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Thursday, May 25, 2006

Immigrants and Welfare Costs

Robert Rector of the NRO claims, based on a Heritage Foundation report, that:

The Wrong Course The Senate’s proposed amnesty will cost a fortune, by Robert Rector, NRO: Congress is in the midst of the most dramatic overhaul of our nation’s immigration laws in 80 years. So why is hardly anyone is asking the basic question, How might this affect government costs?

In the case of the leading reform proposal ... by Sens. Mel Martinez (R., Fla.) and Chuck Hagel (R., Neb.), we have an answer: It would raise them substantially. The ... net addi­tional cost to the federal government of benefits for these individuals will be around $16 billion per year. ...

To make matters worse, once an illegal immigrant becomes a citizen, he has the right to bring his parents to live in the U.S. The parents, in turn, may become citi­zens. The long-term cost of government benefits for the parents of 10 million recipients of amnesty could be $50 billion per year or more. In the long run, the Hagel-Martinez bill, if enacted, would be the largest expansion of the welfare state in 35 years. ...

Hardly anyone is asking? There's an entire CBO report on this topic, and it does not support the Heritage Foundation claims. The CBPP summary of the CBO report says:

CBO Aanalysis Shows Heritage Foundation Claims on the Cost of Immigration Reform are Greatly Exaggerated: ...Even without considering the effects of the increases in revenues that would result from S. 2611, the CBO analysis of the budgetary impact of the legislation indicates that the costs of the bill’s provisions would be a fraction of the cost that Heritage estimates. ...  Furthermore, once the effect of taxes is considered, the CBO data suggest it is likely that the net costs of the legalization provisions will be close to zero, not $30 billion per year. ... Taking into account both the increased revenues from the bill as a whole and the increased benefit costs from the bill as a whole, CBO’s estimates indicate that the bill would raise more in revenues over the next ten years than it would cost in increased public benefits. ...

The Heritage report is largely based on a flawed study by the Center for Immigration Studies (CIS). ...  and estimates that these “welfare” costs ... ultimately would reach $16 billion a year. Heritage further speculates that a significant proportion of the new citizens would bring their parents into the United States and that the parents would subsequently gain citizenship and become eligible for Supplemental Security Income (SSI) and Medicaid in large numbers, bringing the total costs up to $30 billion a year. ... CBO estimates that the ultimate increase in benefit expenditures as a result of the legalization provisions could be $6.9 billion a year (expressed in 2016 dollars). This CBO estimate — which does not reflect any of the increased revenues that would result from the bill — is less than one-fourth of the Heritage estimate of $30 billion a year...

And on that 6.9 billion dollar figure, repeating a quote from above:

When the increased revenues are taken into account, much — and perhaps all — of the $6.9 billion a year that CBO projects in eventual benefit costs are offset.  The net effect on the budget thus may well be close to a wash.

I couldn't find the 50 billion a year figure cited in the NRO commentary, just the 30 billion a year estimate, but it doesn't matter since both are wrong according to the CBO.

    Posted by on Thursday, May 25, 2006 at 11:31 AM in Economics, Policy, Politics | Permalink  TrackBack (0)  Comments (24)

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