CBO Report Cites Economic Benefits Of Immigration Reform
A new Congressional Budget Office report finds real economic benefits from immigration reform.
The Congressional Budget Office came out with a report late yesterday that cites a wide variety of economic benefits from immigration reform, a report that arguably helps the advocates of reform in the Senate and elsewhere make their case:
WASHINGTON — Congressional budget analysts, providing a positive economic assessment of proposed immigration law changes, said Tuesday that legislation to overhaul the nation’s immigration system would cut close to $1 trillion from the federal deficit over the next two decades and lead to more than 10 million new legal residents in the country.
A long-awaited analysis by the Congressional Budget Office found that the benefits of an increase in legal residents from immigration legislation currently being debated in the Senate — which includes a pathway to citizenship — would outweigh the costs. While the report was a clear victory for immigration proponents, it came just hours after Speaker John A. Boehner raised potential new obstacles for the bill, saying he would not bring any immigration measure to the floor unless it had the support of a majority of House Republicans.
The report estimates that in the first decade after the immigration bill is carried out, the net effect of adding millions of additional taxpayers would decrease the federal budget deficit by $197 billion. Over the next decade, the report found, the deficit reduction would be even greater — an estimated $700 billion, from 2024 to 2033. The deficit reduction figures for the first decade do not take into account $22 billion in the discretionary spending required to implement the bill, however, making the savings slightly lower.
The report was immediately seized on by backers of the bill as a significant boost to its prospects. Senator Charles E. Schumer, Democrat of New York, one of the bill’s authors, said the report “debunks the idea that immigration reform is anything other than a boon to our economy.”
The budget office also found that in the next decade the legislation would lead to a net increase of about 10.4 million permanent legal residents and 1.6 million temporary workers and their dependents, as well as a decrease of about 1.6 million unauthorized residents.
Conservatives had expected that an analysis of the second decade — when immigrants would begin to qualify for federal benefits — would bolster their argument that the costs of an immigration overhaul were unwieldy, but that turned out not to be the case in the economic analysis.’
As you might expect, reaction to this report depends upon which side of the immigration debate you happen to be on. For example, Ezra Klein sees this as a big boost for the Senate bill:
The bill’s overall effect on the overall economy is unambiguously positive: CBO expects real GDP to increase by 3.3 percent by 2023 and by 5.4 percent in 2033. The reasoning here is a bit more complex: It’s not just that the bill would mean more workers, but that it would mean more productive workers. CBO says that the law would “lead to slightly higher productivity of both labor and capital because the increase in immigration — particularly of highly skilled immigrants — would tend to generate additional technological advancements,
such as new inventions and improvements in production processes.” This isn’t just a good CBO report. It’s a wildly good CBO report. They’re basically saying immigration reform is a free lunch: It cuts the deficit by growing the economy. It makes Americans better off and it makes immigrants better off. At a time when the U.S. economy desperately needs a bit of help, this bill, according to the CBO, helps. And politically, it forces opponents of the bill onto the ground they’re least comfortable occupying: They have to argue that immigration reform is bad for cultural or ethical reasons rather than economic ones.
Perhaps the best evidence of how unambiguously positive this report is for the law comes from the reaction of some House Republicans to the estimate. “Just got an e-mail from a House Republican reminding me that none of them trust CBO, so this doesn’t much matter to them,” tweets Politico’s Jake Sherman.
As does Kevin Drum, although he’s not quite as enthusiastic about the report as Klein:
Compared to its baseline estimates, CBO also projects that if the immigration bill is passed, GDP will increase a bit over the next decade; wages will go down a bit but then rise in the decade after that; capital investment will rise; and the productivity of labor and of capital will go up. All of these effects are fairly small, however. Economically, a pretty reasonable takeaway is that immigration reform would probably have a positive effect, but not a large one.
On the right, the reaction to the report is, of course, quite different ranging from the skepticism expressed by Hot Air’s Allahpundit to the those like John Hinderaker who believes that the report actually helps the opponents of immigration reform:
Behind these rather antiseptic observations lies a human tragedy: falling wages and rising unemployment for the very segment of American society that has struggled the most in recent years. On top of that, the nation’s welfare system will be severely strained. While newly-legalized immigrants will not immediately be eligible for federal welfare benefits, that does not apply at the state and local levels. Those welfare systems will be overwhelmed with millions of new claimants-the cost to be borne, of course, by the taxpayers.
I don’t doubt that the CBO’s report understates the extent of the devastation that will be wrought by the Gang’s legislation, but the picture it paints is clear enough. Why, one wonders, would anyone support such a destructive proposal? Anyone, that is, other than a Democratic politician who is salivating at the thought of millions of new Democrat voters?
Finally, in a subsequent post to the one noted above, Klein argues that the report helps the political case for immigration reform to at least some degree, while also helping to point out what the real objections to immigration reform are:
Ultimately, the CBO report rips a layer of artifice from the immigration debate. Few critics of immigration reform really base their opposition on concerns about the deficit or the economy. Their real concern with immigration is cultural and sociological. But that’s dangerous political ground. It’s easier to frame opposition using the bloodless language of the budget than the combustible language of national character and composition.
That’s the real damage the CBO did to the anti-immigration caucus. It took the bloodless language of the budget away from them. It left them only with their real concerns — the ones they’d prefer not to emphasize. That will perhaps lead to a slightly more truthful debate about immigration reform, but one that is much more dangerous for the anti-reform side, and for the Republican Party.
I’m not quite as gung-ho about the report as Klein is, mostly because I’ve always been skeptical about the real predictive value of long-term economic forecasts when it comes to telling us what is likely to happen ten or twenty years down the road. Nonetheless, the economic benefits of increased immigration are something that has been well-documented by economists on both sides of the political aisle, and the fiscal benefits of legalizing millions of wage-earning people currently living in the shadow economy seem rather self-evident. The report establishes both of these effects quite clearly, and also tends to demolish quite handily the rather specious economic arguments advanced by opponents of immigration reform, and immigration generally. To that extent, it arguably does provide at least some measure of political support to proponents of reform trying to get something through Congress and onto President Obama’s desk before the end of the year.
That doesn’t mean, of course, that the CBO guarantees smooth sailing for immigration reform from this day forward. For one thing, while it’s true that immigration reform will be good for the economy as a whole, it’s likely true that there are going to be some sectors of the economy that will be significantly disrupted by the introduction of newly legal immigrants into the mainstream economy. Low-wage and low-skill workers, for example, are likely to find themselves competing for work with people who are just as willing as the are to take low wages to get a foot in the door. That’s essentially the argument that Hinderaker makes above, but it strikes me as ironic that conservatives are making that kind of an argument. The conservative economic argument has traditionally been one that has recognized the impact that change can have on some sectors of the economy while at the same time benefiting the economy as a whole. The answer to such disruptions, economists like Friedman and Hayek that conservatives admire would say, isn’t to try to stop the change, but to accept it and recognize the benefits to the economy as a whole rather than the limited impact on one sector of it. If the right is abandoning that principle of economics to make their case against immigration reform, then it strikes me that they are conceding that they don’t really have an economic argument against immigration reform.
As Klein notes in his post today, it’s rather apparent that the real opposition to immigration reform is more cultural than it is economic. A CBO report about the economic benefits of immigration isn’t going to persuade people who come to the debate from this perspective any more than similar arguments have persuaded opponents of immigration in the past. Nonetheless, as Klein says, it will tend to reveal the arguments against reform for what they really are, and that can’t be good politically for a party that dedicates itself to defeating immigration reform
…Comprehensive Immigration Policy Reform is the right thing to do morally and economically.
…How long with the Republicans swim against this tide? Perhaps long enough to drown them.
Those CBO Reports have numbers and facts and logical reasoning and such, so I’m sure that the House Republicans and the right wing will reject and ignore this report. They don’t cotton to stuff like that.
” real opposition to immigration reform is more cultural than it is economic. ”
Does he think the Chamber of Commerce is for more immigrants for cultural reasons? Does he think if people want more high skilled immigrants and less low skilled it is for cultural reasons? That happens to be the policy of other countries like Canada and Australia.
If poor immigrants are good for government budgets why is California”s budget such a mess?.
I’m sure all of the pundits and politicians who loudly voiced their concern regarding the deficit will remain intellectually consistent and publicly promote immigration reform now.
Hindrocket v. the CBO, hm? How can the CBO’s professionals possibly compete with Hinderaker’s gut feelings? Unpossible!
In related news, The House wants a ‘sustained human presence on the Moon and the surface of Mars’
They have no economics, they truly are a cargo cult.
@Mercer: “If poor immigrants are good for government budgets why is California”s budget such a mess?. ”
Because for years there was a rump Republican party in our legislature that was just big enough to block any tax increases necessary to pay for the things our citizens wanted and needed. (There was a 2/3s majority required for passage…)
Now that they’ve become a superminority, the governor and legislature have passed a series of measures that have brought the budget back to surplus and are starting to make up for some of the draconian cuts made in the bad years.
How are things down in Hog Wallow, or whatever right wing swamp you choose to live in?
@Mercer:
California is one of your high growth states.
In that map it isn’t economic policy that determines success. It is largely gifts of nature (either climate or natural resources). The political choice is about what you do with those gifts.
@Blue Shark:
Maybe some Republicans realize that passing comprehensive immigration reform will quickly turn the U.S. into a one party state with much higher taxes, a fast growing public sector, higher housing costs in the good neighborhoods, higher insurance costs, and higher unemployment.
I doubt if the CBO anticipated the economic consequences of the U.S. becoming a one party state with a very liberal government. Remember, the Democrats plan for controlling immigration is the lower the quality of life in the U.S. to the same level as Mexico.
@stonetools:
When the CBO report is based upon the Democrats doing everything they are promising to do in the future when the Democrats have never followed through on promises in the past, it makes sense not to trust them. What is amazing is that progressives are getting excited the prospects of higher unemployment for American citizens.
” budget back to surplus ”
Tell that to the creditors of Stockton and San Bernardino.
@Mercer:
Stockton and San Bernadino are not California, and the budgetary issues most likely aren’t comparable.
@David M:
California has had higher than average unemployment for many years. In addition, California suffers from massive amounts of tax avoidance. the idea that millions of third world immigrants leads to prosperity is laughable. The CBO is assuming that the 2 million immigrants that will be allowed into the U.S. under Comprehensive Immigration Reform will all be above average.
Once again, the left pushes the idea that immigration is good because Americans are lazy, stupid, selfish, and dysfunctional and need to be replaced. This is the latest in the elites openly supporting the replacement of American citizens with immigrants.
@superdestroyer:
Oh spare me. Let me tell you about California, you cretin. I pay 10% state income tax. I don’t pay it happily, but I pay it despite the fact that in my profession I can live literally anywhere on planet earth. You know why? Because it’s Califuckingfornia, that’s why. When you’re out back of your trailer with the Beware of Dog signs everywhere, trying to get the hogs unstuck from the frozen mud in Shitheel, South Hellhole, I’m sitting on my deck looking out over the sailboats on San Francisco Bay.
And by the way, our budget is in surplus and the bond agencies just raised our rating once we got rid of the last few Republicans.
California costs me more than you’ll ever make. And you know what? I pay it. Why? Possibly because there aren’t a whole lot of you around these parts.
@superdestroyer:
Oh spare me. Let me tell you about California, you cretin. I pay 10% state income tax. I don’t pay it happily, but I pay it despite the fact that in my profession I can live literally anywhere on planet earth. You know why? Because it’s Califvckingfornia, that’s why. When you’re out back of your trailer with the Beware of Dog signs everywhere, trying to get the hogs unstuck from the frozen mud in Sh!theel, South Hellhole, I’m sitting on my deck looking out over the sailboats on San Francisco Bay.
And by the way, our budget is in surplus and the bond agencies just raised our rating once we got rid of the last few Republicans.
California costs me more than you’ll ever make. And you know what? I pay it. Why? Possibly because there aren’t a whole lot of you around these parts.
that math is fuzzier than the peaches that will go unpicked by people who have no incentive to pick them….
@superdestroyer:
And by the way, California is a net payer of federal taxes, which means we carry half the goober-Republican-sh!tkicker states around like dead weight. We are quite simply the greatest state in this union. Period. Silicon Valley, Hollywood, and we’re the largest agricultural exporter, and in our spare time we supply the weed that racist losers like you use to dull the pain of their failed lives.
In any other context, immigration is a no-brainer. No one thinks it would be economically reasonable to limit movement to cites or states. In fact, cities tend to welcome population growth and equate it with a booming economy. Change the subject to America as a whole and all of a sudden a lot of reasonable people fall over themselves trying to invent reasons for why their opposition to immigration has nothing to do with racism.
Hell look at the stupid ass California comments in this thread, as though Texas and its immigrant populations don’t exist.
@Mercer: “”budget back to surplus ”
Tell that to the creditors of Stockton and San Bernardino. ”
Gosh, Mercer, if I didn’t know better, I’d have to say that you were so stupid you didn’t know the difference between a state and the cities within it, that they are separate, if interdependent, political and economic entities, and that they success or failure of one is not a sign of the success or failure of the other.
But since you are able to type a message on the internet, I do know you’re not that stupid. Which means that you are being completely disingenuous, using unconnected facts in a desperate attempt to save face when you’ve been proven absolutely uncompromisingly wrong.
Better luck next time. Now go have a Blizzard at the DQ on me!
@bill: “that math is fuzzier than the peaches that will go unpicked by people who have no incentive to pick them…. ”
So you’re saying that our agriculture businesses are so badly run that if they can’t have what amounts to slave labor — illegal immigrants who can be paid subminimum wages and treated as less than human because they’ll be deported if they complain — they’ll go bust?
Seems to me the wonderful Hand o’ the Market says they should go under and let some competent businesses take over.
@michael reynolds:
I guess the rules about personal insults do not apply to progressives even when they are overstating the case about balanced budgets http://www.sacbee.com/2013/06/12/5489724/dan-walters-is-californias-new.html
Of course, California is a good example of the future of the U.S. where it will be good to be in the patron class but not every good to be in the peon class. That is why the number of whites in California has been going down in California for 20 years and why white students in California schools under perform when compared to white students in many other states.
However, I guess snark always makes up for high unemployment rates, an outward migration of American citizens, poor performing schools, and high taxes.
@Console:
Open borders is along run fools game. A government can either choose open borders or having high level of entitlements. Yet, progressives seem to believe that the U.S. can have open borders along with single payer health care, high levels of welfare, and a guaranteed income. That such an economy cannot be sustained in the long run does not seem to matter to progressives.
OMG! Say it isn’t so. This will have some Republicans lose their minds. That’s the last thing they want to hear. They want to hear that immigration reform will be a drain on the country’s resources and millions will lose their jobs if ‘those people’ are added to the general population!
Oh no, that is not what Republicans want to hear at all. In fact I shouldn’t be surprised to hear that Darrell Issa has launched another investigation to see if members of the CBO are legal citizens themselves!!
Most ptant proet now is for Pres Obama to focus on getting more employment for blacks. Yes, we know he is president of USA but if it were not for the suffering and sacrifice of blacks who turned out in droves amidst a lot of abuse to get him re-elected he would not be President. As the first black President he does not want to ever be remembered that he forsook the people of his own race who voted for him. The info marketplace in the black population and liberals should hold the president’s foot to the fire and dont let him and Michelle forget their roots.
Egg-xactly. Both Texas and California are both in the top quintile, and both are majority-minority states (the other two are New Mexico and Hawai’i).
Arizona and Florida are in the second quintile, and they are both less than 60% non-Hispanic white.
Connecticut was the absolutely worst state for growth in 2012, with negative growth – it actually contracted. Last time I checked, Connecticut does not have a massively immigration problem.
@superdestroyer:
The only thing that can be considered a high level of entitlement in the US is Medicare, because most Public Healthcare systems in the world works with some notion of rationing and waiting lists, and Medicare does not. One could also argue that employee provided health care, that´s tax deductable for companies, is also an expensive entitlement. All other entitlements in the US are relatively modest.
Yes, in many US states pensions for public employees are also generous. But people aren´t leaving Oaxaca and Guatemala to become firefighters in the US.
Liar. That’s not what “the Left” says.
Putting that aside, I’m more skeptical of “open borders” (high levels of immigration of poor folks) than many of my fellow liberals, and yet the reality is that we need to improve on current policy, which is a clusterfuck. Push for lower allowed levels, more hoops for folks here to jump through, etc. But standing there like King Cnut ordering the tide to stop coming in is fucking useless. Unless you just like to whine…
😉
“CBO also said that average wages would decline through 2025 as a result of the bill and that unemployment would go up slightly….
So, for elitist writers like Reynolds or Klein, no prob with this bill, since Jose the illiterate is not going to compete for your writer wages. However, if you are in the bottom 80% sorry Charlie, your wages are going down for another generation and you will have more difficulty finding work.
Also, the CBO states the bill “…would boost economic growth as millions of workers join the workforce and begin to pay taxes.”
And WHERE will they find these mythical jobs you ask? People here legally right now would like to know.
Lets face it, Reynolds has more in common with the 1% banksters than the masses of blue collar Richmond or Vallejo voters that are his neighbors. He can easily pay the 13.3% upper rate (not the 10% he alluded to) that California now has, others are not so fortunate.
I am a 4th generation Californian and my neighbor is a very well known labor economist at UC Berkeley and a huge liberal but he has written extensively how illegal allen labor has collapsed wages for the masses of lower/middle income Californians.
GOPers are indeed braindead, but one can’t gainsay some of the arguments that are made about the serious impacts this bill and the greater issue of immigrant labor has on the pre-existing labor force
It has been a disaster for many trades. California has some serious issues related to immigration and to bury your head in the sand by looking at the passing sails in the sunset is no answer.
Sure, a few illegals here and there, whats the harm, but California has 6 million illegals, which is the size of LA, San Diego and SF combined. To say that this doesn’t have some effect in the negative is just naive. Its like a lifeboat, of course you want to save as many as possible, but not at the risk of sinking the boat itself.
We may all have different opinions about this bill, but one thing one can be sure of, the wealthy elite won’t sweat it or be affected by it – they will benefit by it, but the working class dunce will again take it in the short hairs by this strange collusion of elite liberals and big corporate interests.
@brad hamilton:
Not true at all. The impact of the lower wages and tiny unemployment increase are going to be localized to the new immigrants, not the overall workforce.
Care to rethink position now that the facts don’t support your conclusion?
To David M, ”
“For instance, CBO estimates that average wages would fall by 0.1 percent in the first decade, but rise by 0.5 percent in the second decade.”
Juxtaposed by this fact: “The wages of the typical American hardly increased in the three decades leading up to the Crash of 2008, considering inflation. In the 2002, they actually dropped. According to the Census Bureau, in 2007 a male worker earning the median male wage (that is, smack in the middle, with as many men earning more than he did as earning less) took home just over $45,000. Considering inflation, this was less than the typical male worker earned thirty years before.”
This above isn’t from the Heritage Foundation, its from Robert Reich a well known pariah of the GOP deadhead faction.
Real wages have fallen for the common worker for 30 years now and golly gee workers, don’t worry, in 20 years they will go up 0.5% if we pass this bill.
David M, care to rethink your position now that the facts don’t support your conclusion?
@brad hamilton:
The quote from Robert Reich is unrelated to this issue. You did not address the fact that your claim was not true.
Obviously, none of you posters here are electricians, wall hangers, painters, construction workers, carpenters.
Or to quote from a recent Harvard study by Prof. George Borjas, ““The biggest winners from immigration are owners of business that employ a lot of immigrant labor and other users of immigrant labor,” according to the report. The other big winners are the immigrants themselves…
If highly skilled workers were affected in such a manner by immigration, Borjas said, “We may see a very different type of debate.”
David M, I quoted from Klein’s article regarding those wage decreases and nowhere does it say what you assert He stated the overall effect is mitigated by this subgroup, but the decreases are felt by the whole cohort.
Please explain your different interpretation of the same sentence.
Also, as I wrote, wages for 30 years have been going down, and the good news is they will be going up 20 years from now, which I think is kinda the bigger picture here.
@brad hamilton:
@brad hamilton:
It’s misleading to describe wages as increasing 20 years from now as well, as the second decade starts in 10 years. And a 0.5% increase seems more important than a 0.1% decrease.
The idea that immigration lowers wages is disputed by recent studies. Most people do agree that if there is any negative impact, it is very small.
“Most people do agree that if there is any negative impact, it is very small.”
David; M, go up to any construction worker, wall hanger, painter and tell them that.
Again, how many of them are here posting?
@brad hamilton:
I’m going to go out on a limb and assume the construction workers, wall hangers and painters aren’t experts on the economic impact of the proposed immigration reform bill.
One thing that isn’t immediately obvious is how the population increasing would harm those professions.
“I’m going to go out on a limb and assume the construction workers, wall hangers and painters aren’t experts on the economic impact of the proposed immigration reform bill.”
And, obviously, neither are you.
@brad hamilton:
What’s your point? That you have no actual response to being called out after making claims that were not true?
@wr: it’s the good ol’ supply/demand rule! maybe the prices of said fruits will rise to the point where the “poor” can’t afford them and more citizens will need food stamps to buy them? (food stamp nation that we’ve become)
but to the point, if the jobs suck so bad then why do we have so many illegals willing to do said job? because they won’t stay and change their own 4th world shithole we should just throw money at them?
David M, since you have to be hit by a 2×4 to understand my point (that the professions which have been hardest hit, i.e. painters, construction, drywall hangers, you know the rabble you condescend to) maybe you will take more seriously someone who does know what he is talking about you ass.
George J. Borjas has been described by both Business Week and the Wall Street Journal as “America’s leading immigration economist”. He is the Robert W. Scrivner Professor of Economics and Social Policy at the Harvard Kennedy School. He is the recipient of the 2011 IZA Prize in Labor Economics. Professor Borjas is also a Research Associate at the National Bureau of Economic Research and a Research Fellow at IZA. Professor Borjas is the author of several books, including Heaven’s Door: Immigration Policy and the American Economy (Princeton University Press, 1999), and the widely used textbook Labor Economics (McGraw-Hill, 2012), now in its sixth edition. He has published over125 articles in books and scholarly journals. He received his Ph.D. in economics from Columbia University in 1975.
Even though the overall net impact on natives is small, this does not mean that the wage losses suffered by some natives or the income gains accruing to other natives are not substantial. Some groups of workers face a great deal of competition from immigrants. These workers are primarily, but by no means exclusively, at the bottom end of the skill distribution, doing low-wage jobs that require modest levels of education. Such workers make up a significant share of the nation’s working poor. The biggest winners from immigration are owners of businesses that employ a lot of immigrant labor and other users of immigrant labor. The other big winners are the immigrants themselves.
@the Q:
Um, perhaps you didn’t notice I already linked to multiple studies disputing those findings. And furthermore, your point there is meaningless, as it does not specifically address the immigration reform bill being considered.
Pointing out that immigration in general may harm a construction worker somewhere really has no bearing on whether or not we should reform our immigration policy.
The CBO also told us the Healthcare plan would cut the deficit. Just don’t look too hard at the Doc fix bill or the double counted Mcare cuts that had to be left off the cost ledger. Three years out and it’s now going to cost 3X the original scoring. What a fn shock.
The Immigration Reform bill has likewise now been scored, along the parameters given to CBO, to be a net gain for taxpayers. As long as we don’t score in the cost of future social security and medicare benefits. Or factor in the earned income credits that will have to be paid out.
Tell me again which taxes the $8-$15 hour laborer actually pays, because it damn sure isn’t income taxes. No one in those tax brackets pays income taxes, and the social security/Mcare taxes collected, to the extent they aren’t refunded as earned income credits, don’t come close to funding the eligible benefits.
Family of 4, 1 earner, $15/hr. No income tax liability, $3600 EIC refund of SS taxes.
Family of 4, 2 earners, $15/hr, $900 fed tax liability. That outta cover a month of benefits.
Yeah but they’re going to increase the gdp and grow the economy right? That would make sense if you assumed they aren’t spending money on rent, food, cars, etc. now. How exactly will being “legal” cause them to spend more?
No matter how many times they throw this Enron accounting gimmickry out for consumption you dolts just keep lapping it up.