Last week, the
White House Council of Economic Advisers issued a report entitled
"Immigration's Economic Impact" which defended the President's
promotion of the Senate's "comprehensive" immigration legislation
(S.1348). On June 25, the White House issued a
follow-up editorial elaborating on the points made in the CEA
report. These publications criticized Heritage
Foundation research on the fiscal costs of low skill immigration
research criticized by the White House made the following basic
points about immigration and its costs:
without a high school degree impose significant net costs (the
extent to which benefits and services received exceed taxes paid)
- The net fiscal
cost of families of immigrants who lack a high school degree is not
markedly different from the net fiscal cost of families of
non-immigrants who lack a high school degree.
- Immigrants are
disproportionately low skilled; one-third of all immigrants and 50
to 60 percent of illegal immigrants lack a high school degree.
- Unlike low and
moderate skill immigrants, immigrants with a college education will
pay more in taxes than they receive in benefits; therefore.
immigration policy should increase the number of high skill
immigrants entering the country and sharply decrease the number of
low skill, fiscally dependent immigrants.
has shown that low skill immigrants (those without a high school
degree) receive, on average, three dollars in government benefits
and services for each dollar of taxes they pay. This imbalance
imposes a net cost of $89 billion per year on U.S. taxpayers. Over
a lifetime, the typical low skill immigrant household will cost
taxpayers $1.2 million.
costs will be increased by policies which increase (1) the number
of low skill immigrants entering the U.S., (2) the length of low
skill immigrants' stays in the U.S., or (3) low skill immigrants'
access to government benefits and services. Unfortunately, this is
exactly what the Senate immigration bill does:
- The bill would
triple the flow of low skill chain immigration into the U.S.
- By granting
amnesty to at least 12 million illegal immigrants, the bill would
greatly lengthen their stay in the U.S., particularly during
- The bill would
grant illegal immigrants access to Social Security and Medicare
benefits and, over time, to more than 60 different federal welfare
- Although the
bill does not currently permit Z visa holders to bring spouses and
children in from abroad, this would likely be amended at some
future point on humanitarian grounds, resulting in another 5
million predominantly low-skill immigrants entering the
has concluded that the cost of amnesty alone will be $2.6 trillion
once the amnesty recipients reach retirement age.
In an effort to
defend the Senate bill, the White has contested these conclusions.
As described below, many of the assertions made by the White House
are inaccurate or misleading.
House claims that, under the Senate immigration bill, amnesty
recipients would receive little or no welfare.
CEA Chairman Edward Lazear charged that the Heritage claims
concerning the cost of the Senate immigration bill were flawed
because, under the bill, amnesty recipients would be barred from
receiving "the vast majority of welfare benefits." Like previous
statements by White House spokesmen, this assertion
mischaracterizes the Senate bill and also shows a lack of
understanding of the Heritage estimates of the bill's costs.
While provisions of the Senate bill would delay illegal
immigrants' access to welfare for several years, over time, nearly
all amnesty recipients would be offered legal permanent residence
and access to more than 60 federal means-tested welfare programs.
Specifically, Z visa holders would immediately be given Social
Security numbers and would begin earning entitlement to Social
Security and Medicare (which are not means-tested welfare
programs). Some ten to thirteen years after enactment, amnesty
recipients would begin to gain access to a wide variety of
means-tested welfare programs, such as Temporary Assistance to
Needy Families, public housing, and Food Stamps. Children born to
illegal and legal immigrants in the U.S. have immediate, lifetime
access to all welfare programs.
limitation on the receipt of means-tested welfare will have only a
small effect on governmental costs. Adult welfare comprises only a
small part of the benefits received by immigrant families.
Moreover, the average adult amnesty recipient can be expected to
live more than 50 years after receiving his Z visa. While his
eligibility for means-tested welfare would be constrained for the
first 10 to 15 years, each amnesty recipient would be fully
eligible for welfare during the last 30 to 40 years of his life.
Use of welfare during these years will be heavy.
House claims that, to the extent that amnesty recipients receive
welfare benefits, they would receive the same low levels of
benefits as other poorly educated immigrants, who (in the White
House's view) receive little welfare.
The White House
reassures taxpayers that amnesty recipients and millions of future
low skill immigrants will not generate welfare costs because they
must "qualify for…government [welfare] transfers only the
old fashioned way." The implication is that those who must
struggle to earn access to welfare "the old fashioned way" will, in
the end, get very little welfare. Contrary to this claim, the
average low skill immigrant family actually receives $10,500 per
year in means-tested welfare, or about a half million dollars over
the course of a lifetime. Amnesty recipients would indeed gain
access to welfare "the old fashioned way," and the old fashioned
way is extraordinarily expensive.
The brief delay
in adult access to welfare under S. 1348 and current law would have
only a tiny effect on the long-term welfare costs of low skill
immigrants. Further, the White House's touting the delays on
immigrants receiving welfare under existing law is hypocritical:
The actual policy pursued by the White House up to this time has
been to dismantle the barriers in current law and increase
immigrant families' access to welfare.
House strongly suggests that, under the Senate immigration bill,
amnesty recipients would be net tax contributors.
Some 50 to 60
percent of illegal immigrants who would receive amnesty under S.
1348 lack a high school degree. Another 25 percent have only a high
school degree. Based on the example of current immigrants with
similar levels of education, these individuals would be a net
burden on the taxpayer over the entire course of their lives.
House claims that amnesty recipients would increase the net
government revenue available to support Americans in
The White House
trumpets that "immigrants improve the solvency of our retirement
system." One must assume that they believe that the
same will be true of amnesty recipients, because otherwise the
assertion would be irrelevant in the current debate. The White
House does correctly point out that amnesty recipients would pay
Social Security taxes during their working years. Amnesty
recipients' low skill levels, however, mean that the Social
Security tax payments they make would, on average, be quite
More important is
the fact that, in future years, Social Security benefits will be
funded by both Social Security taxes and general revenue. What
matters is not the small amount of Social Security taxes that would
be paid by amnesty recipients but their overall fiscal balance-that
is, the total federal state and local benefits received, minus all
taxes paid. Because the total benefits taken by amnesty recipients
and their families would exceed the Social Security and other taxes
that they would pay, amnesty recipients would undermine, rather
than strengthen, financial support for U.S. retirees, even before
the amnesty recipients reach retirement age themselves.
House suggests that the retirement costs of amnesty recipients
would not impose a significant tax burden on U.S.
The Senate bill would give amnesty recipients access not only to
means-tested welfare, but also to government retirement benefits.
The Heritage Foundation has estimated that the net fiscal costs of
amnesty recipients during retirement would be $2.6 trillion. These
particular costs would begin to impact the taxpayer about 30 years
after enactment of the Senate legislation. The White House has made
no specific refutation of this estimate.
The bulk of the
net expenditure would be in the Social Security and Medicare
programs; substantial costs would also occur in the means-tested
Medicaid program (amnesty recipients would be fully eligible for
Medicaid benefits long before they reach retirement). Contrary to
any suggestions made by the White House, temporary restrictions on
access to means-tested welfare by amnesty recipients is irrelevant
to the estimated $2.6 trillion cost of amnesty.
The White House
does point out that amnesty recipients will have paid Social
Security taxes prior to retirement and thereby might be seen as
having "earned" all the government benefits they would receive.
But, as noted above, the Social Security taxes paid by amnesty
recipients would be modest. Even during working years, most amnesty
recipients would be a drain on the taxpayer, and during retirement
their fiscal cost would be dramatic.
House claims that the Senate immigration bill would benefit U.S.
taxpayers by increasing the future flow of high skill immigrants
(who would be strong net tax contributors) and decreasing the flow
of low skill immigrants who are more likely to be a fiscal
The White House
claims that the Senate immigration bill would "sharply improve" the
fiscal contributions of immigrants by increasing the share of
future immigrants who are high skilled. It asserts, "[T]he bill
will end chain migration which allows legal immigrants to bring
extended family members to the U.S" and replace it with a "new
merit-based system to select future immigrants based on
[their]…skills and attributes."
In reality, the
bill would triple the annual rate of family chain migration,
raising the annual allotment for these immigrants from the current
level of 147,000 to 440,000 and bringing up to 5.9 million such
immigrants into the U.S. over the next decade. Family chain
immigrants are predominately low skilled: 60 percent have only a
high school degree or less and 38 percent lack a high school
What about the
new merit-based system, ostensibly intended to bring in highly
educated high tech workers? The core of this proposal is a point
system to select future green card holders, but this point system
is far from merit-based. For example, green card applicants would
receive a high number of points if they are currently employed in
"high demand" occupations, which include janitor, waitress, sales
clerk, fast food worker, freight handler, laborer, grounds keeping
worker, food preparation worker, maid, and house cleaner. Under the
proposed point system, a high school dropout working in a fast food
restaurant who has the recommendation of her employer would
outscore an applicant with a Ph.D. trying to enter the country from
abroad. The merit system is actually designed to confer citizenship
on low skill "temporary guest workers" rather than bring in
professionals from abroad.
The bill would
eliminate the current green card allocation for workers of
"exceptional ability" but allocate 90,000 green cards per year for
the next eight years to reduce the existing employment visa backlog
of primarily low skill workers. Contrary to White House claims, it
seems unlikely that S. 1348 would increase the number of green
cards for high-skill workers, at least through the first eight
years of operation.
House claims high school dropouts are a "very small part" of the
The Chairman of
the White House Council of Economic Advisers dismissed Heritage
research on the negative fiscal impact of poorly educated
immigrants as "relevant only to a very small part of the
population" and therefore of little importance in assessing the
Senate immigration bill. In reality, a large and disproportionate
share of current immigrants in the U.S. is poorly educated.
One-third of all current immigrants lack a high school degree,
compared to nine percent of native-born Americans. The families of
immigrants without a high school degree now comprise 5 percent of
the U.S. population. As noted, among the ten million adult illegal
immigrants who would receive amnesty and citizenship under the
Senate's immigration bill, some 50 to 60 percent lack a high school
degree and many have only a high school degree.
House asserts that low skill immigrant families impose a
substantially lesser burden on taxpayers than do low skill
The White House
asserts, "[L]ow-skill immigrants are actually comparatively
self-sufficient compared to low skill native households."
This assertion is false. Low skill immigrants and non-immigrants
impose similar burdens on the taxpayer. Wages, tax payments, and
receipt of welfare are quite similar for the two groups. Low skill
non-immigrants differ from immigrants primarily because they are
more likely to be elderly and therefore less likely to be
House asserts that the children of low skill immigrants quickly
become fiscal contributors (taxes paid exceed benefits and services
received) and thereby compensate taxpayers for nearly all the
fiscal losses generated by their parents.
The White House
has suggested that while low skill immigrants may impose some
initial taxpayer costs, these costs are "recovered quickly" by the
net taxes paid by the immigrants' children. This is not true.
Low skill immigrants impose very heavy costs on U.S. taxpayers. As
noted, on average, each low skill immigrant household receives
three dollars in benefits for each one dollar of taxes paid; over a
lifetime, each household costs the taxpayer more than $1
The children of
low skill immigrants do better than their parents. With higher
levels of education, they will receive fewer welfare benefits and
pay more taxes. Nonetheless, despite this upward progress, the
children of immigrant dropouts are likely to remain a net drain on
the taxpayers. 
The White House
asserts that the "children of immigrant parents are 12 percent more
likely to obtain a college degree than other natives." It
neglects to note that the relevant group, the children of low skill
immigrant parents, have below-average educational attainment. For
example, the children of Hispanic dropout parents are three times
more likely to drop out of high school and 75 percent less likely
to have a college degree than the general population.
trends in upward mobility, the descendents of immigrant dropouts
will not become net tax contributors until the third generation.
This means that the net fiscal impact of low skill immigrants will
remains negative for 50 to 60 years after the immigrants' arrival
in the U.S.
House obscures the cost of low skill immigrants.
The White House
report asserted that Heritage Foundation research on low skill
immigrants is flawed because it lacks a "forward looking
projection." The Council of Economic Advisers stated
that, from the 'long-run point of view," low skill immigrants are
remarkably inexpensive: Each immigrant without a high school degree
costs the taxpayer a mere $13,000 overall. The CEA failed to
note that its "long-run point of view" includes the estimated taxes
paid by the low skill immigrants' descendents for the next 300
years. In other words, the White House is
asserting that taxpayers should not be concerned about the $89
billion annual cost generated by low skill immigrants because that
cost would be largely offset by the taxes paid by the immigrants'
descendents in the year 2407. In addition, the 300-year estimate
cited by White House assumes very large tax increases and benefits
reductions in the near future.
In its defense of
the Senate immigration bill, the White House employs statistics
about the fiscal contributions of college-educated immigrants, but
the taxes paid by college-educated immigrants are almost completely
irrelevant to a fiscal analysis of S. 1348. The main fiscal impact
of S. 1348 will occur through two mechanisms: (1) the grant of
amnesty, with accompanying access to Social Security, Medicare and
welfare benefits, to 12 million illegal immigrants who are
overwhelmingly low skilled; and (2) a dramatic increase in chain
immigration, which will also be predominantly low skilled.
In this context,
talking about the taxes paid by college-educated immigrants is a
red herring and merely serves to obscure the obvious fiscal
consequences of the legislation.
The bottom line
is that high school dropouts are extremely expensive to U.S.
taxpayers. It does not matter whether the dropout comes from Ohio,
Tennessee, or Mexico. It does matter that the Senate immigration
bill would increase the future flow of poorly educated immigrants
into the U.S. and grant amnesty and access to government benefits
to millions of poorly educated illegal aliens already here. Such
legislation would inevitably impose huge costs on U.S.
Robert Rector is Senior
Research Fellow in Domestic Policy Studies at The Heritage
 "Response to False
Claims That Illegal Immigrants Will Not Receive Welfare Under
Senate Bill," Robert E. Rector, Heritage Foundation WebMemo No.
1509, June 18, 2007.