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U.S., Mexico Sign Deal on Social Security

Workers would pay into one system at a time and could transfer benefits to their home country.

June 30, 2004|Kathy M. Kristof and Richard Simon | Times Staff Writers

Mexican workers in the U.S. and American workers in Mexico would be able to transfer social security benefits across national borders under a pact signed by both countries Tuesday.

The deal will have limited effect, at least initially, because it excludes the estimated 6 million to 8 million Mexicans employed here illegally. But the agreement could have greater consequences if immigration reforms are adopted to relax rules for Mexican workers here.

The pact, similar to agreements the U.S. has with Canada, Britain and other countries, allows workers to transfer social security credits earned across the border to their home country. In addition, workers would have to contribute to only one system at a time.

Some Mexican workers in the U.S. and American workers in Mexico must now contribute to the social security systems of both countries, a situation that has prompted complaints of double taxation.

U.S. Social Security officials estimate that over the next five years, about 7,500 American citizens working in Mexico will qualify for retirement benefits under the Mexican plan, versus 41,000 Mexican workers likely to qualify for Social Security in the U.S.

In a General Accounting Office report issued last fall, Social Security actuaries estimated that the agreement would cost $78 million in the first year, but would grow to $650 million annually by 2050.

"However, this proxy figure doesn't directly consider the estimated millions of current and former unauthorized workers and family members from Mexico and appears small in comparison with those estimates," the report said.

Mexican workers in the U.S. illegally would be able to qualify for Social Security benefits under a guest-worker program proposed by President Bush, said White House spokeswoman Claire Buchan.

"Part of what the president has talked about is providing an incentive for workers to return to their home country," Buchan said. "This would give them the benefit of the Social Security contributions that they paid in the U.S., as well as the retirement contributions they paid in Mexico."

Democrats have proposed a competing immigration reform proposal, however, dimming prospects that any measure will be passed in this election year.

Social Security officials declined to comment on the financial effect of the pact under immigration reform scenarios, saying it would be too speculative.

"The agreement does not have any impact on immigration law," said Mark Lassiter, a Social Security spokesman. "It does not alter existing law relative to undocumented workers."

Mexican President Vicente Fox is a strong supporter of the deal signed Tuesday, which will become law in 2005 unless either the U.S. Congress or the Mexican Senate moves to block it.

"It is a way for thousands of Mexicans to access a pension," said Agustin Gutierrez Canet, a Fox spokesman.

The U.S. has similar deals with about 20 other countries, according to Social Security officials, but the pact with Mexico would stand out given the number of Mexican workers here.

Rep. Thomas G. Tancredo (R-Colo.) had expressed concern in January that the pact would endanger the Social Security system. Adding Mexico to the countries with which the U.S. has reciprocal Social Security agreements, he said, "makes no sense unless the primary goal is to encourage more illegal workers to enter the U.S. workforce."

David John, a research fellow at the conservative Heritage Foundation, said Tuesday that congressional offices have been bombarded for months by groups making similar claims. But John said that was not a realistic concern, because the pact excludes illegal aliens.

"This should not be controversial, but it will be," John said. "This is really about tax relief. It's not about immigration."

Rep. Robert T. Matsui (D-Sacramento), top Democrat on the House Ways and Means subcommittee on Social Security, said he thought Bush was pushing the deal to court the Latino vote as he faces reelection Nov. 2. Even so, Matsui said, he supported the deal and said he expected Congress to approve it.

"It's an issue of equity," he said.

Kristof reported from Los Angeles and Simon from Washington. Times staff writer Chris Kraul in Mexico City contributed to this report.

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