According to a study by the Congressional Budget Office (CBO), the increase in the U.S. illegal immigrant population is expected to reduce the budget deficit by nearly $1 trillion over the next decade.
CBO ForecastThese are based on the net amount of economic activity generated, taxes paid, and benefits allocated by the immigrant groups included in the study.
The nonpartisan agency estimates that between 2021 and 2026, the net immigrant population growth will be 8.7 million, an average increase of 1.7 million per year above the pre-2020 average of 200,000 annual net immigration.
CBO based its projections on the expected economic impact of a population surge of 8.7 million people between 2024 and 2034.
The report excludes immigrants who have obtained or are eligible to obtain permanent residency, nonimmigrant aliens on temporary work visas, and asylum seekers, and focuses on people paroled at or between border ports of entry, people who have overstayed their visas, and undocumented immigrants who enter the country without being encountered by a U.S. border patrol officer.
This group is projected to increase federal revenues by $1.175 trillion between 2024 and 2034, increase mandatory and net federal spending by $270 billion, and reduce the federal deficit by a net $897 billion.
The economic effect of that population is expected to grow over time, with the net deficit reduction due to its presence projected to be $296 billion from 2024-2028.
CBO’s projections break down the fiscal impacts of illegal immigration into two categories: taxes paid directly by that population and the economic growth spurred by immigrants’ role in consumer and labor markets.
Between 2024 and 2034, the CBO projects that the burgeoning immigrant population will pay $788 billion in taxes and generate $387 billion in additional federal revenue through its impact on the overall economy.
The impact on mandatory spending and interest net spending (how much the presence of immigrants costs the federal government) is also split into two parts: the cost of the benefits themselves and the costs associated with the economic effects of population growth.
The CBO estimates that the federal government will spend $177 billion on benefits for that population between 2024 and 2034, a figure that will grow over time as immigrants and their children become eligible for more government benefits.
The impact on interest payments for this group is estimated to reduce the deficit by about $4 billion between 2024 and 2028, but will trend upward in the second half of the decade, leading to an increase in spending of $101 billion over the entire 2024-2034 period.
CBO estimates that the net effect of taxes paid minus allocated benefits would reduce the deficit by $611 billion between 2024 and 2034, and that the collateral economic effects of illegal and paroled immigration would reduce the deficit by $285 billion over the same period.
CBO does not forecast state and local budgets, but the report says the balance between tax revenues and benefit allocations will depend on each state’s benefit structure.
“The researchers found that, generally, while increased immigration raises more revenues for the federal government than it costs, it tends to raise more costs than revenues for state and local governments,” the report said.
“CBO expects this general pattern to hold true for the immigration surge considered in the report – the 8.7 million people in other categories of aliens who move to the United States between 2021 and 2026 or who remain in the United States after an authorized stay, and their U.S.-born children.”
But the report added that the overall impact on local finances for this particular group of 8.7 million people may deviate from this norm, in part because this group is made up primarily of working-age people who tend to use less social services and pay more tax than children and the elderly.
CBO estimates that the net population increase will be 8.7 million, with about half arriving between 2021 and 2023 and the other half between 2024 and 2026. The researchers came up with figures that project the net number of illegal and parole immigrants will return to the long-term average of 200,000 per year.
