Epilogue - Confronting the Direct and Indirect Costs of America’s Foreign-Born Population

By Edwin S. Rubenstein
Published in The Social Contract
Volume 18, Number 2 (Winter 2007-2008)
Issue theme: "What price mass immigration?"
http://www.thesocialcontract.com/artman2/publish/tsc_18_2/tsc_18_2_rubenstein_epilog.shtml





[All articles in this Immigration Fiscal Impact Statement series can be viewed in a single pdf document]


What is the fiscal impact of immigration?

The answer consists of many parts. There are the direct costs of providing services to immigrants and their children: Medicaid, food stamps, welfare, and education. Legal immigrants can receive Social Security, and even illegals are made eligible under totalization agreements.

A disproportionate share of the federal prison population is foreign born. Border security and enforcing immigration laws in the workplace are expenses borne by federal agencies. Meanwhile, visa fraud and bureaucratic negligence allow unauthorized persons to enter uncontested.

Indirect fiscal costs are larger still. Immigrants reduce native wages and, therefore, federal tax revenues. Traffic congestion, environmental pollution, and communicable diseases are exacerbated by immigrant-driven population increases.

And there are the unintended consequences of federal policies. The Department of Agriculture’s grain subsidies, for example, have made it impossible for Mexican farmers to compete—forcing many to cross the border in search of jobs. The Commerce Department’s Security and Prosperity Partnership proposal would eliminate border controls throughout North America.

We estimate that the 15 departments profiled here incurred $346 billion of immigrant-related costs in FY2007. That translates to a fiscal impact of $9,139 per immigrant that year.

The departmental impacts range from $146 billion at the Treasury Department to $300 million at the Department of Defense.

The table on the next page ranks the departments on immigrant-related costs.

Each immigrant costs taxpayers more than $9,000.

Each four-person immigrant household costs $36,000.

As daunting as these figures are, they probably understate the problem.

The quality of foreign-born entrants has deteriorated for decades. In 1960, for example, new immigrants were generally better educated, earned more, and were less likely to be poor than natives. But by the end of the 20th century, new arrivals had two fewer years of education and earned one-third less than natives.1

The trend implies an ever-increasing imbalance between the public benefits received by immigrants and the taxes they pay. By midcentury, fiscal impact per immigrant will be far higher than it is today.

And there will be more of them.


Summary of Key Findings

-  We estimate that the 15 departments profiled here incurred $346 billion of immigrant-related costs in FY2007.  That translates to a fiscal impact of $9,139 per immigrant that year.

-  The departmental impacts range from $146 billion at the Treasury Department to $300 million at the Department of Defense.

-  Each immigrant costs taxpayers more than $9,000.

-  Each four-person immigrant household costs $36,000.

-  As daunting as these figures are, they probably understate the problem.  The following table ranks the departments on immigrant-related costs.


tsc_18_2_rubenstein_epilogue_1.png


 


End Notes

1. George Borjas, The Top Ten Symptoms of Immigration, CIS, November 1999.

About the author

Edwin S. Rubenstein, president of ESR Research, economic consultants, has 25 years of experience as a business researcher, financial analyst, and economics journalist.  Mr. Rubenstein joined the Hudson Institute, a public policy think tank headquartered in Indianapolis, as director of research in November 1997.  While at Hudson he wrote proposals and conducted research on a wide array of topics, including workforce development, the impact of AIDS on South Africa's labor force, Boston's "Big Dig" the economic impact of transportation infrastructure, and the future of the private water industry in the United States.

As a journalist, Mr. Rubenstein was a contributing editor at Forbes Magazine and economics editor at National Review, where his "Right Data" column was featured for more than a decade. His televised appearances include Firing Line, Bill Moyers, McNeil-Lehrer, CNBC, and Debates-Debates.  In The Right Data (National Review Press, 1994), Rubenstein debunks many widely held beliefs surrounding the distribution of income, government spending, and the nature of economic growth.

Mr. Rubenstein is also an adjunct fellow at the Manhattan Institute where he is principal investigator in the institute's ongoing analysis of New  York state's budget and tax structure.  He also published a newsletter devoted to economic statistics and contributed regularly to The City Journal, the Manhattan Institute

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