America: Mexico's ATM
"Investor's Business Daily
Issues & Insights
Monday, May 9, 2005
Immigration: That "giant sucking sound" you hear isn't the jobs that Ross Perot warned we'd lose to Mexico due to NAFTA. It's from all the cash Mexico is collecting from illegals working on this side of the border.
Funds sent home from Mexican immigrants, both legal and illegal, now outstrip revenues from foreign investors and tourism in Mexico (see chart). And "migradollars" are on course to surpass even revenues from Pemex, the state oil company, making them the country's largest source of income.
Revenues from Mexican workers in the U.S. are critical to Mexico's economy, accounting for nearly one-fifth of its GDP. They've grown at a 17.6% annual clip over the past decade — thanks to an explosion of illegal immigration encouraged by the Mexican government and winked at by ours — and are expected to grow by more than 20% a year over the next decade.
U.S. banks are aiding the shakedown by offering Mexican workers ATM cards — such as Wachovia's Dinero Directo card — that make it easier for them to transfer money home to relatives. This year they'll wire as much as $20 billion in cash.
For lucky recipients south of the border, where the average wage is below $2 an hour, remittances account for 80% of household income.
No wonder Mexican President Vicente Fox calls illegal aliens "heroes." They're no less than his economic plan. So long as his frustrated poor have the escape valve of America, he can postpone much-needed reforms at home, such as privatizing Pemex and other state industries. Why change Mexico's corrupt feudal system when there's a giant ATM open next door?
Fox, who's as dumb as his name, is channeling the migradollar withdrawals to rural sectors mired in poverty through a "padrino," or sponsorship, program. Last month, he also set up a mortgage plan to let Mexican workers here buy homes in Mexico.
Both point up the inadequacy of his government to provide for the needs of its people.
But Fox isn't fazed. He's hoping to get us to pay for their retirement, too, by pushing a totalization deal with President Bush to permit even Mexicans who have worked in this country illegally to draw U.S. Social Security benefits.
Right now, 5 million illegal aliens from Mexico work in the U.S. Letting them take Social Security would create a huge drain on a system that's already careening toward bankruptcy.
No matter. Bush signed the deal last June and is expected to present it to Congress for final approval.
House Immigration Reform Caucus Chairman Tom Tancredo, R-Colo., strongly opposes the idea. He says the administration has already moved ahead with plans to set up an office at the embassy in Mexico City to process benefit claims. The Social Security Administration denies it, but allows that its sole benefits officer down there will need help handling the crush of new claims from Mexicans if the deal goes through. The agreement is now with the SSA's general counsel, who's preparing it for Congress.
Mexico's own social security system pales next to ours. Mexicans have to work more than twice as long to become fully vested, and benefits aren't nearly as generous.
So Fox prefers U.S. taxpayers pick up the tab, as if paying for the retiring baby boomers weren't enough in our pay-as-you-go system.
The best way to reform the kleptocracy south of us (to say nothing of Social Security) is to secure our borders — remember 9-11? — and pressure it to fix its own economy.
investors.com |
