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The United States and Mexico are in preliminary talks to merge both countries’ Social Security systems under a plan that would add tens of thousands of residents south of the border to the rolls and cost American taxpayers hundreds of millions of dollars annually.
Though officials describe the talks so far as “informal,” the idea is being pushed by Mexican President Vincente Fox as payback from President Bush for failing to secure major new immigration reforms beneficial to Mexico City, the Washington Post reported today.
Excerpts from a U.S. Social Security Administration memo dated this month say the agreement “is expected to move forward at an accelerated pace,” and could be in place by next October.
Both governments are said to be supportive of the plan, though it is being pushed by the Mexican government.
The pact is the latest and largest attempt by Washington and Mexico City to ensure that people from one country working in another aren’t taxed twice for Social Security benefits. In the first year alone, the agreement is expected to trigger 37,000 claims from Mexicans working in the U.S. legally who paid Social Security taxes but haven’t been able to claim their checks, said the memo, prepared by Ted Girdner, the Social Security Administration’s assistant associate commissioner for international operations.
Within five years of implementation, the agreement could cost U.S. taxpayers $750 million, though an independent estimate put the cost at around $1 billion. Currently, $372 billion in Social Security benefits are being paid to 46.4 million recipients.
Mexican officials began pushing the Bush administration hard in October to support the agreement.
“When the legalization talks began going nowhere, the Mexicans began focusing on this,” Maria Blanco, national senior counsel for the Mexican American Legal Defense and Educational Fund, told the Post.
Arturo Sarukhan, a top Mexican foreign ministry official, said his government has been lobbying the Bush administration hard after failing to win favorable immigration reforms.
“How do you eat an elephant? One bite at a time,” he said.
He said the agreement would improve the daily lives of Mexican citizens, many of whom are still trapped in poverty a decade after the North American Free Trade Agreement promised prosperity to the nation’s 103.4 million people.
Critics, as well as some on the Bush administration economic team, worry that adding more beneficiaries would burden an already ailing system, just as American baby boomers begin to retire.
In the meantime, House Ways and Means Committee staff members are meeting today with Social Security officials to hash out projected costs for such an agreement.
“We are concerned about the sheer magnitude of the agreement,” said a House Republican aide who is an expert on Social Security.
Currently, around 94,000 beneficiaries living abroad have been brought into the U.S. system under the auspices of about 20 international treaties. One estimate said the number of Mexicans coming into the system under the plan being considered number around 164,000 in the first five years.
Canada and South Korea are among some of the countries that already have a similar agreement with the U.S.
White House spokeswoman Claire Buchan said the issue is being explored at this time only on a “technical level” and that no decision to move forward has been made.
In 1996, the U.S. passed a law stating that foreigners not legally residing in the country could no longer claim benefits unless their home countries were subject to a treaty.
Mexico says those beneficiaries, numbering around 13,000, were owed some $50 million in 1998.
Negotiators working on the plan say the U.S. will have to build a new building in the embassy complex in Mexico City to handle the crush of claims expected, sources said.
Steven A. Camarota, director of research at the Center for Immigration Studies, says if Mexicans receive the $8,100 in benefits that Mexican-born retirees in the U.S. currently get, the total expenditure for the program will easily surpass $1 billion annually.
The cost, however, is of little consequence to supporters.
“How can [the U.S. government] say this is too costly? This is money these workers paid into the Social Security system. This is their money,” said Blanco.