A bill offered by a pair of Senate Republicans this week to reduce immigration could save taxpayers $1.7 trillion, according to back-of-the-envelope calculations by a scholar at The Heritage Foundation.
The sponsors of the bill, Sens. Tom Cotton (R-Ark.) and David Perdue (R-Ga.), have not estimated the fiscal impact of the proposal. But they cite models projecting that the result of eliminating an immigration diversity visa program and prohibiting new citizens from sponsoring their extended family members would reduce legal immigration by about 4.3 million people over the first 10 years.
“The fiscal impact would be very strong and very positive.”
Most of the people who come into the United States to join family members have low skills and little education, making them less likely to succeed in the U.S. economy.
Citing data from the National Academies of Sciences, Heritage Senior Research Fellow Robert Rector projected the net lifetime cost to taxpayers of the typical immigrant with a high school degree or less at $400,000. That is the net of costs minus taxes paid at all levels of government. If all of the would-be immigrants who would be stopped from coming had high school degrees or less, according to the projections, the lifetime savings to taxpayers would be about $1.7 trillion.
“The fiscal impact would be very strong and very positive,” Rector said.
A large and obvious source of taxpayer savings would be government-assistance programs designed to help the working poor. This includes programs such as food stamps, Medicaid, and housing subsidies. Immigrants without advanced education and skills tend to be heavy users of those programs, just like natives of that profile.
“It doesn’t matter whether you come from Mexico or Indiana,” Rector said.
But Rector said the costs of low-skill immigration go beyond anti-poverty programs.
“Conservatives have deluded themselves that the whole cost of government is means-tested welfare,” he said.
The typical low-skill worker does not pay nearly enough in taxes to pay for the benefits he receives, Rector said. As just one example, he cited public education, where the average annual cost is about $12,000 per student. Low-income Americans also cost more in Social Security and Medicare when they get older than they pay in payroll taxes for those programs, he added.
Strong Opposition Looming
In a sign of the opposition that the Reforming American Immigration for Strong Employment (RAISE) Act is likely to face, Sen Jeanne Shaheen (D-N.H.) quickly released a statement criticizing the proposal.
“This legislation sends a terrible message to the rest of the world and is unquestionably a job killer,” she stated. “As a nation of immigrants, this bill runs counter to our values.”
Roy Beck, president of NumbersUSA, pointed out that previous proposals for “comprehensive immigration reform” contained provisions to reduce chain migration. He said this bill would reverse decades of immigration policy that have resulted in the nation currently housing the most foreign-born residents in U.S. history.
“It would be the biggest change in immigration since the 1965 act,” he said. “It would be the first one since 1924 that would act to reduce immigration.”
Steven Camarota, director of research at the Center for Immigration Studies, said calculating the precise fiscal impact of the bill is difficult. He noted that Rector’s estimate, for instance, does not account for the effect of inflation over decades. The impact also depends on other policy decisions that are unknowable in the long run.
Camarota said not all immigrants who arrive via family reunification lack skills and education. Educated foreigners who arrive on employment-based visas are more likely to have extended family members who also have education and skills, he noted. But he said the impact on taxpayers “almost certainly” would be positive.
Proponents argue the law would do more than save taxpayer money. They contend it also would benefit American workers, particularly those with the least education and skills who compete directly with low-skill immigrants for jobs. Cotton said Wednesday on “The Laura Ingraham Show” that 14 out of 15 immigrants arrive in the U.S. without the government checking on their skills or education.
“The effect of it simply is to drive down wages for people who work with their hands and work on their feet, people with a high school diploma or less,” Cotton said. “The very people we’re hurting are the previous generation of immigrants who are most likely to face more competition for the very same jobs they’re working today. So, I would say that my legislation is both pro-immigration and pro-immigrant.”
Impact Would Grow Over Time
Camarota said with 325 million people total and 150 million in the labor force, the country is too big to see much of an impact from a reduction of 300,000 to 400,000 workers in Year 1.
“It would take awhile for it to have a big impact,” he said. “The economy and the workforce are very large … But over 10 years, it begins to add up.”
[lz_table title=”Immigration Cut?” source=”Office of Sen. Tom Cotton”]Projected immigrants under RAISE Act (from 1.05 million in 2015)
The impact would be greatest in certain geographic areas and for certain occupations where immigrants are disproportionately represented, he said. Camarota said foreign-born workers, for instance, make up 49 percent of maids working in the United States.
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However, Camarota said other effects are hard to predict. For instance, he noted, there is some evidence that immigrants flooding into areas like Southern California may have reduced the number of Americans moving there from other parts of the country. If immigration dropped sharply, it might draw more natives to those areas, canceling out whatever wage effect the immigration cut produced.
But there are real-world examples of how a sharp decline in immigration has impacted wages. The Wall Street Journal reported last year that a 40 percent decline in immigrants from 2007 to 2012 prompted by an Arizona law targeting illegal immigrants in the state led to wage gains in certain industries.
The paper pointed to Bureau of Labor Statistics data showing the wages from 2010 to 2014 rose by 15 percent for farm workers and 10 percent for construction laborers.
But can the bill actually pass? Beck said he thinks it has a chance.
“This is really going to be decided by [House Speaker Paul] Ryan, [Senate Majority Leader Mitch] McConnell, and the 10 Democratic senators up for re-election in states that Trump won,” he said.