Why deporting illegal immigrants could drain the Social Security trust fund faster than expected

The United States has been a beacon for many immigrants seeking to make a better life for themselves and their families. Abandoning one’s home to venture abroad is no easy task. And doing so legally has become a harder and harder process over the years.

That is one reason millions of people in the U.S. are living and working in the nation without the proper documentation. Tackling the issue has been a top priority for the Trump administration, but it has focused on deportations and not changing policies on how immigrants can legally establish themselves in the country.

The mass deportations could have severe unintended consequences as history has shown and experts are sounding the alarm.

Immigrants’ have a significant postive impact on the U.S. economy

Some of the main arguments against undocumented immigrants is that they use up resources and are taking away jobs that should go to Americans that were born in the United States. While there are documented short-term costs from educating immigrant children, it has been shown that they contribute positively to economic growth overall.

They expand the labor force and a greater percentage of them are of working age than the native population. They also increase consumer demand. Combined they help support overall GDP growth in the nation.

As US consumers, undocumented immigrants spent around $300 billion on goods and services in 2023 reports CNN. Additionally, they put over $90 billion into federal, state and local coffers through the taxes that they paid.

The Brookings Institute notes that “empirical evidence indicates that immigrants have historically contributed more in tax revenue than they receive in public benefits, creating a substantial fiscal surplus for the U.S. government over time.”

Experts on the subject say that the Trump’s immigration policy could cost the country billions of dollars. US GDP could shrink between $1.1 trillion and $1.7 trillion according to estimates by the American Immigration Council. This would result from pulling all those consumers out of the economy as well as labor shortages across a number of sectors it will likely cause.

This in turn would slow the economy effecting native-born Americans and there is historical evidence of the cost of pulling immigrants our of the economy. A study that looked at the effects of the Secure Communities immigration enforcement policy between 2008 and 2014 found that mass deportations also had a knock-on effect of decreased employment and wages of US citizens.

Trump deportation program helping drive up Social Security insolvency date

In another analysis the nonprofit that advocates for immigrants’ rights, warned of the effects it will have on the solvency of the Social Security program, saying that “removing millions of workers through deportation and revocation of work authorization just as the Social Security safety net is risking collapse is nothing short of reckless.”

This is because working immigrants pay into the system but most will never be able to collect benefits based on the taxes they paid into the system. “In 2023 alone, undocumented immigrants paid $26.2 billion into the Social Security Trust Fund,” the American Immigration Council notes.

They point out that the Social Security Administration for decades has been tracking how undocumented workers have been contributing to the trust for the program. “The presence of unauthorized workers in the United States has, on average, a positive effect on the financial status of the Social Security program,” the SSA stated in a report.

One must also take into account the reduced tax revenues from the knock-on effects across the rest of the economy that was mentioned above. This could help push up the insolvency date for the Social Security Trust Fund which is rapidly approaching.

Currently, the Social Security Trustees have said that without reform the Trust Fund will run dry by 2033, at which point beneficiaries would see their monthly payments cut. Based on last year’s report once the fund’s reserves are depleted, continuing program income would only cover 77% of total benefits.

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