The Heritage Foundation rolled out new artillery on Monday in its effort to block immigration reform with the release of a study claiming that a bipartisan plan in the Senate would drain the government of $6.3 trillion in the coming decades because of increased demand for social services and retirement payouts.
Former South Carolina senator Jim DeMint, the new president of the premier conservative think tank, unveiled the analysis just days before the Senate Judiciary Committee begins to mark up an 844-page bipartisan bill. That legislation, drafted by the bipartisan “Gang of Eight,” would tighten security along the borders as a prelude to granting many of the 11 million undocumented immigrants legal status and a decade-long path to citizenship after paying fines and back taxes.
DeMint blasted the “Gang of Eight” plan as a costlier version of previous “amnesty” proposals that he said would impose staggering costs on the country in the long term, as more and more immigrants begin to qualify for government benefits and entitlements, including Social Security.
“Taxpayers are right to be cautious about another large incomprehensible bill like Obamacare, which created numerous new federal programs while politicians falsely claimed it would lower our deficit,” DeMint said during a news conference at the foundation offices. “Amnesty also violates the rule of law that makes our nation a beacon of freedom for people around the world, and it is unfair to immigrants who want to come here the right way.”
The report will provide fresh ammunition for Sens. Jeff Sessions, R-Ala., Charles Grassley, R-Iowa, and other staunch opponents of the immigration reform plan. The legislation is likely to narrowly win the approval of the Judiciary Committee, but will face an uncertain future on the Senate floor and in the House.
“The study released today by Heritage about the costs of the Gang of Eight’s proposed amnesty should be heeded by all lawmakers,” Sessions said. “The study puts to rest the contention that the bill will benefit American taxpayers, reduce our deficits, or strengthen our already endangered Social Security and Medicare programs.”
According to the study prepared by Robert Rector and Jason Richwine, senior research fellows at the foundation, the vast majority of the fiscal costs incurred if Congress approves the legislation are associated with the Affordable Care Act, Social Security and other entitlements, plus more than 80 means-tested welfare programs. Among the study’s major findings:
Over the course of their lives, former unlawful immigrants together would receive $9.4 trillion in government benefits and services and pay $3.1 trillion in taxes, for a lifetime “fiscal deficit” – at minimum – of $6.3 trillion or total benefits minus total taxes.
The typical unlawful immigrant is 34 years old, has a 10th-grade education, and already receives $14,387 per household in government benefits in excess of taxes paid. After the bill’s “interim” period of 10 years, when former unlawful immigrants become eligible for welfare and Obamacare subsidies, that “fiscal deficit” would jump to $29,500 per household.
After the law takes effect, the typical unlawful immigrant would receive government benefits for 50 years, meaning his household would receive $592,000 more in government benefits during his lifetime than he would pay in taxes. At retirement, he would draw more than $3 in Social Security and Medicare for every dollar he paid in FICA taxes.
The study is similar to one that Rector produced back in 2007, when Heritage helped kill a previous Senate immigration reform effort, concluding it would cost the government $2.6 trillion in the decades to follow.
However, that report focused largely on how much undocumented immigrants would likely eventually receive in retirement benefits. The latest study – which carries a much larger total price tag – includes virtually any benefit an illegal immigrant or his family might receive for years to come – from primary and secondary education and food stamps, to Medicare, unemployment insurance, workers compensation and the Earned Income Tax Credit.
Heritage officials justified this everything-but-the-kitchen sink approach to tallying the long term cost because they said it was modeled after a study published by the National Academy of Sciences.
Currently, the average unlawful immigrant household receives $14,387 a year more in government benefits than it contributes in taxes. Taken together, all illegal immigrant households have an aggregate annual deficit of benefits to taxes of roughly $54.5 billion, according to the Heritage study.
Over the first 13 years of amnesty under the proposed “Gang of Eight” legislation, the aggregate annual deficit would fall to $43.4 billion, as many illegal immigrants who previously worked off the books begin to come out of the shadows and pay taxes. But that figure would soar to about $106 billion when former unlawful immigrant households become fully eligible for 80 different means-tested welfare and health care benefits. And beyond then, as more and more former illegal immigrants begin to retire, the annual aggregate deficit would hit about $160 billion, according to the report.
While the Heritage study will almost certainly become useful ammunition for foes of immigration reform, it in no way reflects a consensus view among conservative economists and thinkers.
LONG TERM GROWTH OR LONG-TERM DRAIN?
A controversy has flared up among conservatives over the likely economic fallout from the “Gang of Eight” plan, with some Republicans arguing it would be a long-term plus for economic growth and others like Heritage officials opposing it as a drain on federal coffers.
Part of the problem is that conservative economists and scholars disagree over how to measure the potential economic impact. The use of traditional budget and economic estimation tools by the Congressional Budget Office and the Joint Committee on Taxation seem to reflect lasting costs associated with immigration reform. By contrast, “dynamic scoring” techniques – which factor in potential growth – suggest meaningful benefits that could reduce future budget deficits.
Critics quickly pounced on the Heritage analysis today for three basic flaws: 1.) It ignores the possible wage and economic gains from reform; 2.) It makes decades-long assumptions that may be unfounded; and 3.) It stiff-arms stacks of economic research that undermine its harsh conclusion.
“They make all the same errors they did in their 2007 study,” said Alex Nowrasteh, immigration policy analyst at the Cato Institute. “The paper assumes that the economy is virtually unaffected by the increase in immigration. We know from every economic model ever done that studies the impact of immigration on the economy” that these reforms improve growth and wages.
This critique matters when factoring in the supposed cost-benefit analysis of the study. Heritage looked at the average taxes paid and benefits “received over a lifetime.”
While the first 13 years after the reform would actually reduce how much immigrants cost the government, Heritage argues that the change would become a burden once they qualified for social programs. Their projections go well beyond the notoriously inaccurate 10-year timeframe used by the Congressional Budget Office.
Nowrasteh noted that higher wages from immigration reform – a phenomenon linked to the 1986 overhaul – translates into greater tax revenues. After all, if people earn more, they have more money to pay the IRS.
The Heritage study only considers the potential increase in costs, not the possible improvement in revenues.
THE NORQUIST DEFENSE
Grover Norquist, the anti-tax crusader and long a proponent of immigration reform, issued the following statement:
“The Heritage Foundation is a treasured ally in the conservative movement and a pillar of the conservative policy community. However, this study is every bit as flawed as its 2007 iteration. This static analysis takes into account none of the universally-accepted economic benefits of immigration, choosing only to focus on costs,” he added. “But the costs estimates are unfairly inflated. The authors count overall household costs, which often includes benefits paid to native-born, low-income American spouses and children of immigrants. Those costs would exist regardless of the immigration status of one’s partner; this is an indictment of our current welfare state, not proposed immigration reforms.”
In defending his study, Rector noted today that the National Academy of Sciences report concluded that the net economic benefits of illegal immigration were extremely small to non-existent. He added that some critics of the new Heritage study were trying to “distract attention from the issue.”
“What’s really being said here is, well, maybe [the proposed legislation] will cost $6 trillion, but there are these other effects that might possibly offset that,” Rector told reporters at a news conference at the foundation’s offices. “There is no study, in fact, that shows that kind of effect.”
There is no doubt that all immigration, taken together, produces a larger GDP. “You have more laborers, they are going to contribute more, they are going to pay more in taxes,” Rector said. “The question is, fiscally, whether they pay more in taxes than they take out in benefits. College-educated immigrants do that, other immigrants do not. In that sense, we do have a dynamic analysis here.”