SOCIAL SECURITY

Office of the Chief Actuary

SOCIAL SECURITY ADMINISTRATION BALTIMORE MD 21235-0001 

July 24, 2006 

The Honorable Charles E. Grassley 

United States Senate 

Washington, DC 20510 

Dear Senator Grassley: 

In your letter of May 26, 2006, you requested short and long-term analysis of the effect of 

S. 2611, the Comprehensive Immigration Reform Act of 2006 as passed by the Senate, on the

Social Security program. In addition, you requested an estimate of the effect of enactment of this

bill on the estimated cost of a potential totalization agreement with Mexico. Finally, you

requested a separate analysis of Senator Ensign’s amendment #3985, assuming it were included

in final legislation in a conference agreement. The preliminary estimates and analysis described

in this letter reflect the careful work of Chris Chaplain and Alice Wade of the Office of the

Actuary with the help of material provided to us by Steve Robinson of your staff. Being

preliminary, these estimates are undergoing further analysis and may be subject to change in the

future.

Summary Effects of S. 2611 on Social Security

The principal components of S. 2611 are establishment of a new guest worker program, 

expansion of some of the existing limits on annual legal immigration, and special provisions for 

achieving legal permanent resident status for many individuals who have been living in the 

United States without authorization. In addition, the bill includes provisions for extra border 

security (fences/agents) as well as an employment verification system. All estimates reflect the 

intermediate assumptions of the 2006 Trustees Report. 

We estimate the total net effect of the enactment of S. 2611 as passed by the Senate would result 

in increases in net immigration that would improve the long-range OASDI actuarial deficit by 

roughly 0.13 percent of payroll. This would reduce the long range deficit from the estimated 

level of 2.02 percent of payroll under current law to roughly 1.88 percent of payroll. The effect 

of enactment on the annual balance of the OASDI program would rise gradually to about 

0.35 percent of payroll in 2035, as the accumulating numbers of new immigrants are added to the 

workforce. Thereafter, the effect on the annual balance of the program would decline to a fairly 

stable 0.18 percent of payroll by 2070, as the initial new immigrants age into benefit eligibility 

under the OASDI program. For 2080, the annual deficit would be reduced from 5.38 to about 

5.20 percent of payroll. 
2

Over the short term period through calendar year 2016, OASDI net cash flow would be expected 

to improve by about $27 billion. Including interest effects, this change would reduce the federal 

debt held by the public by an estimated $30 billion at the end of 2016. The first year of negative 

cash flow is estimated to remain at 2017. And, the year of OASDI combined trust fund 

exhaustion is projected to be delayed two years from 2040 to 2042. Finally, the projected longrange open group unfunded obligation is projected to be reduced from $4.6 to $4.4 trillion. 

More Detailed Analysis of S. 2611

Guest Worker Provision 

The guest worker provision of the bill would permit entry into this country of up to 

200,000 workers per year beginning 2007, plus dependents of the workers. The term for the 

guest workers would be three years with the opportunity for one renewal for an additional three 

years. Continued residence in the country under this provision would require continued 

employment. Individuals under the guest worker program for four years could apply for legal 

permanent residence. If sponsored by the employer, then legal permanent status could be applied 

for immediately. 

We estimate that 200,000 individuals will begin participating in the guest worker program each 

year. Of these we estimate that about 140,000 would be workers who would not otherwise have 

entered the United States. Including their dependents, we estimate an additional 308,000 

individuals entering the country each year under the guest worker provision. Of these, we 

estimate that about two-thirds, or 200,000 individuals would, about 4 years after entry, on 

average, achieve legal permanent residence (LPR) status, facilitated by the expansion of the 

employment based visa limits in the bill. Of those who achieve LPR status, we assume about 25 

percent will later emigrate back to their home country, leaving a net increase in legal 

immigration of 150,000 individuals per year, starting about 2011. The other 108,000 guest 

workers and dependents newly entering the country are assumed to return to their home country 

within 6 years of entry to the United States without achieving LPR status. 

The additional 60,000 guest workers added each year are assumed to be individuals who are 

already in the country or who would have entered the country on an other (not legal permanent 

resident) basis in the absence of this provision. These workers and their dependents are assumed 

to total 132,000 each year and are further assumed to result in about 60,000 additional net legal 

immigrants about 4 years after becoming guest workers, principally through the expansion of the 

limit on earnings-based visas in the bill. However this attainment of LPR status would have no 

net effect on our projected total immigration because they are simply assumed to transfer status 

from other residents to LPR. 

The overall net increase in immigration represents about half of the long-range effect of the bill, 

or about 0.06 percent of taxable payroll. Through 2016, this provision is estimated to improve 

the OASDI net cash flow by about $11 billion. 
3

Employment Based Visa Limits 

Under the bill, the current limit on employment based visas (for LPR status) would be increased 

from 140,000 per year to 650,000, including dependents of employed immigrants. The 

allocation would also be changed to place greater emphasis on unskilled workers. We do not 

assume that the entire difference would be filled. In the discussion of guest workers above, we 

identify two types of immigration that would qualify under this provision. 

Family Sponsored Preference Limits 

The current effective annual limit on family sponsored preference immigration is 226,000. This 

legislation would increase the limit to 480,000, or an increase of 254,000. We assume that this 

increased limit would be fully met. However, we also assume that about 20 percent (50,000) of 

this number would be individuals who would otherwise enter or remain in the United States on 

an other (not legal permanent resident) basis. Thus, on an ongoing basis, this provision is 

estimated to increase gross immigration by 204,000, and by 153,000 on a net basis (assuming 

emigration from this group will tend to be about 25 percent of the level of immigration.) This 

net effect on immigration represents about half of the long-range ultimate effect of the bill and 

thus would result in an increase in the actuarial balance of roughly 0.06 percent of payroll. 

Through 2016, this provision is estimated to improve the OASDI net cash flow by about 

$11 billion. 

Blue Card Provision 

This provision would allow legal permanent resident status for up to 1.5 million undocumented 

agricultural workers over the 6-year period after bill enactment. We assume that many of those 

who would attain legal permanent resident (LPR) status under this provision would have entered 

the United States in the absence of this provision, as undocumented residents. We assume that 

about 350,000 individuals who achieve LPR status under this provision either (1) would have 

stayed in this country on an other (other than legal permanent resident) basis in any case, or 

(2) would have emigrated subsequently, and still would. However, we project that an additional 

620,000 immigrants would enter the country during the period 2012 through 2014, with 

25 percent assumed to emigrate from the United States in the future. This leaves an additional 

465,000 net legal immigrants. This provision is estimated to have a negligible effect on the longrange actuarial balance. Through 2016, this provision is estimated to improve the OASDI net 

cash flow by about $2 billion. 

Special Provisions for Those Currently in the U.S. Without Authorization 

This provision would provide the opportunity to apply for legal permanent resident status for 

unauthorized individuals with 2 or more years of residence in the U.S. at the time of enactment 

of the bill. This so-called “amnesty” provision is intended to provide an enhanced opportunity 
4

for the up to 12 million individuals currently thought to be residing in the U.S. on an 

unauthorized basis. However, the requirements under this provision present a considerable 

challenge to those who might apply. 

For those who have resided in the U.S. for 5 or more years at enactment, documentation of 

employment would be required for at least 3 of the last 5 years. In addition, total fines/fees of 

$2,750 would be assessed, and any unpaid taxes from prior employment would have to be paid. 

Employment for 6 years after enactment would also be required. If these conditions are met, and 

the individual has a working use of English, then legal permanent residency can be granted, but 

not before any pre-enactment backlogs of applications for LPR status have been resolved. No 

numerical limits would apply for LPR status for this group. 

Requirements for those who have resided in the U.S. for 2 to 4 years at enactment would be 

similar, but to apply for legal permanent residency status, these individuals would be required to 

first return to their home country. No numerical limits would apply for this group to achieve 

LPR status with employment-based visas. 

Due to the strict requirements of this provision, we believe that use of it would be somewhat 

limited. We estimate that about 1.8 million individuals resident in the U.S. at least 2 years at the 

time of enactment would achieve legal permanent residence (LPR) status under these provisions. 

This group would have no effect on the overall population because they either (1) would have 

remained in the United States in any case, or (2) would have left the country subsequently in the 

absence of this provision, and still would. These individuals represent a change of status from 

other (other than legal permanent resident) status to legal permanent status as a result of this 

provision. In addition, we estimate that this provision would result in a net addition to the Social 

Security area population of about 440,000 individuals by their achieving legal permanent 

residence status in 2013, and an additional 73,000 doing so in each year 2014 through 2017. 

Consistent with our usual assumption, 25 percent of these individuals would be expected to 

emigrate to their home country in the future. In the absence of this provision it is assumed that 

all of these workers would have emigrated from the United States and their dependents would 

either have emigrated or not have come to the United States. This provision is estimated to have 

a negligible effect on the long-range actuarial balance. Through 2016, this provision is estimated 

to improve the OASDI net cash flow by about $2 billion. 

Border Security (fences/agents) and Employment Verification 

The bill provides for fences and other security measures along the border with Mexico as well as 

additional agents to reduce unauthorized immigration. In addition, the bill provides for an 

electronic employment verification system to assist employers in determining the legal status of 

employees. Given that the above provisions of this bill are being assumed to reduce the ultimate 

level of net other immigration by one third, from 300,000 to 200,000 per year, we assume that it 

may be difficult to reduce this net flow and their employment much lower. (The net inflow of 

other immigrants has averaged over 500,000 per year since 1990.) For this reason we assume 

that these provisions will have a negligible effect on the financial status of the OASDI program. 
5

Effect of S. 2611 on Potential Totalization Agreement with Mexico

The memorandum dated March 10, 2003 from Chris Chaplain provided the latest estimate for a 

potential totalization agreement with Mexico. A potential agreement has been considered 

between the two governments but awaits full consideration by the executive and legislative 

branches of the federal government. Based on the best available information, such an agreement 

is expected to have a negligible effect on the OASDI actuarial balance (less than 0.005 percent of 

payroll), based on the intermediate assumptions of the 2003 Trustees Report. The memorandum 

cited above indicates that the effect over the first 5 years after implementation should be 

expected to be a net cost to the OASDI program of about $551 million. The precise details of 

such an agreement should it be finalized are not yet clear. Thus, the estimate provided here is to 

be considered preliminary. 

Should S. 2611 become law before a totalization agreement is effected with Mexico, then the net 

cost of such an agreement will be increased somewhat due to interaction between the effects of 

these two changes. S. 2611 would be expected to increase the number of Mexican citizens who 

would earn between 6 and 39 quarters of coverage under the OASDI program and thus 

potentially qualify for a totalized U.S. benefit. While this effect is expected to be small, the fact 

that the cost of a totalization agreement is just short of rounding up to 0.01 percent of payroll in 

the long run means that after enactment of S. 2611 the estimates cost of a totalization agreement 

with Mexico would then round to 0.01 percent of payroll. 

Ensign Amendment Number 3985

The Ensign amendment was in fact considered in the Senate and was not adopted. However, 

your question relates to the possibility that this amendment could be added to the bill in a 

conference committee. 

The Ensign amendment would stipulate that a worker assigned a valid social security number 

(SSN) after enactment not be credited with earnings for social security benefit purposes for years 

prior to being assigned the SSN. The effect of this provision is estimated to be a relatively small 

reduction in total benefits, possibly negligible. 

 Sincerely, 

 

 Stephen C. Goss 

 Chief Actuary