Eric Ruark's picture


  by  Eric Ruark

The Congressional Budget Office (CBO) released a report on the fiscal impact of the Dream Act of 2017 (S.1615) introduced by Senators Lindsay Graham (R-SC) and Dick Durbin (D-Ill.). This process, known as a “scoring,” is done on almost every major bill introduced into committee by Congress. What the CBO found is that the DREAM Act would increase the federal deficit by $25.9 billion over a ten-year period. This is based on its estimation that approximately 2 million individuals will receive legal status and work authorization under the Dream Act. This number is more than double those who are currently benefiting from the extralegal DACA program.

The CBO said:

The bill would affect direct spending by conferring eligibility for federal benefits—health insurance subsidies and benefits under Medicaid and the Supplemental Nutrition Assistance Program (SNAP), among others—provided that those applicants met the other eligibility requirements for those programs.

While it involves a number of factors, calculating the fiscal impact of a piece of legislation is straightforward. The determination is whether or not a bill will result in more money going out of the Treasury than coming in. The CBO concluded that the individuals who will receive amnesty under the Dream Act will, on average, cost the government more than they will pay in taxes.

NOTE: The CBO only considered the first decade after passage. The real government spending on benefits for Dream Act recipients, who are relatively young, will come much later when they qualify for Social Security and Medicare payouts.**

The CBO also considered Chain Migration. It estimated that in the first ten years after enactment:

S. 1615 would cause around 80,000 more people to receive LPR status—as the immediate relatives of the direct beneficiaries of S. 1615 who naturalize—than would be the case under current law.

However, it noted that:

In subsequent decades, some of the additional people who would receive LPR status through chain migration would arrive from abroad.

This Chain Migration would only heighten fiscal outlays in the coming decades.

A common argument that an immigration amnesty will boost revenue is that legalized workers will be much more likely to report their income and pay taxes on that income. The CBO did account for this, yet it also observed that employers would be more likely to take tax exemptions on these legalized employees, reducing overall revenues. And, a provision of the Affordable Care Act would reduce incomes for newly legalized workers who must comply with the law if they file income taxes.

Those increases in revenues [of legalized workers] would be mostly offset for two reasons. First, increased reporting of employment income would result in increases in tax deductions by businesses for labor compensation, including those businesses’ contributions to payroll taxes. As a result, corporations would report lower taxable profits and pay less in income taxes….Second, CBO and JCT estimate that there would be a $1.2 billion decrease in revenues over the 2018-2027 period associated with increases in the nonrefundable portion of the premium assistance tax credit provided through the health insurance marketplaces established under the Affordable Care Act.

Reforming the U.S. immigration to admit fewer, higher-skilled immigrants would very likely have a positive fiscal effect (an economic, too). However, this is not the case with amnesty, in this particular case, the Dream Act of 2017.

ERIC RUARK is the Director of Research for NumbersUSA

Updated: Fri, Dec 29th 2017 @ 4:20pm EST

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