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CBO: DREAM Act Will Reduce The Deficit

Andrea Nill: The increase in authorized workers would affect individual and corporate income taxes, as well as social insurance taxes. On balance, those changes would increase revenues by $2.3 billion over 10 years.

CBO Estimates DREAM Act Will Reduce The Deficit By $1.4 Billion Over Ten Years

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This week, Sen. Jeff Sessions (R-AL) demanded that the Development, Relief and Education for Alien Minors (DREAM) Act be put on hold because, according to him, lawmakers haven’t been given the opportunity to “properly review and consider the legislation prior to a vote.” One of his primary complaints was that the Congressional Budget Office (CBO) had not yet scored the costs associated with enacting the legislation.

Last night, the CBO released the long-awaited cost estimate of S. 3992, the latest version of the DREAM Act. The CBO found that putting thousands of young, undocumented immigrants on a path to legalization would reduce the deficit by $1.4 billion over ten years:

The increase in authorized workers would affect individual and corporate income taxes, as well as social insurance taxes. On balance, those changes would increase revenues by $2.3 billion over 10 years, according to estimates provided by the staff of the Joint Committee on Taxation (JCT).

CBO and JCT estimate that enacting the bill would reduce deficits by about $1.4 billion over the 2011-2020 period. That result reflects an increase in on-budget deficits of about $1.4 billion over that period and a decrease in off-budget deficits of about $2.8 billion over the same period. Only the on-budget effects are counted for purposes of enforcing the Statutory Pay-As-You-Go Act of 2010.

The DREAM Act has been introduced several times throughout the past decade, so Sessions’ grievances about not having enough time to review the legislation didn’t really hold water to begin with. The CBO score also shouldn’t come as a surprise. In order to qualify for the DREAM Act, young undocumented immigrants must fulfill a list of requirements that includes either enlisting in the military or going to college. Many will opt for either both or the latter. Rather than working in the underground economy, those who receive a bachelor’s degree will have the opportunity to actually use their college degrees to boost their income which results in increased tax revenue.

With that said, the CBO did note that “the bill would increase projected deficits by more than $5 billion in at least one of the four consecutive 10-year periods [italics added] starting in 2021.” However, the CBO did not provide a complementary estimate of how much money legalized youth would continue to pay into the system after 2020. In other words, the $5 billion long-term cost estimate does not account for the billions of dollars legalized youth would pay in taxes throughout their lifetimes. It’s reasonable to expect that if they contribute $2.8 billion during their first ten years working in the U.S. with a“conditional nonimmigrant” status, this number will continue to grow as they progress in their careers and eventually qualify for legal permanent residency and ultimately citizenship.

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Luckily, other experts and academics have provided more insight into the increase in long-term earnings that result from legalization. A recent study by the UCLA North American Integration and Development Center showed that the total earnings of DREAM Act beneficiaries over the course of their working lives would generate approximately $1.4 trillion to $3.6 trillion over a 40-year period. Arizona State University found that people who obtain a bachelor’s degree earn approximately $750,000 more over the course of their lifetime than those who only have high-school diploma. Given that by 2025, our nation will be short 16 million college-educated workers, the DREAM Act may even help the U.S. avoid a potential crisis.

Meanwhile, the alternatives that Sessions supports would cost billions more than even the most outlandish estimates put forth on the DREAM Act so far. The Center for American Progress recently found that a successful policy of mass deportation would total approximately $285 billion within five years alone. It would also cost each American man, woman, and child $922 in new taxes. Mass deportation would reduce U.S. GDP by 1.46 percent and amount to $2.6 trillion in cumulative lost GDP over then years, not including the actual cost of deportation.

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Andrea Christina Nill

Since it costs approximately $23,148 for each person to be apprehended, detained, legally processed, and finally transported it would cost about $23.148 billion $25.46 billion to deport the million or so 1.1 million undocumented immigrants who would actually receive legal permanent resident status as a result of the DREAM Act.

It’s doubtful that Sessions will acknowledge any of this data and will instead choose to blindly cling to his ignorant talking points. Yet, it’s possible that the CBO score, together with previous studies, will encourage at least a few Republicans to bypass Sessions’ illogical demands and make the benefits of the DREAM Act a reality.

Andrea Nill

Republished from the Wonk Room with permission.