The Congressional Budget Office (CBO) released its cost estimate and economic impact documents for S. 744, the Border Security, Economic Opportunity, and Immigration Modernization Act, today. We are still analyzing the lengthy reports, but already a few items stand out as noteworthy.
CBO reports that S. 744 would have only a marginal impact in reducing future illegal immigration. According to CBO, S.744 would reduce the future inflow of illegal immigrants into the U.S. over the next two decades by only 25 percent. CBO estimates that by 2033, 7.5 million new illegal immigrants will have entered the U.S. and taken up residence. The Heritage Foundation’s Robert Rector estimates that these new illegal immigrants could cost the taxpayers (federal, state, and local) some $400 billion over 20 years.
The CBO estimate is in sharp contrast to the rhetoric of the bill’s sponsors, who have said the bill “contains the toughest border immigration enforcement measures in U.S. history.” Measures to increase border security or make an amnesty contingent on securing the border first have been voted down by the bill sponsors and their allies in the Senate.
Effect on Workers
Congress should pass only immigration reform measures that are good for American workers. The economic goal should be increased after-tax income for those in the United States lawfully. This bill appears to fail that test in the years following enactment, since per capita gross national product (GNP) would be lower in the bill all the way out past 2030 (Figure 2). (See also “S. 744 would reduce per capita GNP by .7 percent in 2023” [page 14].) CBO notes that by 2033, a range of estimates indicate that per capita GNP could be lower or higher.
Wages also seem to take a hit in the first decade or so, according to CBO. If Heritage is right about the heavy fiscal costs of amnesty starting around 2026 (13 years after a potential enactment), then it would be even more important to measure post-tax wages than simply per capita GNP or wages in any event.
The CBO report also does little to assuage concern that the amnesty portion of the bill would be very costly to U.S. taxpayers. It provides only a look at the first 10 years in any real detail. (It includes only a sketch of the second 10 years.)
As we noted last week prior to the report:
Specifically, the bill allows those who move from unlawful status to registered provisional immigrant status to obtain few benefits initially. Then, upon entering legal permanent resident status, they would be eligible for additional benefits, and in time they would qualify for the full panoply of means-tested welfare and entitlement benefits.
It is important to note as well that the most significant costs during the lifetime of would-be legalized immigrants are during their retirement years after they qualify for Medicare and Social Security. For the vast majority of unlawful immigrants, that is well past the 10-year budget window.
Heritage has noted that an amnesty would be costly to American taxpayers, would not stop unlawful immigration, and would be unfair to those who immigrated lawfully or did not enter the U.S. illegally. Tomorrow, Heritage will host an event to discuss the CBO report in more detail.