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(Rob Garver, A longtime reporter on the intersection of the federal government and the private sector, “Democrats Call for Major Change in Social Security,” pg online @ https://www.thefiscaltimes.com/2015/07/13/Democrats-Call-Major-Change-Social-Security //um-ef)

In a move that may turn out to be politically shrewd but will almost certainly turn out to be practically ineffective, 70 Democrats on Sunday delivered a letter to the White House urging President Obama, in the vaguest of possible language, to “expand Social Security benefits for millions of Americans.”

Wilson’s model predicts that when a policy has both diffuse costs and diffuse benefits (as in Social Security) such policies tend to gradually expand over time. At least half of this is intuitive. If the benefits are widely diffused in the polity, this will result in wide support for expanding those benefits. But would not widely dispersed costs create an equal countervailing pressure? According to Deborah Stone, on the cost side of the matrix, policymaking has a bias toward action and holding the line on costs is more passive and less visible than expanding benefits. Moreover, Stone argues, policymakers can successfully camouflage costs through rhetoric and other devices.14 In her view, this is why a policy like Social Security meets less resistance than Wilson’s model would predict.

Stone, however, questions the whole idea of assigning Social Security to this quadrant of Wilson’s model. She points out that in recent years, debates over Social Security have featured highly active special-interest groups (her example is the American Association for Retired Persons, the AARP) that have managed to successfully define the beneficiaries of Social Security as a more concentrated group than the cohort bearing the costs. Stone made this argument in 1997 and had she waited another decade or so she could have pointed to the cohort of cost bearers (in the form of today’s young workers) also forming special-interest groups to concentrate their identity in the policy matrix.

The United States currently honors Social Security totalization agreements with over twenty countries. These agreements are in place to prevent the double taxation of workers who earn income in two countries. Mexico is the United States' second largest trading partner, but a totalization agreement with Mexico has yet to be adopted. Those opposed to enacting a totalization agreement with Mexico fear that allowing Mexican workers to receive Social Security benefits from the United States will put undue strain on the U.S. Social Security system. However, Mr. Tuladhar argues the benefits of such an agreement are plentiful and could be the answer to protecting Social Security in the United States for years to come

The present redistributive policy focus is on a particular type of government redistribution that may be called direct fiscal redistribution to the poor (hereafter DFRP). Fiscal redistribution refers here to redistribution of money and in-kind income among strata of households by means of both government spending and taxing (i.e., fiscal) activities. For example, increased generosity in public assistance payment levels and reliance upon progressive income as opposed to regressive sales taxes can provide positive fiscal redistribution. Direct fiscal redistribution refers to that part of such redistribution that can be accounted for in terms of government's relatively direct and immediate give-and-take of expenditures and taxes to and from income strata of households. Current evidence suggests that such redistribution is considerable in advanced capitalist political democracies, especially vis-à-vis the poor (e.g., Reynolds and Smolensky, 1977; Hicks and Swank, 1984b). During the 1970s DFRP apparently augmented the "pre-fisc" income share of poor households in the U.S. by over 100 percent (see Reynolds and Smolensky, 1977: 74 on the U.S.; and Hicks and Swank, 1984b on advanced capitalism).

SSA has no written policies or procedures outlining the specific steps it follows when entering into totalization agreements, and the actions it took to assess the integrity and compatibility of Mexico’s social security system were limited and neither transparent nor well-documented. SSA said the process it used to develop the proposed totalization agreement with Mexico was the same as for prior totalization agreements. SSA officials told us that they briefly toured Mexican facilities, observed how their automated systems functioned, and identified the type of data maintained on Mexican workers. However, SSA provided no information showing that it assessed the reliability of Mexican earnings data and the internal controls Mexico uses to ensure the integrity of information that SSA will rely on to pay social security benefits.

(Wall Street Journal, “Steve Moore in the Wall Street Journal: Counter Inequality With Private Social Security Accounts,” pg online @ https://www.freedomworks.org/op-ed/steve-moore-wall-street-journal-counter-inequality-private-social-security-accounts/ //um-ef)

Fiscal hawks should love this plan because it would reduce the national debt significantly. Every dollar paid to a retiree from his Own America Account would be matched by a dollar of reduced Social Security payments. Over decades, tens of trillions of dollars of liabilities could be eliminated. So it’s a win-win for workers and government.

(Wall Street Journal, “Steve Moore in the Wall Street Journal: Counter Inequality With Private Social Security Accounts,” pg online @ https://www.freedomworks.org/op-ed/steve-moore-wall-street-journal-counter-inequality-private-social-security-accounts/ //um-ef)

To be sure, the stock market is risky and highly volatile in the short term, as tens of millions of Americans discovered painfully during the Great Recession. But over periods of 40 or 50 years the market offers remarkably stable and robust real returns of 6% or more—and that’s been true since the New York Stock Exchange first opened its doors. With Own America Accounts, even stock and bond returns half as large as the historical average would leave workers with bigger retirement incomes. This means the government could guarantee that payments wouldn’t fall below the minimum Social Security benefit.

(Wall Street Journal, “Steve Moore in the Wall Street Journal: Counter Inequality With Private Social Security Accounts,” pg online @ https://www.freedomworks.org/op-ed/steve-moore-wall-street-journal-counter-inequality-private-social-security-accounts/ //um-ef)

Fortunately, a simple solution exists: Help workers become owners and grow their investment income. Mr. Booker was exactly right when he said recently: “A paycheck will help you get by, but wealth in America is what lets you get ahead.” Nothing creates wealth like ownership, and the best way to expand ownership is to broaden participation in the stock and bond markets. With Americans’ budgets already tight, funds for new investment should be freed up from the vast sums they send to Washington each month. Congress should amend the Federal Insurance Contributions Act to give every worker the option to shift up to 10% of his paycheck away from Social Security and into a new, personal “Own America Account.” Each individually owned account would be invested in a low-fee index fund of roughly two-thirds stocks and one-third bonds, and would mature at the federal retirement age. This way, every working American—from the minimum-wage waiter to the truck driver to the store manager—would become a genuine owner, building real wealth for himself and his family with each paycheck. Investment in the private market would deliver far better retirement savings than the current government-mandated structure. We estimate that over the past 40 years, Social Security’s real annual return for a typical middle-class worker has been about 1% a year. And given the program’s growing deficits, returns may be even lower or even negative for today’s young workers. In contrast, stocks returned more than 6% annually in the same 40-year period. Over a career of saving, the difference amounts to a literal lifetime’s worth of additional income. A recent study commissioned by the Committee to Unleash Prosperity found that the average American who retired in 2016 after 40 to 45 years of work could have saved more than $1 million in balanced index accounts, and many middle-class families could have accumulated closer to $2 million.

(Star, “How Private Ownership Could Provide Real Social Security,” pg online @ https://www.dailysignal.com/2019/08/02/how-private-ownership-could-provide-real-social-security/ //um-ef)

There is a way out of the darkness, but it takes principles and courage. Low-income America isn’t suffering because of insufficient government dependence but because of insufficient independence—ownership. And here we can use government policy to make things better. Per the Urban Institute, the average savings in retirement accounts in 2016 was $157,884 in white households and $25,212 in black households. Black families, according to the report, “have less access to retirement savings, vehicles, and lower participation when they have access.” The headline in a recent Wall Street Journal column reads: “Counter Inequality With Private Social Security Accounts.” The authors, Jeff Yass and Stephen Moore, propose Own America Accounts, private retirement accounts to where workers could shift 10% of their paycheck from Social Security. The average annual return on Social Security over the last 40 years has been about 1% per year, according to Yass and Moore, and stocks returned 6% per year. With Own America Accounts, an average American could have retired in 2016 with between $1 and 2 million in savings over a 40- to 45-year working life, per Yass and Moore. Furthermore, Social Security is yet another dysfunctional government program. Social Security trustees project that in just 16 years, there will be insufficient funds to meets obligations. So a bad deal will get even worse when our politicians try to “save the system” by raising taxes, raising the retirement age or cutting benefits. At minimum, make Own America Accounts available to low-income Americans, and help them build wealth through ownership rather than more government dependence.

(Kevin Dayaratna, PhD, is Senior Statistician and Research Programmer in the Center for Data Analysis, of the Institute for Economic Freedom, at The Heritage Foundation. Rachel Greszler is Research Fellow in Economics, Budget, and Entitlements in the Thomas A. Roe Institute for Economic Policy Studies of the Institute for Economic Freedom. Patrick Tyrrell is Research Coordinator in the Center for International Trade and Economics of the Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy, at The Heritage Foundation, “Is Social Security Worth Its Cost?,” pg online @ https://www.heritage.org/budget-and-spending/report/social-security-worth-its-cost //um-ef)

This report provides workers with a comparison between what Social Security can provide and what they could receive if they had ownership of their Social Security payroll taxes. This information can help individuals of all ages understand what they can expect to get from the program in the long run. The results are overwhelmingly clear. Americans would be better off keeping their payroll tax contributions and saving them in private retirement accounts than having to sacrifice them to the government’s broken Social Security system. Social Security’s design has, over the decades, presumed that many Americans are too incompetent to make informed decisions for themselves, but few Americans believe that the government knows better than they do what is best for them and their families. Moreover, Social Security’s financial structure effectively guarantees that workers will receive extremely low, or even negative, returns on their payroll taxes.

(Kevin Dayaratna, PhD, is Senior Statistician and Research Programmer in the Center for Data Analysis, of the Institute for Economic Freedom, at The Heritage Foundation. Rachel Greszler is Research Fellow in Economics, Budget, and Entitlements in the Thomas A. Roe Institute for Economic Policy Studies of the Institute for Economic Freedom. Patrick Tyrrell is Research Coordinator in the Center for International Trade and Economics of the Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy, at The Heritage Foundation, “Is Social Security Worth Its Cost?,” pg online @ https://www.heritage.org/budget-and-spending/report/social-security-worth-its-cost //um-ef)

Our results establish that personal investment accounts provide a significantly greater rate of return compared both to what Social Security can afford to pay as well as what it has promised to pay. Prior research comes to the same conclusion.20 Davis and Lacoude, What Social Security Will Pay. See, for example, Thomas A. Garrett and Russell M. Rhine, “Social Security Versus Private Retirement Accounts: A Historical Analysis,“ Federal Reserve Bank of St. Louis Review, Vol. 87 (March/April 2005), pp. 103–121, https://research.stlouisfed.org/publications/review/05/03/part1/GarrettRhine.pdf (accessed September 30, 2016), and Michael Tanner, “Still a Better Deal: Private Investment vs. Social Security,“ CATO Institute Policy Analysis No. 692, February 13, 2012, http://www.cato.org/publications/policy-analysis/still-better-deal-private-investment-vs-social-security (accessed October 4, 2016). 1. Higher Returns and Larger Retirement Incomes. Investment returns in the private market are two to three times the rate of return of U.S. Treasuries (what Social Security used to invest in when it ran surpluses). Consequently, even most low-income earners who get the most back from Social Security (relative to what they contribute) would end up with higher retirement incomes if they had personal investment accounts. This phenomenon was not always true in the past under Social Security’s unsustainable promises, but it is true for anyone in their 40s or younger today. For example, a 23-year-old female, born in 1995, living in Florida and earning the average wage can expect a monthly Social Security check of $1,393 in 2017 dollars when she retires at age 67 in 2062. However, if her payroll taxes had been invested half in large-cap stocks and half in Treasury bonds, based on historical averages she could buy an inflation-adjusting annuity (similar to Social Security) that would provide $2,524 per month in year 2017 dollars.21 The single female earner in Florida would have $709,461 saved at retirement in 2017 dollars. If she purchased an annuity paying her a monthly payout until death, which adjusts for CPI-U each year, it would pay her an estimated $2,524 in monthly income in 2017 dollars. Rate is based on ImmediateAnnuities.com annuity quotes in effect October 21, 2016, https://www.immediateannuities.com/ (accessed May 5, 2017). This amount represents almost twice the amount Social Security will be able to pay. The same is true for other earners. A 23-year-old male, born in 1995, living in Florida and earning only half the average wage throughout his working years would accumulate enough in a personal account to receive an annuity that would pay $3,093 per month in 2017 dollars. Social Security can only provide him significantly less at $1,551 per month.22 The single male earner in Florida would have $781,910 saved up at retirement in 2017 dollars. If he purchased an annuity paying him a monthly payout until death, which adjusts for CPI-U each year, it would pay him an estimated $3,093 in monthly income in 2017 dollars. Rate is based on ImmediateAnnuities.com annuity quotes in effect October 21, 2016, https://www.immediateannuities.com/ (accessed May 5, 2017). Even low-earning females (born in 1995) who tend to receive the most bang-for-the-buck from Social Security would receive 40 percent more from a personal account than from Social Security ($1,262 per month from a personal account vs. $902 from Social Security).

(johan, Johan Norberg is a senior fellow at the Cato Institute, “How Sweden Saved Social Security,” pg online @ https://www.cato.org/commentary/how-sweden-saved-social-security //um-ef)

‘There are few issues on which Sweden and the United States are not in perfect sync,” then‐​Vice President Joe Biden said here in 2016. Here’s one: Social Security. President Biden refuses to consider any reforms, and so do many Republicans. But that won’t save the program; it’ll doom it. In a little over a decade, the trust fund will be exhausted. Sweden faced the same problem in the early 1990s. The old pay‐​as‐​you‐​go pension system had promised too much. With fewer births and longer lives, projections showed the system would be insolvent a decade later. As Mr. Biden has said in another context, Sweden has “an ethic of decency.” Its politicians chose not to deceive the voters. The center‐​left Social Democrats acknowledged that the system “would not withstand the stresses that can be foreseen.” In 1994 the Social Democrats agreed with the four center‐​right parties to create an entirely new system based on the principle that pensions should correspond to what the beneficiary pays into the system—a system in which the contribution, not the benefits, is defined. The reforms were designed to make it impossible to run a deficit and pass the costs to future generations. Crucially, the agreement introduced a balancing mechanism nicknamed “the brake.” When the economy is doing worse than expected, pension benefits are automatically reduced, and when the economy picks up again, the brake is released. Sweden introduced partial privatization of the kind the American left derides as a Republican plot to gamble our money away on the stock market. The Swedish government withholds roughly 2.3% of wages and puts it into individual pension accounts. Workers are allowed to choose up to five different funds in which to invest this money, according to their own risk preference, and can change them at any time free. Commentators claim partial privatization would mean that pensions could be lost in a financial crash. That ignores that the money isn’t all invested or withdrawn at the same time, meaning that the performance in a single year isn’t crucial. The returns from the normal income pension is around 2% per year, but from the private accounts the average Swede has made an impressive average return of roughly 10% a year since its inception in 1995, despite the dot‐​com crash, the financial crisis and the pandemic. Swedish social security isn’t perfect and doesn’t satisfy everyone, but it has the obvious advantage that it actually works and is sustainable in the long run. Far from being a cautionary tale, Sweden’s pension system was recently described as the world’s best by the insurance group Allianz, based on a combination of sustainability and adequacy.

The Benefits of Reform Personal ownership and control and broader freedom of choice. Workers would personally and directly own the funds in their individual accounts, like their own personal bank accounts. They would enjoy freedom of choice over investment of those accounts in a wide range of professionally managed funds. They would also enjoy broader freedom of choice over retirement age, as workers could retire at any age after 59 1/2. Workers would be free to choose to leave substantial funds from their accounts to their children or other heirs. They would also each be free to choose to stay in the current Social Security system as is. Higher returns. A conservative diversified portfolio of half stocks and half bonds would yield a real return of around 5 percent, after accounting for administrative costs. Even though under the reform proposal advanced here substantially less would be paid into the personal accounts than the tax payments required by Social Security, at standard market investment returns workers would get substantially more in benefits from the personal accounts than Social Security promises. Social equity, and benefits for minorities. Low-income workers would receive similar gains under our progressive proposal. The poor deal offered by Social Security applies with a vengeance to African-Americans, because they have much lower life expectancies than the general population. Consequently, they tend to live fewer years in retirement to collect benefits, and more frequently die before reaching retirement age. Workers who die before retirement or just after retirement would be able to leave the account funds they had accumulated to their children or other heirs. Hispanics also suffer from a special problem under Social Security. The Hispanic population is much younger than the general population, and since the return paid by Social Security is falling over time, younger populations get lower returns on average than others. A social safety net. The personal account system would be backed up by a social safety net guaranteeing that workers with the accounts would get at least what they would have gotten from the old Social Security framework. Broader and more equal ownership. Through these accounts, below-average-income workers would enjoy their only real chance to participate in capital markets like higher income workers and accumulate substantial savings and capital. Greatest tax cut in world history. Under this reform proposal, the payments into the personal accounts would be about one-third less than the current taxes for Social Security retirement benefits. Eventually, as the transition costs are brought under control, the current tax would be reduced to the mandatory payments into the accounts, for those who exercise the account option. Such a reduction in payroll taxes amounts to a payroll tax cut of about one-third, shared equally between future workers and employers. The rest of the current payroll tax is transformed into private payments into personal, individual, investment accounts. Greatest reduction in government debt in world history. Ultimately, we would reach the point where virtually all retirees are relying on personal accounts for their retirement benefits. At that point, the old Social Security framework would bear little or no benefit obligations, and there would consequently be no major deficit of any significance for that older system to cover. As a result, the personal accounts would have completely eliminated the unfunded liabilities of Social Security. Moreover, the net impact of the transition to personal accounts on the annual budget deficit is zero under this reform plan, because the transition is financed completely off-budget.

The 2001 President’s Commission to Strengthen Social Security suggested that private accounts offset some of the accumulated debt. More importantly, however, the Commission also suggested that rather than replace a constant share of wage indexed earnings, the defined benefit part of Social Security provide a fixed level of purchasing power. This change alone reduces the outstanding debt to existing generations, the 100-year closed group liability, and significantly reduces funding requirements for both new and current generations. Such a change is one way of recognizing the fact that the existing system is not sustainable and therefore, is not the appropriate target when deciding whether a transition is Pareto. The private account portion of the President’s Commission would allow workers who are 55 years of age and above to contribute roughly 31.7% of their payroll taxes, 4 percentage points of the total 12.4% payroll tax, up to $1,000 per year, to a private account. With the restriction of $1,000, the total contributions to private accounts ultimately reach 2.39% of taxable payroll. This reform also replaces the wage indexed benefits formula with a price indexed formula beginning in 2009. Price indexing effectively sets the defined benefit after 2008 to the real purchasing power of the 2009 benefit. 5 In exchange for the opportunity to divert one’s payroll taxes to a private account, the price indexed benefit is offset by the annuity resulting from one’s private account, assuming the private account earns 2%. Future benefits are first reduced by the new benefit formula and are then further reduced by the benefit offset, assuming the 2% rate of return. Any accumulations earned in excess of the 2% are added to the reformed benefits to arrive at a retirees’ total benefit. Assuming that the private accounts are invested in a portfolio that yields a rate of return of 4.6% during the accumulation phase, and a 3% return during the decumulation phase, the Commission estimated that the ultimate benefits from this reformwould be roughly comparable to those that are currently scheduled

From the comparison in the last section of the CGUOs of the current insolvent system and a solvent one, one can see that a Social Security reform would also have implications for intergenerational equity. A reform featuring private accounts would force policy makers to deal with the financing shortfall directly. If we do nothing, current generations will pay taxes and receive benefits according to the current overly generous tax rate and benefit schedule. As a result, future generations will have to pick up the $12.7 trillion left by current generations. On the other hand, if the financing shortfall is eliminated by a reform, essentially through tax increases, current generations will contribute to the servicing of the $12.7 trillion debt. Indeed, from the previous example, what is left for future generations to pick up is reduced to $5.14 trillion. In general, any transition to a prepaid private account retirement system would have intergenerational redistribution in favor of future generations. Whether generational equity should be a goal of policy is an open question, although one that the proponents of reform have answered in the positive.

The financial crisis of the Social Security program can be resolved by transforming this program into a retirement system based on privately owned savings accounts. A fundamental issue of the transition from the existing pay-as-you-go system to a pre-paid system is the distribution of the transition costs between current and future generations. In any pay-as-you-go retirement system the current generation, consisting of those currently working and retired, is owed a debt in the form of accrued retirement benefits. Any move to a prepaid system based on private accounts must find ways to pay off the debt implicit in the old intergenerational transfer financed retirement system. Social Security systems throughout the world have a greater debt to the current generation than that implied by the pure movement through life of each generation. This greater debt is due to a combination of two events that are occurring worldwide: a population bulge known as “baby boomers,” and increased longevity. These two events have allowed the taxes required to fund the retirement of past retirees to be woefully inadequate to fund the much larger retirement population soon to be in place.

With the war on terrorism focused on the Middle East and political crises erupting in other parts of Latin America, Mexican leaders complain that their country has been receiving little attention from the Bush Administration. Indeed, President Vicente Fox's plea to open borders to help Mexican laborers find work in the United States was sidelined by the tragedy of September 11. The U.S.-Mexico Social Security totalization agreement that is now being negotiated provides an opportunity to boost sagging relations and benefit both countries without enacting complicated and premature immigration reforms. Properly structured, the totalization agreement would allow Mexican workers who are now legally in the United States to invest in the American economy while building a retirement nest egg that would benefit them when they return to their own country. In addition, it would serve as a model of a reformed Social Security system that could eventually allow American workers to have better and more secure retirement incomes. The key is placing Mexican workers' U.S. Social Security taxes into accounts managed by the existing U.S. federal employees' Thrift Savings Plan (TSP) rather than into the existing U.S. Social Security "trust fund." Totalization Is Nothing New Despite sensational press reports, totalization is nothing more than a negotiated agreement between two nations that allows their respective Social Security programs to better serve workers from one nation who are employed in the other during part of their careers. The United States already has similar agreements with nearly 20 other nations, including most of Western Europe, Australia, Chile, and South Korea. The agreement with Mexico differs only in that it would affect more people: While the 20 existing agreements affect a total of approximately 100,000 workers, the Mexican agreement would affect nearly 165,000 in the first five years alone. Such agreements make it easier for aliens who lived in the United States and paid American Social Security taxes for at least 10 years, as well as Americans who have worked overseas and paid Social Security taxes to another nation, to draw their benefits. The proposed agreement would allow citizens from either nation who worked in both countries to receive credit for their entire career from the country that eventually pays their benefits. Thus, an American worker who worked in the United States for 25 years and in Mexico for 15 years, paying Social Security taxes to the country of employment, could receive American retirement benefits based on a combined 40-year work history. The U.S.-Mexico agreement would also eliminate an American requirement that the survivors of a Mexican worker who earned and received U.S. Social Security benefits must come to the United States every year to prove that they still qualify for survivors benefits. Helping Mexico at a Critical Juncture Mexico's President Vicente Fox would like the United States to grant easier access to Mexican immigrants who cannot find adequate work at home. In the wake of September 11, that is impractical for both political and security reasons. Moreover, it would relieve pressure on Fox to fulfill valid campaign promises to improve Mexico's inadequate education system, streamline burdensome regulations that strangle small businesses, and create institutions to provide credit to start new job-providing enterprises. Nonetheless, totalization could help Mexicans start solving some of these problems on their own. Those already working legally in the United States could recover more of their social security to take back to their local economy. Coupled with a new U.S. Agency for International Development program to enhance Mexican credit unions, the flow could provide a basis for increased savings, credit, and mortgages to those who never had them. Properly structured, the U.S.-Mexico Social Security totalization agreement can benefit the United States and serve as a model for U.S. Social Security reform. The Social Security taxes of U.S.-employed Mexicans, instead of being channeled into the U.S. Social Security trust fund, would be deposited in private accounts managed by the U.S. federal employees' TSP that currently provides federal workers and military personnel with low-cost, low-risk retirement investments. Their funds would be invested in a mixed portfolio of U.S. stocks, corporate bonds, and U.S. federal government debt. Upon their retirement or return home, the Mexican nationals' accounts could be paid into the Mexican Social Security system or converted into an annuity that would pay regular retirement benefits. While invested in the TSP, those Mexican workers would help to build the U.S. economy. Creating a Thrift Savings account for Mexican workers in the United States through a totalization agreement would provide a model for Social Security reform that could benefit American citizens as well. Similar to the TSP, Mexico's social security system allows its workers to invest in one of several licensed privately managed pension funds, including stocks, bonds, and other financial instruments. These give Mexicans a much higher rate of return than American workers receive under the current U.S. pay-as-you-go system. While many younger Americans may end up paying more into Social Security than they will ever receive in benefits, Mexicans have the opportunity through their system to build real assets that will fund their retirement incomes and consequently help support their economy. Conclusion The proposed U.S.-Mexico Social Security totalization agreement offers a win-win opportunity. Through it, the Bush Administration can relieve any future stress that the new agreement might place on the U.S. Social Security system while also strengthening the American economy and giving Mexican nationals the same opportunity that they would have if they worked in Mexico.

The 118th Congress, in both legislative and oversight capacities, may be active in numerous trade policy issues related to the implementation of the United States-MexicoCanada Agreement (USMCA), which entered into force on July 1, 2020, replacing the 1994 North American Free Trade Agreement (NAFTA). USMCA revised and modernized NAFTA with new provisions such as digital trade and more enforceable labor provisions. Pursuant to trade promotion authority (TPA), the Trump Administration provided the required consultations and notifications to Congress. Congress approved implementing legislation for USMCA in December 2019 (P.L. 116-113).

In the U.S., these policy changes and improvements helped secure overwhelming bipartisan support in Congress; while NAFTA passed in the Senate with only 61-38 votes, USMCA gained much greater support with a margin of 89-10 votes. Similarly, in the House of Representatives, USMCA received 385-41 votes compared to a more divided House vote for NAFTA of 234-200. This presents an opportunity for a widely supported and bipartisan trade policy.

The passage of the United States-Mexico-Canada Agreement (USMCA) through the U.S. Congress with overwhelming bipartisan support, as well as with strong political backing in Canada and Mexico, underscored the importance of USMCA for North American trade and economic relations.1 It builds on the North American Free Trade Agreement (NAFTA) and largely retains NAFTA’s commitment to lowering trade barriers although it rolls back trade openness in the auto sector. USMCA also adds new and robust commitments, particularly on digital trade, labor, and the environment.