With the Senate having passed its version of immigration reform, the House is now preparing to act, with the outcome quite uncertain. While much of the debate and legislation is clearly a battle for future political advantage, one issue in the debate is the economic impact of the reform. In debating the economics of this issue many of the facts being used present a very distorted view of the truth by only focusing on a part of the whole picture.
The Congressional Budget Office issued a report this week analyzing an earlier version of the Senate bill. CBO estimated the legislation would reduce the federal deficit by $175 billion over the first ten years. Backers of the legislation quickly trumpeted the report as an additional reason to support the bill. However, both the context and the big picture are missing from the CBO report.
To begin to put the numbers in context, it is worth pointing out that the estimated improvement in the budget amounts to less than one-half of one percent of federal spending and somewhere around two percent of the budget deficit. In other words, while $175 billion sounds big because it is a ten year total it is really too small to be meaningful. Essentially this is rounding error.
As amendments were offered, the economic impact of the legislation changed. Since the CBO report was issued an amendment on border security has been accepted that will increase government costs, reducing the fiscal benefit by at least $30 billion. Even though the bill has now passed, there is no new CBO analysis of the final bill, so the budget impact may continue to be revised.
Also, the CBO report clearly states its numbers are based on the assumption that the legalized immigrants will receive no federal welfare benefits.
(Excerpt) Read more at forbes.com ...
