Overstating Border Reform's Price

Would offering undocumented immigrants a path to legalization bust the federal budget? Critics of the Senate immigration bill, which seeks to crack down on illegal immigration while giving many currently undocumented workers a chance to work legally in this country, tout a Congressional Budget Office study that they say shows the bill would cost a whopping $126 billion over 10 years. A fair reading of that study, however, suggests that the bill's actual impact on the deficit would be close to zero and that it could even be beneficial.

Critics add up the bill's increased tax-credit and entitlement costs while ignoring the increased tax revenue it would produce. They also substantially inflate the increased discretionary government spending that would result and overlook the bill's expected positive effects on the economy.

Let's start with revenue. The CBO found that the Senate bill would boost tax revenue by $44 billion over 10 years by increasing the size of the workforce and the number of immigrants working "above ground" and paying taxes. This would roughly offset the $48 billion in increased entitlement costs that the CBO projects under the bill. Indeed, it estimated that after the first few years, new tax collections actually would exceed new entitlement spending.

The CBO also predicts that this increase in the size of the workforce would produce benefits for the economy. Both the Congressional Budget Office and the Office of Management and Budget expect a slowdown in economic growth in coming decades as the population ages and growth in the supply of workers grinds nearly to a halt. The CBO estimates the Senate bill -- because it would expand the workforce -- would boost the economy, possibly by enough to produce an additional $100 billion or more in revenue over 10 years.

This means that the Senate bill would probably reduce long-term deficits, not enlarge them. Similarly, the Social Security actuaries have found that the Senate bill would reduce the Social Security trust fund's long-term deficit and extend the program's solvency by two years.

So how did critics of the Senate bill arrive at the sensational $126 billion figure, which appears nowhere in the CBO report? First, they counted all of the bill's spending increases while ignoring all of its increases in revenue. For example, they counted the increased costs of Social Security and Medicare benefits for those additional immigrants who would qualify for them, while ignoring the increased Social Security and Medicare payroll taxes the immigrants would pay to qualify for those benefits.

They also incorrectly assumed that the Senate bill requires $78 billion in added discretionary spending. To be sure, the bill would authorize future appropriations of roughly that amount over 10 years. But none of these funds would actually be spent unless Congress provided them in future appropriations bills. The federal budget contains hundreds of programs that Congress funds below -- often far below -- the authorized amounts.

In addition, each year Congress must fit appropriations within an overall appropriations limit, as set in the congressional budget resolution. Funding increases for one set of programs often must be offset by reductions in other programs. Consequently, any increase in discretionary spending arising from the Senate bill is likely to be offset, at least in part, by cuts in other areas. For each of the past four years Congress has made across-the-board cuts in discretionary programs to accommodate new priorities while remaining within the prescribed limits. The CBO itself did not include the $78 billion figure in its estimate of how much new spending the Senate bill actually provides.

Finally, whatever portion of the $78 billion ultimately shows up in future appropriations will probably be provided whether Congress passes the Senate bill or not. That is because more than 90 percent of the authorized discretionary spending would go toward the kind of enforcement measures the bill's critics strongly support, such as expanded border security and stronger measures to identify immigrants illegally seeking employment. Republican congressional leaders have made clear their intention to increase funding for enforcement activities by billions of dollars in appropriation bills that they will consider this month. Indeed, Rep. Harold Rogers, a key Appropriations subcommittee chairman, declared this week that the leadership will provide "tons of money" for this.

Because it is a subject that stirs strong emotions, debates over immigration policy demand fact and solid analysis. As Congress searches for agreement on immigration legislation, mistaken claims that the Senate bill would bust the budget only make this already difficult job harder.

Robert Greenstein is executive director of the Center on Budget and Policy Priorities. James Horney is a senior fellow at the center and former chief of the budget projections unit at the Congressional Budget Office.