The Congressional Budget Office’s long-awaited report on the budgetary impact of immigration reform is finally out – and the numbers look good for reform. CBO projects that the bill being considered on the Senate floor would lower deficits, ease future budget pressures, and boost economic growth.
The report, written by Congress’s non-partisan scorekeeper, is the clearest answer to one of the most difficult questions about reform: how much will it cost?
Immigration Reform Would Reduce Deficits By Almost $200 Billion In Next Decade, And $700 Billion In The Decade After
Over the next decade, CBO estimates that immigration reform will generate $460 billion in additional tax receipts, offsetting $260 billion in higher spending mostly from an increase in refundable tax credits, like the Earned Income Tax Credit, and health programs.
But the 8 million currently undocumented immigrants that CBO projects won’t be eligible for key federal benefits until the decade following 2023. Though added spending because of reform is higher in that decade, additional revenues are even higher. CBO projects that the bill will reduce deficits by $700 billion from 2024-2033.
CBO’s projection that immigration reform will reduce the deficit is a powerful case against cost-driven objections to reform. It also calls into question the need for proposed amendments to the Senate bill that would limit federal benefits for currently undocumented immigrants, jeopardizing legalization for some and risking hardship for others. If, as written, the Senate bill already reduces the deficit, then why include provisions that would lower immigrant-driven spending but are potentially harmful?
Long-Term Budget Pressures Can Be Addressed By Immigration Reform
The CBO projects that increased spending on Social Security and Medicare from immigration reform will total no more than $70 billion between 2024 and 2033. Meanwhile, tax revenues will go up by $1.5 trillion during that decade.
Immigration reform would increase the solvency of Medicare and Social Security mainly as a result of the age distribution of immigrants in the U.S.: more young immigrants paying into Medicare and Social Security increases the number of contributing workers per retiree drawing benefits. Older immigrants coming in to the system closer to retirement will by and large be ineligible to receive payments as they will not have been in the U.S. workforce long enough to meet the programs’ eligibility requirements.
CBO is not the only government scorekeeper endorsing immigration reform as a way of increasing the solvency of our retiree entitlement programs. The Chief Actuary of the Social Security Administration has projected that immigration reform would add $275 billion in Social Security taxes over the next decade, and contribute positively to solvency in the long-term.
Immigration Reform Would Boost G.D.P By 3.3% In 2023 And 5.4% in 2033
The CBO projects that immigration reform would grow the economy by raising productivity, boosting investment, and increasing the size of the force.
The broad economic effects of immigration are substantial, and well-known. More workers means, simply, more output. Immigration reform is also a vehicle for upgrading the skills of these workers – legal status would allow currently undocumented workers to invest in education and training, and allowing more high-skilled immigrants into the U.S. would boost the broader quality of our workforce. CBO’s economic growth projections reflect the importance of these effects.