Framing the Debate: Immigration
April 16, 2014
The CBO estimates that the DREAM Act would increase the on-budget deficit by $1.4 billion over ten years while decreasing the off-budget deficit by $2.8 billion over the same period. This is a very minor budget deficit effect overall. S. 744, by contrast, is estimated to decrease the deficit by $300 billion from 2024 to 2033, a very substantial effect. Both pieces of legislation have much more nuanced effects than the budget impact, however.
EDUCATION: Proposed legislation would encourage a more educated, productive workforce at a cost and provide a path for citizenship for those who have lived in America since they were young. Undocumented immigrants receive a costly benefit in the form of K-12 public education; however, as documented citizens, the more educated they and their children become, the more likely it will be that they contribute more in taxes than the cost of public education that they receive. Both the DREAM Act and S. 744 would repeal Section 505 of the Illegal Immigration Reform and Immigration Responsibility Act of 1996, which would allow public colleges and universities to provide in-state tuition to undocumented students. While the DREAM Act would encourage the pursuit of a college education as a pathway to citizenship, it would leave many obstacles in place that would prevent a majority of qualified minors from achieving permanent legal status.
HOUSING: Comprehensive immigration reform would spur the growth of the real estate sector, as well as associated consumer-spending sectors. Providing a pathway to citizenship for undocumented immigrants, as under S. 744, could lead to as many as three million new homeowners. Newly legal immigrant populations who gain access to public housing benefits will impose costs on the government, but this may be offset by private sector real estate gains.
LABOR: Undocumented labor has benefitted the American economy. Research suggests that unauthorized workers do not contribute to higher unemployment among American citizens, and they even stimulate economic growth by demanding goods and services. During the most recent recession, the labor market felt the negative repercussions of drastically slowed illegal immigration. Overall, undocumented labor has not hurt, and may have even helped, the American labor market.
WELFARE: Despite fears of undocumented immigrants draining the American welfare system, they actually have very little interaction with these programs. The Personal Responsibility and Work Opportunity Act of 1996 restricted most benefits to citizens, excluding even legal residents. Therefore, since both S. 744 and the DREAM Act entail a long pathway to citizenship, neither plan will impact means-tested welfare programs for over a decade. Accordingly, research shows that undocumented immigrants gravitate towards states based on their work opportunities, not based on the generosity of their welfare system.
ENTITLEMENTS: Entitlement programs, specifically Social Security and Medicare, would benefit from any proposed amnesty plan. Since many undocumented immigrants are young and healthy workers, their tax dollars would help pay for retirees’ benefits for decades before they become eligible themselves. Currently, many unauthorized workers pay taxes with fake Social Security numbers to avoid detection: they are paying into the programs but not causing those programs to pay out. Thus, undocumented immigrants have a positive effect upon both Social Security and Medicare.
HEALTHCARE: Research suggests that undocumented immigrants may have a health advantage over their American-born counterparts, yet this advantage is at risk due to changes in their culture and limited access to healthcare services. Currently, undocumented immigrants affect public healthcare spending almost exclusively through Emergency Medicaid, which reimburses hospitals for emergency services. These services are often related to childbirth. Preventative and prenatal care would reduce these public expenses. With citizenship, these immigrant populations would subsidize older and less healthy patients in insurance pools. If undocumented immigrants are not granted any subsidies, their participation in the exchanges set up by the Affordable Care Act would likely put downward pressure on premiums.
NATIONAL SECURITY: The federal system of border enforcement involves complex and overlapping regulations between the national and state governments. The Patriot Act of 2001 placed an emphasis on immigration enforcement. Heightened border security has increased the rate of apprehensions, but it has made smuggling more profitable. The cost and efficacy of S. 744’s even greater border security measures are contested, but the effort to further secure the U.S. border alongside any path to citizenship should be considered in light of potential moral hazard concerns.
From education to national security, a broad range of economic issues must be addressed in any discussion of immigration policy. Debates on immigration reform are currently plagued by a lack of central, easily accessible information on the subject. This report seeks to serve as a single resource that makes certain fundamental economic facts clear to all, so as to elevate the level of conversation, but it does not go so far as to make specific policy recommendations. These decisions are beyond the scope of this report. By laying out the facts of the status quo, we hope to frame the debate to allow for productive and informed discourse.
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