Amid ongoing congressional debates\u2014culminating, of course, in a partial shutdown\u2014over Trump\u2019s mass deportation agenda, one fact in particular should capture both Democrats\u2019 and Republicans\u2019 attention: immigrants provide an enormous boost to the country\u2019s long-term economic and fiscal health, reducing our massive deficit by a third.<\/p>\n
Off the bat, the Trump administration\u2019s instincts on the economic effects of immigration are wrongheaded. \u201cFor decades, the structure of U.S. society, by intent and design, was remade to redistribute wealth, resources, property and opportunity from Americans to non-Americans,\u201d Deputy Chief of Staff Stephen Miller said<\/a> in December. It\u2019s a compelling narrative, but it\u2019s simply incorrect.\u00a0<\/p>\n The evidence for immigrants\u2019 significant economic contribution to America is overwhelming. Indeed, a new study<\/a> published recently by the Cato Institute, analyzing three decades of fiscal policy for the first time, finds Deputy Chief Miller\u2019s logic precisely backward: foreigners are creating wealth and redistributing it to Americans. The study finds that immigrants reduced the U.S. debt by nearly a third, or $14.5 trillion, from 1994 to 2023.\u00a0\u00a0<\/p>\n Without immigrants, federal debt would already be more than 200 percent of GDP \u2014 a level some analysts<\/a> fear could trigger a debt crisis.\u00a0<\/p>\n In the Trump administration\u2019s telling, each new immigrant to the United States introduces a host of new costs, principally borne by the federal government in the form of additional public spending. Yet a big chunk of government spending is what economists call \u201cpure public goods,\u201d which don\u2019t increase just because a new person enters the country. We would, for example, have to pay our military and interest on past debt even if the immigrant population had shrunk.\u00a0<\/p>\n From there, we can see that the average person in the United States paid more in taxes than they received from the government in services \u2014 which includes everything from education and welfare to roads and police. Therefore, if an immigrant\u2019s fiscal impact is no worse than the average, they reduce the debt.<\/p>\n And that is indeed the case. Immigrants pay more than the average in taxes and receive less than the average in services, greatly reducing the deficit every year since 1994 when the detailed government data series begins. On the revenue side, immigrants paid higher-than-average taxes because their employment rate was 12 percentage points higher than that of the U.S.-born population. So, there was more income to be taxed.\u00a0<\/p>\n On the spending side, the story is the same. While many believe immigrants must be a huge fiscal drain because they are more likely to live in poverty, it\u2019s important to remember that federal law prohibits<\/a> many noncitizens\u2014primarily those here illegally\u2014from receiving welfare. The truth is that immigrants receive only about the population average in \u201cneeds-based\u201d assistance.\u00a0<\/p>\n This near-average level of needs-based assistance is more than offset by the fact that they receive 34 percent less than the average in public retiree benefits. That isn\u2019t due to age: immigrants are only slightly less likely to be of retirement age. Instead, it\u2019s because many noncitizens are barred from applying for these benefits based on their legal status and only rarely work for the government, so they aren\u2019t eligible for expensive public pensions.\u00a0<\/p>\n Immigrants are also much less likely to be in prisons or jails, reducing incarceration costs. But the far greater savings come from education. The average age at arrival for immigrants was about 25, after their education is typically over, so immigration gives the country fully educated workers ready to enter the labor force\u2014effectively for free.<\/p>\n It\u2019s a far cry from the administration\u2019s assertion that immigrants impose a public cost.<\/p>\n We still don\u2019t know what kind of deal Congress will strike on immigration. But the data are clear that immigrants can have impressively positive effects on the government\u2019s finances. They also point to a possible compromise along the lines of the bipartisan Dignity Act<\/a>, sponsored by Reps. Maria Elvira Salazar, R-Florida, and Veronica Escobar, D-Texas, which would give currently deportable immigrants without serious criminal records the right to stay, work, and pay taxes with little access to public benefits. A proposal along those lines would have much more positive fiscal effects than the current mass deportation strategy.<\/p>\n