While the decision goes deep into the dry world of economics and budget scoring, it has major implications for the debate because it will likely show economic growth and higher tax revenues offsetting any new spending included in the bill.
The CBO serves as lawmakers’ nonpartisan scorekeeper, and in this case its score will show whether legalizing illegal immigrants and bringing in millions of new workers will end up saving or costing taxpayers money.
The agency said it used the same broad type of scoring, which calculates the effects on the economy of bringing in more future immigrants and legalizing those here, when it evaluated a similar bill in 2006. That bill showed a boost to the economy — a finding that the authors of this year’s bill are also counting on to help sell their legislation to the public.
“The CBO confirmed today what we’ve known all along — that dealing with our immigration challenges of course has costs associated with it, but that it also holds enormous potential for economic growth and job creation that benefits all Americans,” said Sen. Marco Rubio, Florida Republican and one of eight authors of the bill.
The CBO generally shies from dynamic scoring, which includes knock-on effects of economic growth when calculating costs and benefits.
In a blog posting, CBO Director Douglas Elmendorf explained why his agency and the Joint Committee on Taxation, which calculates tax scores, relaxed their rules for the 2006 bill, S.2611, and will do so again this year.
“Cost estimates produced by CBO and JCT typically reflect the assumption that macroeconomic variables such as gross domestic product and employment remain fixed. However, because S. 2611 would have had the direct effect of significantly increasing the size of the U.S. labor force, CBO and JCT relaxed that assumption and incorporated in the cost estimate the direct effect of the bill on the U.S. population, employment, and taxable wages,” Mr. Elmendorf wrote Thursday.
Sen. Jeff Sessions, Alabama Republican, has asked the agency to go beyond its usual 10-year window and calculate the costs for 50 years into the future.
“No lawmaker should vote on this legislation until we have a complete and thorough estimation of the long-term cost,” Mr. Sessions wrote.
In order to calculate knock-on effects to the economy, however, the CBO will also have to make estimates for other parts of the bill.
In 2007, the last time the Senate debated immigration, that came back to hurt the bill’s sponsors when the CBO estimated that illegal immigration would be reduced by only about 25 percent a year, and that 500,000 more illegal immigrants would be in the U.S. within a decade.
“We anticipate that many of those would remain in the United States illegally after their visas expire,” CBO said of the guest-worker program included in that year’s bill.
The CBO also will have to estimate how many immigrants would be added to the U.S. through the legal immigration system over the next decade.
That has been a touchy issue in the debate.