CBO Calculation Error Explodes Immigration Surplus Claim

CBO Calculation Error Explodes Immigration Surplus Claim

on Mon, 24 Jun 2013

An analysis by a researcher at the Hoover Institution at Stanford University finds that the Congressional Budget Office's (CBO) claim that the Senate immigration will create a budget surplus is false due to inaccurate calculations of Social Security inputs by immigrants.

The CBO’s projections are based on the assumption that immigrants will pay Social Security taxes for the first 10 years and receive no benefits. But as scholar Paul Gregory points out in Investor’s Business Daily, the CBO incorrectly “counts each year’s Social Security contributions by immigrants in the positive column without making provisions for future benefits, which will be about twice what the immigrants contributed over the long term.”

Gregory also notes the immigration bill’s vague eligibility language is so hazy that the CBO had to provide four possible interpretations of it. He says “administrative agencies will use the most generous interpretation of eligibility,” which will further expand deficits, not surpluses.

The CBO also failed to report on the bill’s impact on the states and municipalities who will have to cover some $10,000 per school student and Medicaid costs. 

Gregory says the immigration bill would only add budgetary surpluses if the law brought an influx of high-income immigrants.

“A family of two parents and three school-age children (immigrant or otherwise) earning $25,000 per year draws some $25,000 more in government benefits than it pays in taxes,” writes Gregory.

He adds: “Immigration will add to deficits if the average immigrant family earns $25,000 per year. It will add to surpluses, if it earns $150,000. These are simple facts not subject to dispute.”