CBO’s misleading immigration $ numbers

The new Congressional Budget Office report on the Senate immigration bill is a textbook illustration of how advocates of massive new spending programs (and the tax increases that will be inevitable to pay for them) hide the true cost: Taking advantage of the fact that the the CBO only looks at the budgetary impact for over a 10-year period, Sen. Edward Kennedy and Republican supporters drew up a bill where — you guessed it — the real spending binge begins in year 11.

CBO found that during the first decade, the immigration bill would increase discretionary spending by $43 billion, while new workers would provide $48 billion worth of additional revenue to the government. (Over the next few days, these numbers will be repeated endlessly on radio and television and in Senate debate by advocates of the “compromise” bill.) But these numbers could hardly be more misleading, because with the exception of the earned-income tax credit and one smaller welfare program, illegal aliens granted amnesty under the bill do not become eligible to benefit from federally funded means-tested welfare programs until 2018 and beyond, while CBO’s figures cover the years 2008-2017. After 10 years, amnesty beneficiaries become eligible for nearly 60 taxpayer-subsidized programs ranging from food stamps to Medicaid, Medicare and Social Security.

Roughly 9 million adult illegal immigrants will be given amnesty under the bill; 7 to 8 million of them will live to retirement age. When this occurs, 30 to 35 years from now, they will receive from the taxpayer an average of $17,000 a year in benefits above and beyond the taxes they pay. When amnesty recipients retire, the situation becomes much worse for the taxpayer: these people will pay approximately $5,000 a year in taxes and receive approximately $37,000 in benefits. The total net cost of the amnesty over the next three to four decades will be approximately $2.5 trillion, estimates Heritage Foundation scholar Robert Rector, who has done pioneering work in analyzing the effect of low-skilled immigrants on taxpayers.

None of this be a surprise, given the low level of employment skills these people bring to the United States. “This is a group that is 50 to 60 percent high-school dropouts,” Mr. Rector tells us. “They will never pay substantial taxes in the U.S. system. But you’re making every one of them, from the very beginning, eligible for Social Security and Medicare. And the worst thing about this is that the fiscal cost is going to come smashing into the Social Security and Medicare systems at the very time they are already going bankrupt.”

In sum, when it comes to the true cost of the Senate bill, CBO’s numbers have little to do with fiscal reality.