Heritage Foundation puts $6.3 trillion price tag on amnesty

The Heritage Foundation has released its long awaited study of the cost to American taxpayers of legalizing the current population of illegal immigrants. The study, available here, estimates the cost at $6.3 trillion, at a minimum.

Andrew Stiles at NRO does a good job of summarizing the study’s methodology and findings:

The study seeks to calculate the total amount of taxpayer-funded benefits and services illegal immigrants would, if given legal status, consume over their lifetimes, compared with the amount they would contribute in taxes. The various benefits and services taken into account include direct benefits such as Social Security and Medicare, means-tested welfare programs such as food stamps and public housing, public education, and other services such as police and fire departments.

The study shows that, in 2010, the average illegal-immigrant household received $24,721 in government benefits and services while paying $10,334 in taxes, creating a fiscal deficit (benefits received minus taxes paid) of $14,387 that must be borne by other taxpayers. That figure “would soar,” the study says, if those illegal immigrants were given legal status, and therefore made eligible for federal welfare programs, which even immigrant households here legally are more likely to receive than U.S.-born households. Under the Gang of Eight’s proposal, the average illegal-immigrant household would produce a net fiscal deficit of nearly $600,000 over the course of a lifetime, the study found.

The study analyzes costs during three phases:

During the ten-year “interim phase” after the bill is passed, in which illegal immigrants would be given legal status but would be ineligible for means-tested welfare programs and Obamacare, the average fiscal deficit for their households would fall to around $12,500 a year because of increased tax payments. Following this initial period, however, government spending would “increase dramatically” — once formerly illegal immigrants become eligible for those programs, average fiscal deficits would rise to about $29,500 per household. During retirement, when former illegal immigrants, now permanent residents or citizens, would be eligible for Social Security and Medicare benefits, the net cost to taxpayers would remain high, at around $22,700 per retiree per year.

Because the average illegal immigrant is about 34 years old, restricting access to benefits during the interim phase would have only a “marginal impact” on the long-term aggregate cost. The study found that, under current law, illegal-immigrant households produce a combined fiscal deficit of about $54.5 billion per year. After legalization, that number would fall to $43.4 billion, but would climb to $106 billion once households become eligible for welfare benefits, and would increase still further to around $160 billion during the retirement phase.

The bottom line is that current illegal immigrants would receive around $9.4 trillion in government benefits and services over the course of their lifetimes, and would pay about $3.1 trillion in taxes. Hence, a net fiscal deficit of $6.3 trillion.

Moreover, this is a conservative estimate, according to the study authors Robert Rector and Jason Richwine. They say that it likely undercounts the total number of illegal immigrants that would ultimately be legalized and as a result would become eligible for welfare and medical benefits.

The Heritage Foundation study received plenty of preemptive criticism from supporters of amnesty, who knew what its methodology would be based on a similar Heritage study from 2007. Critics claim that the cost of amnesty should be calculated through “dynamic scoring,” which, of course, grants the studier lots of room for manipulation.

The Heritage Foundation shouldn’t be treated as the gospel, and we’ll attempt to report on the debate it precipitates. But I suspect that the study’s authors are right in concluding that “those who claim that amnesty will not create a large fiscal burden are simply in a state of denial concerning the underlying redistributional nature of government policy in the 21st century.”

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