Sometime in the next few weeks, the Congressional Budget Office (CBO) will produce a "score” of S. 744, the Border Security, Economic Opportunity, and Immigration Modernization Act (known colloquially as the "Gang of Eight bill”), as recently reported out of the Senate Judiciary Committee.
During the last congressional debate over immigration reform in 2007, a CBO analysis predicted that a similar bill would increase the budget deficit by billions of dollars, one of many factors that led to the defeat of the bill.[1] Policymakers should scrutinize the CBO’s score this time around as well.
CBO’s Limited Time Frame
The first and most critical point to understand about the CBO’s cost estimate is its limited time frame. Typically, the CBO projects costs and revenues for only the first 10 years of a policy. In many instances, this practice is unremarkable, but in the case of S. 744, considering only the first 10 years would be worryingly misleading. The bill’s authors have delayed major costs until after the 10-year budget window. In this case, the major costs derive from eligibility for means-tested welfare and, later, entitlements.
Specifically, the bill allows those who move from unlawful status to registered provisional immigrant status to obtain few benefits initially. Then, upon entering legal permanent resident status, they would be eligible for additional benefits, and in time they would qualify for the full panoply of means-tested welfare and entitlement benefits.
It is important to note as well that the most significant costs during the lifetime of would-be legalized immigrants are during their retirement years after they qualify for Medicare and Social Security. For the vast majority of unlawful immigrants, that is well past the 10-year budget window.
Heritage’s study on the fiscal costs of unlawful immigration and amnesty detailed fiscal costs during four phases: (1) current law, (2) the interim period, (3) what Heritage calls the "full amnesty” period, and (4) retirement.[2] As the graph below demonstrates, the bulk of costs of unlawful immigrants and amnesty come after the first 13 years.
The CBO can resolve these issues by extending its analysis into the full amnesty and retirement-age phases. This would be unusual and may require a specific request by Members of Congress, but it would provide more useful information.
Cost-Control Provision Meaningless
One claim made by the bill’s supporters is that it would stop poor illegal immigrants from advancing on the path to citizenship. However, the loopholes in this provision render it essentially meaningless, and the CBO should score it accordingly.
To get around the poverty exclusion, individuals simply have to show that they are steadily employed or that their lack of employment is due to economic circumstances—in effect, all they would need to do is argue that they would work if they could. Mothers with dependent children, disabled individuals, children, and anyone over the age of 60 are also exceptions to the poverty exclusion. It should be noted that people in these categories receive about 90 percent of means-tested welfare aid.
Unclear Rationales
Another key factor to examine closely is the take-up rates assumed by the CBO among newly legalized immigrants for means-tested welfare programs. In the past, the CBO assumed that take-up rates of newly legalized immigrants would match those of the foreign-born population. However, education level seems to be a more accurate predictor of take-up rates.
Lawful immigrants have much higher rates of college graduation than unlawful immigrants, and about half of unlawful immigrants lack high school diplomas. Those with less education on average receive more in welfare benefits.[3] The Heritage study, in contrast to the CBO, matched the level of benefits of immigrants who are granted amnesty to the level of benefits of lawful immigrants with the same education level.
-Derrick Morgan - Heritage.org