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As Senate Debates Immigration Reform, CBO and New Studies Examine Effects of Immigration on Nation's Fiscal Health

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As Senate Debates Immigration Reform, CBO and New Studies Examine Effects of Immigration on Nation's Fiscal Health

Whether or not immigration reform would have a net positive effect on Social Security and Medicare is part of the ongoing immigration debate on Capitol Hill. (Photo courtesy of Shutterstock)

As the Senate continues its debate over a once-in-a-generation overhaul of the nation's immigration system, proponents and critics have been arguing over the finer details, including the fiscal impacts associated with enactment of such sweeping legislation. This week, the Congressional Budget Office (CBO) offered its own estimate of the bill's fiscal cost—an assessment that could determine the fate of the legislation.

The crux of the fiscal debate is how immigrants' contributions to the tax base compare to the public benefits they would receive, and other federal costs associated with S. 744, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013.

In one camp is the Heritage Foundation, which recently published a study estimating the Senate bill's price tag at more than $6.3 trillion, on the assumption that immigrants would pay $3.1 trillion in taxes while receiving $9.4 trillion in government benefits over a 50-year period. In the other camp is a range of organizations and economists who have argued that immigration reform would have a net positive budgetary effect, due to economic growth. The contested issue crested this week when the CBO released on June 18 a long-awaited cost estimate or "score" of the Senate bill's impact.

CBO, a nonpartisan agency that conducts analysis of the federal budget and the economy for Congress, found that enacting S. 744 would reduce the budget deficit by $175 billion over a ten-year period and by $700 billion over a 20-year time frame. In the first ten years—from 2014 to 2023—federal spending would increase by $262 billion, mostly due to a rise in refundable tax credits, such as the Earned Income Tax Credit, and spending on tax subsidies for immigrants to help them purchase health insurance coverage under the Affordable Care Act. Federal revenues, however, would grow by $459 billion as a result of increased payroll and income taxes. Therefore, the federal budget deficit would decrease by $197 billion, but the net cost for federal discretionary spending would be $22 billion over the first ten-year period.

In the weeks preceding the CBO score, two newly issued analyses from the Social Security Administration (SSA) and Harvard Medical School offered evidence that broad immigration reform would have a more substantial positive impact than generally perceived on two of the federal government’s major entitlement programs: Social Security and Medicare, which together accounted for 38 percent of federal expenditures in fiscal year (FY) 2012. These programs are critically important when considering fiscal impacts beyond the 20-year window of the CBO's score.

According to a preliminary analysis conducted by the SSA, enactment of S. 744 would result in contributions to the Social Security Trust Fund of $500 billion over 25 years, and $4 trillion over 75 years. In a May 8 letter to Sen. Marco Rubio, the Florida Republican who is a leading architect and proponent of S. 744, SSA Chief Actuary Stephen C. Goss attributed this projected revenue infusion to two aspects of the Senate bill: the legalization program that would grant legal status to many of the nation's estimated 11.5 million unauthorized immigrants, and the expansion in the number and categories of immigrants who would be admitted to the United States for legal permanent residence in the future. According to Goss, together the provisions would generate a significant increase in the overall number of taxpayers—both because the tax-paying population would increase and because larger numbers of legalizing immigrants would pay federal taxes as they emerged from the informal economy.

"Overall, we anticipate that the net effect of this bill on the long-range OASDI actuarial balance will be positive," Goss wrote Rubio, using the formal name for the Social Security program: the Old Age, Survivors, and Disability Insurance program.

The SSA actuary projects that roughly 8 million of the estimated 11.5 million unauthorized immigrants living in the United States would be eligible for Registered Provisional Immigrant (RPI) status under S. 744, and a smaller number would eventually meet the requirements to become lawful permanent residents (in other words, gaining a green card).

On the heels of the SSA report, Harvard Medical School released a study finding similar benefits for the Medicare program. The study published in late May found that from 2002 to 2009, immigrants contributed $115.2 billion more to the Medicare Trust Fund than they received in benefits. This compares to a $28 billion deficit generated by the U.S.-born population.

While immigrants' contributions equaled those of the U.S. born, they received fewer payments from the fund, the study found. In 2009, immigrants made 14.7 percent of trust fund contributions but received 7.9 percent of expenditures, amounting to a surplus of $13.8 billion for that year. Each year from 2002 to 2009, immigrants' contributions resulted in a surplus of between $11.1 billion and $17.2 billion. The study found that immigrants as a whole are a younger working-age population that pays taxes and is not yet old enough to be eligible for Medicare.

Although the study partly confirms the obvious—that younger people require less coverage that older people—the findings notably suggest that immigrants are currently subsidizing the Medicare Trust Fund. As a result, immigrants could be expanding the lifespan of one of the government's most relied-upon programs.

Medicare, which provides healthcare coverage to more than 49 million beneficiaries who are 65 and older or have disabilities or certain diseases, accounted for one-fifth of U.S. health care expenditures in 2012.

According to the Trustees' report on the status of Social Security and Medicare, neither program can be fully sustained in the long run under current financing, as both face cost growth substantially in excess of GDP growth. Social Security expenditures have exceeded revenues since 2010, a trend that is expected to continue for the 75-year projection window. The report found that the Social Security deficit will rise from about $49 billion in 2010 to an average of $75 billion for the next five years, and will rise steeply starting in 2019. The Disability Insurance Trust Fund faces depletion by 2016, and the Medicare HI Trust Fund, which pays for hospital care, faces depletion by 2026.

At the heart of the problem is a population that is aging and has not replenished itself from natural births. The baby-boom generation, born between 1946 and 1965 and totaling 75 million, are retiring at the rate of 10,000 per month. Because boomers had fewer children than their parents' generation, there are not enough working-age Americans contributing to programs such as Social Security and Medicare to keep them solvent.

Although legislative changes are ultimately necessary to reform these systems, some see immigration as a part of a short-term fix and the gains potentially realized to Social Security and Medicare from comprehensive immigration reform as a rare bright spot for these programs. Moreover, LPRs are ineligible for the first five years of their residence in the United States for a number of major public benefits programs such as Medicare, Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), nonemergency Medicaid, and Temporary Assistance for Needy Families (TANF). As such, the arrival of increased numbers of working-age, tax-paying individuals who are not eligible to receive benefits may provide a short-term boon for key federal public benefits programs.

The debate over benefits and fiscal impacts, currently playing itself out as the Senate continues debate this month over the immigration legislation, undoubtedly will also resonate in the House, where piecemeal bills are being worked through the Judiciary Committee at the same time as a bipartisan group of negotiators is working behind closed doors on an immigration plan of its own. Already, a rift in the bipartisan group over access to healthcare benefits caused a prominent Republican member of the group, Rep. Raul Labrador (R-ID), to formally withdraw when other members declined to adopt legislative language requiring unauthorized immigrants to purchase their own health insurance.

On June 18, the full Senate started debating amendments to the more than 1,000-page bill that was voted out of the Judiciary Committee by a comfortable (13-5) margin on May 21. Senate Majority Leader Harry Reid (D-NV) has predicted that the Senate will conclude action on the immigration bill by the July 4 recess. Meanwhile, Speaker of the House John Boehner (R-OH) has indicated that the House will begin to consider immigration legislation before the July recess and that the House will act by the time Congress' summer recess begins on August 5. He has also however stated that he does not intend to bring up legislation that the majority of the House GOP does not support. The House calendar therefore remains uncertain. President Obama, on June 11, flanked by a cross section of supporters of immigration reform, lent his enthusiastic support for the Senate bill, saying he hopes to sign immigration reform into law by summer's end.

Policy Beat in Brief

House Approves Amendment to End DACA Program Funding. On June 6, the House voted 224 to 201 to adopt an amendment to its 2014 Homeland Security appropriations bill (HR 2217) that would de-fund the Obama administration's Deferred Action for Childhood Arrivals (DACA) program and prosecutorial discretion policies. The amendment, offered by Rep. Steve King (R-IA), was agreed to largely along party lines. The deferred action and prosecutorial discretion policies have been criticized by some members of Congress as "executive amnesty." Passage of the amendment, King said, stands as the first test on immigration for the House in the 113th Congress.

The DACA program, announced by President Obama in June 2012, offers deferred action to unauthorized youth who are pursuing an education and pass a background check. The administration's prosecutorial discretion policies, which have evolved through a series of agency memoranda issued in recent years, prioritize the removal of noncitizens considered to be public safety or national security threats, repeat immigration violators, and recent border crossers. The House action is generally seen as a symbolic move. Senate Majority Leader Harry Reid (D-NV) has said that the appropriations bill has "zero" chance of passing the Senate, and the White House predicted it will not become law. As of May 31, 2013, USCIS accepted a total of 520,157 requests for Deferred Action for Childhood Arrivals, issued 365,237 approvals, and 3,816 denials. Mexican nationals have received the highest number of approvals by far, at 278,044, followed by El Salvador with 14,048, Honduras with 8,364, Guatemala with 8,510, and South Korea with 6,178. The largest concentration of DACA recipients reside in California (106,414), Texas (59,494), Illinois (23,106), New York (18,308), and Florida (13,881).

Interior Enforcement Bill Approved by House Judiciary Committee. On June 18, an interior enforcement bill titled the Strengthen and Fortify Enforcement Act (H.R. 2278) or the SAFE Act passed out of the House Judiciary Committee on a 20-15 vote after being marked up that day. The bill was introduced on June 6 by Chairman Bob Goodlatte (R-VA) and Immigration and Border Security Subcommittee Chairman Trey Gowdy (R-SC). The SAFE Act would give states and localities more authority to enforce immigration laws, increase Border Patrol access to federal lands within 100 miles of the border, tighten visa security and immigration benefits screening, monitor the executive branch's use of prosecutorial discretion policies, expand ICE agents' arrest authority, and permit them to be armed. The SAFE Act is the fourth in a series of stand-alone bills introduced in the House Judiciary Committee addressing reforms to individual aspects of the U.S. immigration system. Bills on employer verification, high-skilled immigration, and an agricultural guest worker program have already been filed. Currently, groups of House members are working on immigration reform on two parallel tracks. One group of lawmakers is advancing individual piecemeal bills through the Judiciary Committee, while a second group is engaged in bipartisan efforts to craft broad comprehensive legislation. It is unclear what legislation the House will ultimately consider when work on the bills is complete and the chamber takes up immigration reform.

Federal Judge Finds that the Maricopa County Sheriff's Office Engaged in Racial Profiling. On May 24, a U.S. district judge in Phoenix ruled that the Maricopa County Sheriff's Office (MSCO) regularly engages in racial profiling of Latinos in violation of the Constitution. The judge's ruling in Melendres v. Arpaio found that the sheriff's office relies on race during immigration enforcement patrols in which officers check the immigration status of individuals whom they stop. The judge also ruled that the sheriff's office does not have the authority to detain individuals based only on reasonable suspicion or probable cause that they are unauthorized, and that officers unreasonably prolonged traffic stops beyond the time necessary to resolve what justified the stop. Sheriff Joe Arpaio announced that he will comply with the order and suspend immigration enforcement efforts, including the detention of persons believed to be unauthorized but who cannot be arrested on state charges. However, he indicated he intends to appeal the federal court ruling.

Federal Judge Will Not Reconsider Ruling to Uphold DACA License Ban. On May 16, U.S. District Judge David Campbell in Phoenix declined to temporarily block an executive order that prohibits DACA beneficiaries from applying for driver's licenses in Arizona. The policy, put in place by Gov. Jan Brewer in August 2012 when the Obama administration first began accepting application for the DACA program, will therefore continue while litigation proceeds. While Arizona allows other individuals who have received deferred action or work authorization to apply for licenses, the executive order specifically bars DACA beneficiaries from driver's license eligibility. Judge Campbell found that the plaintiffs, five Mexican DACA beneficiaries represented by civil-rights groups, are likely to succeed on the grounds that the order violates the Constitution's equal protection clause. However the plaintiffs could not establish an irreparable injury, the standard that must be met for injunctions to be ordered. On June 12, the judge declined a request to reconsider his decision.

GAO Study Finds DHS List Holds 1 Million Potential Overstays. According to a new Government Accountability Office (GAO) study on visa overstays, as of April 2013, the Department of Homeland Security (DHS) maintained a list of more than 1 million unmatched arrival records in its Arrival and Departure Information System (ADIS) database—down from 1.6 million in April 2011. An unmatched arrival record is an arrival record without a corresponding departure record—a possible indication that a person has remained in the country beyond his or her authorized stay. GAO's analysis also found that 44 percent of the individuals with unmatched records entered on a tourist visa, 43 percent entered as tourists under the Visa Waiver Program, and the remaining 13 percent entered as other nonimmigrants such as temporary workers or students. The average period of time that individuals remained in the United States beyond the terms of their visa was 2.7 years, GAO said.

Report Finds Immigrant Minors Held at Adult Detention Facilities. According to Immigration and Customs Enforcement (ICE) data obtained by the National Immigrant Justice Center, from 2008 to 2012, DHS detained 1,366 minors under the age of 18; they spent a combined 36,598 days in 30 adult detention facilities across the United States. The number of minors is likely underreported as data were only provided for 30 of the 250 adult detention facilities under ICE contract. According to the report, minors were held in adult facilities for periods ranging from three days to more than one year; more than 800 were held for at least one week. The report argues that these practices amount to a violation of the 1997 Flores settlement, which set national policy for the detention, release, and treatment of juveniles in the legacy Immigration and Naturalization Service (INS) custody. The settlement agreement now applies to DHS and the Office of Refugee Resettlement (ORR) within the Department of Health and Human Services, and requires the timely release of minors from immigration detention, mandates the placement of minors into the "least restrictive setting" appropriate to their ages and special needs, and requires the implementation of standards relating to care and treatment of minors in immigration detention. While minors deemed unaccompanied are transferred to ORR custody while in immigration proceedings, minors not found to be unaccompanied remain the responsibility of DHS.

TPS for El Salvador Extended. Homeland Security Secretary Janet Napolitano announced the extension of Temporary Protected Status (TPS), through March 9, 2015, for certain Salvadoran nationals residing in the United States. Since 1990, the United States has granted TPS to noncitizens from designated countries that are determined to be unsafe for their return due to armed conflict or natural disaster. El Salvador was initially designated for TPS in March 2001. TPS beneficiaries receive work authorization and protection against deportation, as well as permission to travel outside of the country and return. Currently, eight countries are designated for TPS: El Salvador, Nicaragua, Honduras, Haiti, Sudan, South Sudan, Syria, and Somalia.

State and Local Policy Beat in Brief

Four More States to Allow Driving Privileges to the Unauthorized. The governors of Colorado and Nevada have signed into law measures that would allow unauthorized immigrants to legally drive in these states, and the governors of Vermont and Connecticut are poised to sign similar measures. Each of the laws will grant driving privileges to unauthorized immigrants, however the type of license and requirements for issuance differ by state. Colorado's law would permit unauthorized immigrants to apply for driver's certificates specially marked to indicate that they are not valid for federal identification purposes, cannot be used to vote, obtain public benefits, or board a plane. Applicants must pass a test and prove they are paying state and federal taxes. Nevada's law, set to take effect in January 2014, will offer annually renewable "driver's authorization cards" to unauthorized immigrants who pass a road test, prove their identity, and obtain insurance. Vermont's new law would create a document not valid for federal identification purposes, but otherwise equivalent to a Vermont license. And Connecticut's, which will not take effect until January 2015, requires the state's commissioner of motor vehicles to issue a license labeled "for driving purposes only." Supporters of such measures argue that they make the roads safer by requiring unauthorized immigrants, many of whom drive anyway, to learn traffic rules and purchase insurance. Others contend that driver's licenses are a benefit that should not be extended to those who are unlawfully present in the country. Currently, unauthorized immigrants are eligible to apply for driver's licenses in six other states—Illinois, Maryland, Oregon, New Mexico, Utah, and Washington.

  • Learn about the recent state trend in adopting state driver's license laws in last month's Policy Beat.

Florida Governor Vetoes Driver's License Bill. On June 4, Florida Governor Rick Scott vetoed the "Dream Act Driver's License" law, which passed the legislature overwhelmingly. The law would have added documents issued to approved DACA beneficiaries to the list of documents accepted by the state to establish eligibility for a driver's license. Both the bill and the governor's veto are largely seen as symbolic because Florida already allows noncitizens with a work permit to apply for a license, and DACA beneficiaries are granted both deferred action and work authorization documents. While those who support Gov. Scott's veto argue that his decision has no practical impact, his critics are characterizing the move as politically motivated. Gov. Scott has defended his veto by arguing that Florida laws should not rely on federal policies adopted without legal basis.

Alabama Board of Medical Examiners Requires Immigration Documents from Doctors. Alabama's Board of Medical Examiners and Board of Nursing have begun requiring some doctors, physician's assistants, and nurses to submit proof of U.S. citizenship or lawful presence in order to renew or apply for a medical license. The new policy stems from implementation of a provision of Alabama's omnibus immigration law, HB 56, passed in 2011 and amended last year, that prohibits unauthorized immigrants from receiving state-issued professional licenses. Media reports suggest many health professionals are expressing anger over the new mandate. Although HB 56 was almost entirely enjoined by the U.S. Court of Appeals for the 11th Circuit in August 2012 and that decision was left in place when the Supreme Court declined to hear the state's appeal in April, several of the law's provisions still stand.

  • Read the letter sent to Alabama doctors.