06.19.13

#CIRfloor: Comprehensive Immigration Reform Will Grow & Strengthen Our Economy

From The Senate Judiciary Committee Majority Staff
S. 744: The Border Security, Economic Opportunity, and Immigration Modernization Act

CBO Report Shows That Comprehensive Immigration Reform

Will Grow and Strengthen Our Economy


The Congressional Budget Office Tuesday night released its analysis of S.744, the Border Security and Economic Opportunity Immigration Modernization Act.  It concluded that S.744 would decrease federal budget deficits by $197 billion over the 2014–2023 period, and by $700 billion from 2024–2033.  The independent report confirms findings by the Chief Actuary of Social Security Administration and economists from across the political spectrum that comprehensive immigration reform will reduce the deficit and strengthen our economy.

CBO’s report found that S.744 would decrease the federal deficit by $197 billion over the next 10 years, and $700 billion in the following decade

·         The independent Congressional Budget Office concluded that S.744 would decrease federal budget deficits by $197 billion over the next ten years, and by $700 billion over the following decade.  The legislation creates $22 billion in net discretionary costs, resulting in a net savings of $175 billion in the first 10 years.

·         In addition, CBO found that S.744 will create additional long-term, indirect economic benefits that would further reduce the deficit by an additional $300 billion by 2033.    ·         Overall, CBO estimates that the bill would increase the nation’s gross domestic product by 3.3 percent in 2023, and 5.4 percent in 2033.

The CBO report is consistent with findings of the Chief Actuary of the Social Security Administration and economists across the political spectrum

  ·         Last month, the independent Social Security Chief Actuary issued a report concluding that S.744 would generate $200 billion for the Social Security trust fund over the next decade. The study concluded that the bill would create 3.22 million jobs and boost GDP by 1.63 percent by 2024. [Chief Actuary, 5/8/13]

·         A study by conservative economist (and former CBO Director) Douglas Holtz-Eakin calculated that the increased demand and productivity that will result from fixing our broken immigration system will reduce the deficit and contribute to our economic growth. [Holtz-Eakin, 4/19/13]   ·         The Council of Economic Advisers under President Bush similarly found that immigrants increase gross domestic product “because immigrants increase the size of the total labor force, complement the native-born workforce in terms of skills and education, and stimulate capital investment by adding workers to the labor pool.” [Council of Econ. Advisers, 2007].  

Other Highlights from the CBO Report

·         A firm commitment to border security.  In its report, CBO calculates that in addition to the $6.5 billion expressly appropriated for border security in the bill, S.744 authorizes as much as $15 billion in additional funding to bolster existing personnel, facilities, and equipment to secure the border.  S.744 also authorizes as much as $750 million for interior enforcement, including enforcement of the mandatory E-Verify requirements to prevent hiring of unauthorized workers.   ·         Impact on U.S. workers.  CBO’s estimate suggests that average wages across the entire labor force would be 0.1 percent lower in 2023, reflecting the increase in previously undocumented workers who work in less-skilled positions and have lower wages, on average, than the labor force under current law.  By 2033, however, average wages would increase to be 0.5 percent higher than under current law. [CBO Report, 6/18/13].  Currently unauthorized workers will ultimately see an increase in their wages by as much as 12% because they will no longer be paid in the grey market [id.]  Economists from across the political spectrum agree that comprehensive immigration reform will generally increase wages for American workers, because it grows our economy and brings individuals into the legal work force, where minimum wage protections can be enforced. [Hinosa-Ojeda, 2010; CEA, 2007; Cato, 2009]   ·         A tough but fair path to citizenship.  In its report, CBO estimates that approximately 6.8 million people would initially register for RPI status, with approximately 1.5 million people qualifying for the DREAM Act provisions and 1.5 million for the Blue Card agricultural program. From 2025-2028 (the first years in which most people in RPI status could potentially become LPRs), CBO estimates that about 75% of initial RPI applicants would qualify for lawful permanent residence. Those applicants will have paid back taxes and nearly $6 billion in fines and fees, and met the rigorous enforcement provisions in the bill.

“Much of the increase in receipts would come from taxes paid on the income of additional workers who entered the country as a result of the bill. . .

In addition, JCT expects that the bill would result in increased reporting of employment income by people who, under current law, are not legally present or allowed to work. 

 

“Moreover, JCT expects that wages for those workers would increase relative to their wages under current law as a result of their attaining legal status under the bill.  That increase in reported wages would yield increases in receipts from both individual income taxes and payroll taxes.”

 

[CBO Report, 6/18/13]

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