Clashes over immigration and control of the U.S. border have already figured prominently in the battle for the presidency. A better policy is certainly needed — one that admits far more workers with skills in short supply, restores an orderly process for accepting other economic migrants and asylum seekers, dissuades those who won’t qualify from turning up at the border, and helps states and cities cope with the consequences of failing to get this right.
But as the arguments continue, it would be good to keep one thing in mind: The vast majority of immigrants — including those arriving under the existing ill-suited arrangements — will prove to be national assets, not liabilities. On balance, they’ll boost the economy and help mend the country’s broken public finances. Although policy can and should be improved, the goal shouldn’t be throttling the supply of foreign workers.
A recent report from the Congressional Budget Office sheds some light on the issue. It looks at what it calls the recent “immigration surge” of people entering the U.S., not counting those with lawful-immigrant or temporary-worker status. The number of these irregular or “other foreign national” arrivals — people who entered the U.S. illegally or overstayed their temporary status, “parolees” awaiting court proceedings, those granted temporary protected status or “deferred action,” and others — expanded enormously after 2020, from an average of about 200,000 a year to roughly 1.7 million a year. By 2026, the CBO projects a total increase of 8.7 million, compared with the pre-2020 trend.
Granted, these estimates depend on contestable assumptions about how many of the new arrivals will enter the workforce and when; their age, sex and family structure; their eligibility for benefits such as Medicaid, schooling and child nutrition programs; the direct and indirect effects on government revenue; and more. Some other costs and benefits can’t be scored because they’ll depend on changes in policy. So the CBO’s effort to crunch the numbers surely won’t be the last word. The results are intriguing nonetheless.
The surge after 2020 is projected to add $1.2 trillion to federal revenue over the next decade — about as much as raising all tax rates on personal income by 1 percentage point. This is mostly because in time the arrivals work and pay taxes, and because a bigger labor force boosts economic growth, adding to others’ incomes and taxes. Gross domestic product goes up by $9 trillion, thanks to the bigger population, higher labor-force participation among the arrivals and higher productivity.
Federal spending is projected to rise by about $300 billion, as the arrivals and their children qualify for benefits.
The net effect is to cut 10-year federal borrowing by $900 billion. States and cities will see revenue and outlays change, too, and the balance there is unlikely to be so benign. (The cost of schooling the arrivals’ children falls mostly on states.) Still, it would be reasonable to conclude that, at worst, the surge imposes no net costs on U.S. taxpayers. And remember, this is the outcome for “other foreign nationals” — that is, arrivals not selected for educational attainment or the skills most in need.
Make no mistake, the failure to control the border, and the stress on local communities forced to cope with a disorderly influx of people, is lamentable and needs to be fixed.
But the claim that even a mismanaged surge of migrants imposes a net financial burden on the economy and its taxpayers is false. The main lesson is that the gains from a better, smarter, well-managed pro-immigration policy would indeed be huge.
— Bloomberg Opinion