What’s Not In The CBO Estimates Of Immigration Bill

The Congressional Budget Office posted Monday morning its latest 44-page estimates of the federal budget costs of the Immigration Bill before the Senate. The estimates do not vary dramatically from earlier CBO work, but are specific to this Bill, and are subject to change with amendments or better data.

Essentially, at the federal level, over the next two decades, as the bill now stands, increased income, payroll tax and regulatory fee revenues would offset increased entitlement, social services and enforcement costs, leaving:

[I]ncrease[d] federal direct spending by $10 billion over the 2008-2012 period and by $23 billion over the 2008-2017 period….Increase[d] federal revenues by $15 billion over the 2008-2012 period and by $48 billion over the 2008-20017 period….Lead to an increase to discretionary spending (that is, spending subject to annual appropriation action) of $20 billion over the 2008-2012 period and $43 billion over the 2008-2017 period [enforcement measures are mostly in this category]…[For a net] increase deficits or reduce surpluses by a total of about $15 billion over the next five years and by about $18 billion over the 2008-2017 period.

The CBO does not extensively calculate the costs at the state and local levels nor on the private sector.

Benefits under the Medicaid program for those individuals would cost states almost $3 billion over the 2008-2017 period….[S]ome state, local, and tribal governments would collect more tax revenues, but also would face significant additional costs to provide education, health care, and other services to those immigrants…[partly offset by] they would receive about $3 billion over the fiscal years 2008-2012 to provide health care and education to immigrants. In addition, assuming appropriation of the authorized amouints, those governments would receive more than $6 billion over the 2008-2012 period from grant programs authorized by the legislation.

The costs not counted by CBO include, for example, the impact of illegal immigrants’ children being educated here. The Associated Press’ education writer says there are about 1 million.

A section of the new legislation deals with illegal immigrants who came to the U.S. as children. They would gain temporary legal status when they graduate from high school as long as they agreed to enroll in college or enlist in the military….In all, about 1 million people now in the country illegally could potentially benefit from the provision aimed at children. Those include students currently in elementary and secondary schools.

These aren’t bad provisions, but they do come at an expense.
The troubled Los Angeles Unified School District, with about 740,000 students, consuming about 59% of the local budget, has an annual cost of about $6.4 billion, so 1 million students has a national cost of about $8.5 billion. Currently, according to the AP’s education writer, there are about 50,000 illegal immigrant students in our colleges. More illegal immigrant students attaining higher education is certainly to be welcomed, but that will have short-term costs as well, although the longer-term benefits should outweigh.

For private employers, the CBO only says the special-skill visa application fees and qualified employment verification costs would exceed “the annual threshold for private-sector mandates ($131 million in 2007, adjusted annually for inflation).” Some protest, and expect far larger costs. There would also be some protests against creating a national identity card, though that cost wouldn’t be levied on employers of citizens and legal immigrants, and would have been included in the costs of the Bill.

Two amendments to the Bill that were passed last week reduced the CBO’s initial cost estimates. The reduction of guest-workers from 400,000-600,000 to 200,000 and of some additional enforcement, which “would reduce the net annual flow of illegal migrants by about one quarter,” knocked several billion dollars off the federal budget impacts over the next 5 and 10-years, and presumedly some off the local government net costs.

The CBO’s estimates are not unreasonable, on their face and within their limitations.

The problems arise from the limitations of the estimates.

1) There’s some disconnect between the CBO estimates and others:
The Center for Immigration Studies, in testimony before Congress, estimated that for 2002 that “if illegal aliens were legalized and began to pay taxes and use services like households headed by legal immigrants with the same education levels, CIS estimates the annual net fiscal deficit would increase [from $10.4 billion at the federal level] to $29 billion.” Part of that is due to differing data, methods of analysis and laws considered. The rest needs further analysis. Nonetheless, although the amounts are not intolerable, of themselves, in an economy our size, they do weigh upon future service levels and taxation of already pressed citizens.

2) The CBO estimates only go out 20-years:
A Heritage Foundation analyst did a back-of-envelope estimate of the present value of future Social Security costs for legalizing current illegal immigrants, whose average age would bring them to retirement in about 30-years, of $2.5 trillion over 18-years of retirement, or about $139-billion per year. If even half that, due to greater than expected return of illegals to their home country and inability to qualify for legal status, it’s a substantially larger fiscal impact – on an already insolvency headed program – than any of the others. Other entitlement and social service programs for the elderly or ill would also be impacted in the future, as the normalized immigrants age.

3) Adequate Enforcement Appears Underestimated:
Critics of the Bill contend, based on both experience and upon the measures in the Bill as it stands, that the costs of adequate enforcement are seriously underestimated. For example, an increase of Immigration and Customs Enforcement investigators by 200 annually over the 2008-2010 period, of 100 annually over the 2008-2012 period of Citizenship and Immigration Services personnel to adjudicate applications, and by 200 annually for investigators assigned to combat alien smuggling over the 2008-2012 period, in the face of enormously increased demands, in an already overburdened system, are clearly inadequate. Similarly, given practical experience with huge cost-over-runs constructing large-scale, complex computer systems, the roughly $6 billion estimated for an eligibility verification system will likely be substantially exceeded. The costs of adequate enforcement personnel would, also, expand the costs by many billions. The CBO reports, “the cost for each additional employee would range from $120,000 a year for CBP officers to $180,000 a year for border patrol agents, including salaries, benefits, training, equipment, and support costs.” Even these minor enforcement measures are subject to future, unsure, appropriations. Skeptics are properly exercised by expectations of large future flows of illegal immigrants from undermanned and underfunded enforcement within the present Bill.

A core problem is not directly addressed by the Immigration Bill: The children born in the U.S. of illegal immigrants are currently automatic citizens. There’s uneven debate over whether this is required by the Constitution, but it’s not been tested. These children represent a major part of the direct and indirect (their parents) costs of illegal immigration. I have not found reliable estimates of numbers and costs.

This week’s amendments:
One of the amendments to be offered this week is from Senator Jeff Sessions (R-Ala), “to prohibit illegal immigrants who are legalized under the law from obtaining the earned-income tax credit to bolster low-income work.” According to the CBO estimate, “refundable tax credits [would increase] by about $13.7 billion, the largest direct spending effect of the legislation.” The outcome of this vote should be indicative of the fiscal restraint of our Senators, regardless of their disposition toward other elements of the Bill. The Earned Income Credit is a taxpayer subsidy of those who earn little. Bestowing it on normalized immigrants subsidizes the illegal entry of the uneducated at taxpayer expense.

Obviously, increasing, choose your term, chain migration or family unification in the Bill, allowing new citizens to bring in their aged parents, will add considerably to the costs. Liberalizing these provisions further, by 800,000 to several million additional parents as some propose to amend the Bill, would be a major impact on entitlement and social service programs spending. The CBO estimate of the current Bill does not include the multi-billion cost of this prospective amendment.

Another target for change in the Bill is to reduce or eliminate its innovative point system for preferred legal immigrants: educated, skilled, of working age, proficient in English. Hold your guffaws for this pot calling the kettle black: “But the plan is provoking strong opposition from leading Democrats, who say it smacks of social engineering and reflects a class bias.” These Democrats prefer to see more uneducated and dependent relatives imported. In contrast, high-tech firms who argue for an amendment to recruit the world’s best and continue their firms’ world leadership and economic success agree with this experience from Australia, which has a point system: “Arnold J. Conyer, a lawyer who is president of the Migration Institute of Australia, said it was important to accept some immigrants specifically sponsored by employers, a feature of current law that would be largely replaced by the point system.”

The latest trade-off being negotiated among Senators, according to Associated Press, would require that heads of households “touchback,” or return to their home country before getting a green card, in exchange for increased chain migration. That may make some Senators more comfortable. However, making it even harder to normalize status, become taxpayers and reduce their budget burden, won’t decrease the number of non-legal immigrants in the U.S., while the support burden for unproductive relatives will be increased.

It is undeniable that the largest present cost impact of immigration comes from the estimated 60%, mostly from Mexico and Central America, who are uneducated. May 3, 2007 CBO testimony before Congress:

In 2006, three-quarters of workers born in Mexico and Central America were employed in occupations that have minimal educational requirements…On average, the weekly earnings of men from Mexico and Central America who worked full-time were 55 percent those of native-born men; women from Mexico and Central America earned about 60 percent of the average weekly earnings of native-born women.

Educated immigrants are net contributors, earning more and paying more taxes. Uneducated immigrants are net fiscal drains on social and retirement programs.

Observations:
I’ve previously posted the documented negative impact of uneducated immigrants upon low-skilled Americans, the values impact upon us of exploiting low-skill guest-workers, and the possible potential impacts upon some of our skilled workers of increased immigration of skilled-workers.

There’s, simply, difficult fiscal and values choices to be made. For those who seek short or longer-term political advantages, more far-sightedness is needed.

I waffle between marginally pro and con the Immigration Bill. There’s many good principles in it. It’s the ifs, and/or buts that rub.

I enjoy ethnic diversity, indeed believe we benefit from it, and I appreciate the desire to better one’s lot. I owe my first duty to poor Americans, and to avoid excess taxes to maintain a growing economy that will provide all Americans with a better lot.

I’m not as much yet tilted negative as “Captain” Ed Morrissey, referencing this take by the Washington Times on the CBO analysis that only a 25% reduction in illegal immigration may be expected from the Bill’s evanescent enforcement, if that, but more neutrals are getting there. Well, 25% is better than nothing, but without the enforcement to stem future incoming tides, it is insufficient. I sincerely hope that Congress will amend the Bill to, instead, firmly tilt me in favor.

The latest USA Today poll has 11% in favor of the Bill, 30% opposed, and 58% who “don’t know enough to say.” Congress still has room to salvage the Bill’s public support. The costs incurred by the Bill as it is will be far larger than appears, and the costs required for the Bill to be effective will be far larger than the Bill contains, at least if the Senate is serious about solving the extent of illegal immigration rather than continuing or increasing the problems.

By the way, if some of these numbers surprise you, then think a moment about how poorly the major media has reported on the Immigration Bill: Some inside-beltway coverage, lots of proponent and opponent heat, but very little hard data and that scattered. Like our elections. We’re not being well-served.

In similar vein, how many Senators who didn’t read or question 2002-3 intelligence reports on Iraq will not read or question this CBO report? We’re not being well-served.

UPDATE:
Mickey Kaus wonders whether immigration is a domestic Iraq, a grand scheme run awry.