security’s finances and speed up its insolvency.
Social Security’s main trust funds, when considered together, are on pace to be depleted in 2034, according to a recent analysis by Social Security’s trustees. Once the trust funds are tapped out, an automatic benefit cut of 19% would occur once the program’s ability to augment payroll tax collections with trust funds is no longer viable.
The Penn-Wharton Budget Model (PWBM) estimates that unauthorized immigrants paid about $24 billion in Social Security taxes in 2024 — though they’re unable to receive benefits unless they obtain legal resident status.
PWBM analyzed the impact of three deportation scenarios, taking into account levels of deportations and timelines for historical baseline levels of immigration and deportations to return, or not, and found that each would move up the depletion date for Social Security’s trust fund by about half a year.
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The first scenario would have 10% of unauthorized immigrants deported in each of the four years of Trump’s term without new illegal immigration, then reverting to baseline projections for immigration and deportation rates. PWBM found the net loss of funds would be $73 billion over the next 10 years and $218 billion over the next 30 years.
In the second, the government would deport 10% of unauthorized immigrants each year for 10 years before net illegal immigration levels return to the baseline. It would result in the loss of $133 billion over the next decade and $656 billion over 30 years.
The third scenario would see illegal immigration halted after all unauthorized immigrants are deported over 10 years, with future illegal immigration halted. That would also lead to the loss of $133 billion in the first decade and $884 billion over the next 30 years.
“Replacing the lost revenue from permanent deportation would require increasing payroll taxes, or some other equivalent, to collect an additional $180 per year from the median U.S. household in 2025, growing at around 3.5% each year in the future,” PWBM noted.
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PWBM’s work illustrating the material contributions of unauthorized immigrants to Social Security’s fiscal stability comes as another report noted the significance of lawful immigration to the U.S. economy.
The conservative advocacy group Unleash Prosperity released a report that emphasized the importance of legal immigration to the U.S. economy over the next several decades due to demographic challenges. The report noted the Trump administration set a goal of 3% or higher GDP for the next decade — a goal that would prove challenging without increased legal immigration.
The study highlighted the role played by immigrants in the innovation of new technologies as well as entrepreneurship. It also detailed how children of immigrants typically have incomes higher than their parents along with the total U.S. population, due in part to higher rates of attaining graduate or professional degrees.
“Immigrants tend to be net contributors to the public fiscal because they pay payroll taxes but they don’t have parents who collect benefits,” Unleash Prosperity co-founder and economist Steven Moore told FOX Business. “Their children pay for their benefits.”
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Unleash Prosperity’s study found that immigrants accounted for 48% of the growth of the U.S. workforce from 2013-2023, and almost half, or 47%, of all Fortune 500 companies were founded either by immigrants or the children of immigrants.
It also found that three of the CEOs of the so-called “magnificent seven” companies are immigrants or the children of immigrants. That includes Tesla CEO Elon Musk who was born in South Africa, Nvidia CEO Jensen Huang in Taiwan and Google CEO Sundar Pichai in India.
“The two main economic benefits of legal immigrants is they come when they are young and just starting their working years and they and their children tend to be highly entrepreneurial — starting new businesses at a rapid rate,” Moore explained.
Unleash Prosperity’s report concludes that a “generous and well targeted legal immigration system that brings to the U.S. the talent and the work ethic that America needs is more important than ever given the aging of our native-born population. The U.S. is the one nation in the world with this demographic safety valve.”
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