CBO: Senate immigration bill will cut deficit $197B over 10 years

The Congressional Budget Office estimated Tuesday the Senate immigration bill would reduce deficits by $197 billion over 10 years, handing supporters a new economic argument for the bill as the upper chamber marches toward a final vote.

The CBO said the bill would increase spending by $262 billion between 2014 and 2023 by requiring new border security measures, but would increase revenue by $459 billion as those given legal status and newly admitted temporary workers pay taxes.

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Perhaps even more importantly, the budget office said the bill would also reduce deficits by $700 billion between 2024 and 2033. 

That finding directly contradicted predictions and estimates from Sen. Jeff Sessions (R-Ala.) and other critics of the bill who said it would add red ink to the budget as more immigrants are granted access to entitlements. 

Supporters of the Senate bill hailed the CBO numbers, which they said would boost the bill ahead of an expected Senate vote next week. 

“This report is a huge momentum boost for immigration reform,” said Sen. Charles Schumer (D-N.Y.), a member of the Gang of Eight that crafted the bill. 

“This debunks the idea that immigration reform is anything other than a boon to our economy, and robs the bill’s opponents of one of their last remaining arguments,” he said. 

Sen. Marco Rubio (Fla.), the key Republican sponsor, said the CBO “has further confirmed what most conservative economists have found: reforming our immigration system is a net benefit for our economy, American workers and taxpayers.” 

While Rubio said the measure should still be “tightened” to prevent those who have broken immigration laws from accessing federal benefits, “the CBO report offers encouraging evidence that the status quo is unacceptable and we can end it without burdening our already burdened taxpayers and, in fact, reduce the deficit over the next 20 years.” 

The White House said the score offered “more proof” that the bill would be good for economic growth and deficit reduction. 

The budget office used a form of dynamic scoring to judge the immigration bill, something the office generally declines to do. 

The office said it and the Joint Committee on Taxation chose to use dynamic scoring in this case because of the unusual nature of the immigration bill, which would significantly increase the size of the U.S. labor force. 

The use of dynamic scoring allows the CBO to assume there would be 6 million more workers in 2023 and 9 million more in 2033. These additional workers would increase Social Security payroll taxes paid to the government by $214 billion, and other tax revenue by $245 billion. The budget office assumes the immigrant population would generally work more than average adults.

Using the dynamic scoring, the CBO sees the bill increasing economic growth by 3.3 percent in 2023 and by 5.4 percent in 2033. But it finds that average wages would decrease slightly, by 0.1 percent, in 2023 because new workers would receive lower pay than current workers, but wages increase after that. Due to higher growth, interest rates would be expected to rise.

The CBO dynamically scores the president’s budget every year and used the scoring method when the Senate considered immigration legislation in 2006. 

It has resisted doing so for other bills despite conservative pressure to apply such scoring to bills that cut taxes. The CBO has argued that dynamic scoring does not usually have much of an impact and that it is not feasible for its staff to complete the analysis.

The budget office estimated the bill will lead to 10.4 million residents in the U.S over the next 10 years. It said 8 million unauthorized workers would be legalized under the measure, and that over 20 years, there would be 16 million more people in the U.S. if the bill passes.

It said the bill requires new appropriations of $22 billion over 10 years to implement policies like enhanced border security. If Congress lifts current budget caps to implement the bill, the net deficit reduction is $175 billion over 10 years, it said. 

The biggest increase in spending over the first 10 years comes from refundable tax credits like the earned income tax credit. These cost a total $126.8 billion. Health insurance subsidies will cost $82.3 billion. While most illegal immigrants would not be able to get health benefits for the first decade, some immigrants brought to the U.S. illegally as children — known as “Dreamers” — would get benefits.

The CBO normally uses a conventional 10-year budget window; this has been a sore point for opponents of the Senate bill who had called for a longer-range estimate. 

Sessions on Tuesday released a detailed rebuttal to CBO. He said that the longer 40-year window he originally asked for would have revealed higher costs. 

He also said the bill does not show costs to state and local governments, incorporates flawed assumptions about immigrant employability and of the costs of ObamaCare and leaves out reduced wages for current American citizens. 

“This bill guarantees three things: amnesty, increased welfare costs and lower wages for the U.S. workforce. It would be the biggest setback for poor and middle-class Americans of any legislation Congress has considered in decades,” he said.

A May report from the Heritage Foundation projected the Senate bill would cost $6.3 trillion over the “lifetimes” of immigrants put on a 13-year path to citizenship. Heritage totaled federal, state and local expenses and subtracted estimated increases in tax revenue to come up with its figures. 

The conservative think tank estimates the bulk of those costs would occur after immigrants become eligible for Medicare and means-tested federal welfare programs. Critics said the analysis made faulty assumptions about the work and earning potential of the immigrants once they are legal. 

—This story was posted at 4:41 p.m. and updated at 8:26 p.m.