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Imprimus, January 2019 • Volume 48, Number 1
Seventy miles northwest of New York City is a hospital that looks like a prison, its drab brick buildings wrapped in layers of fencing and barbed wire. This grim facility is called the Mid-Hudson Forensic Psychiatric Institute. It’s one of three places the state of New York sends the criminally mentally ill—defendants judged not guilty by reason of insanity.
Until recently, my wife Jackie—Dr. Jacqueline Berenson—was a senior psychiatrist there. Many of Mid-Hudson’s 300 patients are killers and arsonists. At least one is a cannibal. Most have been diagnosed with psychotic disorders like schizophrenia that provoked them to violence against family members or strangers.
A couple of years ago, Jackie was telling me about a patient. In passing, she said something like, Of course he’d been smoking pot his whole life.
Of course? I said.
Yes, they all smoke.
So marijuana causes schizophrenia?
I was surprised, to say the least. I tended to be a libertarian on drugs. Years before, I’d covered the pharmaceutical industry for The New York Times. I was aware of the claims about marijuana as medicine, and I’d watched the slow spread of legalized cannabis without much interest.
Jackie would have been within her rights to say, I know what I’m talking about, unlike you. Instead she offered something neutral like, I think that’s what the big studies say. You should read them.
So I did. The big studies, the little ones, and all the rest. I read everything I could find. I talked to every psychiatrist and brain scientist who would talk to me. And I soon realized that in all my years as a journalist I had never seen a story where the gap between insider and outsider knowledge was so great, or the stakes so high.
I began to wonder why—with the stocks of cannabis companies soaring and politicians promoting legalization as a low-risk way to raise tax revenue and reduce crime—I had never heard the truth about marijuana, mental illness, and violence.
Over the last 30 years, psychiatrists and epidemiologists have turned speculation about marijuana’s dangers into science. Yet over the same period, a shrewd and expensive lobbying campaign has pushed public attitudes about marijuana the other way. And the effects are now becoming apparent.
Almost everything you think you know about the health effects of cannabis, almost everything advocates and the media have told you for a generation, is wrong.
They’ve told you marijuana has many different medical uses. In reality marijuana and THC, its active ingredient, have been shown to work only in a few narrow conditions. They are most commonly prescribed for pain relief. But they are rarely tested against other pain relief drugs like ibuprofen—and in July, a large four-year study of patients with chronic pain in Australia showed cannabis use was associated with greater pain over time.
They’ve told you cannabis can stem opioid use—“Two new studies show how marijuana can help fight the opioid epidemic,” according to Wonkblog, a Washington Post website, in April 2018— and that marijuana’s effects as a painkiller make it a potential substitute for opiates. In reality, like alcohol, marijuana is too weak as a painkiller to work for most people who truly need opiates, such as terminal cancer patients. Even cannabis advocates, like Rob Kampia, the co-founder of the Marijuana Policy Project, acknowledge that they have always viewed medical marijuana laws primarily as a way to protect recreational users.
As for the marijuana-reduces-opiate-use theory, it is based largely on a single paper comparing overdose deaths by state before 2010 to the spread of medical marijuana laws— and the paper’s finding is probably a result of simple geographic coincidence. The opiate epidemic began in Appalachia, while the first states to legalize medical marijuana were in the West. Since 2010, as both the epidemic and medical marijuana laws have spread nationally, the finding has vanished. And the United States, the Western country with the most cannabis use, also has by far the worst problem with opioids.
Research on individual users—a better way to trace cause and effect than looking at aggregate state-level data—consistently shows that marijuana use leads to other drug use. For example, a January 2018 paper in the American Journal of Psychiatry showed that people who used cannabis in 2001 were almost three times as likely to use opiates three years later, even after adjusting for other potential risks.
Most of all, advocates have told you that marijuana is not just safe for people with psychiatric problems like depression, but that it is a potential treatment for those patients. On its website, the cannabis delivery service Eaze offers the “Best Marijuana Strains and Products for Treating Anxiety.” “How Does Cannabis Help Depression?” is the topic of an article on Leafly, the largest cannabis website. But a mountain of peer-reviewed research in top medical journals shows that marijuana can cause or worsen severe mental illness, especially psychosis, the medical term for a break from reality. Teenagers who smoke marijuana regularly are about three times as likely to develop schizophrenia, the most devastating psychotic disorder.
After an exhaustive review, the National Academy of Medicine found in 2017 that “cannabis use is likely to increase the risk of developing schizophrenia and other psychoses; the higher the use, the greater the risk.” Also that “regular cannabis use is likely to increase the risk for developing social anxiety disorder.”
Over the past decade, as legalization has spread, patterns of marijuana use—and the drug itself—have changed in dangerous ways.
Legalization has not led to a huge increase in people using the drug casually. About 15 percent of Americans used cannabis at least once in 2017, up from ten percent in 2006, according to a large federal study called the National Survey on Drug Use and Health. (By contrast, about 65 percent of Americans had a drink in the last year.) But the number of Americans who use cannabis heavily is soaring. In 2006, about three million Americans reported using cannabis at least 300 times a year, the standard for daily use. By 2017, that number had nearly tripled, to eight million, approaching the twelve million Americans who drank alcohol every day. Put another way, one in 15 drinkers consumed alcohol daily; about one in five marijuana users used cannabis that often.
Cannabis users today are also consuming a drug that is far more potent than ever before, as measured by the amount of THC—delta-9-tetrahydrocannabinol, the chemical in cannabis responsible for its psychoactive effects—it contains. In the 1970s, the last time this many Americans used cannabis, most marijuana contained less than two percent THC. Today, marijuana routinely contains 20 to 25 percent THC, thanks to sophisticated farming and cloning techniques—as well as to a demand by users for cannabis that produces a stronger high more quickly. In states where cannabis is legal, many users prefer extracts that are nearly pure THC. Think of the difference between near-beer and a martini, or even grain alcohol, to understand the difference.
These new patterns of use have caused problems with the drug to soar. In 2014, people who had diagnosable cannabis use disorder, the medical term for marijuana abuse or addiction, made up about 1.5 percent of Americans. But they accounted for eleven percent of all the psychosis cases in emergency rooms—90,000 cases, 250 a day, triple the number in 2006. In states like Colorado, emergency room physicians have become experts on dealing with cannabis-induced psychosis.
Cannabis advocates often argue that the drug can’t be as neurotoxic as studies suggest, because otherwise Western countries would have seen population-wide increases in psychosis alongside rising use. In reality, accurately tracking psychosis cases is impossible in the United States. The government carefully tracks diseases like cancer with central registries, but no such registry exists for schizophrenia or other severe mental illnesses.
On the other hand, research from Finland and Denmark, two countries that track mental illness more comprehensively, shows a significant increase in psychosis since 2000, following an increase in cannabis use. And in September of last year, a large federal survey found a rise in serious mental illness in the United States as well, especially among young adults, the heaviest users of cannabis.
According to this latter study, 7.5 percent of adults age 18-25 met the criteria for serious mental illness in 2017, double the rate in 2008. What’s especially striking is that adolescents age 12-17 don’t show these increases in cannabis use and severe mental illness.
A caveat: this federal survey doesn’t count individual cases, and it lumps psychosis with other severe mental illness. So it isn’t as accurate as the Finnish or Danish studies. Nor do any of these studies prove that rising cannabis use has caused population-wide increases in psychosis or other mental illness. The most that can be said is that they offer intriguing evidence of a link.
Advocates for people with mental illness do not like discussing the link between schizophrenia and crime. They fear it will stigmatize people with the disease. “Most people with mental illness are not violent,” the National Alliance on Mental Illness (NAMI) explains on its website. But wishing away the link can’t make it disappear. In truth, psychosis is a shockingly high risk factor for violence. The best analysis came in a 2009 paper in PLOS Medicine by Dr. Seena Fazel, an Oxford University psychiatrist and epidemiologist. Drawing on earlier studies, the paper found that people with schizophrenia are five times as likely to commit violent crimes as healthy people, and almost 20 times as likely to commit homicide.
NAMI’s statement that most people with mental illness are not violent is of course accurate, given that “most” simply means “more than half”; but it is deeply misleading. Schizophrenia is rare. But people with the disorder commit an appreciable fraction of all murders, in the range of six to nine percent.
“The best way to deal with the stigma is to reduce the violence,” says Dr. Sheilagh Hodgins, a professor at the University of Montreal who has studied mental illness and violence for more than 30 years.
The marijuana-psychosis-violence connection is even stronger than those figures suggest. People with schizophrenia are only moderately more likely to become violent than healthy people when they are taking antipsychotic medicine and avoiding recreational drugs. But when they use drugs, their risk of violence skyrockets. “You don’t just have an increased risk of one thing—these things occur in clusters,” Dr. Fazel told me.
Along with alcohol, the drug that psychotic patients use more than any other is cannabis: a 2010 review of earlier studies in Schizophrenia Bulletin found that 27 percent of people with schizophrenia had been diagnosed with cannabis use disorder in their lives. And unfortunately—despite its reputation for making users relaxed and calm—cannabis appears to provoke many of them to violence.
A Swiss study of 265 psychotic patients published in Frontiers of Forensic Psychiatry last June found that over a three-year period, young men with psychosis who used cannabis had a 50 percent chance of becoming violent. That risk was four times higher than for those with psychosis who didn’t use, even after adjusting for factors such as alcohol use. Other researchers have produced similar findings. A 2013 paper in an Italian psychiatric journal examined almost 1,600 psychiatric patients in southern Italy and found that cannabis use was associated with a ten-fold increase in violence.
The most obvious way that cannabis fuels violence in psychotic people is through its tendency to cause paranoia—something even cannabis advocates acknowledge the drug can cause. The risk is so obvious that users joke about it and dispensaries advertise certain strains as less likely to induce paranoia. And for people with psychotic disorders, paranoia can fuel extreme violence. A 2007 paper in the Medical Journal of Australia on 88 defendants who had committed homicide during psychotic episodes found that most believed they were in danger from the victim, and almost two-thirds reported misusing cannabis—more than alcohol and amphetamines combined.
Yet the link between marijuana and violence doesn’t appear limited to people with preexisting psychosis. Researchers have studied alcohol and violence for generations, proving that alcohol is a risk factor for domestic abuse, assault, and even murder. Far less work has been done on marijuana, in part because advocates have stigmatized anyone who raises the issue. But studies showing that marijuana use is a significant risk factor for violence have quietly piled up. Many of them weren’t even designed to catch the link, but they did. Dozens of such studies exist, covering everything from bullying by high school students to fighting among vacationers in Spain.
In most cases, studies find that the risk is at least as significant as with alcohol. A 2012 paper in the Journal of Interpersonal Violence examined a federal survey of more than 9,000 adolescents and found that marijuana use was associated with a doubling of domestic violence; a 2017 paper in Social Psychiatry and Psychiatric Epidemiology examined drivers of violence among 6,000 British and Chinese men and found that drug use—the drug nearly always being cannabis—translated into a five-fold increase in violence.
Today that risk is translating into real-world impacts. Before states legalized recreational cannabis, advocates said that legalization would let police focus on hardened criminals rather than marijuana smokers and thus reduce violent crime. Some advocates go so far as to claim that legalization has reduced violent crime. In a 2017 speech calling for federal legalization, U.S. Senator Cory Booker said that “states [that have legalized marijuana] are seeing decreases in violent crime.” He was wrong.
The first four states to legalize marijuana for recreational use were Colorado and Washington in 2014 and Alaska and Oregon in 2015. Combined, those four states had about 450 murders and 30,300 aggravated assaults in 2013. Last year, they had almost 620 murders and 38,000 aggravated assaults—an increase of 37 percent for murders and 25 percent for aggravated assaults, far greater than the national increase, even after accounting for differences in population growth.
Knowing exactly how much of the increase is related to cannabis is impossible without researching every crime. But police reports, news stories, and arrest warrants suggest a close link in many cases. For example, last September, police in Longmont, Colorado, arrested Daniel Lopez for stabbing his brother Thomas to death as a neighbor watched. Daniel Lopez had been diagnosed with schizophrenia and was “self-medicating” with marijuana, according to an arrest affidavit.
In every state, not just those where marijuana is legal, cases like Lopez’s are far more common than either cannabis or mental illness advocates acknowledge. Cannabis is also associated with a disturbing number of child deaths from abuse and neglect—many more than alcohol, and more than cocaine, methamphetamines, and opioids combined—according to reports from Texas, one of the few states to provide detailed information on drug use by perpetrators.
These crimes rarely receive more than local attention. Psychosis-induced violence takes particularly ugly forms and is frequently directed at helpless family members. The elite national media prefers to ignore the crimes as tabloid fodder. Even police departments, which see this violence up close, have been slow to recognize the trend, in part because the epidemic of opioid overdose deaths has overwhelmed them.
So the black tide of psychosis and the red tide of violence are rising steadily, almost unnoticed, on a slow green wave.
For centuries, people worldwide have understood that cannabis causes mental illness and violence—just as they’ve known that opiates cause addiction and overdose. Hard data on the relationship between marijuana and madness dates back 150 years, to British asylum registers in India. Yet 20 years ago, the United States moved to encourage wider use of cannabis and opiates.
In both cases, we decided we could outsmart these drugs—that we could have their benefits without their costs. And in both cases we were wrong. Opiates are riskier, and the overdose deaths they cause a more imminent crisis, so we have focused on those. But soon enough the mental illness and violence that follow cannabis use will also be too widespread to ignore.
Whether to use cannabis, or any drug, is a personal decision. Whether cannabis should be legal is a political issue. But its precise legal status is far less important than making sure that anyone who uses it is aware of its risks. Most cigarette smokers don’t die of lung cancer. But we have made it widely known that cigarettes cause cancer, full stop. Most people who drink and drive don’t have fatal accidents. But we have highlighted the cases of those who do.
We need equally unambiguous and well-funded advertising campaigns on the risks of cannabis. Instead, we are now in the worst of all worlds. Marijuana is legal in some states, illegal in others, dangerously potent, and sold without warnings everywhere.
But before we can do anything, we — especially cannabis advocates and those in the elite media who have for too long credulously accepted their claims — need to come to terms with the truth about the science on marijuana. That adjustment may be painful. But the alternative is far worse, as the patients at Mid-Hudson Forensic Psychiatric Institute — and their victims — know.
The above article was adapted from a speech delivered on January 15, 2019, at Hillsdale College’s Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship in Washington, D.C.
Alex Berenson is a graduate of Yale University with degrees in history and economics. He began his career in journalism in 1994 as a business reporter for the Denver Post, joined the financial news website TheStreet.com in 1996, and worked as an investigative reporter for The New York Times from 1999 to 2010, during which time he also served two stints as an Iraq War correspondent. In 2006 he published The Faithful Spy, which won the 2007 Edgar Award for best first novel from the Mystery Writers of America. He has published ten additional novels and two nonfiction books, The Number: How the Drive for Quarterly Earnings Corrupted Wall Street and Corporate America and Tell Your Children: The Truth About Marijuana, Mental Illness, and Violence.
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Many Americans today have an ambivalent stance toward the free press. On the one hand, nearly all citizens assent to the idealism that originally justified its creation: We value the discovery and circulation of the truth, and the prevention of governmental tyranny. As such, the press is meant to serve both intellectual and political liberty. Yet, on the other hand, few citizens directly experience this idealism, feeling instead the press’s forcefulness, flattery, vehemence, and sometimes fanaticism — often akin to warfare directed at their minds and sentiments. Rather than heading off intellectual and political dogma, the press often creates or disseminates it. A great disparity thus exists between the press’s ideals and its practice today.
As originally understood by many of America’s founders, the open circulation of the truth through the press would serve both society and the individual. As Thomas Jefferson explains,
No experiment can be more interesting than that we are now trying, and which we trust will end in establishing the fact, that man may be governed by reason and truth. Our first object should therefore be, to leave open to him all the avenues to truth. The most effectual hitherto found, is the freedom of the press.
In addition, many of America’s founders also understood the press as an essential bulwark against government for the securing of individual rights. Jefferson, again, summarizes:
I am…for freedom of the press, and against all violations of the Constitution to silence by force and not by reason the complaints or criticisms, just or unjust, of our citizens against the conduct of their agents.
The press, and especially the mass press, is a means by which to enforce accountability and responsibility in the government, and to thereby compel government’s virtue.
Moreover, newspapers even help “maintain civilization,” as Alexis de Tocqueville observes in Democracy in America. By giving democratic citizens common opinions, common sympathies, and a resource for common action, newspapers can help prevent the individuation and isolation of citizens to which democracy disposes them.
These idealistic aims markedly diverge from the mass press’s actual behavior and its effects on republicanism. And that is not a new problem. During America’s founding, as historian Leonard Levy observes, an “extraordinary partisanship, vitality, and invective had become ordinary” in the press. Indeed, today’s press has similar inclinations, often imposing onto the public its taste for derision and ridicule, which it substitutes for depth and thoughtfulness. Examples abound, but consider the Huffington Post‘s editor’s note, added to nearly every article referencing Donald Trump during the 2016 election:
“Donald Trump regularly incites political violence and is a serial liar, rampant xenophobe, racist, misogynist and birther who has repeatedly pledged to ban all Muslims — 1.6 billion members of an entire religion — from entering the U.S.”
Not stopping at public figures, the press also satisfies its penchant for crushing the will of private citizens and groups through shame and fear, making them feel their smallness and brittleness. Its behavior, in sum, often discloses the press’s tacit opinion concerning America’s moral hierarchy: that the press is not merely a fourth estate, but the judge of would-be rulers, and therefore the master, or at least the kingmaker. Yet it remains unclear whether the press rules with the spirit of humanity and prudence, or whether it is animated by the desire to dominate the public mind. It frequently vacillates between these extremes.
By contrast to the early Jefferson, Benjamin Franklin had no illusions about the character of the press in America. Few serious thinkers have reflected with as much clarity on the nature of the press as Franklin. And no other thinker has had so much experience and commercial success in it. A lifelong defender of the freedom of the press, Franklin was nevertheless not uncritical of its effects.
Franklin’s short but rich essay, “An Account of the Supremest Court of Judicature in Pennsylvania, viz., The Court of the Press,” written a year before his death in 1790, lays out a comprehensive analysis of the press: its effects on politics and the democratic mind, its mode of rule, and the origins of its power. His study is, in a sense, an examination of the effectual truth of the principle underlying freedom of the press. His reflections are urgently needed today.
The press, Franklin argues, unlike any other republican institution, has a power that does not fall under any constitutional check. It is motivated to act viciously by its very principle (created to attack dogma, false knowledge, and political corruption), though in practice it is neither limited nor moderated by either its own idealism or by any institution. While the press claims to rule like a court — passing all things before its judgment — it may rule tyrannically because it is liberated from considerations of justice or precedent. Thus unchecked, the press can subvert rational habits of mind among citizens and reverence for the law while flattering public resentments and antagonizing citizens’ pride. Franklin was consciously witnessing the birth of a new class, a kind of press corps, created by this new principle, and his assessment of the human content of this class is contrasted with the powers it wields. For Franklin, a free press must be checked by a vigilant and jealous public, which he hopes to energize against abuses of liberty.
Franklin’s literary style differs from that of the other founders. As University of Chicago professor Ralph Lerner has observed, Franklin often “works on us through indirection and insinuation. But he leaves it to us to catch his drift.” In his analysis of the press, Franklin tacitly points out both the problems with our idealism (so as to soften their deleterious effects) and the conflicts in our motives and hopes (so as to encourage a liberating skepticism). He does so with a view to protecting democratic self-respect while exposing and ridiculing the ability of the press to undermine the host democracy’s institutions.
POWER AND SUBVERSION
In order to get at Franklin’s perspective on the press in America, we need to take a step back to get a sense of its powers. According to Franklin, the press’s powers resemble those of a “court,” a term he uses in several ways. In the first sense, the press resembles a conventional court of law: It has the power to “judge, sentence, and condemn to infamy” citizens both public and private. The press even carries out court-like powers by conducting what look like hearings and inquiries. And since in a republic none can claim superiority to the law, “all persons” and “all inferior courts” are subject to its jurisdiction and judgment. In this way, the press claims to imitate the majesty, objectivity, and moral authority of a court of law.
The press does these things, however, without being “governed by any of the rules of common courts of law.” Unlike a legal court, the press is not part of the judicial system and is therefore not subject to the institutional checks that moderate political power and authority. While the claims to equity and justice authorize such powers in a court of law, the press is neither restrained by legal precedent nor by evidentiary standards that assure the maintenance of those claims. Thus, for example, rather than relying on witnesses sworn to truthfulness, it may use anonymous sources, who suffer no consequences for dishonesty. In fact, as it often rules through mere “accusation,” no limits seem to exist on the nature or extent of the accusations, just as there are no limits on who can be accused.
The press’s proceedings occur “with or without inquiry or hearing, at the court’s discretion” (emphasis in original). The press acts on its own initiative, rather than through citizen or executive complaint. It can pick and choose its own cases — selectively closing its eyes to some, while opening them to others — not with a view to satisfying justice or the law, but in accordance with its own prejudices or interests. Since the press follows its own discretion, its operations and methods are not fully knowable, and one therefore cannot appeal to it rationally. The press is conscious of this supremacy, Franklin contends.
The press also resembles a religious court, Franklin half-jokes, the “Spanish Court of Inquisition,” in its moral authority to force and shape belief through fear and intimidation. Like the Spanish Inquisition, the press enforces its pre-eminence by reaching into individual souls and compelling belief. When the press acts against individuals and institutions:
The accused is allowed no grand jury to judge of the truth of the accusation before it is publicly made, nor is the Name of the Accuser made known to him, nor has he an Opportunity of confronting the Witnesses against him; for they are kept in the dark, as in the Spanish Court of Inquisition.
The open presentation of evidence of wrongdoing corroborated by facts shows respect for rational and transparent procedures that embody the spirit of justice. Such proceedings presume citizens’ intellectual capacity to be convinced by the force of facts and arguments. With the Inquisition, to the contrary, assent is founded on fear and intimidation, as one would expect from despotism. Here there is darkness, mystery, and anxious anticipation. In its practice, Franklin contends, the press contradicts the principles by which it justifies its authority: It claims that belief stems from the free and rational persuasion of the mind, but in its deeds it insists that belief should be compelled through its own powers of insinuation, intimidation, and accusation.
The press has a despotic inclination for making citizens experience its overwhelming power: It takes an “honest” and “good” citizen who, through what is almost a miraculous transformation, “in the same Morning” is judged and condemned by the press to be a “Rogue and a Villain” (emphasis in the original). Its rapidity and forcefulness appear to be almost irresistible. Though the press does not burn individuals at the stake, nonetheless, like tribunals of the Spanish Inquisition, Franklin sees in the press the capacity for fanaticism originating in complete confidence in its ability to judge.
This unrestrained power can even willfully direct public opinion against the law itself, perhaps despite the public’s interests. We witness one contemporary example of this power. Whatever one’s view of immigration policy might be, the press, by relentlessly calling “illegal aliens” “undocumented immigrants” for years, has subtly altered public sympathies against would-be enforcers of the law. The press can make the law appear weak and its authority questionable in comparison to its own power.
Although prepared to subvert the law at times, the press relies on the law’s protection when using it for its own advantages:
[I]f an officer of this court [the unchecked untruthful press] receives the slightest check for misconduct in this his office, he claims immediately the rights of a free citizen by the Constitution, and demands to know his accuser, to confront the witnesses, and to have a fair trial by a jury of his peers.
In sum, the press sometimes reveres and sometimes subverts the law; sometimes it guides public opinion toward the law, sometimes against it. But the press always seems to know its interest in maintaining its superiority over the public mind.
SUPERIORITY AND MEDIOCRITY
Franklin asks us to contrast this remarkable power with the character of the members of the class wielding it. The freedom of the press creates a new human type that dominates the liberal-democratic landscape to this day. This new type is “appointed to this great Trust” of guiding the public intellect, deciding upon citizens’ fates, and sometimes even determining the future of the nation.
This new class, Franklin notes, is open to anyone. The officers of the press corps are not appointed by an executive authority on the basis of their virtue. Nor is the press a hereditary institution governed by and therefore subordinated to considerations of honor or tradition. (Franklin is not in favor of such alternatives, of course.) As such, he observes that under the new democratic conditions, this class is self-created, so to speak:
[A]ny Man who can procure Pen, Ink, and Paper, with a Press, and a huge pair of Blacking Balls, may commissionate himself; and his court is immediately established in the plenary Possession and exercise of its rights.
The effect of this, for Franklin, is the creation of a class requiring neither “Ability, Integrity, [nor] Knowledge.” Surely these qualities sometimes exist — look at Franklin! — but just as surely they are not necessary prerequisites. Franklin chooses his words carefully, subtly leading us to ask whether, in practice, these virtues often become their opposites: Sensationalism will often be mistaken for ability, contempt for all those inferior to it mistaken for integrity, and pedantry mistaken for knowledge. Franklin suggests that the public mind may come to imitate this confusion of virtue and vice under the press’s influence.
This class of unelected opinion makers is also unified by a specific motive, Franklin contends. It is a community that shares the “privilege of accusing and abusing the other four hundred and ninety-nine parts at their pleasure.” These numbers are invented, of course, but Franklin is pointing to the hidden motive unifying this community — the mutual indulgence in feigned superiority, the pleasure of punishing, and a taste for contempt for one’s fellow citizens and for would-be rulers. Can one serve the public if one has contempt for it?
Furthermore, Franklin observes that the powers granted to the press, through the principle authorizing its existence, often culminate in the appearance of principled courage. Feeling its superiority to individual citizens or other public institutions, the press rebels against inquiries into its authority and the modes of its rule: “For, if you make the least complaint of the judge’s conduct, he daubs his blacking balls in your face wherever he meets you.” What at first glance may seem like dignified courage in carrying out its duties is perhaps merely the protection of its own superiority coupled with vengeance against those questioning it.
Indeed, the press, Franklin argues, may use its capacity to “[mark] you out for the odium of the public, as an enemy to the liberty of the press,” in order to suppress dissent against its authority. This has the effect of crushing the voice of reason in citizens along with the self-confidence necessary for them to voice their thoughts publicly. Franklin tacitly suggests that, over time, citizens may lose their habits of reason through this kind of rule.
One barely needs to add that this class serves for its own “Emolument.” Franklin draws our attention to a dual unity in motive: Satisfying the pleasures of ruling citizens and indulging its own taste for contempt become financially lucrative under these new democratic circumstances. In an era of egalitarianism, most human beings are born without genuine wealth, the security of inherited social class and standing, or special destiny. Individuals therefore to a greater extent than ever before become their professions.
It’s important to point out that during Franklin’s time, owners of printing presses printed all kinds of things for profit: newspapers, books, and pamphlets, encompassing every subject, sometimes including the printing of the libelous and scurrilous as well. Our newspapers no longer do precisely this, of course (though it is subject to debate whether appearing to praise oneself for alleged objectivity, as newspapers do today, while printing what is essentially partisan, has polluted the moral and intellectual waters more than when, as during Franklin’s time, all citizens knew that the press was for hire). Nevertheless, the problem Franklin draws our attention to is still with us. When intermixed with the self-serving powers to command public opinion, merely aspiring to uphold a principle for one’s livelihood rarely results in independence of mind or judgment. In fact, the appearance of acting on principle can be lucrative.
As Franklin makes clear, it is not entirely obvious whether the press’s belief in its guiding principles is sincere, as it does not apply them equally to all other individuals or institutions. Today, for example, much of the press class is in favor of campaign-finance laws that regulate the expression of candidates, parties, and interest groups, but is uninterested in applying similar regulations to itself. Taken to its logical extreme, this may suggest that this class has a secret motive, aiming to limit free speech by making only its own speech acceptable. Its unwillingness to subject itself to the same standards of law and regulations as other authorities is suspect.
Franklin also sees in the press a tendency to deform and undermine the idealism necessary for republicanism. Republicanism presumes that citizens are willing, at times, to sacrifice a great deal for liberty, like the signers of the Declaration of Independence who mutually pledged their lives, fortunes, and sacred honor. Yet it is difficult to love liberty if it is experienced as moral chaos, which the press can infuse into democratic life. In fact, Franklin fears that political liberty, as redefined by the press, may come to mean the “Liberty of affronting, calumniating, and defaming one another.” In such an environment, liberty may come to be experienced as burdensome, tedious, and ugly, encouraging citizens to “cheerfully consent to exchange [their] Liberty of Abusing others for the Privilege of not being abus’d [themselves].”
In theory, the freedom of the press presumes that what is most crucially common to all human beings is each individual’s rational faculty, on the basis of which modern republicanism is created and defended. Thus, for Franklin, among the highest manifestations of the freedom of the press is the “Liberty of discussing the Propriety of Public Measures and political opinions.” By this definition, he seems to mean the publication of works like the Federalist Papers (which appeared as a series of newspaper columns) or his own writings — though he is of course aware that this standard is rarely achieved in practice. Such writings elevate and deepen citizens. One should contrast Franklin’s understanding to the recently developed public view of speech which considers dignified any spasmodic effusion of half-formed feeling, obscenity, or agitation subversive of republicanism.
These powers to abuse rather than bolster republican idealism and rational habits of character, Franklin contends, find their “natural Support” in human resentment. Resentment, a “depravity” of the human character, is a powerful though hidden source of the press’s power over the mind. Franklin quotes Juvenal’s Satires to explain:
There is a Lust in Man no Charm can tame,
Of loudly publishing his Neighbour’s Shame.
On Eagle’s Wings immortal Scandals fly,
While virtuous Actions are but born and die.
Resentment is an ugly, double-sided passion. It leads one to assert moral superiority over others, thereby demanding superior desert for oneself, while simultaneously desiring that harm befall others so as to protect one’s own inflated self-appraisal. As Franklin politely puts it, “Whoever feels pain in hearing a good character of his neighbour, will feel a pleasure in the reverse.” Resentment does not even depend on one’s own faring well, for one can be resentful and at the same time prosperous.
Franklin is being neither flippant nor pedantic regarding the central importance of resentment. He is pointing to the deeper problem which resentment reveals — human confusion about desert. As Jerry Weinberger has argued in Benjamin Franklin Unmasked, among the central premises of Franklin’s philosophical thought is that human beings want more for themselves than they deserve. This desire deludes our judgment, distorts our opinion of ourselves, and to a great extent accounts for the human comedy of errors. It also accounts for our jealous hatred of others’ success.
This passion, in conflict with republicanism, is flattered by the press, Franklin argues. In amplifying and dignifying resentment, the press cultivates its own popularity and reach. There are always many “who, despairing to rise into distinction by their virtues, are happy if others can be depressed to a level with themselves.” In flattering the public’s resentment, the press blinds it to its own mediocrity, Franklin suggests. Today, this psychology follows a predictable pattern: tacitly or overtly belittling or ridiculing human greatness, cutting it down to a digestible size, while exposing and laughing at private vices — or, alternatively, encouraging indulgence in feigned great moral feeling without the requirement of sacrifice or sincerity. The steady stream of examples of baseness, greed, and dishonesty teach the lesson that such individuals are no better than you — in fact, they are worse, because you can look down upon them. By implicitly calling resentment high-mindedness in flattering its audience, the press often both ridicules virtue and avoids making mediocrity appear contemptible.
Franklin sees the formation of a community of mutual flattery between the press’s desire to rule and the public’s resentment. On the one hand, fostering resentments maintains the press’s power over the public — for in satisfying the public in such a way, it is allowed to govern the public’s tastes and passions. And the public, on the other hand, in showing its gratitude for not being targeted or undone by the press, redoubles rewards by showing obliging subordination.
Thus, in a final sense of the press’s playing the role of a “court,” it is akin to a monarchical court, for it serves a monarch — the public. Yet in serving its monarch, does the press play the role of the French revolutionary, re-enacting the guillotine by beheading individuals or institutions in order to satisfy the public’s resentments? Oddly, the press, originally conceived as an essential means by which to preserve political and intellectual freedom, may become a mechanism through which the public oppresses itself. In suggesting that the lust to satisfy resentment guides “such minds, as have not been mended by religion, nor improved by good education,” Franklin is goading us to consider more closely the kind of education he is providing his readers, which can correct this natural defect. His wit makes us aware of our defects, while his humor attempts to shame us out of them.
LIBERTY OF PRIDE AND HONOR
Is it possible to correct for these abuses of the free press? Unlike the other powers enumerated in the Constitution, Franklin observes that the press has no corresponding check against it:
[S]o much has been written and published on the federal Constitution, and the necessity of checks in all other parts of good government has been so clearly and learnedly explained, I find myself so far enlightened as to suspect some check may be proper in this part also; but I have been at a loss to imagine any that may not be construed an infringement of the sacred liberty of the press.
Franklin jokes that the only check he can find is the “liberty of the cudgel.” In other words, the press is free to print as it pleases so long as citizens are free to go to an authentic offender “and break his head.” Franklin’s ludicrous solution points to a contradiction in republican laws.
Self-government presumes a certain measure of self-respect and pride among citizens. Republicanism depends on the conviction that individuals have the psychological and physical ability to order their lives and to legislate for themselves and their community on the basis of their judgment.
Individual pride, of course, cannot be given full reign in a republic, nor can its demands be fully satisfied. When carried to its extremes, pride points to absurd self-importance and tyranny. In republics, individual pride must be restrained to some degree for the protection of others’ rights, for too much of it can destroy a republic. Yet republican law puts man in an odd state: On the one hand, man desires the full security of his pride and therefore his reputation — loving his reputation perhaps more than his life, as Franklin observes — while the law constrains his ability to defend it fully against its attackers. Defending one’s self-respect, Franklin implies, is perhaps a right as much as any other. On the other hand, however, “the right [of the press] of abusing seems to remain in full force, the laws made against it being rendered ineffectual by the liberty of the press” (emphasis in original). Citizens cannot fully protect their self-respect while the press is given broad authorization to abuse it. For Franklin, the effect of this may be the weakening of citizens’ pride and the diminishing of their attachment to self-government, which correspondingly grows the space for the press’s influence over the mind.
What is to be done, according to Franklin? He jokes, “[L]eave the liberty of the press untouched, to be exercised in its full extent, force, and vigor; but to permit the liberty of the cudgel to go with it pari passu” (emphasis in the original). Franklin wants the vindication of republican pride — not just because he honors such sentiments, but because he thinks that such a counterbalance or check, like the checks employed in other parts of the Constitution, is necessary against the press’s powers, too. In fact, the public can unite if it is affronted, “as it ought to be,” by the press’s abuses (emphasis in original). The public can show its “moderation,” he jokes, by “tarring and feathering, and tossing them in a blanket.” Franklin is of course not advocating such actions, but he does want the public to recall its power to humiliate.
Franklin concludes by emphasizing the need to secure citizens’ reputations:
If, however, it should be thought that this proposal of mine may disturb the public peace, I would then humbly recommend to our legislators to take up the consideration of both liberties, that of the press, and that of the cudgel, and by an explicit law mark their extent and limits; and, at the same time that they secure the person of a citizen from assaults, they would likewise provide for the security of his reputation.
Balancing both liberties, for Franklin, ought to be among the highest considerations of legislators and statesmen — the liberty of the press and the liberty to defend one’s pride. One wonders whether Franklin here explicitly means only libel laws, or is also referring to citizens who are jealous of their liberty and who know their power.
The press exists as an institution to protect and strengthen republicanism, resting on the idea that human beings and public institutions must be made good, or, as we say today, made responsible. But the press can also exceed its limits, becoming over-powerful and therefore no longer serving the interests of the society that hosts it. Franklin’s solutions to the problems created by the press are partly comical, both because they are exaggerated and because relatively little, it seems, can be done about the effectual truth of this principle.
To some degree, the conservative oppositional press begun a few generations ago has addressed what is among the worst diseases of a republic: the centralization of the press. As Tocqueville observes:
When a large number of organs of the press come to advance along the same track, their influence becomes almost irresistible in the long term, and public opinion, struck always from the same side, ends by yielding under their blows.
The press’s powers (as analyzed by Franklin), combined with centralization, may be lethal to a republic. In this regard, America’s conservative oppositional press — which has no parallel anywhere else in the Western world — has greatly contributed to breaking up centralization. Yet having guided us away from the shoal of centralization, the oppositional press has created new problems.
With the help of new media technologies, the oppositional press has ushered into existence the parallel universes that American citizens now construct for themselves by choosing which press better flatters their prejudices. Alarmingly, citizens who inhabit each of these monolithic realities are more than merely at partisan ends of a political spectrum — they have become to some degree almost different kinds of beings, given the extent of their differences in sentiments, passions, habits of character, and tastes. Indeed, the new multiplicity of news sources, despite some obviously healthy effects, can create a greater and greater cacophony of similar sentiments while reducing genuine thoughtfulness. This need not, however, be our nation’s final situation.
The quality of our press will decide the fate of our civilization. We might try to follow Franklin’s general lessons in order to facilitate public discourse: bolstering citizen pride as a means of preventing the press’s excesses; diminishing the public’s resentment by ridiculing rather than flattering it; all while recalling that the press must serve republicanism rather than weaken it. For this to be possible, the press must renew its self-understanding. And the public ought to demand it. On the side of the press, this would mean a new devotion to elevating political debate — while consciously avoiding self-flattery, dogmatism, and partisan dishonesty — about important political questions facing the nation. On the side of the public, this means deepening its understanding of the stakes to the nation, and showing a new willingness to speak freely and rationally, despite the obstacles of political correctness or fear of intimidation.
Finally, lessons in moderating the press’s power and reach may be seen in Franklin’s own activity. Perhaps lampooning and parodying the press — that is, exposing it, its inferior personages, and its interests, through film, books, and on stage, as Franklin himself did — can liberate the democratic mind to some degree from its power. Also following Franklin, we see that democratic resentment — though exploited by the press — can be harnessed and directed toward useful ends. For example, resentment can despise and envy the great, or it can satisfy itself through the prosecution of corruption, both governmental and that of the press itself.
Arthur Milikh is associate director of the Heritage Foundation’s B. Kenneth Simon Center for Principles and Politics.
Abstract: Did America have a Christian Founding? This disputed question, far from being only of historical interest, has important implications for how we conceive of the role of religion in the American republic. Mark David Hall begins by considering two popular answers to the query—“Of course not!” and “Absolutely!”—both of which distort the Founders’ views. After showing that Christian ideas were one of the important intellectual influences on the Founders, he discusses three major areas of agreement with respect to religious liberty and church–state relations at the time of the Founding: Religious liberty is a right and must be protected; the national government should not create an established church, and states should have them only if they encourage and assist Christianity; and religion belongs in the public square. In short, while America did not have a Christian Founding in the sense of creating a theocracy, its Founding was deeply shaped by Christian moral truths. More important, it created a regime that was hospitable to Christians, but also to practitioners of other religions.
The role of religion in the American republic has been a source of controversy since the nation’s inception. Debates are particularly fierce when they concern religious liberty and the proper relationship between church and state. Arguments on these questions are often framed in the light of the Founders’ intentions, but unfortunately, their views are often distorted.
Did America have a Christian Founding? Two popular answers to this query—“Of course not!” and “Absolutely!”—both distort the Founders’ views. There is in fact a great deal of evidence that America’s Founders were influenced by Christian ideas, and there are many ways in which the Founders’ views might inform contemporary political and legal controversies.
Two Common but Mistaken Answers
According to those who answer “Of course not!” America’s Founders were guided by secular ideas and self, class, or state interests. These scholars do not deny that the Founders were religious, but they contend that they were mostly deists—i.e., persons who reject many Christian doctrines and who think God does not interfere in the affairs of men and nations.
For instance, historian Frank Lambert writes that “[the] significance of the Enlightenment and Deism for the birth of the American republic, and especially the relationship between church and state within it, can hardly be overstated.” Similarly, University of Chicago law professor Geoffrey Stone avers that “deistic beliefs played a central role in the framing of the American republic” and that the “Founding generation viewed religion, and particularly religion’s relation to government, through an Enlightenment lens that was deeply skeptical of orthodox Christianity.” Virtually identical claims are made by Edwin Gaustad, Steven Waldman, Richard Hughes, Steven Keillor, David Holmes, Brooke Allen, and many others.
In addition to asserting that the Founders were deists, these authors regularly contend that they abandoned their ancestors’ intolerant approach to church–state relations and embraced religious liberty. They often concede that some Founders thought civic authorities should support religion but argue that this is irrelevant as Jefferson’s and Madison’s conviction that there should be a high wall of separation between church and state was written into the Constitution and reinforced by the First Amendment. As we shall see, there are significant problems with this story.
The second answer to this question is offered by popular Christian writers such as Peter Marshall, David Manuel, John Eidsmoe, Tim LaHaye, William J. Federer, David Barton, and Gary DeMar. They contend that not only did America have a Christian Founding, but virtually all of the Founders were devout, orthodox Christians who consciously drew from their religious convictions to answer most political questions.
To support their case, these writers are fond of finding religious quotations from the Founders. The rule seems to be that if a Founder utters anything religious, at any time in his life, he counts as an orthodox or even evangelical Christian Founder. Using this methodology, Tim LaHaye concludes, for instance, that John Adams was “deeply committed to Jesus Christ and the use of Biblical principles in governing the nation,” and George Washington, if he was alive today, “would freely associate with the Bible-believing branch of evangelical Christianity that is having such a positive influence upon our nation.” This approach leads to similarly bad history.
What Exactly Would a Christian Founding Look Like?
In order to answer the question “Did America have a Christian Founding?” properly, we must first understand it. Let us begin by considering what, exactly, would constitute a Christian Founding?
One possibility is simply that the Founders identified themselves as Christians. Clearly, they did. In 1776, every European American, with the exception of about 2,500 Jews, identified himself or herself as a Christian. Moreover, approximately 98 percent of the colonists were Protestants, with the remaining 1.9 percent being Roman Catholics.
But this reality is not particularly interesting. These men and women might have been bad Christians, they may have been Christians significantly influenced by non-Christian ideas, or they may even have been Christians self-consciously attempting to create a secular political order.
Second, we might mean that the Founders were all sincere Christians. Yet sincerity is very difficult for the scholars, or anyone else, to judge. In most cases, the historical record gives us little with which to work. And even if we can determine, say, that a particular Founder was a member, regular attendee, and even officer in a church, it does not necessarily mean he was a sincere Christian. Perhaps he did these things simply because society expected it of him.
Third, we might mean that the Founders were orthodox Christians. In some cases—for example, Samuel Adams, Patrick Henry, John Jay, Roger Sherman, and John Witherspoon—there is abundant evidence that these Founders embraced and articulated orthodox Christian ideas. But the lack of records often makes it difficult to speak with confidence on this issue.
Nevertheless, in light of the many and powerful claims that the Founders were deists, it should be noted that there is virtually no evidence that more than a handful of civic leaders in the Founding era—notably Benjamin Franklin, Ethan Allen, Thomas Jefferson, John Adams, and (if we count him as an American) Tom Paine—embraced anything approximating this view. Moreover, a good argument can be made that even these Founders were influenced by Christianity in significant ways—and it certainly does not follow that they desired the strict separation of church and state.
A fourth possibility is that the Founders acted as Christians in their private and/or public lives. Some historians have argued that the Founding cannot be called Christian because some Founders did not join churches, take communion, or remain faithful to their spouses. Moreover, in their public capacity, they did not act in a Christian manner because they did things such as fight an unjust war against England and did not immediately abolish slavery.
In some cases, these critiques do not take into account historical context, such as the difficulty of joining Calvinist churches in 18th century America. In others, they neglect the traditional Christian teaching that even saints sin. If the standard of being a Christian is moral perfection, no one has ever been a Christian. Most egregious, it is profoundly unhistorical to judge the Founders by specific policy outcomes that seem perfectly clear to 21st century Christians.
This is not to say that biblical principles are relativistic, but their applications to specific issues in particular times and places may vary or be unclear. To take a contemporary example, one should be very careful in saying, for instance, that someone is a good Christian politician only if she votes for (or against) tax cuts or national health care.
A final possibility is that the Founders were influenced by Christian ideas. Scholars have spent a great amount of time attempting to discern influence. Book after book has been written about whether the Founders were most influenced by Lockean liberalism, classical republicanism, the Scottish Enlightenment, etc.
I believe that this is the most reasonable way to approach the question “Did America have a Christian Founding?” In doing so, it is important to note that nominal Christians might be influenced by Christian ideas, just as it is possible for an orthodox Christian to be influenced by non-Christian ideas. I believe that an excellent case can be made that Christianity had a profound influence on the Founders.
Before proceeding, I should emphasize that I am not arguing that Christianity was the only significant influence on America’s Founders or that it influenced each Founder in the exact same manner. Clearly there were a variety of different, but often overlapping, intellectual influences in the era. The Founders were also informed by the Anglo–American political–legal tradition and their own political experience, and like all humans, they were motivated to varying degrees by self, class, or state interests. My contention is merely that orthodox Christianity had a very significant influence on America’s Founders and that this influence is often overlooked by students of the American Founding.
What Constitutes America’s Founding?
I have assumed here that America was founded in the late 18th century, but some authors have argued, in the words of Gary DeMar, that our “nation begins not in 1776, but more than one hundred fifty years earlier.” Let us consider three major possibilities that might count as the country’s founding: (1) the establishment of colonial governments in the 17th century, (2) America’s break with Great Britain in the 1770s, and (3) the creation of a new constitutional order in the 1780s and 1790s.
- America’s Colonial Origins
Few doubt that Puritans were serious Christians attempting to create, in the words of Massachusetts Governor John Winthrop, “a shining city upon a hill” (a reference to Matthew 5:14). Puritans separated church and state, but they clearly thought the two institutions should work in tandem to support, protect, and promote true Christianity.
Other colonies, however, are often described as being significantly different from those in New England. Historian John Fea, for instance, contends that “the real appeal of Jamestown was economic opportunity and the very real possibility of striking it rich.” It is certainly the case that colonists were attracted to the New World by economic opportunity (in New England as well as in the South), and yet even in the southern colonies the protection and promotion of Christianity was more important than many authors assume. For instance, Virginia’s 1610 legal code begins:
Whereas his Majesty, like himself a most zealous prince, has in his own realms a principal care of true religion and reverence to God and has always strictly commanded his generals and governors, with all his forces wheresoever, to let their ways be, like his ends, for the glory of God….
The first three articles of this text go on to state that the colonists have embarked on a “sacred cause,” to mandate regular church attendance, and to proclaim that anyone who speaks impiously against the Trinity or who blasphemes God’s name will be put to death.
Early colonial laws and constitutions such as the Mayflower Compact, the Fundamental Orders of Connecticut, and Massachusetts Body of Liberties are filled with such language—and in some cases, they incorporate biblical texts wholesale. Perhaps more surprisingly, tolerant, Quaker Pennsylvania was more similar to Puritan New England than many realize. The Charter of Liberties and Frame of Government of the Province of Pennsylvania (1681) begins by making it clear that God has ordained government, and it even quotes Romans 13 to this effect. Article 38 of the document lists “offenses against God” that may be punished by the magistrate, including:
swearing, cursing, lying, profane talking, drunkenness, drinking of healths, obscene words, incest, sodomy…stage-plays, cards, dice, May-games, gamesters, masques, revels, bull-baiting, cock-fighting, bear-baiting, and the like, which excite the people to rudeness, cruelty, looseness, and irreligion….
An extensive survey of early colonial constitutions and laws reveals many similar provisions. As well, at least nine of the 13 colonies had established churches, and all required officeholders to be Christians—or, in some cases, Protestants. Quaker Pennsylvania, for instance, expected officeholders to be “such as possess faith in Jesus Christ.”
If one is to understand the story of the United States of America, it is important to have a proper appreciation for its Christian colonial roots. By almost any measure, colonists of European descent who settled in the New World were serious Christians whose constitutions, laws, and practices reflected the influence of Christianity. Although some authors refer to this “planting” as a “founding,” such a designation is rare among scholars. Instead, most scholars consider America to have been founded in the late 18th century around one of, or some combination of, two major events: the War for Independence and the creation of America’s constitutional order.
- The War for Independence
On the surface, the War for American Independence appears to be an inherently un-Christian event. The Apostle Paul, in Romans 13, seems to leave little room for revolution: “Let every soul be subject unto the higher powers. For there is no power but of God: the powers that be are ordained by God. Whosoever therefore resists the power, resists the ordinance of God: and they that resist shall receive to themselves damnation.”
Historically, Christian thinkers have taken this and similar biblical passages to prohibit rebellion against civic authorities. However, in the 12th century, some Christian scholars began to allow for the possibility that inferior magistrates might overthrow evil kings. These ideas were developed and significantly expanded by the Protestant Reformers. John Calvin, the most politically conservative of these men, contended that, in some cases, inferior magistrates might resist an ungodly ruler. However, Reformed leaders such as John Knox, George Buchanan, and Samuel Rutherford of Scotland, Stephanus Junius Brutus and Theodore Beza of France, and Christopher Goodman and John Ponet of England argued that inferior magistrates must resist unjust rulers and even permitted or required citizens to do so.
It is worth noting that all of these men wrote before Locke published his Two Treatises of Government and that this tradition was profoundly influential in America. Indeed, between 55 percent and 75 percent of white citizens in this era associated themselves with Calvinist churches, and members of the tradition were significantly overrepresented among American intellectual elites.
The influence of the Reformed political tradition in the Founding era is manifested in a variety of ways, but particularly noteworthy is the almost unanimous support Calvinist clergy offered to American patriots. This was noticed by the other side, as suggested by the Loyalist Peter Oliver, who railed against the “black Regiment, the dissenting Clergy, who took so active a part in the Rebellion.” King George himself reportedly referred to the War for Independence as “a Presbyterian Rebellion.” From the English perspective, British Major Harry Rooke was largely correct when he confiscated a presumably Calvinist book from an American prisoner and remarked that “[i]t is your G-d Damned Religion of this Country that ruins the Country; Damn your religion.”
The Declaration of Independence, the most famous document produced by the Continental Congress during the War for Independence, proclaims: “We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty and the pursuit of happiness.” As well, this text references “the laws of nature and of nature’s God” and closes by “appealing to the Supreme Judge of the world” and noting the signers’ “reliance on the protection of divine Providence.” The Founders’ use of Christian rhetoric and arguments becomes even more evident if one looks at other statements of colonial rights and concerns such as the Suffolk Resolves, the Declaration of Rights, and the Declaration of the Causes and Necessity of Taking up Arms—to say nothing of the dozen explicitly Christian calls for prayer, fasting, and thanksgiving issued by the Continental and Confederation Congresses.
Some scholars have argued that the use of “distant” words for God or “vague and generic God-language” like “Nature’s God,” Creator,” and “Providence” in the Declaration and other texts is evidence that the Founders were deists. However, indisputably orthodox Christians regularly used such appellations.
For instance, the Westminster Standards (a classic Reformed confession of faith), both in the original 1647 version and in the 1788 American revision, refer to the deity as “the Supreme Judge,” “the great Creator of all things,” “the first cause,” “righteous judge,” “God the Creator,” and “the supreme Law and King of all the world.” The Standards also regularly reference God’s providence and even proclaim that “[t]he light of nature showeth that there is a God….” Similarly, Isaac Watts, the “father of English Hymnody,” referred to the deity as “nature’s God” in a poem about Psalm 148: 10. Jeffry H. Morrison has argued persuasively that the Declaration’s references to “‘divine Providence’ and ‘the Supreme Judge of the World’ would have been quite acceptable to Reformed Americans in 1776, and conjured up images of the ‘distinctly biblical God’ when they heard or read the Declaration.”
It may be objected that Jefferson, the man who drafted the Declaration, was hardly an orthodox Christian, and that is certainly the case. But this is beside the point. As Jefferson himself pointed out in an 1825 letter, the object of the document was not to “find out new principles, or new arguments…. [I]t was intended to be an expression of the American mind, and to give that expression the proper tone and spirit called for by the occasion. All its authority rests then on the harmonizing sentiments of the day.…” Even though Jefferson believed in a vague, distant deity, when his fellow delegates revised and approved the Declaration, virtually all of them understood “Nature’s God,” “Creator,” and “Providence” to refer to the God of Abraham, Isaac, and Jacob: a God who is active in the affairs of men and nations.
- The Creation of America’s Constitutional Order
In light of the above discussion, it is perhaps surprising that the Constitution says little about God or religion. Of course, there are hints that America is a Christian nation (e.g., a pocket veto occurs 10 days after a bill is passed by Congress, Sundays excepted), but these seem to be more than balanced by Article VI’s prohibition of religious tests for federal offices. The only specific mention of God is found in the date the Constitution was written: “in the Year of our Lord 1787.”
What is going on? Some have argued that America began as a Christian country but that the authors of the Constitution recognized that this was not a good thing, and so they created, in the words of Isaac Kramnick and R. Laurence Moore, a “Godless Constitution.” To reinforce this point, the Founders added the First Amendment to the Constitution, which begins “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof….”
On the surface, this is a plausible hypothesis, and a few Founding-era documents such as James Madison’s “Memorial and Remonstrance” (1785) and Thomas Jefferson’s letter to the Danbury Baptists (1802) seem to offer some support for this view. As we shall see, this interpretation of the Founding is inaccurate even with respect to Jefferson and Madison, and if one looks beyond them to the hundreds of men who attended the Federal Convention of 1787, participated in the state ratification conventions, and were elected to the first federal Congress, it becomes completely implausible. These individuals, without exception, called themselves Christians, and a good case can be made that many were influenced by orthodox Christian ideas in important ways.
This argument is made well in broad strokes by Barry Alan Shain in The Myth of American Individualism: The Protestant Origins of American Political Thought. It also receives interesting empirical support from Donald Lutz, who examined 15,000 pamphlets, articles, and books on political subjects published in the late 18th century. His study found that the Bible was cited far more often than any other book, article, or pamphlet. In fact, the Founders referenced the Bible more than all Enlightenment authors combined.
If Shain and Lutz make the argument for Christian influence in broad strokes, others have made it in finer strokes through studies of individual Founders. For instance, I have co-edited four books that collectively shine light on 26 different Founders and several major traditions. These books, along with a number of other articles and books on less famous Founders, demonstrate that there is little evidence that the Founders as a group were deists who desired the separation of church and state.
Before discussing the positive influence of Christian ideas on the American Founders, let me briefly suggest the central reason why the Constitution appears to be “Godless.” Simply put, the Founders were creating a national government for a very few limited purposes—notably those enumerated in Article I, Section 8. There was almost universal agreement that if there was to be legislation on religious or moral matters, it should be done by state and local governments.
In fact, states remained active in this business well into the 20th century. It is true that the last state church was disestablished in 1832, but many states retained religious tests for public office, had laws aimed at restricting vice, required prayer in schools, and so forth. Because the federal government was not to be concerned with these issues, they were not addressed in the Constitution. The First Amendment merely reinforced this understanding with respect to the faith—i.e., Congress has no power to establish a national church or restrict the free exercise of religion.
Even though Christianity is not mentioned in the Constitution or Bill or Rights, the Founders of the American republic were influenced by Christian ideas in significant ways. For example:
- Their faith taught them that humans were sinful. As James Madison wrote in Federalist No. 51, “If men were angels, no government would be necessary. If angels were to govern men, neither external or internal controls on government would be necessary.” This conviction led them to avoid utopian experiments such as those later pursued during the French Revolution and to adopt a constitutional system characterized by separated powers, checks and balances, and federalism. Many Enlightenment thinkers in this era, by way of contrast, tended to favor a strong, centralized government run by experts.
- They firmly believed that God ordained moral standards, that legislation should be made in accordance with these standards, and that moral laws took precedence over human laws. This conviction manifests itself in their abstract reflections (e.g., James Wilson’s law lectures, parts of which read like St. Thomas Aquinas’s Summa Theologica) and practical decisions (e.g., all but one Supreme Court Justice prior to John Marshall argued publicly that the Court could strike down an act of Congress if it violated natural law).
- Similarly, Christianity informed the Founders’ understanding of substantive concepts such as “liberty.” Barry Shain has identified eight different ways in which the word was used in the 18th century. Only one of these is related to the excessively individualistic way the term is often used today. Instead, the Founders were far more likely to see liberty as the freedom to do what is morally correct, as illustrated by United States Supreme Court Justice James Wilson’s marvelous dictum: “Without liberty, law loses its nature and its name, and becomes oppression. Without law, liberty also loses its nature and its name, and becomes licentiousness.”
- America’s Founders believed that humans were created in the imago dei—the image of God. Part of what this means is that humans are reasonable beings. This led them to conclude that we the people (as opposed to the elite) can order our public lives together through politics rather than force. It also helped inform early (and later) American opposition to slavery.
- Faith led many Founders to conclude that religious liberty should be extensively protected. Yet many also thought that civic authorities should encourage Christianity and that it is appropriate to use religious language in the public square. By the late 18th century, some Founders were beginning to question the wisdom of religious establishments, primarily because they thought that such establishments hurt true religion. The Founders’ views on these questions have the most immediate and obvious policy and legal implications, so I will address them in some detail.
The Founders on Church and State
In the 1947 Supreme Court decision of Everson v. Board of Education, Justice Wiley Rutledge proclaimed that “no provision of the Constitution is more closely tied to or given content by its generating history than the religious clause of the First Amendment. It is at once the refined product and the terse summation of that history.” Like many jurists and academics since, he proceeded to argue that the Founders intended the First Amendment to create a strict separation of church and state. As evidence, he relied almost solely on statements by Thomas Jefferson and James Madison, most taken out of context and made before or well after the Religion Clauses were drafted.
Yet consideration of a wide range of Founders and their public actions shows that few if any embraced anything approximating modern conceptions of the separation of church and state. Of course, they differed among themselves, but it is possible to identify three major areas of agreement with respect to religious liberty and church–state relations.
Consensus #1: Religious Liberty Is a Right and Must be Protected.
To a person, the Founders were committed to protecting religious liberty. This conviction was usually based upon the theological principle that humans have a duty to worship God as their consciences dictate. A good illustration of this is George Mason’s 1776 draft of Article XVI of Virginia’s Declaration of Rights. It reads:
That as Religion, or the Duty which we owe to our divine and omnipotent Creator, and the Manner of discharging it, can be governed only by Reason and Conviction, not by Force or Violence; and therefore that all Men shou’d enjoy the fullest Toleration in the Exercise of Religion, according to the Dictates of Conscience, unpunished and unrestrained by the Magistrate….
James Madison, in his first significant public act, objected to the use of “toleration” in the article, believing that it implied that religious liberty was a grant from the state that could be revoked at will. The Virginia Convention agreed, and Article XVI was amended to make it clear that “the free exercise of religion” is a right, not a privilege granted by the state.
Mason’s draft of Article XVI was reprinted throughout the states and had an important impact on subsequent state constitutions and the national Bill of Rights. By the end of the Revolutionary era, every state offered significant protection of religious liberty. The federal Constitution of 1787 did not, but only because its supporters believed the national government did not have the delegated power to pass laws interfering with religious belief or practice. In the face of popular outcry, the first Congress proposed and the states ratified a constitutional amendment prohibiting Congress from restricting the free exercise of religion.
Scholars and jurists debate the exact scope of religious liberty protected by the First Amendment. For instance, it is unclear whether the amendment requires religious minorities to be exempted from neutral laws. (For example, does the Free Exercise Clause require Congress to exempt religious pacifists from conscription into the military?) But at a minimum, it prohibits Congress from, in the words of James Madison, compelling “men to worship God in any manner contrary to their conscience.”
Consensus #2: States Should Have Established Churches Only If They Encourage and Assist Christianity.
In 1775, at least nine of the 13 colonies had established churches. Although establishments took a variety of forms, they generally entailed the state providing favorable treatment for one denomination—treatment which often included financial support. Members of religious denominations other than the official established church were usually tolerated, but they were occasionally taxed to support the state church, and some were not permitted to hold civic office.
After independence, most states either disestablished their churches (particularly states where the Church of England was previously established) or moved to a system of “plural” or “multiple” establishments. Under the latter model, citizens were taxed to support their own churches. Although a few Founders challenged establishments of any sort in the name of religious liberty, most arguments were framed in terms of which arrangement would be best for Christianity.
A good illustration of the last point may be found in two petitions from Westmoreland County that arrived at the Virginia General Assembly on the same day regarding Patrick Henry’s 1784 proposal to provide state funds to a variety of churches. The first supported Henry’s bill, arguing, much like public-sector unions today, that state subsidies are necessary to keep salaries high enough to attract the best candidates into the ministry.
Opponents of Henry’s plan disagreed, responding that assessments were against “the spirit of the Gospel,” that “the Holy Author of our Religion” did not require state support, and that Christianity was far purer before “Constantine first established Christianity by human Laws.” Rejecting their fellow petitioners’ arguments that government support was necessary to attract good candidates to the ministry, they argued that clergy should manifest:
that they are inwardly moved by the Holy Ghost to take upon them that Office, that they seek the good of Mankind and not worldly Interest. Let their doctrines be scriptural and their Lives upright. Then shall Religion (if departed) speedily return, and Deism be put to open shame, and its dreaded Consequences removed.
This petition was significantly more popular than James Madison’s now-famous “Memorial and Remonstrance,” another petition written to oppose Henry’s plan. Madison’s memorial has often been referenced to shine light on the First Amendment, and it is regularly treated as a rationalist, secular argument for religious liberty. But, as in the Virginia Declaration, Madison argues that the right to religious liberty is unalienable “because what is here a right towards men, is a duty towards the Creator.” As well, he noted that “ecclesiastical establishments, instead of maintaining the purity and efficacy of Religion, have had a contrary operation” and that “the bill is adverse to the diffusion of the light of Christianity.”
America’s Founders were committed to the idea that religion (by which virtually all of them meant Christianity) was necessary for public happiness and political prosperity. This view was so widespread that James Hutson has called it “the Founders’ syllogism.” The key question with respect to particular establishments at the state level was whether they helped or hurt the faith.
Consensus #3: Religion Belongs in the Public Square.
In 1802, Thomas Jefferson penned a letter to the Danbury Baptist Association in which he famously suggested that the First Amendment created a “wall of separation between Church & State.” This metaphor lay dormant with respect to the Supreme Court’s Establishment Clause jurisprudence until 1947, when Justice Hugo Black seized upon it as the definitive statement of the Founders’ views on church–state relations.
As appealing as the wall metaphor is to contemporary advocates of the strict separation of church and state, it obscures far more than it illuminates. Leaving aside the fact that Jefferson was in Europe when the Constitution and Bill of Rights were written, that the letter was a profoundly political document, and that Jefferson used the metaphor only once in his life, it is not even clear that it sheds useful light upon Jefferson’s views, much less those of his far more traditional colleagues.
Jefferson issued calls for prayer and fasting as governor of Virginia, and in his revision of Virginia’s statutes, he drafted bills stipulating when the governor could appoint “days of public fasting and humiliation, or thanksgiving” and to punish “Disturbers of Religious Worship and Sabbath Breakers.” As a member of the Continental Congress, he proposed that the nation adopt a seal containing the image of Moses “extending his hand over the sea, caus[ing] it to overwhelm Pharaoh,” and the motto “Rebellion to tyrants is obedience to God.” He closed his second inaugural address by encouraging all Americans to join him in seeking “the favor of that Being in whose hands we are, who led our forefathers, as Israel of old….” And two days after completing his letter to the Danbury Baptists, he attended church services in the U.S. Capitol, where he heard John Leland, the great Baptist minister and opponent of religious establishments, preach.
The point is not that Jefferson was a pious man who wanted a union between church and state. His private letters make it clear that he was not an orthodox Christian, and his public arguments and actions demonstrate that he favored a stricter separation between church and state than virtually any other Founder. Yet even Jefferson, at least in his actions, did not attempt to completely remove religion from the public square, and what Jefferson did not completely exclude, most Founders embraced.
This point may be illustrated in a variety of ways, but a particularly useful exercise is to look at the first Congress, the body that crafted the First Amendment. One of Congress’s first acts was to agree to appoint and pay congressional chaplains. Shortly after doing so, it reauthorized the Northwest Ordinance, which held that “Religion, morality, and knowledge being necessary to good government and the happiness of mankind, schools and the means of education shall forever be encouraged.”
More significantly for understanding the First Amendment, on the day after the House approved the final wording of the Bill of Rights, Elias Boudinot, later president of the American Bible Society, proposed that the President recommend a day of public thanksgiving and prayer. In response to objections that such a practice mimicked European customs or should be done by the states, Roger Sherman, according to a contemporary newspaper account:
justified the practice of thanksgiving, on any signal event, not only as a laudable one in itself, but as warranted by a number of precedents in holy writ: for instance, the solemn thanksgivings and rejoicings which took place in the time of Solomon, after the building of the temple, was a case in point. This example, he thought, worthy of Christian imitation on the present occasion; and he would agree with the gentleman who moved the resolution.
The House agreed, as did the Senate, as did the President. The result was George Washington’s famous 1789 Thanksgiving Day Proclamation. The text of his proclamation is worth quoting at some length:
Whereas it is the duty of all Nations to acknowledge the providence of Almighty God, to obey his will, to be grateful for his benefits, and humbly to implore His protection and favor…
I do recommend…the People of these States to the service of that great and glorious Being, who is the beneficent Author of all the good that was, that is, or that will be….
And also that we may then unite in most humbly offering our prayers and supplications to the great Lord and Ruler of Nations and beseech Him to pardon our national and other transgressions, to enable us all, whether in public or private stations, to perform our several and relative duties properly and punctually; to render our national government a blessing to all the People….
Similar proclamations were routinely issued by Presidents Washington, Adams, and Madison. Jefferson, it is true, refused to formally issue such proclamations, yet as Daniel L. Dreisbach has pointed out, he “employed rhetoric in official utterances that, in terms of religious content, was virtually indistinguishable from the traditional thanksgiving day proclamations.”
America’s Founders did not want Congress to establish a national church, and many opposed establishments at the state level as well. Yet they believed, as George Washington declared in his Farewell Address, that of “all the dispositions and habits which lead to political prosperity, Religion and morality are indispensable supports.” Moreover, almost without exception, they agreed that civic authorities could promote and encourage Christianity and that it was appropriate for elected officials to make religious arguments in the public square. There was virtually no support for contemporary visions of a separation of church and state that would have political leaders avoid religious language and require public spaces to be stripped of religious symbols.
So did America have a Christian Founding? History is complicated, and we should always be suspicious of simple answers to difficult questions. As we have seen, there is precious little evidence that the Founders were deists, wanted religion excluded from the public square, or desired the strict separation of church and state. On the other hand, they identified themselves as Christians, were influenced in important ways by Christian ideas, and generally thought it appropriate for civic authorities to encourage Christianity.
What do these facts mean for Americans who embrace non-Christian faiths or no faith at all? Although the Founders were profoundly influenced by Christianity, they did not design a constitutional order only for fellow believers. They explicitly prohibited religious tests for federal offices, and they were committed to the proposition that all men and women should be free to worship God (or not) as their consciences dictate.
As evidenced by George Washington’s 1790 letter to a “Hebrew Congregation” in Newport, Rhode Island, the new nation was to be open to a wide array of individuals who were willing to assume the responsibilities of citizenship:
All [citizens] possess alike liberty and conscience and immunities of citizenship. It is now no more that toleration is spoken of, as if it was by the indulgence of one class of people, that another enjoyed the exercise of their inherent natural rights. For happily the Government of the United States, which gives to bigotry no sanction, to persecution no assistance requires only that they who live under its protection should demean themselves as good citizens, in giving it on all occasions their effectual support.
…May the Children of the Stock of Abraham, who dwell in this land, continue to merit and enjoy the good will of the other Inhabitants; while every one shall sit in safety under his own vine and fig tree, and there shall be none to make him afraid. May the father of all mercies scatter light and not darkness in our paths, and make us all in our several vocations useful here, and in his own due time and way everlastingly happy.
Yet it does not follow from this openness that Americans should simply forget about their country’s Christian roots. Anyone interested in an accurate account of the nation’s past cannot afford to ignore the important influence of faith on many Americans, from the Puritans to the present day.
Christian ideas underlie some key tenets of America’s constitutional order. For instance, the Founders believed that humans are created in the image of God, which led them to design institutions and laws meant to protect and promote human dignity. Because they were convinced that humans are sinful, they attempted to avoid the concentration of power by framing a national government with carefully enumerated powers. As well, the Founders were committed to liberty, but they never imagined that provisions of the Bill of Rights would be used to protect licentiousness. And they clearly thought moral considerations should inform legislation.
America has drifted from these first principles. We would do well to reconsider the wisdom of these changes.
The Founders believed it permissible for the national and state governments to encourage Christianity, but this may no longer be prudential in our increasingly pluralistic country. Yet the Constitution does not mandate a secular polity, and we should be wary of jurists, politicians, and academics who would strip religion from the public square. We should certainly reject arguments that America’s Founders intended the First Amendment to prohibit neutral programs that support faith-based social service agencies, religious schools, and the like.
Finally, we ignore at our peril the Founders’ insight that democracy requires a moral people and that faith is an important, if not indispensable, support for morality. Such faith may well flourish best without government support, but it should not have to flourish in the face of government hostility.
 Frank Lambert, The Founding Fathers and the Place of Religion in America (Princeton, N.J.: Princeton University Press, 2003), p. 161; Geoffrey R. Stone, “The World of the Framers: A Christian Nation?” University of California Law Review, Vol. 56 (October 2008), pp. 7–8; Steven Waldman, Founding Faith: Providence, Politics, and the Birth of Religious Freedom in America (New York: Random House, 2008), p. 193; Richard T. Hughes, Myths America Lives By (Urbana: University of Illinois Press, 2003), pp. 50–57; Steven J. Keillor, This Rebellious House: American History and the Truth of Christianity (Downers Grove, Ill.: InterVarsity, 1996), p. 85; David L. Holmes, The Faiths of the Founding Fathers (New York: Oxford University Press, 2006), pp. 163–164; Brooke Allen, Moral Minority: Our Skeptical Founding Fathers (Chicago: Ivan R. Dee, 2006), p. xiii.
 Peter Marshall and David Manuel, The Light and the Glory (Grand Rapids, Mich.: Fleming H. Revell, 1977); John Eidsmoe, Christianity and the Constitution: The Faith of Our Founding Fathers (Grand Rapids, Mich.: Baker Book House, 1987); Tim LaHaye, Faith of Our Founding Fathers (Brentwood, Tenn.: Wolgemuth & Hyatt, 1987), pp. 90, 113; William J. Federer, America’s God and Country (Coppell, Tex.: FAME Publishing, 1994); David Barton, Original Intent: The Courts, the Constitution, & Religion, 4th ed. (Aledo, Tex.: Wallbuilder Press, 2005); and Gary DeMar, America’s Christian Heritage (Nashville: Broadman & Holman, 2003).
 For further discussion, see Mark David Hall, “Faith and the Founders of the American Republic: Distortion and Consensus,” in Faith and Politics: Religion in the Public Square, Proceedings of the Maryville Symposium, Vol. 3, 2010 (Maryville, Tenn.: Maryville College, 2011), pp. 55–79.
 Alan Gibson provides an overview of scholarly attempts to understand the intellectual influences on America’s Founders in Interpreting the Founding: Guide to the Enduring Debates Over the Origins and Foundations of the American Republic (Lawrence: University Press of Kansas, 2006). Like many other scholars, he almost completely neglects the possibility that Christian ideas may have had an important influence in the era.
 I discuss ways Christian influence may have interacted with other intellectual traditions, especially Lockean liberalism, in “Vindiciae, Contra Tyrannos: The Influence of the Reformed Tradition on the American Founding,” a paper presented at the annual meeting of the American Political Science Association, Washington, D.C., September 2010. A revised version of the paper will be published as a book chapter with the same title in Daniel L. Dreisbach and Mark David Hall, ed., Faith and the Founders of the American Republic (New York: Oxford University Press, forthcoming).
 Daniel L. Dreisbach and Mark David Hall, The Sacred Rights of Conscience: Selected Readings on Religious Liberty and Church–State Relations in the American Founding (Indianapolis: Liberty Fund Press, 2009), p. 84. I have modernized spelling and punctuation in all quotations.
 Ibid., p. 118. Rhode Island, Pennsylvania, Delaware, and New Jersey did not have established churches. New York had establishments in select counties. Most colonies had religious tests for office, and all had laws encouraging and protecting Christianity and Christian morality.
 Some scholars argue that Locke’s political philosophy is sharply at odds with earlier Protestant resistance literature, but I believe it is best understood as a logical extension of it. In any case, the American Founders clearly thought Locke’s ideas were compatible with orthodox Christianity. For further discussion, see Hall, “Vindiciae, Contra Tyrannos: The Influence of the Reformed Tradition on the American Founding.” An excellent example of Protestant resistance literature is Stephanus Junius Brutus, Vindiciae, Contra Tyrannos, ed. George Garnett (Cambridge: Cambridge University Press, 1994). Sydney E. Ahlstrom, A Religious History of the American People (Garden City, N.Y.: Doubleday, 1975), Vol. 1, p. 426.
 Douglass Adair and John A. Schutz, eds., Peter Oliver’s Origin and Progress of the American Rebellion (Stanford: Stanford University Press, 1961), p. 41; Paul Johnson, A History of the American People (New York: HarperCollins, 1997), p. 173; John Leach, “A Journal Kept by John Leach, During His Confinement by the British, In Boston Gaol, in 1775,” The New England Historical and Genealogical Register, Vol.19 (1865), p. 256.
 Dreisbach and Hall, Sacred Rights, p. 220. For a discussion of these and other statements of colonial concerns, see Mark David Hall, The Old Puritan and a New Nation: Roger Sherman and the Creation of the American Republic (book mss. under review), chapter 3.
 Westminster Standards, 1: 10; 5: 1, 2, 6; 19: 5; 23: 1; 1: 1, 7; 5; and 21: 5. See also The Works of the Late Reverend and Learned Isaac Watts (London, 1753), Vol. 4, p. 356, and The Windham Herald,April 15, 1797, p. 4. Such examples could be multiplied almost indefinitely. Jeffry H. Morrison, “Political Theology in the Declaration of Independence,” paper delivered at a conference on the Declaration of Independence, Princeton University, April 5–6, 2002. I am grateful to Daniel L. Dreisbach for pointing me to the language of the Standards.
 Barry Alan Shain, The Myth of American Individualism: The Protestant Origins of American Political Thought (Princeton, N.J.: Princeton University Press, 1994); Donald S. Lutz, “The Relative Influence of European Writers on Late Eighteenth-Century American Political Thought,” American Political Science Review, Vol. 78 (March 1984), pp. 189–197.
 Daniel L. Dreisbach, Mark D. Hall, and Jeffry H. Morrison, The Founders on God and Government (Lanham, Md.: Rowman and Littlefield, 2004) (containing essays about George Washington, John Adams, Thomas Jefferson, James Madison, John Witherspoon, Benjamin Franklin, James Wilson, George Mason, and Daniel and Charles Carroll); Dreisbach, Hall, and Morrison, The Forgotten Founders on Religion and Public Life (Notre Dame, Ind.: University of Notre Dame Press, 2009) (containing essays about Abigail Adams, Samuel Adams, Oliver Ellsworth, Alexander Hamilton, Patrick Henry, John Jay, Thomas Paine, Edmund Randolph, Benjamin Rush, Roger Sherman, and Mercy Otis Warren); Dreisbach and Hall, Faith and the Founders of the American Republic (containing eight thematic essays and profiles of John Dickinson, Isaac Backus, John Leland, Elias Boudinot, Gouverneur Morris, and John Hancock); Dreisbach and Hall, Sacred Rights (a massive collection of primary source documents on religious liberty and church–state relations in the Founding era). See also John E. O’Connor, William Paterson: Lawyer and Statesman, 1745–1806 (New Brunswick, N.J.: Rutgers University Press, 1986), and Marc M. Arkin, “Regionalism and the Religion Clauses: The Contribution on Fisher Ames,” Buffalo Law Review, Vol.47 (Spring 1999), pp. 763–828.
 Even Thomas Jefferson observed: “Certainly, no power to prescribe any religious exercise, or to assume authority in religious disciple, has been delegated to the General [i.e., federal] Government. It must then rest with the States, as far as it can be in any human authority.” Thomas Jefferson to Samuel Miller, January 23, 1808, in Dreisbach and Hall, Sacred Rights, p. 531. The Founders did think legislators should take religion and morality into account when the national government is acting within its enumerated powers. See, for instance, the debates in the first Congress over the assumption of state debts and excise taxes in Documentary History of the First Federal Congress, 14 vols. (Baltimore: Johns Hopkins University Press, 1972–2004), Vol. 10, pp. 568, 581; Vol. 13, pp. 1419–1424; Vol. 14, p. 247.
 The U.S. Supreme Court has used the Fourteenth Amendment to apply the First Amendment to state and local governments. For a good discussion of this process and different ways the Court has interpreted the religion clauses, see Henry J. Abraham and Barbara A. Perry, Freedom and the Court: Civil Rights and Civil Liberties in the United States, 7th ed. (New York: Oxford University Press, 1998), pp. 29–91, 221–325.
 Barry Alan Shain, “Afterword: Revolutionary-Era Americans: Were They Enlightened or Protestant? Does it Matter?” in Dreisbach, Hall, and Morrison, The Founders on God and Government, pp. 274–277. This characterization of Enlightenment thinkers is truer for members of the Continental or Radical Enlightenment than for those associated with the British and/or Scottish Enlightenment.
 Kermit L. Hall and Mark David Hall, eds., Collected Works of James Wilson, 2 vols. (Indianapolis: Liberty Fund Press, 2007), pp. 498–499; Scott Douglas Gerber, ed., In Seriatim: The Early Supreme Court (New York: New York University Press, 1998).
 Associate Justice Wiley B. Rutledge, in Everson v. Board of Education, 330 U.S. 1, 33 (1947); Mark David Hall, “Jeffersonian Walls and Madisonian Lines: The Supreme Court’s Use of History in Religion Clause Cases,” Oregon Law Review, Vol.85 (2006), pp. 563–614.
 Specifically, the syllogism refers to the connection between virtue and morality, republican institutions, and religion—and by religion the Founders meant some version of Christianity. See James H. Hutson, Religion and the Founding of the American Republic (Washington: Library of Congress, 1998), p. 81.
 Ibid., p. 464. Peter Lillback and Jerry Newcombe identify nine scriptural references in this letter, including one to Micah 4:4 (“while everyone shall sit in safety under his own vine and fig tree, and there shall be none to make him afraid”), which was Washington’s favorite biblical passage. See Peter Lillback and Jerry Newcombe, George Washington’s Sacred Fire (Bryn Mawr, Pa.: Providence Forum Press, 2006), pp. 321–322. See also George Washington to the Society of Quakers, October 1789, Papers of George Washington: Presidential Series, Vol. 4: September 1789–January 1790, ed. W. W. Abbot (Charlottesville: University of Virginia Press, 1993), p. 266, and George Washington to the Roman Catholics of the United States of America, March 15, 1790, in Bruce Frohnen, ed., The American Republic (Indianapolis: Liberty Fund Press, 2002), pp. 70–71.
- While America did not have a Christian Founding in the sense of creating a theocracy, it was deeply shaped by Christian moral truths, and the Founders created a regime that was hospitable to Christians as well as to practitioners of other religions.
- To a person, the Founders were committed to protecting religious liberty.
- Moreover, almost without exception, they agreed that civic authorities could promote and encourage Christianity and that it was appropriate for elected officials to make religious arguments in the public square.
- There was no support among the Founders for contemporary visions of a strict separation of church and state that would have political leaders avoid religious language and require public spaces to be stripped of religious symbols.
Washington’s Response to a Congressional Request for Documents, 30 March 1796
The 1794 treaty with Great Britain negotiated by John Jay was one of the most controversial events of GW’s presidency. Opponents claimed that the treaty conceded too much to Great Britain with little benefit to the United States. It failed to address the impressment of seamen or compensation for the slaves carried off by Great Britain at the end of the Revolutionary War; it guaranteed to British fur traders access to posts within the United States, but failed to give American traders the same access to Canada; it abandoned the principle that free ships make free goods; and yet it obtained very limited access to British colonial ports for American vessels. Moreover, the treaty, by strengthening Great Britain, showed base ingratitude toward France and risked a possible war with that erstwhile ally. After the Senate approved the treaty in June 1795 (with a condition that article XII concerning trade with the West Indies be renegotiated), citizens meetings from around the country urged GW to withhold ratification.
Ultimately GW decided that while some provisions of the treaty were not favorable, its acceptance was preferable to a continuation of the disputes with Great Britain, and he ratified the treaty in August 1795.
Having failed to persuade GW to reject the treaty, opponents argued that although the Constitution placed responsibility for treaties in the president and the Senate, the House of Representatives had “a discretionary power of carrying the Treaty into effect, or refusing it their sanction” (Annals of Congress, 4th Cong., 1st sess., 427-28). The Constitution vested Congress with the power to regulate commerce, to lay taxes and duties, and to make appropriations. If, however, the Senate and the president could, by making a treaty, obligate the House to accept commercial regulations or make appropriations, then in effect, they could legislate without the sanction of the people’s representatives. Pursuant to that theory, in March 1796 Edward Livingston introduced a resolution calling on GW to provide the House with a copy of the instructions given to Jay and other documents relative to the treaty. The House extensively debated the resolution from 7 March until the resolution was agreed to on 24 March.
GW consulted with his cabinet and with Alexander Hamilton (who submitted a draft that was not used) before replying to the House. This reply categorically denied that the House has any veto over a treaty approved by the Senate and the president, and it characterized the House demand as a “dangerous precedent” that would violate the proper separation of powers within the government. GW would not comply.
The House then debated GW’s message for another 7 days. These important debates, both before the resolution’s passage and after GW’s message, are gathered in Annals of Congress, 4th Cong., 1st sess., 424-783, which can be found online at “A Century of Lawmaking For a New Nation,” hosted by the Library of Congress: http://memory.loc.gov/ammem/amlaw/lwaclink.html
To the United States House of Representatives
United States March 30th 1796.
Gentlemen of the House of Representatives.
With the utmost attention, I have considered your resolution of the twenty fourth instant, requesting me to lay before your House, a copy of the instructions to the Minister of the United States, who negociated the treaty with the king of Great Britain, together with the correspondence and other documents relative to that treaty, excepting such of the said papers, as any existing negociation may render improper to be disclosed.
In deliberating upon this subject, it was impossible for me to lose sight of the principle, which some have avowed in its discussion, or to avoid extending my views to the consequences, which must flow from the admission of that principle.
I trust, that no part of my conduct has ever indicated a disposition to withhold any information, which the constitution has enjoined upon the President, as a duty, to give, or which could be required of him by either House of Congress, as a right; and with truth, I affirm, that it has been, as it will continue to be, while I have the honor to preside in the government, my constant endeavor to harmonize with the other branches thereof; so far as the trust, delegated to me by the people of the United States, and my sense of the obligation it imposes “to preserve, protect and defend the Constitution,” will permit.
The nature of foreign negociations requires caution; and their success must often depend on secrecy: and even when brought to a conclusion, a full disclosure of all the measures, demands, or eventual concessions, which may have been proposed or contemplated, would be deemed impolitic; for this might have a pernicious influence on future negociations, or produce immediate inconveniences, perhaps danger and mischief, in relation to the other powers. The necessity of such caution and secrecy was one cogent reason for vesting the power of making treaties, in the President, with the advice and consent of the Senate; the principle, on which that body was formed, confining it to a small number of members. To admit, then, a right in the House of Representatives, to demand, and to have, as a matter of course,all the papers respecting a negociation with a foreign power, would be, to establish a dangerous precedent.
It does not occur, that the inspection of the papers asked for can be relative to any purpose under the cognizance of the House of Representatives, except that of an impeachment; which the resolution has not expressed. I repeat, that I have no disposition to withhold any information, which the duty of my station will permit, or the public good will require to be disclosed;and, in fact, all the papers affecting the negociation with Great Britain were laid before the Senate, when the treaty itself was communicated for their consideration and advice.
The course, which the debate has taken, on the resolution of the House, leads to some observations on the mode of making treaties under the constitution of the United States.
Having been a member of the general convention, and knowing the principles, on which, the constitution was formed, I have ever entertained but one opinion on this subject; and from the first establishment of the government, to this moment, my conduct has exemplified that opinion, that the power of making treaties is exclusively vested in the President, by and with the advice and consent of the Senate; provided two thirds of the Senators present concur; and that every treaty so made, and promulgated, thenceforward became the law of the land. It is thus, that the treaty-making power has been understood by foreign nations; and in all the treaties made with them, we have declared, and they have believed, that, when ratified by the President, with the advice and consent of the Senate, they became obligatory. In this construction of the constitution, every House of Representatives has heretofore acquiesced, and, until the present time, not a doubt or suspicion has appeared to my knowledge, that this construction was not the true one. Nay, they have more than acquiesced; for, till now, without controverting the obligation of such treaties, they have made all the requisite provisions for carrying them into effect.
There is also reason to believe, that this construction agrees with the opinion entertained by the State conventions, when they were deliberating on the constitution, especially by those who objected to it;because there was not required, in commercial treaties, the consent of two thirds of the whole number of the members of the Senate, instead of two thirds of the Senators present; and because, in treaties respecting territorial and certain other rights and claims, the concurrence of three fourths of the whole number of the members of both Houses, respectively, was not made necessary.
It is a fact declared by the General Convention, and universally understood, that the constitution of the United States was the result of a spirit of amity and mutual concession. And it is well known, that under this influence, the smaller States were admitted to an equal representation in the Senate, with the larger States; and that this branch of the government was invested with great powers: for, on the equal participation of those powers, the sovereignty and political safety of the smaller States were deemed essentially to depend.
If other proofs than these, and the plain letter of the constitution itself, be necessary to ascertain the point under consideration, they may be found in the journals of the General Convention, which I have deposited in the office of the department of State. In these journals, it will appear, that a proposition was made, “that no treaty should be binding on the United States, which was not ratified by a law”: and that the proposition was explicitly rejected.
As, therefore, it is perfectly clear to my understanding, that the assent of the House of Representatives is not n[e]cessary to the validity of a treaty: as the treaty with Great Britain exhibits, in itself, all the objects requiring legislative provision, and on these, the papers called for can throw no light; and as it is essential to the due administration of the government, that the boundaries, fixed by the constitution between the different departments, should be preserved: a just regard to the constitution, and to the duty of my office, under all the circumstances of this case, forbid a compliance with your request.
Copy, DNA: RG 233, entry 28, Journals; copy, DLC:GW; Df, in the writing of Timothy Pickering, DLC:GW. The draft has a few minor alterations in the writing of Charles Lee. With the draft are two pages containing corrections to it by Lee and Pickering. GW docketed the correction document as “First Draft altered.” The message was published by order of the House, and it also appeared in the newspapers and in numerous unofficial broadsides.
1.At this point in Pickering’s draft, he wrote in parentheses “communicated by my message of the first instant.”[back]
2.At this point in Pickering’s draft the sentence continued with “for this is superior to all other obligations.”[back]
3.Instead of this word, Pickering’s draft used the word “extremely.”[back]
4.At this point Pickering’s draft continued with the words, “& without a specification of any object.”[back]
5.Pickering’s draft concluded this paragraph with a more detailed explication: “hazardous; & according to my view of the Constitution, repugnant to my duty. A discretion in the Executive department, when & how far to comply with such demands, is essential to the due conduct of foreign negociations. The resolution of the House now before me, contains a demand for all the papers that respect past negotiations relative to the treaty with Great Britain: while it exhibits no reason, no object, by which I may judge of the propriety of a compliance: and therefore I cannot comply, without establishing a dangerous precedent.”
The final version of this paragraph uses the language submitted on the correction document by Charles Lee, except that Lee retained Pickering’s sentence about executive discretion, placing it at the end of the paragraph, while the final version does not.[back]
6.At this point Pickering’s draft contains the following additional text: “But in the case of a treaty, if there be any grounds for an impeachment, they will probably be found in the instrument itself. If at any time a treaty should present such grounds; and it should have been so pronounced by the House of Representatives; and a further enquiry should be necessary to discover the culpable person, or the degree of his offence; there being then a declared and ascertained object; I should deem it to be the duty of the President to furnish all the evidence which could be derived from the papers in his possession. Or if information to any other point should be judged necessary, and that point were specified, the President would know what communications it would be proper to make.”[back]
7.The remainder of this sentence does not appear in Pickering’s initial draft, but the addition was suggested in one of his corrections.[back]
8.Instead of the preceding text, Pickering wrote in his draft, “It is the construction which perfectly agrees with the numerous declarations of the framers of the constitution, in the several State Conventions, when these were deliberating on its adoption; and with the opinions of the Conventions themselves, some of whom objected to the Constitution.”[back]
9.Pickering’s draft adds at this point “for such were the amendments proposed in some Conventions to this part of the Constitution.”[back]
10.The preceding sentence was phrased quite differently in Pickering’s initial draft, but the content was essentially the same. The final language was taken from one of Pickering’s corrections to the draft.[back]
11.The preceding part of this paragraph alters the phrasing but not the meaning of Pickering’s original draft. It follows the language suggested in one of Pickering’s corrections but omits two clauses that were placed after “no light” in that correction: “As the resolution of the House assigns no reason for the call: As the papers respecting the negociation of treaties ordinarily pertain only to the President & Senate, by whom they are made.”[back]
The remaining text of the paragraph replaces Pickering’s initial conclusion, which read: “and as no object for the call is expressed in the Resolution of the House: I feel the obligation I am under, to preserve the Constitution in its purity, too strongly to yield to your request.” Lee wrote on the draft an alternative: “it becomes impossible for me to comply with your request.” Pickering’s correction offered a third unused alternative: “A sense of duty compels me to withhold the papers which are the subject of your request.”
The Great Racial Disconnect on Police
August 22, 2014
On Monday, Rasmussen released a poll of Americans regarding the guilt or innocence of Officer Darren Wilson, the police officer who shot unarmed 18-year-old black man Michael Brown six times in Ferguson, Missouri. Those polls show that 57 percent of black adults think that Wilson should be found guilty of murder; 56 percent of whites, by contrast, are undecided on the matter.
The latter position is the correct one. Witnesses, including one Dorian Johnson, claim that Brown was pulled over by Wilson, attacked by him and pulled into the car, ran, stopped when told to freeze by Wilson, held up his hands, and was then shot. Other witnesses — more than a dozen of them, according to local media — say that Brown attacked Wilson, went for Wilson’s gun, fled before being told to stop, then charged Wilson before being shot.
Here’s what we do know: Despite original media reports labeling Brown a “gentle giant,” Brown and shooting witness Dorian Johnson did participate in a strong-arm robbery of a local convenience store. We know that despite original witness reports suggesting that Brown was shot in the back, he was not. We know that contemporaneous witness accounts caught on tape suggest that Brown charged at Wilson. And we know that a young black man is dead with six bullets in him at the hands of a white cop.
And to huge segments of the black community, that last fact is the only one that matters. The full facts do not matter to extremists in the black community and to their white leftist enablers, particularly in the media. A full 41 percent of black Americans believe that riots and looting represent “legitimate outrage.” Not protesting — riots and looting. Just 35 percent of blacks think that looters and rioters are criminals taking advantage of the situation.
There is a pattern here: a widespread belief in the black community that the justice system is rigged against them. That belief is not without basis — there is no question that America has a history of racism within the criminal justice community. By the same token, there is also no question that American law enforcement is the least racist it has ever been, by a long shot, and that racism within the law enforcement community is broadly considered unacceptable and vile.
But the belief in a racist justice system seems to have maintained its stranglehold inside the black community. That belief, taken to its extreme, means support for black criminality. It is no coincidence that during the O.J. Simpson trial, 60 percent of black Americans did not believe O.J. was guilty. It is also no coincidence that many white Americans perceive black support for murderers like O.J. Simpson and riots in Ferguson as support for lawlessness, and therefore pooh-pooh charges of police racism. When crying racism becomes crying wolf, it is hard to take such charges seriously.
The solution, however, lays neither in knee-jerk accusations of racism from the black community nor in immediate dismissals of individual accusations by the white community. It lies in continued targeting and prosecution of individual racists in the police community, of course — and far more importantly, it lies in less criminality within the black community. The high levels of crime in the black community contribute to heavier policing, which in turn reinforces perceptions of racial targeting; those perceptions then create resentment against police than ends too often in violent encounters and failure to report crime. And so the cycle starts anew.
It’s time to break the cycle. The only way to do that is to focus on the fact that police have no excuse to shoot anyone unless those people are committing criminal acts. On that we can all agree. Yes, we must arduously insist that police hold to that standard, and we must prosecute those who do not to the fullest extent of the law. But by the same token, we must insist that criminal acts stop — and to do that, we must move beyond simple anti-police sentiment.
Ben Shapiro, 30, is a graduate of UCLA and Harvard Law School, a radio host on KTTH 770 Seattle and KRLA 870 Los Angeles, Editor-in-Chief of TruthRevolt.org, and Senior Editor-at-Large of Breitbart News. He is the New York Times bestselling author of “Bullies.” His latest book, “The People vs. Barack Obama: The Criminal Case Against the Obama Administration,” will be released on June 10. He lives with his wife and daughter in Los Angeles.
Major Findings from The Color of Crime 2005
- Police and the justice system are not biased against minorities.
- Blacks are seven times more likely than people of other races to commit murder, and eight times more likely to commit robbery.
- When blacks commit crimes of violence, they are nearly three times more likely than non-blacks to use a gun, and more than twice as likely to use a knife.
- Hispanics commit violent crimes at roughly three times the white rate, and Asians commit violent crimes at about one quarter the white rate.
- The single best indicator of violent crime levels in an area is the percentage of the population that is black and Hispanic.
- Of the nearly 770,000 violent interracial crimes committed every year involving blacks and whites, blacks commit 85 percent and whites commit 15 percent.
- Blacks commit more violent crime against whites than against blacks. Forty-five percent of their victims are white, 43 percent are black, and 10 percent are Hispanic. When whites commit violent crime, only three percent of their victims are black.
- Blacks are an estimated 39 times more likely to commit a violent crime against a white than vice versa, and 136 times more likely to commit robbery.
- Blacks are 2.25 times more likely to commit officially-designated hate crimes against whites than vice versa.
- Only 10 percent of youth gang members are white.
- Hispanics are 19 times more likely than whites to be members of youth gangs. Blacks are 15 times more likely, and Asians are nine times more likely.
- Between 1980 and 2003 the US incarceration rate more than tripled, from 139 to 482 per 100,000, and the number of prisoners increased from 320,000 to 1.39 million.
- Blacks are seven times more likely to be in prison than whites. Hispanics are three times more likely.
HEATHER Mac DONALD
June 25, 2010
THERE was a predictable chorus of criticism from civil rights groups last month when the New York Police Department released its data on stop-and-frisk interactions for 2009. The department made 575,000 pedestrian stops last year. Fifty-five percent involved blacks, even though blacks are only 23 percent of the city’s population. Whites, by contrast, were involved in 10 percent of all stops, though they make up 35 percent of the city’s population.
According to the department’s critics, that imbalance in stop rates results from officers’ racial bias. The use of these stops, they say, should be sharply curtailed, if not eliminated entirely, and some activists are suing the department to achieve that end.
Allegations of racial bias, however, ignore the most important factor governing the Police Department’s operations: crime. Trends in criminal acts, not census data, drive everything that the department does, thanks to the statistics-based managerial revolution known as CompStat. Given the patterns of crime in New York, it is inevitable that stop rates will not mirror the city’s ethnic and racial breakdown.
CompStat embodies the iconoclastic idea that the police can stop violence before it happens. The department analyzes victim reports daily, and deploys additional manpower to the places where crime is increasing. Once at a crime hot spot, officers are expected to look out for, and respond to, suspicious behavior.
Such stops happen more frequently in minority neighborhoods because that is where the vast majority of violent crime occurs — and thus where police presence is most intense. Based on reports filed by victims, blacks committed 66 percent of all violent crime in New York in 2009, including 80 percent of shootings and 71 percent of robberies. Blacks and Hispanics together accounted for 98 percent of reported gun assaults. And the vast majority of the victims of violent crime were also members of minority groups.
Non-Hispanic whites, on the other hand, committed 5 percent of the city’s violent crimes in 2009, 1.4 percent of all shootings and less than 5 percent of all robberies.
Given these facts, the Police Department cannot direct its resources where they are most needed without generating racially disproportionate stop data, even though the department’s tactics themselves are colorblind. The per capita rate of shootings in the 73rd Precinct — which covers Brooklyn’s largely black Ocean Hill and Brownsville neighborhoods — is 81 times higher than in the 68th Precinct in largely white Bay Ridge. Not surprisingly, the per capita stop rate in the 73rd Precinct is 15 times higher than that in the 68th.
Crime rates are not the only thing that drives police strategy — so do requests for assistance from communities besieged by lawlessness. If residents of an apartment building ask their precinct commander to eliminate the drug dealing on their street, officers will likely question people hanging out around the building and step up their enforcement of quality-of-life laws, resulting in more stops. Requests for crackdowns on street sales come far more frequently from minority neighborhoods, because that is where most open-air drug dealing occurs.
Some critics charge that the more than half a million stops last year indicate that the department is out of control. But the ratios of stops to population and of stops to total arrests in New York are very close to those in Los Angeles, where last summer a judge lifted a federal consent decree under which the police department had operated for the last eight years. The police stop data in Los Angeles are as racially disproportionate as New York’s, yet the judge deemed them consistent with civil rights.
For several years, the ratio of stops in New York that resulted in an arrest or summons — about 12 percent of the total — was identical for whites, blacks and Hispanics, suggesting that the police use the same measure of reasonable suspicion in stopping members of different racial and ethnic groups. Just because a stop does not result in an arrest or summons does not mean that it did not interrupt a crime. Someone who is casing a victim or acting as a lookout may not have inculpatory evidence on him on which to base an arrest.
No public policy change of the last quarter-century has done as much for the city’s poor and minority neighborhoods as CompStat policing. More than 10,000 black and Hispanic males are alive today who would have been killed had homicide rates remained at the levels of the early 1990s.
Most minority-group members in the city recognize the enormous benefit from CompStat policing. A poll released last month by Quinnipiac University found that 68 percent of black respondents approve of the job Police Commissioner Raymond Kelly is doing, suggesting that the city’s civil rights activists do not speak for their purported beneficiaries on this issue.
The attack on the Police Department’s stop-and-frisk data is based on the false premise that police activity should mirror census data, not crime. If the critics get their way, it would strip police protection from the New Yorkers who need it most.
Heather Mac Donald is a fellow at the Manhattan Institute and the author of “Are Cops Racist?”
Blacks Suffer Disproportionate Share of Firearm Homicide Deaths
Blacks were 55% of shooting homicide victims in 2010, but 13% of the population.
In 2010, there were 31,672 deaths in the U.S. from firearm injuries, mainly through suicide (19,392) and homicide (11,078), according to CDC compilation of data from death certificates.
Among racial and ethnic groups, blacks are over-represented among gun homicide victims; blacks were 55% of shooting homicide victims in 2010, but 13% of the population.
By contrast, whites are underrepresented; whites were 25% of the victims of gun homicide in 2010, but 65% of the population. For Hispanics, the 17% share of gun homicide victims was about equal to their 16% proportion of the total population.
The black homicide death rate has declined 50% since its peak in 1993, and the number of black homicide deaths fell by more than a third (37%) from 1993 to 2010. The white homicide death rate has declined by 42% over that time, and the number of white homicide deaths declined 39%. The Hispanic shooting homicide rate fell 69% from 1993 to 2000, and the number of deaths declined by 40%.
From 2000 to 2010, when the overall gun homicide rate decline slowed, the Hispanic rate fell 32%, while the black and white rates declined only 4%.
Russia’s swashbuckling military intelligence unit is full of assassins, arms dealers, and bandits. And what they pulled off in Ukraine was just the beginning.
by Mark Galeotti
Mark Galeotti is professor of global affairs at New York University’s Center for Global Affairs and is currently researching in Moscow.
JULY 7, 2014
There are two ways an espionage agency can prove its worth to the government it serves. Either it can be truly useful (think: locating a most-wanted terrorist), or it canengender fear, dislike, and vilification from its rivals(think: being named a major threat in congressional testimony). But when a spy agency does both, its worth is beyond question.
Since the Ukraine crisis began, the Kremlin has few doubts about the importance of the GRU, Russia’s military intelligence apparatus. The agency has not only demonstrated how the Kremlin can employ it as an important foreign-policy tool, by ripping a country apart with just a handful of agents and a lot of guns. The GRU has also shown the rest of the world how Russia expects to fight its future wars: with a mix of stealth, deniability, subversion, and surgical violence.Even as GRU-backed rebel groups in eastern Ukraine lose ground in the face of Kiev’s advancing forces, the geopolitical landscape has changed. The GRU is back in the global spook game and with a new playbook that will be a challenge for the West for years to come.
Recent years had not been kind to the Main Intelligence Directorate of the General Staff, the Glavnoe razvedyvatelnoe upravlenie (GRU). Once, it had been arguably Russia’s largest intelligence agency, with self-contained stations — known as “residencies” — in embassies around the world, extensive networks of undercover agents, and nine brigades of special forces known as Spetsnaz.
By the start of 2013, the GRU was on the ropes. Since 1992, the agency had been in charge of operations in the post-Soviet countries, Russia’s “near abroad.” But Russian President Vladimir Putin appears to have seen it as increasingly unfit for that purpose. When the Federal Security Service (FSB), Russia’s domestic security agency, was allowed to run operations abroad openly in 2003, one insider told me that this was because “the GRU doesn’t seem to know how to do anything in our neighborhood except count tanks.” (It may not even have done that very well. Putin regarded the GRU as partly responsible for Russia’s lackluster performance in the 2008 invasion of Georgia.) There was a prevailing view in Moscow that the GRU’s focus on gung-ho “kinetic operations” like paramilitary hit squads seemed less relevant in an age of cyberwar and oil politics.
Political missteps also contributed to the GRU’s diminished role. Valentin Korabelnikov, the agency’s chieffrom 1997 to 2009,seemed more comfortable accompanying Spetsnaz assassination teams in Chechnya than playing palace politics in Moscow. His criticisms of Putin’smilitary reforms put him on the Kremlin’s bad side too. Korabelnikov was sacked in 2009 and replaced with soon-to-be-retired Col. Gen. Alexander Shlyakhturov, who, within two years, was rarely seen in the GRU’s headquarters due to his bad health. In December 2011 the GRU welcomed its third head in nearly three years, Maj. Gen. Igor Sergun, a former attaché and intelligence officer with no combat experience and the lowest-ranking head of the service in decades. By the end of 2013, the Kremlin seemed to be entertaining the suggestion that the agency be demoted from a “main directorate” to a mere directorate, which would have been a massive blow to the service’s prestige and political access.
In many ways, a demotion for the GRU seemed inevitable. Since 2008, the GRU had suffered a savage round of cuts during a period when most of Russia’s security and intelligence agencies’ budgets enjoyed steady increases. Eighty of its hundred general-rank officers had been sacked, retired, or transferred. Most of the Spetsnaz were reassigned to the regular army. Residencies were downsized, sometimes even to a single officer working undercover as a military attaché.
What a difference a few months can make. What the Kremlin had once seen as the GRU’s limitations — a focus on the “near abroad,” a concentration onviolence over subtlety, a more swashbuckling style (including a willingness to conduct assassinations abroad) — have become assets.
The near-bloodless seizure of Crimea in March was based on plans drawn up by the General Staff’s Main Operations Directorate that relied heavily on GRU intelligence. The GRU had comprehensively surveyed the region, was watching Ukrainian forces based there, and was listening to their communications. The GRU didn’t only provide cover for the “little green men” who moved so quickly to seize strategic points on the peninsula before revealing themselves to be Russian troops. Many of those operatives were current or former GRU Spetsnaz.
There is an increasing body of evidence that the so-called defense minister of the separatist Donetsk People’s Republic, Igor Strelkov, whose real name is Igor Girkin, is a serving or reserve GRU officer, who likely takes at the very least guidance, if not orders, from the agency’s headquarters. As a result, the European Union has identified him as GRU “staff” and has placed him on its sanctions list. Although the bulk of the insurgents in eastern Ukraine appear to be Ukrainians or Russian “war tourists” — encouraged, armed, and facilitated by Moscow — there also appear to be GRU operators on the groundhelping to bring guns and people across the border.
It was only when the Vostok Battalion appeared in eastern Ukraine at the end of May that the GRU’s full re-emergence became clear. This separatist group bears the same name as a GRU-sponsored Chechen unit that was disbanded in 2008. This new brigade — composed largely of the same fighters from Chechnya — seemed to spring from nowhere, uniformly armed and mounted in armored personnel carriers. Its first act was to seize the administration building in Donetsk, turfing out the motley insurgents who had made it their headquarters. Having established its credentials as the biggest dog in the pack, Vostok began recruiting Ukrainian volunteers to make up for Chechens who quietly drifted home.
Alexander Khodakovsky, a defector from the Security Service of Ukraine, subsequently announced that he was the battalion’s commander. But this only happened a few days after the seizure of the Donetsk headquarters. The implication is that the battalion was originally commanded by GRU representatives. Vostok appears intended not so much to fight the regular Ukrainian forces — though it has — but rather to serve as a skilled and disciplined enforcer of Moscow’s authority over the militias if need be.
The Vostok Battalion makes Moscow’s strategy clear: The Kremlin has no desire for outright military conflict in its neighbors. Instead, the kind of “non-linear war” being waged in Ukraine, which blends outright force, misinformation, political and economic pressure, and covert operations, will likely be its means of choice in the future. These are the kinds of operations in which the GRU excels.
After all, while Moscow is not going to abandon its claims to being a global power, in the immediate future Russia’s foreign-policy focus will clearly be building and maintaining its hegemony in Eurasia. These are also the areas where the GRU is strongest. For example, in Kazakhstan, whose Russian-heavy northern regions are a potential future target for similar political pressure through local minorities,the GRU is the lead intelligence provider, as its civilian counterpart, the SVR, is technically barred from operating in Kazakhstan or any of the countries in the Commonwealth of Independent States by the 1992 Alma-Ata Declaration.
The combination of these factors means that the GRU now looks far more comfortable and confident than it did a year ago. Kiev outed and expelled a naval attaché from the Russian Embassy as a GRU officer, and Sergun, the GRU’s head, made it onto the list of officials under Western sanctions. But neither of these actions has done the agency any harm. If anything, they have increased the GRU’s prestige.
Talk of downgrading the GRU’s status is conspicuously absent in Moscow circles. The agency’s restored status means it is again a player in the perennial turf wars within the Russian intelligence community. More importantly, it means that GRU operations elsewhere in the world are likely to be expanded again and to regain some of their old aggression.
The GRU’s revival also demonstrates that the doctrine of “non-linear war” is not just an ad hoc response to the particularities of Ukraine. This is how Moscow plans to drive forward its interests in today’s world. The rest of the world has not realized this now, even though Chief of the General Staff Valery Gerasimov spelled it out in an obscure Russian military journal last year. He wrote that the new way of war involves “the broad use of political, economic, informational, humanitarian, and other nonmilitary measures … supplemented by military means of a covert nature character,” not least with the use of special forces.
This kind of conflict will be fought by spies, commandos, hackers, dupes, and mercenaries — exactly the kind of operatives at the GRU’s disposal. Even after the transfer of most Spetsnaz out of the GRU’s direct chain of command, the agency still commands elite special forces trained for assassination, sabotage, and misdirection, as Ukraine shows. The GRU has also demonstrated a willingness to work with a wide range of mavericks. In Chechnya, it raised not just the Vostok Battalion but other units of defectors from guerrillas and bandits. The convicted arms dealer Viktor Bout is generally accepted to have been a part-time GRU asset too. The GRU is less picky than most intelligence agencies about who is cooperates with, which also means that it is harder to be sure who is working for them.
NATO and the West still have no effective response to this development. NATO, a military alliance built to respond to direct and overt aggression, has already found itself at a loss on how to deal with virtual attacks, such as the 2007 cyberattack on Estonia. The revival of the GRU’s fortunes promises a future in which the Cold War threat of tanks spilling across the border is replaced by a new kind of war, combining subterfuge, careful cultivation of local allies, and covert Spetsnaz strikes to achieve the Kremlin’s political aims. NATO may be stronger in strictly military terms, but if Russia can open political divisions in the West, carry out deniable operations using third-party combatants, and target strategic individuals and facilities, it doesn’t really matter who has more tanks and better fighter jets. This is exactly what the GRU is tooling up to do.
Photo by VIKTOR DRACHEV/AFP/Getty Images
Small-government advocates should oppose amnesty and support selective immigration policies.
By Steven Camarota
The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer
Unlawful immigration and amnesty for current unlawful immigrants can pose large fiscal costs for U.S. taxpayers. Government provides four types of benefits and services that are relevant to this issue:
- Direct benefits. These include Social Security, Medicare, unemployment insurance, and workers’ compensation.
- Means-tested welfare benefits. There are over 80 of these programs which, at a cost of nearly $900 billion per year, provide cash, food, housing, medical, and other services to roughly 100 million low-income Americans. Major programs include Medicaid, food stamps, the refundable Earned Income Tax Credit, public housing, Supplemental Security Income, and Temporary Assistance for Needy Families.
- Public education. At a cost of $12,300 per pupil per year, these services are largely free or heavily subsidized for low-income parents.
- Population-based services. Police, fire, highways, parks, and similar services, as the National Academy of Sciences determined in its study of the fiscal costs of immigration, generally have to expand as new immigrants enter a community; someone has to bear the cost of that expansion.
The cost of these governmental services is far larger than many people imagine. For example, in 2010, the average U.S. household received $31,584 in government benefits and services in these four categories.
The governmental system is highly redistributive. Well-educated households tend to be net tax contributors: The taxes they pay exceed the direct and means-tested benefits, education, and population-based services they receive. For example, in 2010, in the whole U.S. population, households with college-educated heads, on average, received $24,839 in government benefits while paying $54,089 in taxes. The average college-educated household thus generated a fiscal surplus of $29,250 that government used to finance benefits for other households.
Other households are net tax consumers: The benefits they receive exceed the taxes they pay. These households generate a “fiscal deficit” that must be financed by taxes from other households or by government borrowing. For example, in 2010, in the U.S. population as a whole, households headed by persons without a high school degree, on average, received $46,582 in government benefits while paying only $11,469 in taxes. This generated an average fiscal deficit (benefits received minus taxes paid) of $35,113.
The high deficits of poorly educated households are important in the amnesty debate because the typical unlawful immigrant has only a 10th-grade education. Half of unlawful immigrant households are headed by an individual with less than a high school degree, and another 25 percent of household heads have only a high school degree.
Some argue that the deficit figures for poorly educated households in the general population are not relevant for immigrants. Many believe, for example, that lawful immigrants use little welfare. In reality, lawful immigrant households receive significantly more welfare, on average, than U.S.-born households. Overall, the fiscal deficits or surpluses for lawful immigrant households are the same as or higher than those for U.S.-born households with the same education level. Poorly educated households, whether immigrant or U.S.-born, receive far more in government benefits than they pay in taxes.
In contrast to lawful immigrants, unlawful immigrants at present do not have access to means-tested welfare, Social Security, or Medicare. This does not mean, however, that they do not receive government benefits and services. Children in unlawful immigrant households receive heavily subsidized public education. Many unlawful immigrants have U.S.-born children; these children are currently eligible for the full range of government welfare and medical benefits. And, of course, when unlawful immigrants live in a community, they use roads, parks, sewers, police, and fire protection; these services must expand to cover the added population or there will be “congestion” effects that lead to a decline in service quality.
In 2010, the average unlawful immigrant household received around $24,721 in government benefits and services while paying some $10,334 in taxes. This generated an average annual fiscal deficit (benefits received minus taxes paid) of around $14,387 per household. This cost had to be borne by U.S. taxpayers. Amnesty would provide unlawful households with access to over 80 means-tested welfare programs, Obamacare, Social Security, and Medicare. The fiscal deficit for each household would soar.
If enacted, amnesty would be implemented in phases. During the first or interim phase (which is likely to last 13 years), unlawful immigrants would be given lawful status but would be denied access to means-tested welfare and Obamacare. Most analysts assume that roughly half of unlawful immigrants work “off the books” and therefore do not pay income or FICA taxes. During the interim phase, these “off the books” workers would have a strong incentive to move to “on the books” employment. In addition, their wages would likely go up as they sought jobs in a more open environment. As a result, during the interim period, tax payments would rise and the average fiscal deficit among former unlawful immigrant households would fall.
After 13 years, unlawful immigrants would become eligible for means-tested welfare and Obamacare. At that point or shortly thereafter, former unlawful immigrant households would likely begin to receive government benefits at the same rate as lawful immigrant households of the same education level. As a result, government spending and fiscal deficits would increase dramatically.
The final phase of amnesty is retirement. Unlawful immigrants are not currently eligible for Social Security and Medicare, but under amnesty they would become so. The cost of this change would be very large indeed.
As noted, at the current time (before amnesty), the average unlawful immigrant household has a net deficit (benefits received minus taxes paid) of $14,387 per household.
During the interim phase immediately after amnesty, tax payments would increase more than government benefits, and the average fiscal deficit for former unlawful immigrant households would fall to $11,455.
At the end of the interim period, unlawful immigrants would become eligible for means-tested welfare and medical subsidies under Obamacare. Average benefits would rise to $43,900 per household; tax payments would remain around $16,000; the average fiscal deficit (benefits minus taxes) would be about $28,000 per household.
Amnesty would also raise retirement costs by making unlawful immigrants eligible for Social Security and Medicare, resulting in a net fiscal deficit of around $22,700 per retired amnesty recipient per year.
In terms of public policy and government deficits, an important figure is the aggregate annual deficit for all unlawful immigrant households. This equals the total benefits and services received by all unlawful immigrant households minus the total taxes paid by those households.
Under current law, all unlawful immigrant households together have an aggregate annual deficit of around $54.5 billion.
In the interim phase (roughly the first 13 years after amnesty), the aggregate annual deficit would fall to $43.4 billion.
At the end of the interim phase, former unlawful immigrant households would become fully eligible for means-tested welfare and health care benefits under the Affordable Care Act. The aggregate annual deficit would soar to around $106 billion.
In the retirement phase, the annual aggregate deficit would be around $160 billion. It would slowly decline as former unlawful immigrants gradually expire.
These costs would have to be borne by already overburdened U.S. taxpayers. (All figures are in 2010 dollars.)
The typical unlawful immigrant is 34 years old. After amnesty, this individual will receive government benefits, on average, for 50 years. Restricting access to benefits for the first 13 years after amnesty therefore has only a marginal impact on long-term costs.
If amnesty is enacted, the average adult unlawful immigrant would receive $592,000 more in government benefits over the course of his remaining lifetime than he would pay in taxes.
Over a lifetime, the former unlawful immigrants together would receive $9.4 trillion in government benefits and services and pay $3.1 trillion in taxes. They would generate a lifetime fiscal deficit (total benefits minus total taxes) of $6.3 trillion. (All figures are in constant 2010 dollars.) This should be considered a minimum estimate. It probably understates real future costs because it undercounts the number of unlawful immigrants and dependents who will actually receive amnesty and underestimates significantly the future growth in welfare and medical benefits.
The debate about the fiscal consequences of unlawful and low-skill immigration is hampered by a number of misconceptions. Few lawmakers really understand the current size of government and the scope of redistribution. The fact that the average household gets $31,600 in government benefits each year is a shock. The fact that a household headed by an individual with less than a high school degree gets $46,600 is a bigger one.
Many conservatives believe that if an individual has a job and works hard, he will inevitably be a net tax contributor (paying more in taxes than he takes in benefits). In our society, this has not been true for a very long time. Similarly, many believe that unlawful immigrants work more than other groups. This is also not true. The employment rate for non-elderly adult unlawful immigrants is about the same as it is for the general population.
Many policymakers also believe that because unlawful immigrants are comparatively young, they will help relieve the fiscal strains of an aging society. Regrettably, this is not true. At every stage of the life cycle, unlawful immigrants, on average, generate fiscal deficits (benefits exceed taxes). Unlawful immigrants, on average, are always tax consumers; they never once generate a “fiscal surplus” that can be used to pay for government benefits elsewhere in society. This situation obviously will get much worse after amnesty.
Many policymakers believe that after amnesty, unlawful immigrants will help make Social Security solvent. It is true that unlawful immigrants currently pay FICA taxes and would pay more after amnesty, but with average earnings of $24,800 per year, the typical unlawful immigrant will pay only about $3,700 per year in FICA taxes. After retirement, that individual is likely to draw more than $3.00 in Social Security and Medicare (adjusted for inflation) for every dollar in FICA taxes he has paid.
Moreover, taxes and benefits must be viewed holistically. It is a mistake to look at the Social Security trust fund in isolation. If an individual pays $3,700 per year into the Social Security trust fund but simultaneously draws a net $25,000 per year (benefits minus taxes) out of general government revenue, the solvency of government has not improved.
Following amnesty, the fiscal costs of former unlawful immigrant households will be roughly the same as those of lawful immigrant and non-immigrant households with the same level of education. Because U.S. government policy is highly redistributive, those costs are very large. Those who claim that amnesty will not create a large fiscal burden are simply in a state of denial concerning the underlying redistributional nature of government policy in the 21st century.
Finally, some argue that it does not matter whether unlawful immigrants create a fiscal deficit of $6.3 trillion because their children will make up for these costs. This is not true. Even if all the children of unlawful immigrants graduated from college, they would be hard-pressed to pay back $6.3 trillion in costs over their lifetimes.
Of course, not all the children of unlawful immigrants will graduate from college. Data on intergenerational social mobility show that, although the children of unlawful immigrants will have substantially better educational outcomes than their parents, these achievements will have limits. Only 13 percent are likely to graduate from college, for example. Because of this, the children, on average, are not likely to become net tax contributors. The children of unlawful immigrants are likely to remain a net fiscal burden on U.S. taxpayers, although a far smaller burden than their parents.
A final problem is that unlawful immigration appears to depress the wages of low-skill U.S.-born and lawful immigrant workers by 10 percent, or $2,300, per year. Unlawful immigration also probably drives many of our most vulnerable U.S.-born workers out of the labor force entirely. Unlawful immigration thus makes it harder for the least advantaged U.S. citizens to share in the American dream. This is wrong; public policy should support the interests of those who have a right to be here, not those who have broken our laws.
Each year, families and individuals pay taxes to the government and receive back a wide variety of services and benefits. A fiscal deficit occurs when the benefits and services received by one group exceed the taxes paid. When such a deficit occurs, other groups must pay for the services and benefits of the group in deficit. Each year, therefore, government is involved in a large-scale economic transfer of resources between different social groups.
Fiscal distribution analysis measures the distribution of total government benefits and taxes in society. It provides an assessment of the magnitude of government transfers between groups.
This paper provides a fiscal distribution analysis of households headed by unlawful immigrants: individuals who reside in the U.S. in violation of federal law. The paper measures the total government benefits and services received by unlawful immigrant households and the total taxes paid. The difference between benefits received and taxes paid represents the total resources transferred by government on behalf of unlawful immigrants from the rest of society.
Identifying the Unlawful Immigrant Population
The U.S. Department of Homeland Security (DHS) estimates that there were 11.5 million undocumented, or unlawful, foreign-born persons in the U.S. in January 2011. These estimates are based on the fact that the number of foreign-born persons appearing in U.S. Census surveys is considerably greater than the actual number of foreign-born persons who are permitted to reside lawfully in the U.S. according to immigration records.
For example, in January 2011, some 31.95 million foreign-born persons (who arrived in the country after 1980) appeared in the annual Census survey, but the corresponding number of lawful foreign-born residents in that year (according to government administrative records) was only 21.6 million. DHS estimates that the difference—some 10.35 million foreign-born persons appearing in the Census American Community Survey (ACS)—was comprised of unauthorized or unlawful residents. DHS further estimates that an additional 1.15 million unlawful immigrants resided in the U.S. but did not appear in the Census survey, for a total of 11.5 million unlawful residents.
DHS employs a “residual” method to determine the characteristics of the unlawful immigrant population. First, immigration records are used to determine the gender, age, country of origin, and time of entry of all foreign-born lawful residents. Foreign-born persons with these characteristics are subtracted from the total foreign-born population in Census records; the leftover, or “residual,” foreign-born population is assumed to be unlawful. This procedure enables DHS to estimate the age, gender, country of origin, date of entry, and current U.S. state of residence of the unlawful immigrant population in the U.S.
The current Heritage Foundation study uses the DHS reports on the characteristics of unlawful immigrants to identify in the Current Population Survey (CPS) of the U.S. Census a population of foreign-born persons who have a very high probability of being unlawful immigrants. (The Current Population Survey is used in place of the similar American Community Survey because it has more detailed income and benefit information.)
The procedures used to identify unlawful immigrants in the CPS are similar to those used in studies of the unlawful immigrant population produced by the Pew Hispanic Center, the Center for Immigration Studies, and the Migration Policy Institute. Selection procedures included the following:
The unlawful immigrant population identified in the CPS matched as closely as possible the age, gender, country of origin, year of arrival, and state of residence of the unlawful immigrant population identified by DHS.
Foreign-born persons who were current or former members of the armed forces of the U.S. or current employees of federal, state, and local governments were assumed to be lawful residents.
Since it is unlawful for unlawful immigrants to receive government benefits such as Social Security, Medicare, Medicaid, and public housing, individuals reporting personal receipt of such benefits were assumed to be lawfully resident.
Principles of consistency were applied within families; for example, children of lawful residents were assumed to be lawful.
Additional information on the procedures used to identify unlawful immigrants in the CPS is provided in Appendix B. It should also be noted that the Heritage Foundation analysis matched the DHS figures as closely as possible.
The characteristics of the unlawful immigrant population estimated for the present analysis are shown in text Table 1. In 2010, there were 11.5 million unlawful immigrants in the U.S. Some 10.34 million of these appeared in the annual Current Population Survey and were identified by the residual method described above. Following the DHS estimate, an additional 1.15 million unlawful immigrants were assumed to reside in the U.S. but not to appear in Census surveys.
As Table 1 shows, 84 percent of unlawful immigrants came from Mexico, the Caribbean, and Central or South America; 11 percent came from Asia; and 5 percent came from the rest of the world. Unlawful immigrants were almost equally split by gender: 54 percent were males, and 46 percent were females.
Characteristics of Unlawful Immigrants and Unlawful Immigrant Households
Any analysis of the fiscal costs of unlawful immigration must deal with the fact that a great many unlawful immigrants are parents of U.S.-born children. For example, the Pew Hispanic Center estimates that in 2010, there were 5.5 million children residing in the U.S. who have unlawful immigrant parents. Among these children, some 1 million were born abroad and were brought into the U.S. unlawfully; the remaining 4.5 million were born in the U.S. and are treated under law as U.S. citizens. Overall, some 8 percent of the children born in the U.S. each year have unlawful immigrant parents.
The presence of these 4 million native-born children with unlawful immigrant parents is a direct result of unlawful immigration. These children would not reside in the U.S. if their parents had not chosen to enter and remain in the nation unlawfully. Obviously, any analysis of the fiscal cost of unlawful immigration must therefore include the costs associated with these children, because those costs are a direct and inevitable result of the unlawful immigration of the parents. The costs would not exist in the absence of unlawful immigration.
To address that issue, the present study analyzes the fiscal costs of all households headed by unlawful immigrants. (Throughout this study, the terms “households headed by an unlawful immigrant” and “unlawful immigrant households” are used synonymously.)
In 2010, 3.44 million such households appeared in the CPS. These households contained 12.7 million persons including 7.4 million adults and 5.3 million children. Among the children, some 930,000 were unlawful immigrants, and 4.4 million were native-born or lawful immigrants.
Table 2 shows the characteristics of unlawful immigrant households in comparison to non-immigrant and lawful immigrant households. Unlawful immigrant households are larger than other households, with an average of 3.7 persons per household compared to 2.5 persons in non-immigrant households.
Unlawful immigrant households have more wage earners per household: 1.6 compared to 1.2 among non-immigrant households. However, the average earnings per worker are dramatically lower in unlawful immigrant households: $24,791 per worker compared to $43,413 in non-immigrant households. Contrary to conventional wisdom, non-elderly adult unlawful immigrants are not more likely to work than are similar non-immigrants.
The heads of unlawful immigrant households are younger, with a median age of 34 compared to 50 among non-immigrant householders. Partly because they are younger, unlawful immigrant households have more children, with an average of 1.6 children per household compared to 0.6 among non-immigrant households. The higher number of children tends to raise governmental costs among unlawful immigrant households. (Both lawful and unlawful children in unlawful immigrant households are eligible for public education, and the large number of children who were born in the U.S. are also eligible for means-tested welfare benefits such as food stamps, Medicaid, and Children’s Health Insurance Program benefits.)
By contrast, there are very few elderly persons in unlawful immigrant households. Only 1.1 percent of persons in those households are over 65 years of age compared to 13.7 percent of persons in non-immigrant households. The absence of elderly persons in unlawful immigrant households significantly reduces current government costs; however, if unlawful immigrants remain in the U.S. permanently, the number who are elderly will obviously increase significantly.
Unlawful immigrant households are far more likely to be poor. Over one-third of unlawful immigrant households have incomes below the federal poverty level compared to 18.8 percent of lawful immigrant households and 13.6 percent of non-immigrant households.
Education Level of Unlawful Immigrant Households
The low wage level of unlawful immigrant workers is a direct result of their low education levels. As Table 3 shows, half of unlawful immigrant households are headed by persons without a high school degree; more than 75 percent are headed by individuals with a high school degree or less. Only 10 percent of unlawful immigrant households are headed by college graduates. By contrast, among non-immigrant households, 9.6 percent are headed by persons without a high school degree, around 40 percent are headed by persons with a high school degree or less, and nearly one-third are headed by college graduates.
The current unlawful immigrant population thus contains a disproportionate share of poorly educated individuals. These individuals will tend to have low wages and pay comparatively little in taxes.
There is a common misconception that the low education levels of recent immigrants are part of a permanent historical pattern and that the U.S. has always admitted immigrants who were poorly educated relative to the native-born population. Historically, this has not been the case. For example, in 1960, recent immigrants were no more likely than non-immigrants to lack a high school degree. By 1998, recent immigrants were almost four times more likely to lack a high school degree than were non-immigrants.
As the relative education level of immigrants fell in recent decades, so did their relative wage levels. In 1960, the average immigrant male in the U.S. actually earned more than the average non-immigrant male. As the relative education levels of subsequent waves of immigrants fell, so did relative wages. By 1998, the average immigrant earned 23 percent less than the average non-immigrant earned.
Aggregate Cost of Government Benefits and Services
Any analysis of the distribution of benefits and taxes within the U.S. population must begin with an accurate count of the cost of all benefits and services provided by the government. The size and cost of government is far larger than many people imagine. In fiscal year (FY) 2010, the expenditures of the federal government were $3.46 trillion. In the same year, expenditures of state and local governments were $1.94 trillion. The combined value of federal, state, and local expenditures in FY 2010 was $5.4 trillion.
This sum is so large that it is difficult to comprehend. One way to grasp the size of government more readily is to calculate average expenditures per household. In 2010, there were 120.2 million households in the U.S. (This figure includes both multi-person families and single persons living alone.) The average cost of government spending thus amounted to $44,932 per household across the U.S. population.
The $5.4 trillion in government expenditure is not free; it must be paid for by taxing or borrowing economic resources from Americans or by borrowing from abroad. In FY 2010, federal taxes amounted to $2.12 trillion. State and local taxes and related revenues amounted to $1.98 trillion. Together, federal, state, and local taxes amounted to $4.11 trillion. Taxes and related revenues came to 75 percent of the $5.4 trillion in expenditures. The gap between taxes and spending was financed by government borrowing.
Types of Government Expenditure
After the full cost of government benefits and services has been determined, the next step in analyzing the distribution of benefits and taxes is to determine the beneficiaries of specific government programs. Some programs, such as Social Security, neatly parcel out benefits to specific individuals. With programs such as these, it is relatively easy to determine the identity of the beneficiary and the cost of the benefit provided. On the other hand, other government functions such as highway construction do not neatly parcel out benefits to individuals. Determining the proper allocation of the benefits of that type of program is more complex.
To determine the distribution of government benefits and services, this study begins by dividing government expenditures into six categories: direct benefits, means-tested benefits, educational services, population-based services, interest and other financial obligations resulting from prior government activity, and pure public goods.
Direct Benefits. Direct benefit programs involve either cash transfers or the purchase of specific services for an individual. Unlike means-tested programs, direct benefit programs are not limited to low-income persons. By far the largest direct benefit programs are Social Security and Medicare. Other substantial direct benefit programs are unemployment insurance and workers’ compensation.
Direct benefit programs involve a fairly transparent transfer of economic resources. The benefits are parceled out discretely to individuals in the population; both the recipient and the cost of the benefit are relatively easy to determine. In the case of Social Security, the cost of the benefit would equal the value of the Social Security check plus the administrative costs involved in delivering the benefit.
Calculating the cost of Medicare services is more complex. Ordinarily, government does not seek to compute the particular medical services received by an individual. Instead, government counts the cost of Medicare for an individual as equal to the average per capita cost of Medicare services. (This number equals the total cost of Medicare services divided by the total number of recipients.) Overall, government spent $1.33 trillion on direct benefits in FY 2010.
Means-Tested Benefits. Means-tested programs are typically termed welfare programs. Unlike direct benefits, means-tested programs are available only to households that fall below specific income thresholds. Means-tested welfare programs provide cash, food, housing, medical care, and social services to poor and low-income persons.
The federal government operates over 80 means-tested aid programs. The largest are Medicaid; the Earned Income Tax Credit (EITC); food stamps; Supplemental Security Income (SSI); Section 8 housing; public housing; Temporary Assistance for Needy Families (TANF); school lunch and breakfast programs; the WIC (Women, Infants, and Children) nutrition program; and the Social Services Block Grant (SSBG). Many means-tested programs, such as SSI and the EITC, provide cash to recipients. Others, such as public housing or SSBG, pay for services that are provided to recipients.
The value of Medicaid benefits is usually counted much as the value of Medicare benefits is counted. Government does not attempt to itemize the specific medical services given to an individual; instead, it computes an average per capita cost of services to individuals in different beneficiary categories such as children, elderly persons, and disabled adults. (The average per capita cost for a particular group is determined by dividing the total expenditures on the group by the total number of beneficiaries in the group.) Overall, the U.S. spent $835 billion on means-tested aid in FY 2010.
Public Education. Government provides primary, secondary, post-secondary, and vocational education to individuals. In most cases, the government pays directly for the cost of educational services provided. In other cases, such as the Pell Grant program, the government in effect provides money to an eligible individual who then spends it on educational services.
Education is the single largest component of state and local government spending, absorbing roughly a third of all state and local expenditures. The average cost of public primary and secondary education per pupil is now around $12,300 per year. Overall, federal, state, and local governments spent $758 billion on education in FY 2010.
Population-Based Services. Whereas direct benefits, means-tested benefits, and education services provide discrete benefits and services to particular individuals, population-based programs generally provide services to a whole group or community. Population-based expenditures include police and fire protection, courts, parks, sanitation, and food safety and health inspections. Another important population-based expenditure is transportation, especially roads and highways.
A key feature of population-based expenditures is that such programs generally need to expand as the population of a community expands. (This quality separates them from pure public goods.) For example, as the population of a community increases, the number of police and firefighters will generally need to expand proportionally.
In The New Americans, a study of the fiscal costs of immigration published by the National Academy of Sciences, the National Research Council (NRC) argued that if service remains fixed while the population increases, a program will become “congested,” and the quality of service for users will deteriorate. Thus, the NRC uses the term “congestible goods” to describe population-based services. Highways are an obvious example. In general, the cost of population-based services can be allocated according to an individual’s estimated utilization of the service or at a flat per capita cost across the relevant population.
A subcategory of population-based services is government administrative support functions such as tax collections and legislative activities. Few taxpayers view tax collection as a government benefit; therefore, assigning the cost of this “benefit” appears to be problematic.
The solution to this dilemma is to conceptualize government activities into two categories: primary functions and secondary functions.
Primary functions provide benefits directly to the public; they include direct and means-tested benefits, education, ordinary population-based services such as police and parks, and public goods.
By contrast, secondary or support functions do not provide direct benefits to the public but do provide necessary support services that enable the government to perform primary functions. For example, no one can receive food stamp benefits unless the government first collects taxes to fund the program. Secondary functions can thus be considered an inherent part of the “cost of production” of primary functions, and the benefits of secondary support functions can be allocated among the population in proportion to the allocation of benefits from government primary functions.
Government spent $871 billion on population-based services in FY 2010. Of this amount, some $769.6 billion went for ordinary services such as police and parks, and $101.4 billion went for administrative support functions.
Interest and Other Financial Obligations Relating to Past Government Activities. Often, tax revenues are insufficient to pay for the full cost of government benefits and services. In that case, government will borrow money and accumulate debt. In subsequent years, interest payments must be paid to those who lent the government money. Interest payments for the government debt are in fact partial payments for past government benefits and services that were not fully paid for at the time of delivery.
Similarly, government employees deliver services to the public. Part of the cost of the service is paid for immediately through the employee’s salary, but government employees are also compensated by future retirement benefits. To a considerable degree, expenditures of public-sector retirement are therefore present payments in compensation for services delivered in the past. The expenditure category “interest and other financial obligations relating to past government activities” thus includes interest and principal payments on government debt and outlays for government employee retirement. Total government spending on these items equaled $533.3 billion in FY 2010.
While direct benefits, means-tested benefits, public education, and population-based services will grow as more immigrants take up residence in the United States, this is not the case for interest payments on the debt and related costs. These costs were fixed by past government spending and borrowing and are largely unaffected, at least in the intermediate term, by immigrants’ entry into the United States. While an increased inflow of immigrants will lead to an increase in most forms of government spending, it will not cause an increase in interest payments on government debt in the short term.
To assess the fiscal impact of unlawful immigrants, therefore, the present report follows the procedures used by the National Research Council in The New Americans: That is, it ignores the costs of interest on the debt and similar financial obligations when calculating the net tax burden imposed by lawful and unlawful immigrant households.
On the other hand, while unlawful immigrant households do not increase government debt immediately, such households will, on average, increase government debt significantly over the long term. For example, if an unlawful immigrant household generated a net fiscal deficit (benefits received minus taxes paid) of $20,000 per year and roughly 20 percent of that amount was financed each year by government borrowing, then the immigrant household would be responsible for adding roughly $4,000 to government debt each year. After 50 years, the family’s contribution to growth in government debt would be around $200,000. While these potential costs are significant, they are outside the scope of the current paper and are not included in the calculations presented here.
Pure Public Goods. Economic theory distinguishes between “private consumption goods” and pure public goods. Economist Paul Samuelson is credited with first making this distinction. In his seminal 1954 paper “The Pure Theory of Public Expenditure,” Samuelson defined a pure public good (or what he called a “collective consumption good”) as a good “which all enjoy in common in the sense that each individual’s consumption of such a good leads to no subtractions from any other individual’s consumption of that good.” By contrast, a “private consumption good” is a good that “can be parceled out among different individuals.” Its use by one person precludes or diminishes its use by another.
A classic example of a pure public good is a lighthouse: The fact that one ship perceives the warning beacon does not diminish the usefulness of the lighthouse to other ships. Another clear example of a governmental pure public good would be a future cure for cancer produced by government-funded research: The fact that non-taxpayers would benefit from this discovery would neither diminish its benefit nor add extra costs to taxpayers. By contrast, an obvious example of a private consumption good is a hamburger: When one person eats it, it cannot be eaten by others.
Direct benefits, means-tested benefits, and education services are private consumption goods in the sense that the use of a benefit or service by one person precludes or limits the use of that same benefit by another. (Two people cannot cash the same Social Security check.) Population-based services such as parks and highways are often mentioned as “public goods,” but they are not pure public goods in the strict sense described above. In most cases, as the number of persons using a population-based service (such as highways and parks) increases, the service must either expand (at added cost to taxpayers) or become “congested,” in which case its quality will be reduced. Consequently, use of population-based services such as police and fire departments by non-taxpayers does impose significant extra costs on taxpayers.
Government pure public goods are rare; they include scientific research, defense, spending on veterans, international affairs, and some environmental protection activities such as the preservation of endangered species. Each of these functions generally meets the criterion that the benefits received by non-taxpayers do not result in a loss of utility for taxpayers. Government pure public good expenditures on these functions equaled $978 billion in FY 2010. Interest payments on government debt and related costs resulting from public good spending in previous years add an estimated additional cost of $93.5 billion, bringing the total public goods cost in FY 2010 to $1,071.5 billion.
An immigrant’s entry into the country neither increases the size and cost of public goods nor decreases the utility of those goods to taxpayers. In contrast to direct benefits, means-tested benefits, public education, and population-based services, the fact that unlawful and low-skill immigrant households may benefit from public goods that they do not pay for does not add to the net tax burden on other taxpayers.
This report therefore follows the same methods employed by the National Research Council in The New Americans and excludes public goods from the count of benefits received by unlawful immigrant households. (For a further discussion of pure public goods, see Appendix G.)
Summary: Total Expenditures. As Table 4 shows, overall government spending in FY 2010 came to $5.40 trillion. Direct benefits had an average cost of $11,088 per household across the whole population, while means-tested benefits had an average cost of $6,944 per household. Education benefits and population-based services cost $6,304 and $7,249 per household, respectively. Interest payments on government debt and other costs relating to past government activities cost $4,436 per household. Pure public good expenditures comprised 20 percent of all government spending and had an average cost of $8,912 per household.
Excluding spending on public goods, interest on the debt, and related financial obligations, total spending came to $31,584 per household across the entire population.
Taxes and Revenues
Total taxes and revenues for federal, state, and local governments amounted to $4.107 trillion in FY 2010. The federal government received $2.12 trillion in revenue, while state and local governments received $1.98 trillion.
A detailed breakdown of federal, state, and local taxes is provided in Appendix Tables 6 and 7. The biggest revenue generator was the federal income tax, which cost taxpayers $899 billion in 2010, followed by Federal Insurance Contribution Act (FICA) taxes, which raised $812 billion. Property tax was the biggest revenue producer at the state and local levels, generating $442 billion, while general sales taxes gathered $285 billion.
Over 90 percent of the revenues shown in Appendix Tables 6 and 7 are conventional taxes and revenues; the remaining 9 percent ($449 billion) are earnings from government assets, primarily assets held in state and local government employee pension funds. About one-quarter of these revenues were used to fund current retirement benefits; the rest were accumulated for future use.
Unlike general taxes, these earnings are not mandatory transfers from the population to the government, but rather represent an economic return on assets the government owns or controls. Because they do not represent payments made by households to the government, these earnings are not included in the fiscal balance analysis presented in the body of this paper. If they were included, they would alter the fiscal balance of current government retirees; therefore, they are irrelevant to the main topic of this paper: the fiscal balance of unlawful immigrants.
Summary of Estimation Methodology
The accounting framework used in the present analysis is the same framework employed by the National Research Council of the National Academy of Sciences in The New Americans. Following that framework, the present study:
Excludes public goods costs such as defense and interest payments on government debt;
Treats population-based or congestible services as fully private goods and assigns the cost of those services to immigrant households based either on estimated use or on the immigrant share of the population.
Includes the welfare and educational costs of immigrant and non-immigrant minor children and assigns those costs to the child’s household;
Assigns the welfare and educational costs of minor U.S.-born children of immigrant parents in the immigrant household; and
Assigns the cost of means-tested and direct benefits according to the self-reported use of those benefits in the CPS.
Clearly, any study that does not follow this framework may reach very different conclusions. For example, any study that excludes the welfare benefits and educational services received by the minor U.S.-born children of unlawful immigrant parents from the costs assigned to unlawful immigrant households will reach very different conclusions about the fiscal consequences of unlawful immigration.
An important principle in the analysis is that receipt of means-tested benefits and direct benefits was not imputed or assigned to households arbitrarily. Rather, the cost of benefits received was based on the household’s self-report of benefits in the U.S. Census Bureau’s Current Population Survey. For example, the cost of the food stamp benefits received is based on the food stamp benefits data provided by the household. If the household stated it did not receive food stamps, then the value of food stamps within the household would be zero.
Data on attendance in public primary and secondary schools were also taken from the CPS; students attending public school were then assigned educational costs equal to the average per-pupil expenditures in their state. Public post-secondary education costs were calculated in a similar manner.
Wherever possible, the cost of population-based services was based on the estimated utilization of the service by unlawful immigrant households. For example, each household’s share of public transportation expenditures was assumed to be proportional to its share of spending on public transportation as reported in the Bureau of Labor Statistics Consumer Expenditure Survey (CEX). When data on utilization of a service were not available, the household’s share of population-based services was assumed to equal its share of the total U.S. population.
Federal and state income taxes were calculated based on data from the CPS. FICA taxes were also calculated from CPS data; both the employer and employee share of FICA taxes were assumed to fall on workers. Corporate income taxes were assumed to be borne partly by workers and partly by owners; the distribution of these taxes was estimated according to the distribution of earnings and property income in the CPS.
Sales, excise, and property tax payments were based on consumption data from the Consumer Expenditure Survey. For example, if the CEX showed that households headed by persons without a high school degree accounted for 10 percent of all sales of tobacco products in the U.S., those households were assumed to pay 10 percent of all tobacco excise taxes.
Certain specific adjustments were made for unlawful immigrant households. Since 45 percent of unlawful immigrants are believed to work “off the books,” the federal and state income tax and FICA tax payments that Census imputes for each household were reduced by 45 percent among unlawful immigrant households. The values of the Earned Income Tax Credit and Additional Child Tax Credit that Census imputes based on family income were reduced to zero for unlawful immigrant families since they are not eligible for those benefits. Immigrant children enrolled in government medical programs were assumed to have half the actual cost of non-immigrant children. And unlawful immigrant families were assumed to use parks, highways, and libraries less than lawful households with the same income.
Finally, about 9 percent of the persons in unlawful immigrant households are adult lawful immigrants or U.S. citizens. The benefits received and taxes paid by these individuals have been excluded from the analysis. The overall methodology of the study is described in detail in the Appendices.
Distribution of Government Benefits and Taxes in the U.S. Population
Table 5 shows government benefits received and taxes paid by the average household in the whole U.S. population. In FY 2010, the average household received a total of $31,584 in government direct benefits, means-tested benefits, education, and population-based services. The household paid $30,426 in federal, state, and local taxes. Since the benefits received exceeded taxes paid, the average household had a fiscal deficit of $1,158 that had to be financed by government borrowing.
If earnings in government employee retirement funds were included in the analysis, this small average household deficit would be largely erased. Nonetheless, these figures show that the taxes paid by U.S. households overall barely cover the cost of immediate services received (direct benefits, means-tested aid, education, and population-based services). Public goods such as defense and interest on government debt are funded by government borrowing.
However, these average household figures mask great differences between different types of households. Individual households have different fiscal balances. Many households are net tax contributors: The taxes they pay exceed the direct and means-tested benefits, education, and population-based services they receive. These households generate a “fiscal surplus” that government uses to finance benefits and services for other households. By contrast, other households are net tax consumers: The government benefits and services received by these households exceed taxes paid. These households generate a “fiscal deficit” that must be financed by taxes from other households or by government borrowing.
Table 5 shows that a critical factor in determining the fiscal balance of a household is the education of the head of household. Individuals with higher education levels earn more, pay more in taxes, and receive fewer government benefits. Less-educated individuals tend to receive more in government benefits and pay less in taxes.
Chart 2 shows the average fiscal balance for all U.S. households based on the education level of the head of household. At one extreme are households with college-educated heads; on average, these households receive $24,839 in government benefits while paying $54,089 in taxes. The average college-educated household thus generates a fiscal surplus of $29,250 that government uses to finance benefits for other households.
At the other extreme are households headed by persons without a high school degree. On average, these households receive $46,582 in government benefits (direct, means-tested, education, and population-based services) while paying only $11,469 in taxes. This generates an average fiscal deficit (benefits received minus taxes paid) of $35,113.
The large average fiscal deficit of less-educated households has a bearing on the immigration debate because immigrant families (both lawful and unlawful) have, on average, far lower education levels than non-immigrants. For example, as Table 3 shows, half of unlawful immigrant household heads do not have a high school degree, and another 27 percent have only a high school diploma.
Household Fiscal Balances and Immigration
Table 6 shows the fiscal balance for non-immigrant, lawful immigrant, and unlawful immigrant households. Unlawful immigrant households have the largest annual fiscal deficits at $14,387 per household. Lawful immigrant households have an average annual fiscal deficit of $4,344, and non-immigrant households have a deficit of $310, meaning that taxes paid roughly equal benefits received.
Lawful immigrant households have higher fiscal deficits than non-immigrants for two reasons. The first is lower education levels; 20 percent of lawful immigrant households are headed by individuals without a high school diploma, compared to 10 percent among non-immigrant households. The second reason is high levels of welfare use. There is a popular misconception that immigrants use little welfare. The opposite is true. In fact, lawful immigrants receive the highest level of welfare benefits.
At $9,040, lawful immigrants’ annual welfare benefits are a third higher than non-immigrants’ benefits. This seems paradoxical because lawful immigrants are barred from receiving nearly all means-tested welfare during their first five years in the U.S. As Table 6 shows, this temporary ban has virtually no impact on the overall use of welfare because (a) the ban does not apply to children born inside the U.S. and (b) receipt of welfare occurs continually throughout a lifetime and therefore is little affected by a five- or 10-year moratorium on receipt of aid.
The lack of effectiveness of the five-year ban on welfare receipt in controlling total welfare costs has a direct bearing on the debate about amnesty legislation. It is noteworthy that the highest level of welfare use shown in Table 6 is $19,762 per household per year among lawful immigrant households headed by individuals without a high school diploma. This figure is important because similar levels of welfare use can be expected among unlawful immigrant households receiving amnesty.
Another important point is that the level of welfare benefits received by unlawful immigrant households is significant, despite the fact that unlawful immigrants themselves are ineligible for nearly all welfare aid. The welfare benefits received by unlawful immigrant households go to U.S.-born children within these homes. If undocumented adults within these households are given access to means-tested welfare programs, per-household benefits will reach very high levels.
Cost of Government Benefits and Services Received by Unlawful Immigrant Households
As noted, in 2010, some 3.44 million unlawful immigrant households appeared in Census surveys. Appendix Table 8 shows the estimated costs of government benefits and services received by these households in 73 separate expenditure categories. The results are summarized in Chart 3.
Overall, households headed by an unlawful immigrant received an average of $24,721 per household in direct benefits, means-tested benefits, education, and population-based services in FY 2010. Education spending on behalf of these households averaged $13,627, and means-tested aid (going mainly to the U.S.-born children in the family) averaged $4,497. Spending on police, fire, and public safety came to $3,656 per household. Transportation added another $662, and administrative support services cost $958. Direct benefits came to $44. Miscellaneous population-based services added a final $1,277.
Taxes and Revenues Paid by Unlawful Immigrant Households. Appendix Table 9 details the estimated taxes and revenues paid by unlawful immigrant households in 34 categories. The results are summarized in Chart 4.
Total federal, state, and local taxes paid by unlawful immigrant households averaged $10,334 per household in 2010. Federal and state individual income taxes comprised less than a fifth of total taxes paid. Instead, taxes on consumption and employment (FICA) produced nearly half of the tax revenue for unlawful immigrant households. (The analysis assumes that workers pay both the employer and employee share of FICA tax.) Property taxes (shifted to renters) and corporate profit taxes (shifted to workers) also form a significant part of the tax burden.
It is worth noting that FICA and income taxes reported in Chart 4 have been reduced because the analysis assumes that 45 percent of unlawful immigrant earners work off the books. If all unlawful immigrant workers were employed on the books, these tax payments would increase significantly.
Balance of Taxes and Benefits. On average, unlawful immigrant households received $24,721 per household in government benefits and services in FY 2010. This figure includes direct benefits, means-tested benefits, education, and population-based services received by the household but excludes the cost of public goods, interest on the government debt, and other payments for prior government functions. By contrast, unlawful immigrant households on average paid only $10,334 in taxes. Thus, unlawful immigrant households received $2.40 in benefits and services for each dollar paid in taxes.
Many politicians believe that households that maintain steady employment are invariably net tax contributors, paying more in taxes than they receive in government benefits. Chart 5 shows why this is not the case. As Table 2 shows, unlawful immigrant households have high levels of employment, with 1.6 earners per household and average annual earnings of around $39,000 for all workers in the household. But with average government benefits at $24,721, unlawful immigrant households actually receive 63 cents in government benefits for every dollar of earnings.
To achieve fiscal balance, with taxes equal to benefits, the average unlawful immigrant household would have to pay nearly two-thirds of its income in taxes. Given this simple fact, it is obvious that unlawful immigrant households can never pay enough taxes to cover the cost of their current government benefits and services.
Net Annual Fiscal Deficit. The net fiscal deficit of a household equals the cost of benefits and services received minus taxes paid. As Chart 6 shows, when the costs of direct and means-tested benefits, education, and population-based services are counted, the average unlawful immigrant household had a fiscal deficit of $14,387 (government expenditures of $24,721 minus $10,334 in taxes) in 2010.
For the average unlawful immigrant household to become fiscally solvent, with taxes paid equaling immediate benefits received, it would be necessary to increase the household’s tax payments to 240 percent of current levels. Alternatively, unlawful immigrant households could become solvent only if all means-tested welfare and nearly all public education benefits were eliminated.
Age Distribution of Benefits and Taxes Among Unlawful Immigrant Households. Many political decision makers believe that because unlawful immigrant workers are comparatively young, they can help to relieve the fiscal strains of an aging society. Charts 7 and 8 show why this is not the case. These charts separate the 3.44 million unlawful immigrant households into five categories based on the age of the head of household.
The benefits levels in Chart 7 again include direct benefits, means-tested benefits, public education, and population-based services. These benefits start at $24,726 for households headed by immigrants under 25 years of age and rise to $28,000 to $29,000 per year as the heads of household reach their 30s and 40s. The increase is driven by a rise in the number of children in each home. As the age of the head of household reaches the late 50s, the number of children in the home falls, and benefits dip to around $21,000 per year. Annual tax payments vary little by the age of the householder, averaging around $12,000 per year in each age bracket.
The critical fact shown in Chart 7 and Chart 8 is that, for each age category, the benefits received by unlawful immigrant households exceed the taxes paid. At no point in the life cycle does the average unlawful immigrant household pay more in taxes than it takes out in benefits. In each age category, unlawful immigrant households receive roughly $2.00 in government benefits for each dollar paid in taxes. Between ages 45 and 54 (generally considered prime earning years), unlawful immigrants actually receive nearly $3.00 in benefits for each dollar paid in taxes.
These figures belie the notion that government can relieve financial strains in Social Security and other programs simply by importing younger unlawful immigrant workers. The fiscal impact of an immigrant worker is determined far more by education and skill level than by age. Low-skill immigrant workers (whether lawful or unlawful) impose a net drain on government finance as soon as they enter the country and add significantly to those costs every year they remain.
Chart 8 shows the net fiscal deficits (benefits minus taxes) for each age category. The fiscal deficits reach a peak of over $19,000 per year for households with heads between 45 and 54 years old. The average deficit then falls to around $10,000 per year for households with heads between 55 and 64 years old. The number of unlawful immigrant households declines sharply with age. There are very few unlawful immigrant households with heads over age 65.
Aggregate Annual Net Fiscal Costs. In 2010, 3.44 million unlawful immigrant households appeared in the Current Population Survey. The average net fiscal deficit per household was $14,387. Most experts believe that at least 350,000 more unlawful immigrant households resided in the U.S. but were not reported in the CPS.
Assuming that the fiscal deficit for these unreported households was the same as the fiscal deficit for the unlawful immigrant households in the CPS, the total annual fiscal deficit (total benefits received minus total taxes paid) for all 3.79 million unlawful immigrant households together equaled $54.5 billion (the deficit of $14,387 per household times 3.79 million households). This sum includes direct and means-tested benefits, education, and population-based services.
Adjusting Future Deficit Estimates for the Potential Impact of the 2010 Recession
In 2010, the economy was in recession. In a recession, overall income and tax revenue will be lower; some benefits such as unemployment insurance will be dramatically higher. The recession may therefore have increased the fiscal deficit of unlawful immigrant households relative to non-recession years. However, the impact of a recession will not be uniform across all socioeconomic groups.
Evidence suggests that the recession had at best a modest impact on the fiscal status of unlawful immigrant households. For example, while incomes dropped significantly during the recession, most of the drop occurred in property income; the National Income and Product Accounts (which measure the whole economy) show that total nominal wages fell by only 2.3 percent from 2008 to 2010. Some 95 percent of the income of unlawful immigrant households comes from wages.
As measured in the CPS, the constant-dollar income of the average unlawful immigrant household was the same in 2010 as in 2006. The measured income of unlawful immigrants may be comparatively stable during a recession because unemployed unlawful immigrants return to their country of origin and thereby disappear from Census records. If the average unlawful immigrant household lost income during the recession, the drop was modest.
What about welfare spending? There is a popular conception that welfare spending is like a roller coaster, rising sharply during a recession and falling when the recession ends. This pattern applies somewhat to food stamps but not to means-tested welfare in general. Historically, overall means-tested spending does rise during a recession but does not fall noticeably when the recession ends.
This pattern is shown in Chart 9, which shows total means-tested spending over time adjusted for inflation. The chart shows a dramatic rise in costs over time. Periods of rapid increase are followed by spending plateaus, but there are no significant dips in post-recession periods. Following this pattern, the Obama budget shows that constant-dollar per capita means-tested spending will not decline over the next decade.
Despite these caveats, the estimates of future fiscal deficits in the rest of this paper will be adjusted for the potential effects of the recession on the 2010 data. Specifically, the analysis reduces future unemployment benefits and food stamp benefits by 66 percent and 25 percent below 2010 levels, respectively. These adjustments are firmly backed by evidence and included in all of the figures on future-year deficits.
In addition, the analysis increases future tax payments by unlawful immigrants upward by 5 percent and reduces future overall means-tested welfare benefits downward by 5 percent to compensate for the impact of the recession on 2010 data. These adjustments are more speculative; their impact is shown separately in Table 7 and in subsequent tables. The latter adjustments reduce projected future fiscal deficits among unlawful immigrant households by about 5 percent.
Fiscal Impact of Amnesty or “Earned Citizenship”
In recent years, Congress has considered various comprehensive immigration reform proposals. One key feature of these proposals has been that all or most current unlawful immigrants would be allowed to stay in the U.S. and become U.S. citizens.
In most legislative proposals, amnesty or “earned citizenship” would have three phases. First, unlawful immigrants would be placed in a provisional status that would allow them to remain in the U.S. lawfully. After five to 10 years in this provisional status, most former unlawful immigrants would be granted legal permanent resident (LPR) status. After five years in LPR status, the individuals would be allowed to become U.S. citizens. The interval between initial amnesty and citizenships would thus stretch for 10 to 15 years or longer.
The fiscal impact of amnesty would vary greatly depending on the time period examined. The present paper will analyze the fiscal consequences of amnesty in four phases.
Phase 1: Current Law or Status Quo. This is the fiscal status at the present time prior to amnesty.
Phase 2: The Interim Phase. This phase would include the period in which amnesty recipients were in provisional status followed by the first five years of legal permanent residence. During the interim phase, tax revenues would go up as more former unlawful immigrants began to work “on the books” but would remain barred from receiving means-tested welfare and probably Obamacare health care subsidies. The overall net fiscal cost of the former unlawful immigrant population could be expected to decline slightly during this period. The length and programmatic boundaries of the interim phase would obviously vary in different bills, but five to 15 years would be typical.
Phase 3: Full Implementation of Amnesty. At the end of the interim phase, all amnesty bills would provide the amnesty recipients (former unlawful immigrants) with full eligibility for more than 80 means-tested welfare programs as well as health care subsidies under the Affordable Care Act (ACA, or Obamacare). The resulting increase in outlays would be substantial.
Phase 4: Retirement Years. Under current law, unlawful immigrants are not eligible for Social Security and Medicare benefits. All amnesty legislation would allow recipients of amnesty to obtain eligibility for these programs. Immediately after enactment of amnesty, former unlawful immigrants with jobs would begin to acquire credits toward future Social Security and Medicare eligibility. Once they had completed 40 quarters (or 10 years) of employment, they would become eligible for Social Security old age benefits and Medicare and would begin to receive benefits upon reaching retirement age.
In addition, under amnesty, former unlawful immigrants would probably be able to obtain credits toward Social Security for work performed during their time of unlawful residence if they could show that FICA taxes were paid for that employment. Upon reaching the retirement age of 67, former unlawful immigrants could begin to draw Social Security and Medicare benefits. They would also be eligible for other government benefits such as public housing, food stamps, and Medicaid payments for nursing home care. Given the present age of most unlawful immigrants, these retirement costs would not emerge for several decades, but they would be quite large when they did occur.
The median age for current adult unlawful immigrants is 34. Given amnesty, these individuals would, on average, continue to pay taxes and receive benefits for five decades. From this perspective, placing a temporary moratorium on receipt of welfare and Obamacare subsidies would have only a marginal impact on overall costs.
Postponing the date when amnesty recipients would receive welfare and Obamacare is important politically, however, because it hides the real costs of amnesty during the all-important 10-year “budget window” employed by the Congressional Budget Office (CBO). Concealing the actual costs of legislation by delaying program expansion until after the end of the CBO 10-year budget window is a time-worn legislative trick in Washington. This budgetary ploy can be very effective in deluding both politicians and the public about the actual costs of legislation.
When amnesty legislation is rolled out in Congress, the public should expect to see this strategy of deception in full force. Nearly all fiscal discussion in Congress and the press will focus on the deliberately low temporary costs during the interim phase. The far more significant longer-term costs will be largely ignored. No politician who is serious about government spending and deficits should promote this deceptive budgetary gimmick, and the public should not be fooled by it.
Fiscal Changes During the Interim Phase
During the initial interim phase, amnesty would produce three fiscal changes: an increase in tax revenue, an increase in Social Security and Medicare payments for disabled persons and survivors, and an increase in some population-based costs as former unlawful immigrants become more comfortable using government services. This section analyzes those changes.
As noted earlier, nearly all experts believe that much employment of unlawful immigrants occurs “off the books.” Since taxes are not paid on this hidden employment, the result is less government revenue. After amnesty, former unlawful immigrants would have a strong incentive to shift to “on the books” employment because a consistent record of official employment would probably be necessary for these individuals to remain in the U.S. and to progress toward LPR status.
The present analysis assumes that at the current time, some 55 percent of unlawful immigrant workers work on the books and 45 percent work off the books. The analysis assumes that if amnesty were enacted, 95 percent of future employment of the former unlawful immigrants would occur on the books. This would increase payments of federal and state income taxes, FICA taxes, and other labor taxes (such unemployment and work compensation fees) by nearly $14 billion per year.
After amnesty, former unlawful immigrants would be able to seek employment more openly and compete for a wider range of positions. Research from the amnesty in 1986 shows that this led to significant wage gains among amnesty recipients, but amnesty also made individuals eligible for unemployment insurance and other programs that support individuals when they are not working, and this led to a decline in employment among workers receiving amnesty. These two effects offset each other, yielding a net overall gain of 5 percent in wages. This 5 percent wage boost is included in the analysis and leads to an increase in income, FICA, and consumption tax payments of around $3 billion per year.
The analysis also assumes that after amnesty, former unlawful immigrant households would be more likely to use highways, autos, and airports; this would result in an increase in related taxes and fees of roughly $800 million per year. Overall, amnesty would increase tax revenue and fees by some $18 billion per year, or roughly $4,700 per former unlawful immigrant household.
As former unlawful immigrants began to work on the books using their own names and Social Security numbers, their eligibility for unemployment insurance benefits and workers’ compensation would increase. These benefits would likely reach levels comparable to those received by lawful immigrant families with similar socioeconomic characteristics.
In contrast to old age benefits, Social Security disability, survivor’s benefits, and related Medicare are available well before retirement age. Any amnesty law would make former unlawful immigrants and their kin eligible for these benefits. For example, a worker who had five years of credited employment would receive disability benefits if he became unable to work. Ten years of credited employment would make a worker’s family eligible for survivor benefits upon the worker’s death.
Former unlawful immigrants would begin to receive these benefits not long after amnesty, and the number receiving benefits would grow over time. Eventually, the per-household disability and survivor benefits and accompanying Medicare received by former unlawful immigrant households would likely equal the benefits received by current lawful immigrants: roughly $1,600 per household per year. However, during the first decade after amnesty, the benefit increase would be much less.
The present analysis assumes that unlawful immigrant households are less likely to use certain government services such as parks, highways, libraries, and airports than are lawful households with the same level of income. However, if unlawful immigrant households are granted amnesty, their utilization of these government services will increase.
Over time, the use of these services by former unlawful households would likely match their use by current lawful immigrant and non-immigrant households with similar demographic characteristics. The resulting increase in population-based government services would raise government costs by around $2,000 per household. Increased receipt of unemployment insurance, workers’ compensation, disability benefits, and population-based services would increase the overall government benefits received by former unlawful immigrant households by nearly $11 billion per year.
Fiscal Impact of the Full Implementation of Amnesty
Federal and state governments currently spend over $830 billion per year on more than 80 different means-tested aid programs. U.S.-born children of unlawful immigrants are currently eligible for aid through most of these programs, but foreign-born children who are in the country unlawfully and adult unlawful immigrants are generally not eligible for aid.
At present, all amnesty proposals would make adult unlawful immigrants and their foreign-born children fully eligible for these programs at the end of the waiting period. As a result, welfare benefits in former unlawful households would likely rise to the level of those received by current lawful immigrant families with similar socioeconomic characteristics. This would mean a sharp increase in benefits from programs such as Temporary Assistance for Needy Families, the Earned Income Tax Credit, Medicaid, public housing, and food stamps.
Overall, annual welfare costs would rise to around $13,700 per household among former unlawful households. Amnesty would increase overall welfare costs to $51 billion per year for this group.
Starting in 2014, the Affordable Care Act will begin to provide various forms of aid, including expanded Medicaid, premium subsidies, and cost-sharing subsidies, to lower-income individuals who lack health insurance. Unlawful immigrants are currently ineligible for this aid. Under amnesty or “earned citizenship,” unlawful immigrants would obtain full eligibility for these benefits, although access to aid would probably be delayed until the end of the interim period.
The estimated cost of benefits from Obamacare to former unlawful immigrant households would be $24 billion per year.
Overall Fiscal Impact of Amnesty or “Earned Citizenship”
Table 7 and Chart 10 show the average fiscal balances of unlawful immigrant households during the three stages: before amnesty, the interim period after amnesty, and full implementation of amnesty. At the current time, before amnesty, the average unlawful immigrant household has a fiscal deficit of $14,387 per year. During the interim period immediately following amnesty, tax revenues would increase more than government benefits, and the average fiscal deficit among the former unlawful households would fall to $11,455 per household. (This figure, however, assumes there would be no expansion of government medical care to poor amnesty recipients for a full decade after amnesty is enacted; this seems politically implausible.)
When the interim phase ends, amnesty recipients would become eligible for means-tested welfare and health care benefits under the Affordable Care Act. At that point, annual government benefits would rise to around $43,900 for the average former unlawful immigrant household. Tax payments would remain at around $16,000 per household, yielding an annual fiscal deficit (benefits minus taxes paid) of around $28,000 per household.
Table 8 and Chart 11 show the aggregate fiscal balance for all unlawful immigrant households in the three stages. All of the figures in Table 8 and Charts 10 and 11 are adjusted for future inflation and presented in 2010 constant dollars.
Before amnesty, all unlawful immigrant households together received $93.7 billion per year in government benefits and services and paid $39.2 billion, yielding an aggregate annual deficit of $54.5 billion.
In the interim phase after amnesty, aggregate government benefits and services would rise to $103.4 billion per year, but tax revenue would rise to around $60 billion; as a consequence, the aggregate annual deficit would fall slightly to $43.4 billion. (These figures include all post-recession adjustments.)
At the end of the interim phase, former unlawful immigrant households would become fully eligible for means-tested welfare and health care benefits under the Affordable Care Act. Total annual government benefits and services would soar to $166.5 billion; tax revenue would remain at around $60.5 billion, yielding an aggregate annual fiscal deficit of $106 billion. (These figures include all post-recession adjustments.)
Long-Term Retirement Costs for Former Unlawful Immigrants Under Amnesty
One major fiscal consequence of amnesty is that nearly all current unlawful immigrants would become eligible for Social Security and Medicare and would receive benefits from those programs when they reach retirement age. In most cases, the few who did not obtain eligibility for Social Security and Medicare would receive support from Supplemental Security Income and Medicaid. As they aged, former unlawful immigrants would also be eligible for nursing home care funded by Medicaid. The cost of these benefits would be quite large.
One way to estimate the future retirement costs of unlawful immigrants under amnesty is to examine the average benefits currently received by lawful immigrants over age 65 whose education levels match those of unlawful immigrants. The figures for lawful immigrants over age 65 are shown in Table 9. (Once individuals move into retirement years, it is more accurate to analyze persons rather than households. Thus, in contrast to the previous tables in this paper, Table 9 presents benefits and taxes per immigrant rather than per household.)
Table 9 reports the actual benefits received and taxes paid per person in 2010 by lawful immigrants over age 65. For example, the average elderly lawful immigrant who lacked a high school degree received $31,574 in annual government benefits and services and paid $3,921 in taxes, yielding an annual fiscal deficit of $27,653.
Table 10 shows the estimated fiscal balances of adult amnesty recipients over age 65 if amnesty were enacted. (Again, the estimated benefits received and taxes paid are modeled on the actual current figures for elderly lawful immigrants.) Given amnesty, the average former unlawful immigrant age 65 or older would receive around $30,500 per year in benefits. Social Security benefits would come to around $10,000 per year; Medicare would add another $9,000. Retirees would receive some $7,600 in means-tested welfare, primarily in Medicaid nursing home benefits, general Medicaid, and SSI. Population-based benefits would add another $3,100 in costs. The average amnesty recipient would pay around $7,800 in taxes, resulting in an average annual fiscal deficit of roughly $22,700 per retiree. (All figures include post-recession adjustments.)
Retiring at age 67, amnesty recipients could be expected to receive benefits for 18 to 19 years on average. This would produce a long-term fiscal deficit cost of $420,000 per person during retirement.
Parents of Amnesty Recipients
An additional consequence of legalization is that when amnesty recipients become citizens, they would have the unconditional right to bring their parents to the U.S. On arrival, the parents would become legal permanent residents with the right to obtain citizenship in five years. They would probably be eligible for Obamacare immediately; after five years, they would become eligible for Supplemental Security Income (at $8,500 per year) and other means-tested benefits. The right to bring parents to the U.S. to become citizens is automatic and unlimited. As many as 15 million to 20 million parents would become eligible for legal permanent residence under an amnesty law.
Not all of these individuals would come to the U.S. Historically, one parent has been brought to the U.S. for every seven non-elderly adult immigrants. Following this ratio, 10 million adult amnesty recipients would be likely to bring 1.5 million parents to the country as lawful residents.
For the most part, these parents would be poor and heavily dependent on taxpayers. Typical costs would probably be around $20,000 per parent per year for welfare and medical care. The parents would be elderly on arrival and might receive benefits for five to 10 years. In that case, the total cost to taxpayers would be about $260 billion.
Lifetime Fiscal Costs of Unlawful Immigrants Following Amnesty
Most discussions of the fiscal consequences of unlawful immigration and amnesty focus on the next five to 10 years, but amnesty, by definition, entitles each unlawful immigrant with lifetime eligibility for the full array of government benefits. The average adult unlawful immigrant is currently 34 years old and has a life expectancy of 50 more years. Under amnesty, that means 50 years of government benefits funded by U.S. taxpayers.
If amnesty is enacted, some 3.74 million unlawful immigrant households will be given eventual access to welfare and other entitlements. Of course, amnesty recipients will not live forever. Given standard mortality statistics, it is possible to estimate the decline in the number of adult unlawful immigrants/amnesty recipients and corresponding households year by year in the future. Table 7 gave the estimated fiscal deficit per household during the interim period and during full implementation of amnesty. By combining these per-household deficit figures with the expected number of surviving households headed by amnesty recipients, it is possible to estimate the total lifetime fiscal costs of current unlawful households after amnesty but prior to retirement age.
Table 10 gave the estimated per-person fiscal cost of amnesty recipients after retirement. Combining this per-person deficit figure with the expected number of surviving individuals in each year after retirement yields an estimated total fiscal cost for amnesty recipients after retirement. If the total fiscal costs in the interim, full amnesty, and retirement periods are summed, the result is the estimated lifetime fiscal costs for unlawful immigrants after amnesty.
Table 11 shows the lifetime costs. During the interim phase, the former unlawful immigrant households would generate a net fiscal cost (benefits received minus tax paid) of $550 billion. During the full phase of amnesty (but prior to retirement), the net fiscal deficit would be $1.99 trillion. After retirement, amnesty recipients would run a fiscal deficit of $3.45 trillion. Parents brought into the U.S. by amnesty recipients would generate another $260 billion in net fiscal costs.
If amnesty were enacted tomorrow, current unlawful immigrants (along with their minor children and dependent parents) would subsequently receive around $9.4 trillion in government benefits over the span of a lifetime. The lifetime taxes paid by the amnesty recipients would come to $3.1 trillion. The total fiscal deficit (total benefits received minus taxes paid) would equal $6.3 trillion. (All figures are in constant 2010 dollars.)
Put another way, if amnesty were enacted, the average adult unlawful immigrant would subsequently receive $898,000 in government benefits over the course of a lifetime and pay $306,000 in taxes over the same period. The average lifetime fiscal deficit (benefit received minus taxes paid) would be around $592,000 for each adult amnesty recipient.
These costs would be spread over the lifetime of the amnesty recipients. More than 90 percent of the fiscal costs would occur during a 50-year period after amnesty.
The policy of barring amnesty recipients from receiving welfare and Obamacare during a short period after amnesty is usually trumpeted as a means of eliminating the potential costs of amnesty. In reality, postponing access to government benefits has only a marginal impact on fiscal costs. If amnesty recipients are barred from receiving welfare aid and health benefits from Obamacare for 13 years after initial amnesty, the total fiscal deficit falls by 12 percent from $7.1 trillion to $6.3 trillion.
How Much Does Amnesty Add to Existing Costs?
The $6.3 trillion figure represents the lifetime fiscal costs of unlawful immigrant households after amnesty. It does not represent the increased fiscal costs caused by amnesty alone. The increased lifetime costs caused by amnesty would equal $6.3 trillion minus the estimated lifetime fiscal costs of unlawful immigrant households under current law. Calculating the latter figure is not easy.
As noted, there currently are few unlawful immigrants over age 50. This may be because unlawful immigrants, arriving as young adults over the past 15 to 20 years, have simply not yet reached age 50. It may also be that unlawful immigrants, being unable to access the U.S. welfare and retirement systems under current law, simply go back to their country of origin as they get older. If one assumes that under current law, most unlawful immigrants will return to their country of origin around age 55, the lifetime fiscal costs of unlawful immigrants under current law are comparatively low: only around $1 trillion. The net increased fiscal costs generated by amnesty would be around $5.3 trillion ($6.3 trillion minus $1 trillion.)
However, there is a loophole in existing law that may allow many or most current unlawful immigrants to achieve lawful status and obtain benefits from the welfare system, Social Security, Medicare, Obamacare, and Medicaid. Given access to the U.S entitlement system, it seems unlikely that most unlawful immigrants would choose to return to their native countries empty-handed. The loophole in existing law is the open-ended provision of green cards to the foreign-born parents of U.S. citizens.
A majority of adult unlawful immigrants have children who were born in the U.S. When these children reach age 21, they can immediately demand that their unlawful immigrant parents be given a green card (legal permanent residence) as parents/immediate relatives. The number of green cards (or visas for legal permanent residence) available to parents is unlimited, and the visas will be granted almost automatically. Once the parent spends five years in legal permanent residence, he immediately becomes eligible for welfare and citizenship. As a legal resident, the parent may also be given credit in the Social Security system for work performed previously as an unlawful immigrant. This would contribute to future eligibility for Social Security and Medicare benefits.
If millions of unlawful immigrants utilize the parent visa option in the future and thereby obtain legal permanent residence and/or citizenship, the cost to the taxpayers could run into the trillions. Thus, ironically, the increased fiscal costs generated by amnesty may be reduced by the fact that many unlawful immigrants already have potential long-term access to Social Security, Medicare, Obamacare, and means-tested welfare through a loophole in current law.
Policymakers who are interested in future government solvency should close this loophole by prohibiting any individual who has fathered or mothered a child in the U.S while he or she was an unlawful immigrant from ever receiving an immediate relative/parent visa. This would prevent unlawful immigrants from gaining legal permanent residence and citizenship simply because they have children born in the U.S.
Will the Children of Unlawful Immigrants Repay Their Parents’ Costs?
It is often argued that the fiscal burdens produced by unlawful immigrants are irrelevant because their children will become vigorous net tax contributors, producing fiscal surpluses that will more than pay for any costs their parents have generated. This is not true. As this paper has shown, the degree to which the children of unlawful immigrants become net fiscal contributors (rather than tax consumers) will depend largely on their educational attainment. Moreover, even if all of the children of unlawful immigrants became college graduates, they would be very hard-pressed to pay back $6.3 trillion in net costs even over the course of their entire lives.
Of course, not all of these children will graduate from college; many will have substantially lower educational achievements. The National Educational Longitudinal Study (NELS) reports the intergenerational educational attainment of U.S. children based on the educational attainment of their parents. Table 12 uses data from the NELS survey to predict the educational attainment of the children of unlawful immigrants based on ethnicity and their parents’ education level. Although these children will clearly do better than their parents, 18 percent are still likely to leave school without a high school degree, and only 13 percent are likely to graduate from college.
Based on this level of educational attainment, the children of unlawful immigrants, on average, will become net tax consumers rather than net taxpayers: The government benefits they receive will exceed the taxes they pay. If the children of unlawful immigrants were adults today and had the levels of education predicted in Table 12, they would have an average fiscal deficit of around $7,900 per household.
The odds that the children of unlawful immigrants, on average, will become strong net taxpayers are minimal. Indeed, for these children even to become fiscally neutral (taxes paid equal to benefits received), the percent that graduate from college would need to rise to 30 percent, and the percent without a high school diploma would need to fall to 10 percent. In reality, unlawful immigrants will be net tax consumers, placing a fiscal burden on other taxpayers not only in the first generation, but in the second generation as well.
Will Unlawful Immigrants Contribute to the Solvency of Social Security and Medicare?
It is often argued that unlawful immigrants have a positive impact on U.S. taxpayers because they pay taxes into the Social Security trust fund. Unlawful immigrant workers do pay Social Security or FICA taxes; the median unlawful immigrant worker currently pays about $2,070 per year in FICA taxes.
If amnesty encouraged all former unlawful immigrant workers to work on the books, that number would rise to around $3,770. A worker who paid this amount into Social Security for 35 years would contribute $132,000. Upon retiring, this individual would receive $14,650 per year in Social Security benefits and $10,074 per year in Medicare benefits. Over an average span of 18 years of retirement, the total Social Security and Medicare benefits received by this individual would come to $445,000. Thus, the retirement benefits received would be more than three times the taxes paid into the system.
Moreover, taxes and benefits must be viewed holistically. It is a mistake to look at the Social Security trust fund in isolation. Unlawful immigrants draw benefits from many other government programs besides Social Security. If an individual pays $3,700 per year into the Social Security trust fund but simultaneously draws a net $25,000 per year (benefits minus taxes) out of general government revenue, the solvency of government has not improved. In reality, other taxpayers, including many Social Security recipients, will face higher taxes in order to subsidize unlawful immigrant households.
Caveat: Understating Future Welfare and Medical Benefits
The fiscal analysis in this paper, presented in Table 11 and Chart 12, takes the current fiscal status of households and projects that status forward into future years. All figures are presented in 2010 dollars. One problem with this approach is that it assumes that means-tested welfare and medical benefits per household will grow no faster than general inflation for the next 50 years. Households are assumed to receive no greater welfare benefits in 2035 than they did in 2010. The historical record suggests that this is highly unlikely.
For nearly every year for the past half-century, welfare spending per capita has increased much faster than inflation. In fact, constant-dollar spending per person today is six times higher than it was 50 years ago. By contrast, the analysis in this paper assumes that for the next 50 years, per capita welfare benefits will rise no faster than inflation. While this assumption simplifies the analysis, it is likely an underestimate. The same problem applies to medical benefits. The inflation rate is higher for medical care than for other goods. In addition, when new medical treatment and technology become available, they are provided through government medical programs, broadening the scope of service and increasing costs for taxpayers. The main analysis in this paper assumes that the cost of medical services per beneficiary will grow no faster than inflation for the next 50 years. This is likely an underestimate and probably results in an understatement of future spending.
Additional Factors That Could Raise Future Fiscal Costs
There are a number of demographic, economic, and policy factors that could raise the short-term and long-term fiscal deficit estimates presented in Tables 8 and 11. These include demographic variables that affect the number of amnesty recipients and their dependents and economic factors that would affect the future economic growth rate.
- Potential Undercount of Unlawful Immigrants. The analysis in this paper assumes that there are currently 11.5 million immigrants in the U.S. based on DHS estimates. The DHS estimates that there are some 10.4 million unlawful immigrants recorded in Census surveys and 1.1 million more who are not reported by the Census. While the first number is based on firm evidence, the second is merely a guess. The number of unlawful immigrants who reside in the U.S. but do not respond to Census surveys may be far more than 1.1 million. These extra unlawful immigrants would tend to be single adults, since children would show up in birth or school records. The fact that the actual number of unlawful immigrants can be far greater than 11.5 million is another reason that amnesty is a bad policy. If the number of unlawful immigrants is actually 20 percent greater than the 11.5 million assumed in this paper, the long-term fiscal cost of amnesty would increase proportionately, adding perhaps $1.2 trillion to the lifetime fiscal deficit.
- Cheating in Amnesty. In the 1986 amnesty, an estimated 25 percent of the amnesties granted were fraudulent. In the past 20 years, the underground industry producing fraudulent documents has grown vastly larger and more sophisticated. In the proposed new amnesty, the fraud rate could be as high as or higher than in 1986, resulting in far more than 11 million amnestied individuals. If cheating increased the number of amnesty recipients by 25 percent, the added lifetime fiscal cost would be $1.5 trillion.
- Exclusion of 20 Percent of Unlawful Immigrants During the Interim and Full Implementation Phases of the Analysis. This analysis estimates costs for persons living in households headed by unlawful immigrants during the interim and full amnesty phases. However, about 20 percent of unlawful immigrants do not reside in those households. Any fiscal costs associated with that 20 percent are therefore omitted from the analysis; this is likely to lead to an underestimate of total costs. (In the retirement phase, however, all unlawful immigrants who were adults in 2010 are included in the analysis, not just those residing in unlawful immigrant households.)
- Spouses and Children Brought from Abroad. Any amnesty or legalization will automatically grant amnesty recipients the right to bring spouses and minor children from abroad to reunify families. This reunification would probably occur during the interim phase. Once admitted to the U.S., the children would receive heavily subsidized public education; over time, both children and spouses would become eligible for means-tested welfare and Obamacare. The number of spouses and dependent children who would be brought into the U.S as a result of amnesty is uncertain, but the added fiscal costs could be considerable. If an additional one million spouses and dependent children were brought to the U.S as a result of amnesty, the added lifetime fiscal cost would be around $600 billion.
- Triggering of Additional Chain Migration by Relatives. Social and kinship networks are important factors in increasing immigration flows. Once unlawful immigrant households were legalized, there would be an increased tendency for brothers, sisters, and cousins to migrate from abroad both lawfully and unlawfully to join their relatives. Thus, other things being equal, amnesty would likely increase future unlawful immigration, in turn increasing future fiscal costs.
- Amnesty as a Magnet for Future Unlawful Immigration. The U.S. enacted a much smaller amnesty for unlawful immigrants in 1986. The public was promised that the 1986 amnesty was a one-time affair that would never be repeated. Despite this promise, the 1986 amnesty was probably a factor in encouraging the subsequent surge in unlawful immigration, since it signaled that the U.S. might take a lenient stance toward unlawful immigrants in the future. If the U.S now enacts a second amnesty, it will have established a very strong precedent for serial amnesties. The prospect of recurring amnesties would certainly make future unlawful immigration more attractive, drawing more unlawful immigrants into the country and significantly increasing long-term fiscal costs.
- Dynamic Effects of Increased Fiscal Deficits. The core analysis in this paper indicates that amnesty would increase net governmental costs by perhaps $6.3 trillion. These added costs would have to be financed either by higher taxes or by greater government borrowing leading to a higher national debt. Higher taxes or a higher national debt in turn would reduce future economic growth, thereby lowering future tax revenues. This dynamic feedback effect has not been included in the calculations in the paper.
Additional Factors That Could Reduce Future Fiscal Costs
- Reduced Number of Amnesty Recipients. Not all current unlawful immigrants will necessarily receive amnesty. Some individuals may not apply. Others may not be able to demonstrate residence. Others will fail the criminal background check. If 10 percent of the unlawful immigrants currently residing in the U.S. did not receive amnesty and instead returned to their country of origin, lifetime fiscal costs would be reduced proportionately, resulting in roughly $600 billion in savings.
- Increased Emigration. The core long-term analysis presented in Table 11 assumes an emigration rate of 5 percent among amnesty recipients. Certainly, amnesty recipients would have a very strong financial incentive to remain in the country to receive nearly free education for their children and eventually obtain access to welfare, Obamacare, Social Security, and Medicare. Nonetheless, some amnesty recipients would return to their country of origin. If this emigration occurred before the individual obtained eligibility for Social Security and Medicare, there would be considerable cost savings. If the individual emigrated after establishing eligibility for those programs, the cost saving would be less. The core analysis assumes that 5 percent of unlawful immigrants would emigrate before establishing eligibility for Social Security and Medicare. If, instead, 10 percent emigrated, the lifetime fiscal costs might be reduced by roughly $300 billion.
- Increased Recessionary Adjustments. The recession in 2010 may have reduced tax payments from unlawful immigrants and temporarily increased welfare assistance. In response to this issue, the analysis has reduced estimated future benefits in the unemployment insurance and food stamp programs, increased future estimated tax revenues by 5 percent, and decreased long-term receipt of welfare benefits by 5 percent. All of these adjustments are included in the lifetime fiscal cost figures appearing in table 11. There is considerable evidence that the last two adjustments are not absolutely necessary; nonetheless, some may argue that even greater post-recessionary adjustments should be considered. In general, an increase of one percentage point in the tax loss estimate, combined with a one percentage point decrease in the future welfare benefits will lower the estimated lifetime deficit of amnesty recipients by 1 percent. Setting the post-recessionary tax loss estimate at 10 percent (rather than 5 percent) and reducing future welfare benefits by 10 percent (rather than 5 percent) would thus increase the estimated lifetime fiscal deficit by an added 5 percent, or $315 billion.
Altogether, the variables discussed above suggest that the number of amnesty recipients and dependents may well be much higher than the numbers assumed in this paper. This could have a considerable impact on future costs. If the number were 30 percent greater, for example, the lifetime fiscal costs could rise to nearly $9 trillion.
Possible Indirect Fiscal Effects
The analysis presented in this paper reflects the direct fiscal impact of unlawful immigrants. It reports the benefits received and taxes paid by those immigrants. However, there can be other indirect fiscal consequences of unlawful immigration. For example, unlawful immigrants augment the U.S. labor force and thereby expand the gross domestic product (GDP) by roughly 2 percent. Unlawful immigrants themselves capture most of the gain from this expanded production through their wages, and taxes on the immigrants’ wages and consumption are already incorporated into the analysis.
But the owners of businesses that employ the unlawful immigrants also receive income from their investment in the enterprises in which the immigrants work. The difficulty lies in determining whether the investment in enterprises employing unlawful immigrants represents a net expansion of the stock of investment or merely a reallocation of investment that would have existed without the presence of the immigrant labor. New investment would be unlikely to occur unless the increased labor supply had reduced wages. New net investment would result in new income, and this added income would be taxed by government in a variety of ways. Even though the unlawful immigrants would not pay these taxes themselves, their employment would have triggered the extra tax revenue.
In the extreme case, one might assume that all of the investment associated with unlawful immigrant labor represents a net increase in capital stock. Since unlawful immigrants earn about 2 percent of all wages in the U.S. economy, this might coincide with a 2 percent increase in business profits and capital income. If this were the case, the result would be a roughly $8.5 billion increase in federal, state, and local revenue from a variety of different taxes; this indirect tax gain would amount to roughly $2,500 per unlawful immigrant household. The future lifetime tax gain due to unlawful immigrants from this source could be around $280 billion. Again, the difficulty with this calculation lies in the assumption that all of the capital invested in the employment of unlawful immigrants represents a net increase rather than a reallocation of capital stock.
Conversely, there may be other indirect effects that substantially increase the fiscal drain created by unlawful immigrants. An additional indirect fiscal effect would occur if the presence of immigrant workers in the U.S. reduced the wages or employment of competing non-immigrant workers. For example, Harvard professor George Borjas has estimated that the very large influx of immigrant workers between 1980 and 2000 lowered the wages of the average non-immigrant worker by 3.2 percent. In particular, the disproportionate influx of low-skill immigrants was estimated to reduce the wages of low-skill native workers by 8.9 percent.
The National Research Council has estimated that a 10 percent increase in the labor supply lowers the wage for similarly skilled workers by 3 percent. In 2010, unlawful immigrants constituted about 25 percent of employed adults with less than a high school degree. This means that unlawful immigrants have increased the labor supply of individuals without a high school degree by one-third.
Applying the NRC ratio, the wages of legal residents without a high school diploma have been reduced by about 10 percent due to unlawful immigration. This amounts to $23.1 billion in lost income, or about $2,300 per worker. A wage loss of $23 billion would result in around $8 billion in lost tax revenue (income, FICA, and consumption taxes) and perhaps $6 billion in added welfare costs. The overall indirect fiscal loss to government would be around $14 billion per year.
Another potential impact of unlawful immigration is a reduction in employment rates for native workers. This may be of particular importance for youth and black male workers. Heavy competition for jobs can discourage less-skilled workers, leading them to leave the labor force. As immigrants become the majority of workers in certain occupations, networking and word-of-mouth regarding job openings may increasingly exclude natives. Finally, the abundance of unlawful immigrant labor helps employers to avoid expending effort on recruiting potential U.S.-born workers from underemployed areas, such as Appalachia or Midwestern industrial towns.
Even if just one out of five unlawful immigrant workers displaced a legal resident from a job, wage losses could amount to $14 billion annually. The tax loss and added welfare costs from this could reach $10 billion per year. The lifetime fiscal loss to government due to wage and job loss among U.S. citizens and lawful immigrants might be around $790 billion. In addition, the decline in jobs and wages for lower-skill males may contribute to the long-term decline in marriage in low-income communities; the social and fiscal consequences of this decline are enormous.
Because figures are imprecise, none of the indirect fiscal effects discussed in this section is included in the fiscal analysis in this paper.
Potential Economic Gains and Losses from Unlawful Immigration
While the fiscal consequences of unlawful immigration are strongly negative, some argue that unlawful immigrants create economic benefits that partially compensate for the net tax burdens they create. For example, it is frequently argued that unlawful immigration is beneficial because unlawful immigrant workers expand the gross domestic product. While it is true that unlawful immigrants enlarge GDP by roughly 2 percent, the problem with this argument is that the immigrants themselves capture most of the gain from expanded production in their own wages. Metaphorically, while unlawful immigrants make the American economic pie larger, they themselves consume most of the slice that their labor adds.
The central issue in the debate over the costs and benefits of unlawful immigration is not whether such immigration makes U.S. GDP larger (clearly, it does), but whether unlawful immigration raises the post-tax income of the average non-immigrant American. Given the very large net tax burden that unlawful immigrants impose on U.S. society, such immigrants would have to raise the incomes of non-immigrants to a remarkable degree to have a net beneficial effect.
There are approximately 3.7 million unlawful immigrant households in the U.S. These households impose a net fiscal burden (benefits received minus taxes paid) of around $54.5 billion per year. The fiscal cost of unlawful and low-skill immigrants will be increased in the future by government policies that increase the number of low-skill immigrants, the immigrants’ length of stay in the U.S., or the access of unlawful immigrants to government benefits. Conversely, fiscal costs will be reduced by policies that decrease these variables.
Clearly, immigration policy has enormous fiscal implications. Consistent with principles for immigration reform laid out elsewhere. immigration policy should be changed in the following ways to reduce the costs of unlawful and low-skill immigration to the taxpayer:
- Enforce the current law against employing unlawful immigrants. Unlawful immigrants are predominantly low-skilled. Over time, they impose large costs on the taxpayer. In 1986, the U.S. gave amnesty to 3 million unlawful aliens in exchange for a prohibition on hiring unlawful immigrants in the future. While amnesty was granted, the law against hiring unlawful immigrants was never enforced in more than a token manner. As a result, there are now at least 11.5 million unlawful immigrants in the U.S. Because the majority of unlawful immigrants come to the U.S. for jobs, serious enforcement of the ban on hiring unlawful labor would substantially reduce the employment of unlawful aliens and encourage many to leave the U.S. Reducing the number of unlawful immigrants in the nation and limiting the future flow of unlawful immigrants would also reduce future costs to the taxpayer.
- Do not grant amnesty to unlawful immigrants. Granting amnesty to unlawful immigrants would confer entitlement to welfare, Social Security, and Medicare for the amnesty recipients. This would be ruinously expensive to U.S. taxpayers.
- Eliminate “back door amnesty.” This could be done by closing the loophole in current law that permits unlawful immigrants to become U.S. citizens because they have U.S.-born children. Roughly half of unlawful immigrants have U.S.-born children. When these children reach age 21, they can demand that their parents be given a visa, which grants the parents legal permanent residence; this gives the parents access to the U.S. welfare system and puts them on a potential path to U.S. citizenship. This provision, which operates automatically and cannot be stopped under current law, could be called “back door amnesty.” Current law should be changed to prohibit any individual who conceived or gave birth to a child in the U.S. while that individual was unlawfully present in the U.S. from ever receiving an immediate relative/parent visa that provides legal permanent residence. Closing that loophole could save the taxpayers trillions of dollars over the long term.
- Ensure that any guest worker program is truly temporary and not a gateway to welfare entitlements. A program that involves long-term residence and permits access to welfare, Social Security, Medicare, and public education would be enormously expensive for the U.S. taxpayer. For example, if the “guest worker” brings school-age children with him, each child will generate, on average, $12,300 in public education costs that must be funded by U.S. taxpayers. Similarly, even if formally barred from receiving welfare assistance, guest workers’ low-income families would be likely to receive aid simply because welfare agencies would be reluctant to deny services to families that appear to be in need of aid. Finally, bringing a family into the U.S. would make it far less likely that the guest worker would actually return home, and continued residence in the U.S would increase fiscal costs.
Granting U.S. citizenship to guest workers’ children born in the U.S. would raise fiscal costs. If a child born to a guest worker is granted U.S. citizenship, that child immediately becomes entitled to Medicaid coverage and a full range of other welfare benefits. Further, granting the child citizenship makes it less likely that the guest worker’s parents will actually leave the U.S. and thereby increases taxpayer costs. To the extent permitted by the Fourteenth Amendment to the Constitution, the law establishing the guest worker programs should clearly stipulate that children born to guest workers would be treated in the same manner as children of diplomats—that is, they would be citizens of their parents’ country of origin rather than citizens of the United States.
- Reduce the number of legal permanent residence visas based on kinship and increase the number of visas allocated to high-skilled workers. Under current law, the visa lottery and visa preferences for adult brothers, sisters, and parents tend to bring a high proportion of low-skill immigrants into the U.S. While low-skill immigrants create a fiscal burden for U.S. taxpayers, high-skill immigrants tend to pay more in taxes than they receive in benefits. The legal immigration system should be altered to greatly reduce the number of low-skill immigrants entering the country and increase the number of new entrants with high levels of education and skills that are in demand by U.S. firms. The visa lottery and all preferences for brothers, sisters, parents, and relatives other than spouses and minor children should be eliminated and replaced by new skill-based visas. Parents would be able to visit children in the U.S. as guests but not as legal permanent residents with access to welfare.
The United States offers enormous economic opportunities and societal benefits. Countless more people would immigrate to the U.S. if they had the opportunity. Given this context, the U.S. must be selective in its immigration policy. Policymakers must ensure that the interaction of welfare and other financial transfer programs with immigration does not expand the fiscally dependent population, thereby imposing large costs on American society.
Current immigration policies with respect to both lawful and unlawful immigration encourage the entry of a disproportionate number of poorly educated immigrants into the U.S. As these low-skill immigrants (both lawful and unlawful) take up residence, they impose a substantial tax burden on U.S. taxpayers. The benefits received by unlawful and low-skill immigrant households exceed taxes paid at each age level; at no point do these households pay more in taxes than they receive in benefits.
Current immigration practices, both lawful and unlawful, operate like a system of transnational welfare outreach, bringing millions of fiscally dependent individuals into the U.S. This policy needs to be changed. U.S. immigration policy should encourage high-skill immigration and strictly limit low-skill immigration. In general, government policy should limit immigration to those who will be net fiscal contributors, avoiding those who will increase poverty and impose new costs on overburdened U.S. taxpayers.
Robert Rector is Senior Research Fellow in the Domestic Policy Studies Department at The Heritage Foundation. Jason Richwine, PhD is Senior Policy Analyst for Empirical Studies in the Domestic Policy Studies Department at The Heritage Foundation.
Appendix A: General Methodology
This paper seeks to estimate the total cost of benefits and services received and the total value of taxes paid by all households, by non-immigrant households, by households headed by lawful immigrants, and in particular by households headed by unlawful immigrants. The fiscal analysis presented in this paper is based on three core methodological principles: comprehensiveness, fiscal accuracy, and transparency.
Comprehensiveness. The analysis seeks to cover all government expenditures and all taxes and similar revenue sources for federal, state, and local government. Comprehensiveness helps to ensure balance in the analysis. If a study covered only a limited number of government spending programs or just a portion of taxes, the omissions might bias the conclusions.
Fiscal Accuracy. A cardinal principle of the estimation procedure employed for each expenditure program or category in the analysis is that if the procedure is replicated for the whole U.S. population, the resulting estimated expenditure will equal actual expenditures on the program according to official budgetary documents. The same principle is applied to each tax and revenue category. Altogether, the estimating procedures used in this paper, if applied to the entire U.S. population, will yield figures for total government spending and revenues that match the real-life totals presented in budgetary sources.
Transparency. Specific calculations were made for 34 separate tax and revenue categories and over 74 separate expenditure categories. Since conclusions can be influenced by the assumptions and procedures employed in any analysis, we have endeavored to make the mechanics of the analysis as transparent as possible to interested readers by describing the details of each calculation in Appendices D and E and Appendix Tables A8 and A9.
The accounting framework used in the present analysis is the same framework employed by the National Research Council (NRC) of the National Academy of Sciences in its study of the fiscal impact of immigration, The New Americans. Following the NRC framework, the present study:
Excludes public goods costs such as defense and interest payments on government debt;
Treats population-based or congestible services as fully private goods and assigns the cost of those services to immigrant households based either on estimated use or the immigrant share of population.
Includes the welfare and educational costs of immigrant and non-immigrant minor children and assigns those costs to the child’s household;
Assigns the welfare and educational costs of minor U.S.-born children of immigrant parents in the immigrant household; and
Assigns the cost of means-tested and direct benefits according to the self-reported use of those benefits in the U.S. Census Bureau’s Current Population Survey (CPS).
Clearly, any study that does not follow this framework may reach very different conclusions. For example, any study that excludes the welfare benefits and educational services received by the minor U.S.-born children of unlawful immigrant parents from the costs assigned to unlawful immigrant households will reach very different conclusions about the fiscal consequences of unlawful immigration.
An important principle in the analysis is that receipt of means-tested benefits and direct benefits was not imputed or assigned to households arbitrarily. Rather, the cost of benefits received was based on the household’s self-report of benefits in the CPS. For example, the cost of the food stamp benefits received is based on the food stamp benefits data provided by the household. If the household stated that it did not receive food stamps, then the value of food stamps within the household would be zero. The main exception to this rule was benefits from the Affordable Care Act (ACA), or Obamacare; since these benefits did not exist in 2010, they had to be imputed in future years.
This paper uses the 3.44 million households headed by unlawful immigrants, rather than the unlawful immigrant population as a whole, as the basis of its analysis. By using the household as the unit of analysis, Heritage follows the procedure employed by the National Research Council. Since many variables are not available at the individual level, analysis at the household level is methodologically simpler.
However, one problem with this choice is that 2.08 million unlawful immigrants do not reside in households headed by unlawful immigrants. These individuals, who reside mainly in homes headed by lawful immigrants, are therefore not included in the present fiscal analysis for the interim and full amnesty periods. While this exclusion almost certainly reduces the fiscal cost figures presented in this paper, including these individuals is beyond the scope of the current analysis. (On the other hand, the fiscal analysis of retirement years includes all current adult unlawful immigrants.)
There were some 1.1 million U.S.-born adult citizens and lawful immigrants residing in unlawful immigrant households in 2010, and they represent 8 percent of the persons in those households. These individuals were excluded from the analysis. They are not included in the demographic information on unlawful immigrant households; the benefits they receive and taxes they paid were not included in the fiscal analysis. Exclusion or inclusion of these individuals makes little difference in the fiscal balance of unlawful immigrant households.
Undercount of Unlawful Immigrant Households
The Department of Homeland Security (DHS) assumes that approximately one in 10 unlawful immigrants (1.15 million persons) do not appear in Census records. The Heritage Foundation analysis assumes that the fiscal balance and demography of this undercounted population is similar to the unlawful immigrant population appearing in the CPS.
To adjust for the undercounted population, the number of unlawful immigrant households in the analysis was increased from 3.44 million households (which appear in the CPS) to 3.79 million. Aggregate government benefits and taxes are assumed to increase in the same proportion as the number of households so that the average fiscal cost per unlawful immigrant household was unaffected.
Unless otherwise noted, aggregate fiscal figures for unlawful immigrant households appearing in this paper have been increased to include the undercounted unlawful immigrant households. It is quite possible that the number of uncounted unlawful immigrants residing in the U.S. exceeds 1.15 million.
Data on federal expenditures were taken from Office of Management and Budget, Budget of the United States Government, Fiscal Year 2013: Historical Tables, Table 3.2.
Data on federal taxes and revenues were taken from Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012: Analytical Perspectives, p. 220, Table 15.5.
State and local aggregate expenditures and revenue data were taken from the U.S. Census Bureau’s “State and Local Government Finances Summary: 2010,” Appendix, p. 6, Table A-1.
Additional information on state and local spending categories was taken from U.S. Census Bureau, Federal, State, and Local Governments: 1992 Government Finance and Employment Classification Manual.
Data on state and local pension funds are from U.S. Census Bureau, 2010 Annual Survey of Public Pensions: State & Local Data, Table 1, “National Summary of State and Local Public-Employee Retirement System Finances, Fiscal Year 2010.”
Data on the distribution of benefits and distribution of some taxes were taken from the U.S. Census Bureau’s Current Population Survey of March 2011 (which covers 2010). Additional data on public school attendance were taken from the October 2010 CPS. Data on household expenditure were taken from the Bureau of Labor Statistics Consumer Expenditure Survey (CEX) for 2010.
Data on state spending on Medicaid are drawn from Centers for Medicare and Medicaid Services, Office of the Actuary, 2010 Actuarial Report on the Financial Outlook for Medicaid.
Detailed information on means-tested spending was taken from Congressional Research Service, “Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY 2002–FY 2004.” This report provides important information on state and local means-tested expenditures from states’ and localities’ own financial resources as distinct from expenditures funded by federal grants in aid. FY 2010 data were taken from Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012: Appendix. These data are summarized in Robert Rector’s testimony before the Budget Committee of the United States House of Representatives on May 3, 2012, “Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending.”
Data on Medicaid expenditures for different recipient categories were taken from the Medicaid Statistical Information System (MSIS) as published in Table 13.24, “Medicare & Medicaid Statistical Supplement,” 2010 Edition. Data on Medicaid expenditures in institutional long-term care facilities were taken from “Medicare & Medicaid Statistical Supplement,” 2011 Edition.
Data on the education levels of elderly persons in institutional long-term care facilities were taken from the National Long Term-Care Survey (NLTCS). Data on the number of individuals residing in nursing homes in the average month and the number of Medicaid recipients in nursing homes were taken from the 2004 National Nursing Home Survey (NNHS).
Data on household financial assets based on the age and education level of the household were taken from the 2010 Survey of Consumer Finance.
Appendix B: Identifying Unlawful Immigrants in the CPS
The Department of Homeland Security estimates that there were 11.5 million foreign-born persons residing unlawfully in the U.S. in January 2011.81 These estimates are based on the fact that the number of foreign-born persons appearing in U.S. Census surveys is considerably greater than the number of foreign-born persons who are permitted to reside legally in the U.S., according to immigration records.
For example, in January 2011, some 31.95 million foreign-born persons (who entered the country after 1980) appeared in the annual Census survey, but the actual number of corresponding lawful foreign-born residents in that year (according to government administrative records) was only 21.6 million.82 DHS estimates that the difference—some 10.35 million foreign-born persons appearing in the Census American Community Survey (ACS)—is made up of unauthorized or unlawful residents. DHS further estimates that an additional 1.15 million unlawful immigrants resided in the U.S. but did not appear in the Census survey, for a total of 11.5 million unlawful residents.83
DHS employs a “residual” method to determine the characteristics of the unlawful immigrant population. First, immigration records are used to determine the gender, age, country of origin, and time of entry of all foreign-born lawful residents. Foreign-born persons with these characteristics are subtracted from the total foreign-born population in Census records; the leftover or “residual” foreign-born population is assumed to be unlawful. This procedure enables DHS to estimate the age, gender, country of origin, date of entry, and current U.S. state of residence of the unlawful immigrant population in the U.S.
The current Heritage Foundation study uses the Department of Homeland Security reports on the characteristics of unlawful immigrants to identify in the Current Population Survey (CPS) of the U.S. Census a population of foreign-born persons who have a very high probability of being unlawful immigrants. (The CPS is used in place of the similar ACS because it has more detailed income and benefit information.)84 The procedures used to select unlawful immigrants within the CPS included the following.
The unlawful immigrant population identified in the CPS was matched as closely as possible to the age, gender, country of origin, date of entry, and state of residence of the unlawful immigrant population identified by DHS.
Foreign-born persons who were current or former members of the armed forces of the U.S. or current employees of federal, state, and local governments were assumed to be lawful residents.
Since it is unlawful for unlawful immigrants to receive government benefits such as Social Security, Supplemental Security Income, Medicare, and Medicaid, individuals reporting personal enrollment in these programs were assumed to be lawful.
Immigrant heads of households residing in public or subsidized housing were assumed to be lawful, although other members in the household might be unlawful immigrants.
Principles of consistency were applied within families; for example, children of lawful residents were assumed to be lawful.
Since a U.S. citizen can obtain lawful resident status for a spouse, the foreign-born spouses of U.S citizens were assumed to be lawful.
Foreign-born persons in occupations that involve high levels of professional regulation and legal credentialing, such as doctors, pharmacists, lawyers, and nurse practitioners, were assumed to be lawful.
Under immigration law, virtually all Cuban immigrants will be lawful; all Cuban immigrants in the CPS were therefore assumed to be lawful.
Unlawful immigrants were assumed to be slightly less likely to own a home and to have slightly lower incomes than lawful immigrants with matching characteristics.
The end result of these procedures was to produce an estimated unlawful immigrant population that matched the Department of Homeland Security figures as closely as possible across a range of variables. A comparison of Heritage Foundation and DHS figures is provided in Appendix Table A1.
Appendix C: Calculating Aggregate Federal, State, and Local Spending
Aggregate federal expenditures at the subfunction level were taken from Budget of the United States Government, Fiscal Year 2013: Historical Tables. These data are presented in Appendix Table 2. State and local aggregate expenditures were based on data from the U.S. Census Bureau survey of government.
Two modifications were necessary to yield an estimate of the overall combined spending for federal, state, and local government. First, some $608 billion in state and local spending is financed by grants-in-aid from the federal government. Since these funds are counted as federal expenditures, recording them again as state and local expenditure would constitute a double count. Consequently, federal grants-in-aid were deducted from the appropriate categories of state and local spending.
A second modification involves the treatment of market-like user fees and charges at the state and local levels. These transactions involve direct payment of a fee in exchange for a government service: for example, payment of an entry fee at a park. User fees are described in the federal budget in the following manner:
In addition to collecting taxes…the Federal Government collects income from the public from market-oriented activities and the financing of regulatory expenses. These collections are classified as user charges, and they include the sale of postage stamps and electricity, charges for admittance to national parks, premiums for deposit insurance, and proceeds from the sale of assets, such as rents and royalties for the right to extract oil from the Outer Continental Shelf.
In the federal budget, user fees are not counted as revenue, and the government services financed by user fees are not included in the count of government expenditures. As the Office of Management and Budget states:
[User charges] are subtracted from gross outlays rather than added to taxes on the receipts side of the budget. The purpose of this treatment is to produce budget totals for receipts, outlays, and budget authority in terms of the amount of resources allocated governmentally, through collective political choice, rather than through the market.
In contrast, Census tabulations of state and local government finances include user fees as revenue and also include the cost of the service provided for the fee as an expenditure. The most prominent user fees treated in this manner by the Census are household payments to public utilities for water, power, and sanitation services.
But market-like user fee payments of this type do not involve a transfer of resources from one group to another or from one household to another. In addition, government user fee transactions do not alter the net fiscal deficit or surplus of any household (defined as the cost of total government benefits and services received minus total taxes and revenues paid) because each dollar in services received will be matched by one dollar of fees paid. Finally, determining who has paid a user fee and received the corresponding service is very difficult.
For these reasons, this paper has applied the federal accounting principle of excluding most user fees from revenue tallies, as well as excluding the services funded by the fees from the count of expenditures, to state and local government finances. This means that user charges and fees were removed from both the revenue and expenditure tallies for state and local government. As noted, the inclusion or exclusion of these user fees has no effect on the fiscal deficit figures for unlawful immigrant households or any other group presented in this paper.
Appendix Tables A3, A4, and A5 show the deductions of federal grant-in-aid and user fee expenditures that yielded the state and local expenditure totals used in this analysis.
Appendix D: Estimating the Allocation of Government Benefits and Taxes
This appendix describes the way specific benefits and taxes were allocated among households.
Estimating Government Benefits
In most cases, the dollar cost of direct and means-tested benefits received by unlawful immigrant households and other households was estimated by the dollar cost of benefits received as reported in the Census Bureau’s Current Population Survey.
Underreporting of Benefits. One problem with this approach is that the CPS underreports receipt of most government benefits. This means that the aggregate dollar cost of benefits for a particular program as reported in the CPS is generally less than the actual program expenditures according to government budgetary data.
To be accurate, any fiscal analysis must adjust for the underreporting of benefits. This has been done in prior studies; for example, the National Research Council’s study of the fiscal costs of immigration, The New Americans, made a similar adjustment for such underreporting.
The current analysis adjusts for underreporting in the CPS with a simple mathematical procedure that increases overall spending on any given program to equal actual aggregate spending levels and increases the household benefits reported in the CPS for each category of households in an equal proportion. For example, the equation for lawful immigrant households would be:
Etx = total expenditures for program x reported in the CPS;
Elx = expenditures for program x for lawful immigrant households reported in the CPS;
Ebx = total expenditures for program x according to independent budgetary sources; and
Hl = number of lawful immigrant households in the CPS.
The share of expenditures received by lawful immigrant households as reported in the CPS would equal Elx/Etx; the actual expenditures allocated to lawful immigrant households would be estimated to equal (Elx/Etx) times Ebx; and the average benefit per household from the program received by lawful immigrant households would equal (Elx/Etx) times (Ebx /Hl).
For example, if the CPS reported that lawful immigrant households received 10 percent of food stamp benefits and the total expenditures on food stamps according to budgetary data were $20 billion, lawful immigrant households would be estimated to receive $2 billion in food stamp benefits. If there were 4 million lawful immigrant households, the average food stamp benefit per lawful household would equal $2 billion divided by 4 million households, or $500.
The key assumption behind this underreporting adjustment procedure is that non-immigrant, lawful immigrant, and unlawful immigrant households underreport receipt of welfare and other government benefits at roughly the same rate. For example, if receipt of food stamps is underreported by 15 percent in the CPS for the overall population, the adjustment procedure assumes that each of the subgroups of non-immigrant, lawful immigrant, and unlawful immigrant households in the CPS would underreport food stamp receipt by 15 percent. The average level of food stamp benefits among each group of households as reported in the CPS is then adjusted upward by this ratio to compensate for the underreporting.
This is a conservative assumption with respect to unlawful immigrant households, since those households might have a higher tendency to underreport benefits, particularly if the benefit was obtained unlawfully. However, since there is no evidence to suggest that unlawful immigrant households underreport government benefits to the Census at a rate different from that of the general population, this procedure appears to be valid as an estimating technique.
Education Expenditures. The average cost of public education services was calculated in a somewhat different manner since the CPS reports whether an individual is enrolled in a public school but does not report the cost of education services provided. Consequently, data from the Census survey of governments were used to calculate the average cost of public primary and secondary education per pupil in each state.
Pupil attendance data were obtained from the October 2010 CPS. The total governmental cost of primary and secondary schooling for each household was then estimated by multiplying the number of enrolled pupils in the household by the average cost per pupil in the state where the household resides. This procedure yielded estimates of total public primary and secondary education costs for non-immigrant and immigrant households in each demographic group in the CPS and for the whole CPS population.
Average costs of public post-secondary education per pupil were developed in the same manner. To determine the aggregate public cost of public post-secondary education, all tuition payments were deducted from the state and local expenditure totals. Figures on college attendance were taken from the March 2011 CPS.
Medicare Expenditures. There is often confusion concerning the calculation of the cost of Medicare benefits by the Census. The Census makes no effort to determine the costs of medical treatments given to a particular person. Instead, it calculates the average cost of Medicare benefits per recipient and assigns that cost to each person in the CPS who reports Medicare enrollment.
The current analysis allocated Medicare spending among households according to the share of Medicare spending assigned to the household in the CPS. The analysis adjusted for underreporting of Medicare with the same procedures used for other direct benefits.
Medicaid Expenditures. As with Medicare, the Census makes no effort to record the costs of specific medical treatments given to a particular person under the Medicaid program. Instead, it calculates the average cost of Medicaid benefits per person for a particular demographic/beneficiary group. For example, per capita Medicaid costs for children are very different from those for the elderly. The Census assigns the appropriate per capita Medicaid costs to each individual who reports coverage in the CPS according to the individual’s beneficiary class: for example, elderly, children, non-elderly able-bodied adults, and disabled adults.
In the analysis, Medicaid spending was divided into three categories: Medicaid benefits for persons in the general population, Medicaid spending on elderly and non-elderly persons in nursing homes and other long-term care facilities, and disproportionate share hospital (DSH) payments.
- Medicaid Benefits Among Persons in the General Population. Data from the Medicaid Statistical Information System (MSIS) were used to determine aggregate Medicaid expenditures among the general non-institutionalized population for the following recipient categories: the elderly; non-elderly disabled adults; non-disabled, non-elderly adults; and youth under 18. The aggregate expenditures for each recipient category were then allocated among households according each household’s reported share of the relevant benefits in the CPS.
- Medicaid Benefits Among Elderly Persons in Nursing Homes and Other Long-term Care Facilities. MSIS data and other data sources were used to determine the aggregate Medicaid spending going to elderly persons in nursing homes. These Medicaid institutional expenditures were then allocated among eight major demographic groups: non-immigrant households headed by individuals without a high school diploma, non-immigrant households headed by high school graduates, non-immigrant households headed by persons with some college, non-immigrant households headed by college graduates, immigrant households headed by individuals without a high school diploma, immigrant households headed by high school graduates, immigrant households headed by persons with some college, and immigrant households headed by college graduates.
The share of Medicaid spending on the elderly in institutions was assumed to equal the share of Medicaid spending on the elderly in the non-institutional population for each of the eight groups. The analysis assumed there were no elderly unlawful immigrants receiving Medicaid in nursing homes.
- Medicaid Benefits Among Non-elderly Disabled Adults in Nursing Homes and Other Long-term Care Facilities. MSIS data were used to determine aggregate Medicaid spending on non-elderly disabled persons in nursing homes and other long-term care institutions. This spending was then allocated among the eight major demographic groups using the same procedures outlined in the proceeding section. (The same process was then applied to non-disabled non-elderly adults and persons under age 18, although there are relatively few such persons in long-term care.) Critically, the analysis assumed there were no unlawful immigrants of any type receiving Medicaid in nursing homes.
Medicaid Disproportionate Share Hospital (DSH) Spending. Allocation of this spending is discussed in Appendix E.
Other Means-Tested Aid. Altogether, the federal government operates over 80 different means-tested aid programs. The CPS contains data on household utilization of 11 of the largest programs, which cover 93 percent of overall means-tested spending, but provides no data on the smaller programs.
Allocation of benefits from the remaining means-tested programs was estimated in the following manner. First, the share of reported total spending for the 11 means-tested programs covered by the CPS that goes to unlawful immigrant households was determined. Second, these households were assumed to receive a share of the means-tested benefits from the remaining unreported programs equal to their share of all expenditures on the reported means-tested programs in the CPS.
Affordable Care Act/Obamacare. The analysis estimated the benefits that would be provided from the Affordable Care Act during the full implementation phase of amnesty. Since the ACA subsidies are not currently available, these prospective benefits had to be calculated and imputed to households that lack medical insurance. The ACA will provide premium subsidies and cost-sharing subsidies through health care exchanges to households with incomes between 138 percent and 400 percent of poverty. Households with incomes between 138 percent of poverty and 100 percent of poverty may either participate in the exchanges or receive Medicaid.
The analysis used the formulas in the law to calculate premium and cost-sharing subsidies for each uninsured household. The Heritage analysis was designed to match cost estimates provided by the Congressional Budget Office (CBO) for 2017. The CBO predicts that 33 million persons will receive either health exchange subsidies or expanded Medicaid coverage under the Affordable Care Act in 2017. All of these would be lawful residents. The Heritage Foundation analysis also estimates that 33 million lawful residents would receive ACA benefits in 2017. About 40 percent of total U.S. recipients of ACA benefits would participate in expanded Medicaid, and 60 percent would receive exchange subsidies.
In addition, if amnesty were enacted, an additional 5.3 million unlawful immigrants would enroll in Obamacare; of these, 4.3 million would reside in unlawful immigrant households. Altogether, 5.4 million individuals residing in former unlawful immigrant households would receive benefits from ACA during the full amnesty period; 1.1 million of these would be U.S.-born children of unlawful immigrant parents.
According to the Heritage Foundation model of the ACA, premium and cost-sharing subsidies per enrollee would be $5,695 in 2016. The CBO estimate is $5,570 per enrollee in 2017. The cost of new enrollees in Medicaid was set at the average Medicaid cost per beneficiary for each eligibility group in 2010. Former unlawful immigrants were assumed to have Medicaid expenses per beneficiary at 85 percent of normal costs.
Criminal Justice Expenditures. Expenditures for police, corrections, and the courts can be allocated in two ways. First, they can be allocated according to the number of persons protected from criminal activity. The elderly, for example, commit very little crime but require police services to protect themselves from the criminal activity of others. In general, the cost of police protection will expand in proportion to increases in the number of persons protected. Viewed in that light, the cost of criminal justice could be allocated evenly on a per capita or per household basis.
Alternatively, the costs of police protection could be allocated among groups according to their comparative threat of criminal activity. This seems reasonable because groups that have high levels of criminal activity cause other members of the community to demand higher levels of expenditure to protect themselves. Viewed in this light, criminal justice costs could be allocated among groups according to the relative number of criminal offenses committed. The current analysis has followed the former approach; criminal justice costs were apportioned on a per capita basis.
Some might object to this procedure because they believe unlawful immigrants have low rates of criminal activity. The question then arises whether unlawful immigrants have abnormally high or low rates of criminal activity.
Information on this point is available from the State Criminal Alien Assistance Program (SCAAP), which provides federal reimbursement to state and local governments for the costs of incarcerating unlawful aliens in state and local jails. While unlawful immigrants are less than 4 percent of the U.S. population, SCAAP data show that 5 percent of inmates in state prisons and 6 percent of inmates in local jails are unlawful immigrants.98 State and local governments rarely, if ever, incarcerate immigrants merely for violation of U.S. immigration law; instead, unlawful immigrants are incarcerated for standard criminal offenses such as assault, robbery, burglary, homicide, and drug crimes.99
The SCAAP data indicate that unlawful aliens may commit disproportionately higher levels of crime in the U.S. The present analysis, by conservatively estimating the criminal justice costs of unlawful immigrant households to be proportionate to their share of the population in the U.S, probably underestimates the actual criminal justice costs of unlawful immigration.
Population-Based Services. Wherever possible, the analysis allocated the cost of population-based services among households in proportion to their estimated utilization of those services, which was calculated from their share of expenditures for the service in the CPS. For example, use of highways and roads was allocated among households in proportion to their share of gasoline expenditures reported in the CEX. Airport, public transport, water, and electric services were allocated in proportion to expenditures on those items in the CEX; in these cases, the subsidized portion of the service was assumed to be proportionate to the fees paid for the service.
The procedures used to combine CEX and CPS data are discussed under sales taxes, below. When an estimate of proportionate utilization was not possible, the cost of population-based services was generally allocated on a uniform per capita basis.
General Government/Administrative Support Functions at the Federal Level. This category consists of administrative services in support of other government functions. It includes tax and revenue collection, budgeting, central administration, and legislative functions. The analysis followed the National Research Council’s framework in treating these costs as private, population-based services that should be assigned to households.
Allocation of the costs of general government services, such as tax collection, presents difficulties since no one appears to benefit directly from those services. Most taxpayers would regard IRS collection activities as a burden, not a benefit. However, while government administrative functions per se do not benefit the public, they do provide a necessary foundation that makes all other government benefit and service programs possible. A household that receives food stamp benefits, for example, could not receive those benefits unless the IRS had collected the tax revenue to fund the program in the first place.
Since the purpose of the administrative support functions is to sustain other government programs, the costs of administrative services were allocated according to the share of overall federal direct benefits, means-tested benefits, education, and population-based services received by a household.
By contrast, administrative costs in support of pure public goods were not assigned to households. In FY 2010, some 27 percent of total federal spending was allocated to pure public good functions. Therefore, the analysis assumed that 27 percent of federal general government and administrative support spending supported pure public good functions. These costs were excluded from the fiscal analysis. A further 5 percent of administrative costs were assumed to be fixed costs that would not expand or contract in response to changes in the population served; these costs were not assigned to households.
General Government/Administrative Support Functions at the State and Local Levels. These functions include tax and revenue collection, budgeting, central administration, trust fund and lottery administration, and legislative functions. Like federal administrative costs, these costs were allocated according to the share of overall state and local direct benefits, means-tested benefits, education, and population-based services received by a household. Five percent of overall administrative costs were assumed to be fixed; these costs, along with support functions for public goods services, were not allocated to households.
Financial Obligations Relating to Past Government Activities. Year by year, throughout most of the post–World War II period, U.S. taxpayers have not paid for the full cost of benefits and services provided by government. A portion of annual costs is passed on to future years through borrowing and through the retirement costs of former government employees. Current interest payments on government debt are therefore fixed by past government borrowing; current government employee retirement costs are based on past hiring.
An immigrant’s entry into the U.S. does not cause these payments to increase. For that reason, they have been excluded from the fiscal analysis presented in this paper. This is consistent with methods employed by the National Research Council in The New Americans.
Pure Public Goods. Government pure public goods include expenditures on defense, veterans, international affairs, and scientific research and part of spending on the environment, as well as debt obligations relating to past public good spending. An immigrant’s entry into the U.S. does not increase these costs or diminish the utility of public goods spending for other taxpayers. Therefore, these costs have been excluded from the fiscal analysis in this paper. This is consistent with methods employed by the National Research Council in The New Americans.
Estimating the Distribution of Taxes
The distribution of federal and state income taxes was calculated from CPS data. The Census imputes income tax payments into the CPS based on a household’s income and demographic characteristics and the appropriate federal and state tax rules. However, since income is underreported in the CPS, imputed taxes will also be too low. Thus, the imputed tax payments in the CPS were adjusted to equal the aggregate income tax revenues reported in government budgetary documents. Federal revenue totals were taken from Budget of the United States Government, Fiscal Year 2011: Analytical Perspectives. State and local tax and revenue data were taken from the U.S. Census survey of governments.
The procedures for adjusting for the underreporting of income taxes were the same as those used to adjust for underreporting of expenditures. For example, for lawful immigrant households’ federal income tax payments, let:
Tt = total income tax reported in the CPS;
Tl = total income tax for lawful immigrant households reported in the CPS;
Tb = total income tax according to independent budgetary sources; and
Hl = number of lawful immigrant households in the CPS.
The share of taxes paid by lawful immigrant households as reported in the CPS would equal Tl /Tt; the actual expenditures allocated to lawful immigrant households would be estimated to equal (Tl /Tt ) times Tb; and the average paid per lawful immigrant household would equal (Tl /Tt ) times (Tb/Hl).
State income taxes were adjusted for underreporting according to the same formula.
FICA Taxes. Employees were assumed to pay both the “employee” and “employer” share of FICA taxes. Allocation of FICA taxes was estimated based on the distribution reported in the CPS, adjusted for underreporting in the manner described above. Fees for unemployment insurance and workers’ compensation were assumed to be borne fully by the worker and were allocated according to the distribution of earnings in the CPS. FICA taxes were adjusted to equal the actual tax totals from budgetary sources with the same methods employed for income taxes.
Corporate Profits Tax. The incidence of federal and state corporate profits tax was assumed to fall 50 percent on workers and 50 percent on owners of capital. The workers’ share was allocated according to the distribution of earnings in the CPS; the owners’ share was allocated among households according to each household’s estimated share of financial assets.
Sales and Excise Taxes. These taxes are assumed to be paid entirely by consumers. The share paid by each household was assumed to be proportionate to its share of the consumption of goods and services.
In order to estimate consumption, the analysis combined CPS income data with consumption data from the Consumer Expenditure Survey in the following manner. First, for each of the four main demographic groups in the analysis (based on the education level of the head of household), the share of income allocated to total consumption was calculated within the CEX data base. The share of income allocated to specific items such as tobacco and gasoline was then calculated. These specific consumption-to-income ratios were then applied to the CPS income data for each group to determine the group’s share of consumption of a specific item.
This same procedure was then applied to each of the household subcategories presented in the paper. Each group’s share of consumption of an item was assumed to equal its share of the sales or excise tax on the item. For example, lawful immigrant households headed by persons without a high school diploma had 1 percent of total alcohol consumption and were therefore assumed to pay 1 percent of the excise taxes on alcohol. Although specific calculations were performed for 11 different sales and excise taxes, in most cases, a group’s estimated share of tax paid closely matched its estimated share of overall consumer expenditures.
Property Taxes. The Tax Foundation calculates that in 2010, 56 percent of property tax was paid for commercial property and 44 percent for residential property. The Heritage Foundation analysis assumes that the property tax on commercial property was split equally between owners and consumers. The owners’ share of tax was allocated among households according to the households’ estimated share of financial assets. The tax paid by consumers was allocated among households in proportion to their share of total consumer expenditures. (See sales tax, above.)
The analysis further assumes that 35 percent of total property taxes fell on owner-occupied residences and 9 percent on rented residences. The tax on owner-occupied residences was allocated among households according to the share of property tax payments reported in the CPS. The property tax on rented homes or apartments was assumed to be split evenly between owners and renters. The renter share was allocated among households according to their share of rental payments reported in the CEX. The owner share was allocated among households according to their estimated share of financial assets.
Federal Highway Trust Fund Taxes. This tax was assumed to fall half on the private owners of motor vehicles and half on businesses. The business share was further assumed to fall half on consumers and half on owners. Thus, overall, the tax was assumed to fall 50 percent on private motor vehicle operators, 25 percent on consumers, and 25 percent on owners of businesses.
The portion of the tax paid by private motor vehicle operators was allocated among households in proportion to the household’s share of gasoline consumption as estimated from the CEX. The consumer portion of the tax was allocated among households according to the household’s estimated share of total consumption based on the CEX. (See sales tax, above.) The portion of the tax paid by owners was allocated among households according to their estimated share of financial assets.
State Lottery Receipts. An important source of government revenue paid by households headed by persons without a high school diploma is the purchase of state lottery tickets. A major study of the sale of state lottery tickets to different socioeconomic groups shows that per capita spending on state lottery tickets by adults without a high school diploma was twice that of other adults. In the present analysis, lottery spending per adult in households headed by persons without a high school diploma was assumed to be double the purchase rate of adults in the general population.
Earnings on Investments Held in Employee Retirement Trust Funds. These state and local revenues represent the property income received by government trust funds as owners of capital. These earnings are not taxes and cannot be allocated among households.
State and Local Interest Earnings and Earnings from the Sale of Property. These revenues represent the property income received by government as owner of capital and other property. These earnings are not taxes and cannot be allocated among households.
Appendix E: Modified Estimating Procedures for Unlawful Immigrant Households
Some of the estimating procedures described above were modified for unlawful immigrant households. First, all adult U.S. citizens and adult lawful immigrants who resided within unlawful immigrant households were removed from the analysis of those households; benefits and taxes were reduced accordingly.
The earnings and property income of these excluded individuals was deducted from household income, resulting in an automatic matching reduction in all income and property-related taxes. The total income of the excluded individuals was deducted from household total income. This change reduced the estimated consumer expenditures in the household and thereby reduced all relevant sales and consumption taxes as well as government benefit estimates linked to consumption. Direct, means-tested benefits and Obamacare benefits received by these individuals were excluded from the analysis. Public housing and food stamp subsidies were reduced pro rata in affected households. The excluded individuals were removed from the count of persons in unlawful immigrant households, thereby modifying any calculation based on shares of population.
With respect to labor-related taxes, the analysis assumed that 45 percent of unlawful immigrant earnings was paid “off the books.” The CPS imputes federal income taxes, state income taxes, and FICA taxes based on reported earnings, but these taxes are obviously not paid on “off the books” employment. Therefore, the analysis reduced the levels of income and FICA tax reported in the CPS by 45 percent for unlawful immigrant households under the current-law scenarios. Unemployment insurance fees and workers’ compensation fees were reduced by the same amount.
Unlawful immigrant households were assumed to use motor vehicles, roads, and highways less than lawful households with the same income level. Motor vehicle license fees for unlawful immigrant households were therefore cut to 33 percent of normal values; gasoline and highway taxes for personal auto use were reduced to 50 percent of normal levels. Unlawful immigrants were assumed not to use airports; airport fees paid were therefore set at zero.
Government benefit levels were also modified for unlawful immigrant households. The CPS imputes refundable payments of the Earned Income Tax Credit and Additional Child Tax Credit as a percentage of family income. Since unlawful immigrants cannot receive these benefits, these benefits were set at zero under current law.
Unlawful immigrant households were assumed to use roads, highways, parks, libraries, and general health services less than comparable lawful immigrant and non-immigrant families. To adjust for this, the analysis reduced the unlawful immigrant use of roads and highways to 50 percent of normal rates; parks, recreation, and libraries to 75 percent of normal rates; and general health care to 15 percent of normal rates.
Unlawful immigrants can receive health care funded through Medicaid disproportionate share hospital (DSH) payments and community health center programs. Determining spending on unlawful immigrants through these programs is difficult. According to a key study in Health Affairs, adult unlawful immigrants (aged 18–64) nationwide were estimated to have received about $1.1 billion in publicly funded medical care in 2000. Since these individuals cannot enroll in programs such as Medicaid and Medicare, most of this care would have occurred through DSH and community clinics. Adjusting the $1.1 billion spending figure to 2010 levels would result in roughly $2 billion in expenditure. Additional public funds would have been spent on unlawful immigrant elderly and children.
Following the estimates in the Health Affairs study, the Heritage Foundation analysis assumes that expenditures on unlawful immigrants through DHS payments and community health centers was around $3 billion in 2010, or roughly 15 percent of total spending in these programs. The share of remaining spending was allocated to other groups in proportion to their general receipt of means-tested welfare.
There is evidence that immigrants enrolled in the Medicaid and Children’s Health Insurance (CHIP) program have lower costs per beneficiary than non-immigrants. A study by the Cato Institute reports that the costs per beneficiary of immigrant adults in Medicaid is 25 percent lower than the cost for non-immigrant adults. The same study shows that the cost per beneficiary for immigrant children in Medicaid is more than 50 percent lower than the cost for non-immigrant children. On the other hand, medical costs for the foreign-born elderly do not appear to be noticeably lower than the costs for the U.S.-born elderly.
The Medicaid costs imputed into the CPS by the Census do not vary by immigration status. The present analysis has therefore reduced the CPS imputed Medicaid costs for immigrant children in the Medicaid and CHIP programs by 50 percent in the “current law” analysis. CHIP costs were reduced by the same amount. The differences between immigrants and non-immigrants with respect to medical services seem to be a result of differences in access and social attitudes toward medical use. These differences are likely to diminish after amnesty; therefore, immigrant children were assumed to use 25 percent less medical service per beneficiary during the interim period and 20 percent less during the full amnesty period when compared to non-immigrants.
Unlawful immigrant adults would not receive Medicaid benefits under current law or during the interim period. In the full amnesty period, the analysis assumes that the immigrant/non-immigrant difference would have diminished slightly; during the full amnesty period, non-disabled adults who were formerly unlawful immigrants are assumed to receive normal Medicaid benefits that are 15 percent lower than those received by similar non-immigrants during the full amnesty period.
Changes in Algorithms for Calculation of Benefits and Taxes During the Interim Period
The following changes were made to calculate the benefits received and taxes paid by former unlawful immigrant households during the interim amnesty period. (Benefits and taxes not listed remained the same as under current law.)
Government Benefits and Services
Social Security disability and survivor benefits per household were raised from zero to 33 percent of the level of lawful immigrant households with comparable education levels.
Medicare benefits for Old-Age, Survivor, and Disability Insurance (OASDI) recipients were raised from zero to 33 percent of the level of lawful immigrant households with comparable education levels.
Unemployment insurance benefits were raised to the level of lawful immigrant households with comparable education levels and then reduced by 66 percent to reach non-recessionary levels.
Workers’ compensation benefits were raised to the level of lawful immigrant households with comparable education levels.
The value of Medicaid benefits for children was raised to 75 percent of the normal values imputed in the CPS. It was assumed that the difference between expenditures for immigrant and non-immigrant children would diminish over time.
Former unlawful immigrant households were assumed to use roads and highways, airports, parks, libraries, disaster relief, and general (non–means-tested) health care services at the normal rate for similar households in the general population.
A post-recession adjustment reduced unemployment insurance by 66 percent and food stamp benefits by 25 percent. These reductions were incorporated into all post-amnesty benefit figures.
Another post-reduction adjustment reduced total means-tested benefits by 5 percent; the effects of this adjustment appear separately in tables in the text.
The percentage of former unlawful immigrant workers who were assumed to work on the books was raised from 55 percent to 95 percent; federal personal income tax, state personal income tax, FICA taxes, unemployment insurance fees, and workers’ compensation fees were increased proportionately.
The worker’s share of federal and state corporate income tax was increased in direct proportion to the increase in on-the-books employment.
Former unlawful immigrant households were assumed to use roads and highways at the same rate as comparable households with the same incomes in the general population; highway trust fund gas taxes, state gas taxes, and motor vehicle license fees were increased proportionately. Former unlawful immigrant households were assumed to use airports at the same rate as comparable households with the same incomes in the general population; airport fees were increased proportionately.
Former unlawful immigrant workers were assumed to receive a 5 percent increase in earnings as a result of amnesty; total taxes paid per household were therefore increased by 5 percent.
It is possible that the recession in 2010 reduced incomes and tax revenues in unlawful immigrant households by 5 percent. A post-recession adjustment was applied raising the total taxes paid by unlawful immigrant households by 5 percent in future years; this adjustment appears separately in the text tables.
Changes in Algorithms for Calculation of Benefits and Taxes During the Full Amnesty Period
The following changes were made to calculate the benefits received and taxes paid by former unlawful immigrant households during the full amnesty period. (Benefits and taxes not listed remained the same as under current law.)
Government Benefits and Services
Social Security disability and survivor benefits per household were raised to the level of lawful immigrant households with comparable education levels.
Medicare benefits for OASDI recipients were raised to the level of lawful immigrant households with comparable education levels.
Unemployment Insurance benefits were raised to the level of lawful immigrant households with comparable education levels.
Workers’ compensation benefits were raised to the level of lawful immigrant households with comparable education levels.
Temporary Assistance for Needy Families benefits were raised to the level of lawful immigrant households with comparable education levels and adjusted for differences in the number of children per household.
Supplemental Security Income benefits were raised to the level of lawful immigrant households with comparable education levels and adjusted for differences in the number of persons per household.
Food stamp benefits were raised to the level of lawful immigrant households with comparable education levels, adjusted for differences in the number of persons per household.
Refundable Earned Income Tax Credits and Additional Child Tax Credits were set at the levels imputed by the Census in the CPS.
The value of Medicaid benefits for children was set at 75 percent of the normal values imputed in the CPS.
Disproportionate share hospital expenditures were reduced by 33 percent.
Former unlawful immigrant households were assumed to use roads and highways, airports, parks, libraries, disaster relief, and general (non–means-tested) health care services at the normal rate for similar households in the general population.
A post-recession adjustment reduced unemployment insurance by 66 percent and food stamp benefits by 25 percent. These reductions were incorporated into all post-amnesty benefit figures.
Another post-reduction adjustment reduced total means-tested benefits by 5 percent; the effects of this adjustment appear separately in tables in the text.
The percentage of former unlawful immigrant workers who were assumed to work on the books was raised from 55 percent to 95 percent; federal personal income tax, state personal income tax, FICA taxes, unemployment insurance fees, and workers’ compensation fees were increased proportionately.
The worker’s share of federal and state corporate income tax was increased in direct proportion to the increase in on-the-books employment.
Former unlawful immigrant households were assumed to use roads and highways at the same rate as comparable households with the same incomes in the general population; highway trust fund gas taxes, state gas taxes, and motor vehicle license fees were increased proportionately.
Former unlawful immigrant households were assumed to use airports at the same rate as comparable households with the same incomes in the general population; airport fees were increased proportionately.
Former unlawful immigrant workers were assumed to receive a 5 percent increase in earnings as a result of amnesty; total taxes paid per household were therefore increased by 5 percent.
It is possible that the recession in 2010 reduced incomes and tax revenues in unlawful immigrant households by 5 percent. A post-recession adjustment was applied raising the total taxes paid by unlawful immigrant households by 5 percent in future years; this adjustment appears separately in the text tables.
Estimating the Aggregate Lifetime Fiscal Deficit for Unlawful Immigrant Households After Amnesty
The estimate of the lifetime fiscal cost of unlawful immigrant households was based on the following assumptions. The estimates assume that amnesty is enacted in 2013.
The number of former unlawful immigrant households was assumed to decline year by year after amnesty according to standard mortality tables.
Five percent of the households were assumed to emigrate. The emigration was assumed to be spread evenly over the first 30 years after amnesty.
For the first 13 years after amnesty, the annual cumulative deficit would equal the deficit per household for the interim period with post-recession adjustments (as shown in Table 8 in the text) times the remaining number of households.
Starting in the 14th year after amnesty, the annual cumulative deficit was assumed to equal the deficit per household during the full amnesty period with post-recession adjustments (shown in Table 8 in the text) times the remaining number of households.
Thirty-three years after amnesty, the median-aged householder (among the former unlawful immigrant households) would reach retirement age (age 67). Starting in that year, all unlawful immigrants were assumed to begin receiving retirement benefits. Obviously, half of the householders would reach age 67 before this year and half would reach it later. Using individual ages rather than the median age to determine retirement would be more precise but would affect the overall figures only slightly.
The retirement phase of amnesty begins in 2046. In the retirement phase, fiscal costs are based on individuals, not households. The costs are based on the total number of adult unlawful immigrants in 2010 (10.1 million), not just those residing in households with unlawful immigrant heads in 2010. Five percent of these unlawful immigrants are assumed to emigrate before retirement, and the number is further reduced by natural mortality rates. Some 8.8 million are assumed to be alive and in the U.S. in 2046. The annual cumulative deficit is assumed to equal the per-person deficit for former unlawful immigrants over 65 (shown in text table 10) times the surviving number of individuals. In subsequent years, the number of surviving individuals is reduced by standard mortality rates, and the cumulative deficit is reduced accordingly.
Amnesty recipients are assumed to bring some 1.5 million parents to the U.S. as legal permanent residents, resulting in a net added cost of $260 billion. These costs are added to the lifetime total figure.
The lifetime fiscal cost figure is in 2010 dollars.
Appendix F: Other Methodological Issues
Use of 2010 as the Base Year
The fiscal analysis in this paper uses data from 2010, which was a recession year. In a recession year, tax payments by unlawful immigrant households might have been lower, and government benefits might have been higher, than normal. This would artificially increase the average household fiscal deficit and bias the estimates of future deficits upward.
The analysis presented in Tables 7, 8, 10, 11, and 12 in the text has already adjusted for this by reducing the estimated future use of unemployment insurance and food stamps after amnesty to compensate for the higher levels of receipt during the recession in 2010. Beyond this, the fact that 2010 was a recession year has a limited impact on the analysis. While the recession reduced incomes and tax revenues in the economy as a whole, the impact on the average unlawful immigrant household was limited. It is true that gross income in the economy dropped during the recession, but most of that decline was in interest and property income. Overall, wages fell by only 2.3 percent between their peak in 2008 and 2010.
Unlawful immigrants have very little property income, and thus little income loss. In fact, CPS data indicate that the average income of the average unlawful immigrant household did not decline during the recession. Tax payments per household for unlawful immigrant households in 2010 were therefore not artificially low. When unlawful immigrants cannot find employment, they may simply return to their country of origin. This removes them from the survey data and would contribute to the stability of unlawful immigrant household income during an economic downturn.
What about welfare benefits? Welfare benefits received by lawful immigrant households in 2010 were used to estimate future benefits for amnesty recipients. If the 2010 benefits were artificially high, this would bias the estimates of future deficits upward. Many people believe the welfare system is like a roller coaster: Benefits go up during a recession and fall when the recession ends. While food stamp rolls expand and contract to a degree in response to economic trends, most other welfare programs are largely unaffected by business cycles.
Chart 9 in the text shows the means-tested welfare spending for cash, food, and housing between 1965 and 2011. The figures cover the whole population and are adjusted for inflation. Covering several business cycles, the chart reveals no roller-coaster patterns. Benefits may rise during a recession, but they do not fall when the recession ends.
The analysis does include further post-recession adjustments to compensate for the possibility that tax revenue from unlawful immigrants was depressed in 2010 and means-tested benefits were artificially high. The analysis increases future tax revenues for unlawful immigrant households by 5 percent above the 2010 levels. It also reduces future estimated means-tested benefits by 5 percent. These adjustments are presented separately in Tables 7, 8, 10, and 12 in the text. They are also incorporated into Table 11.
Aging of the Population Prior to Retirement
The average unlawful immigrant will spend 20 years in the full amnesty stage before retiring. During that period, the composition of the household’s benefits and taxes may change, but the average household deficit likely will vary little. The number of children in the household is likely to rise and then fall. Wages will rise somewhat, but medical costs and subsidies will rise as well. The number of individuals receiving disability benefits will increase significantly. Overall, the average household deficit is comparatively unchanging for households with heads between 35 and 55.
The analysis assumes that unlawful immigrant households, as a group, will have an average deficit of around $28,000 (in constant dollars) throughout the full amnesty period. This is a simplifying assumption but not an unreasonable one. The unlawful immigrant population already contains adults of various ages. The age composition of unlawful immigrant household heads and the general lack of variation in household fiscal deficit through middle age mean that the average deficit will not vary a great deal before retirement.
However, there are two issues with respect to aging that require special consideration. The first is added child births. An additional 3 million to 4 million children will be born to present unlawful immigrants over the next two decades. At first glance, these children would seem to create an extra cost that should be calculated separately. In reality, these additional children are unlikely to raise the average fiscal deficit among the unlawful immigrant households. As new children are born, older children will mature and leave the households. Thus, the number of children within the unlawful immigrant households as a whole is likely to be fairly stable for many years.
The second issue is wage growth. The basic analysis in this paper included a 5 percent boost in wages due to the direct impact of legalization. However, many unlawful immigrants can be expected to have additional wage growth over time and therefore to pay more taxes. This wage growth could take two forms: structural and maturational.
Structural wage growth occurs between generations: for example, if college graduates in one generation earned more than similar workers in the prior generation. Regrettably, there has been no structural wage growth among workers with a high school degree or less for 40 years. In constant dollars, these earnings either have remained constant or have fallen.111 Therefore, this will not be an important factor in raising the wages of amnesty recipients.
Maturational wage growth occurs as a single worker gets older. Most workers at age 55 are more skilled than they were at 25 and thus receive a higher wage; tax payments will increase proportionately. Historical data show that workers with a high school degree or less may experience, on average, a 15 percent to 30 percent boost in constant-dollar wages after three decades of work.112 This wage growth will produce higher tax payments. Thus, on the surface, one might expect to see household deficit fall as amnesty recipients get older.
But the situation is more complex than this. The unlawful immigrant population in 2010 already contained workers at various ages, so any increase in the group average wage would be less than the 15 percent to 30 percent mentioned above. Moreover, the fiscal balance of each household is determined not by wages alone but by the ratio of wages (and taxes) to government benefits. Older workers will tend to earn more when employed, but they also are more likely to become ill and may leave the labor force and receive disability benefits. Obamacare for older workers will be very expensive.
The analysis in this paper already incorporates most of any anticipated maturation wage increases because it already includes the wages of lawful and unlawful immigrant workers at various ages. More important, it examines the fiscal deficits of households of different ages. The average fiscal deficit for lower-skill households tends to rise until ages 40–45, then fall slightly, and then rise again in retirement. This rise-fall-rise pattern means that as a low-skill population ages, the average household deficit is unlikely to change much, even though wages may rise slightly
Appendix G: Pure Public Goods, Private Consumption Goods, and Population-Based Services
Fiscal distribution analysis seeks to determine the government benefits received by a particular group compared to taxes paid. A necessary first step in this process is to distinguish government programs that provide “pure public goods” as opposed to “private goods.” These two types of expenditures have very different fiscal implications.
Economist Paul Samuelson is credited with being the first to develop the theory of public goods. In his seminal 1954 paper “The Pure Theory of Public Expenditure,”. Samuelson defined a pure public good (or what he called a “collective consumption good”) as a good “which all enjoy in common in the sense that each individual’s consumption of such a good leads to no subtractions from any other individual’s consumption of that good.” By contrast, a “private consumption good” is a good that “can be parceled out among different individuals.” Its use by one person precludes or diminishes its use by another.
A classic example of a pure public good would be a lighthouse: The fact that any particular ship perceives the warning beacon does not diminish the usefulness of the lighthouse to other ships. A typical example of a private consumption good is a hamburger: When one person eats it, it cannot be eaten by others.
Formally, all pure public goods will meet two criteria.
Zero-Cost Extension to Additional Users. Once a pure public good has been produced, it requires no extra cost for additional individuals to benefit from the good. Expansion of the number of beneficiaries does not reduce its utility to any initial user and does not add new costs of production. As Nobel prize–winning economist James Buchanan explains, with a pure public good, “Additional consumers may be added at zero marginal cost.”
The second criterion is a direct corollary of the first. If consumption of a good is truly non-rivalrous, then adding extra new consumers will not reduce utility or add costs for the initial consumers.
The distinction between collective and private consumption goods can be illustrated by considering the difference between a recipe for pie and an actual piece of pie. A recipe for pie is a public consumption good in the sense that it can be shared with others without reducing its usefulness to the original possessor; moreover, the recipe can be disseminated to others with little or no added cost. By contrast, an actual slice of pie is a private consumption good: Its consumption by one person bars its consumption by another. Efforts to expand the number of individuals utilizing the pie slice will either reduce the satisfaction of each user (as each gets a smaller portion of the initial pie) or entail new costs (to produce more pie).
Examples of Governmental Pure Public Goods
Pure public goods are relatively rare. One prime example of a governmental public good is medical research. If research funded by the National Institutes of Health produces a cure for cancer, all Americans will benefit from this discovery. The benefit received by one person is not reduced by the benefit received by others; moreover, the value of the discovery to each individual would remain the same even if the U.S. population doubled.
Another notable example of a pure public good is defense expenditure. The utility of an Army division or an aircraft carrier lies in its effectiveness in combating foreign threats to America. In most respects, one person’s benefit from defense strength is not reduced because others also benefit. The military effectiveness of an Army division or an aircraft carrier is not reduced just because the size of the civilian population being defended increases.
Finally, individuals may receive psychic satisfaction from the preservation of wildlife or wilderness areas. This psychic satisfaction is not reduced because others receive the same benefit and is not directly affected by changes in the population. By contrast, enjoyment of a national park may be reduced if population increases lead to crowding. In consequence, general activities to preserve species may be considered a public good, while provision of parks is a private good.
Pure Public Goods Compared to Population-Based Goods
Many government services that are dubbed public goods are not true public goods. Economists Thomas MaCurdy, Thomas Nechyba, and Jay Bhattacharya state that “relatively few of the goods produced by [the] government sector are pure public goods, in the sense that the cost of providing the same level of the good is invariant to the size of the population.” In other words, many government services referred to conventionally as “public goods” need to be increased at added expense to the taxpayer as the population increases, thereby violating the criterion of zero-cost extension to additional users.
For example, police protection is often incorrectly referred to as a “public good.” True, police do provide a diffuse service that benefits nearly all members of a community, but the benefit that each individual receives from a police officer is reduced by the claims that other citizens may make on the police officer’s time. Someone living in a town of 500 protected by a single police officer gets far more protection from that police officer than would another individual protected by the same single police officer in a town of 10,000.
The National Research Council explains that government services that generally need to be increased as the population increases are not real public goods. It refers to these services as “congestible” goods: If such a program remains fixed in size as the number of users increases, it may become “congested,” and the quality of service will consequently be reduced. An obvious example would be highways. Other examples of “congestible” goods are sewers, parks, fire departments, police, courts, and mail service. These types of programs are categorized as “population-based” services in the paper.
In contrast to population-based services, governmental pure public goods have odd fiscal properties. The fact that a low-income person who pays little or nothing in taxes receives benefit from government defense or medical research programs does not impose added costs or reduce the utility of those programs to other taxpayers. Therefore, it is inaccurate to say that the non-taxpayers’ use of these programs imposes a burden on other taxpayers. On the other hand, non-taxpayers or individuals who pay little in taxes are “free riders” on public goods in the sense that they benefit from a good for which they have not paid.
The entry of unlawful or low-skill immigrants into the U.S. does not increase the costs or reduce the utility of public goods for other taxpayers; therefore, public goods spending is not included in the net fiscal deficit calculations for unlawful immigrant households presented in this paper. By contrast, the entry of unlawful immigrants does increase costs and reduce the utility of “congestible” or population-based services for other taxpayers; therefore, those expenditures have been included in the net fiscal deficit calculations for low-skill immigrant households presented in this paper.
 Ibid. Table 2 and its accompanying text state that in January 2011, the foreign-born population in the U.S. that entered after 1980 was 33.6 million. Of these, 1.65 million were not reported in the Census American Community Survey, leaving 31.95 million foreign-born persons appearing in the survey. The 31.95 million foreign-born persons in the ACS survey minus the 21.6 legal foreign born in the survey left 10.35 million unlawful foreign-born persons in the ACS survey.
 Table 2 shows that there were an estimated 11.5 million unlawful immigrants in the U.S. in January 2011. Of these, 1,150,000 were an undercount, meaning that they did not appear in the Census American Community Survey; the remaining 10.35 million unlawful immigrants were recorded in the ACS.
 The primary analysis in this paper uses the March 2011 Current Population Survey. The data in this survey cover the prior 12 months; thus, they mainly represent conditions in 2010. Throughout the report, the March 2011 CPS data are referred to as 2010 data.
 For a comparison of the DHS and Heritage estimates of the unlawful immigrant populations, see Appendix Table 1. Because of slight differences in the CPS and ACS and because both are weighted surveys, it was impossible to match DHS data exactly on every characteristic.
 Jeffrey S. Passel and D’Vera Cohn, “Unauthorized Immigrant Population: Unauthorized Immigrant Population: National and State Trends, 2010,” Pew Research Hispanic Center, February 1, 2011, http://www.pewhispanic.org/2011/02/01/iii-births-and-children/ (accessed April 18, 2013).
 Some 1.1 million adult U.S. citizens and adult lawful immigrants resided in households headed by unlawful immigrants in 2010. These individuals have been excluded from the figures in Table 2. The benefits they received and taxes they paid were excluded from the analysis in this paper. Inclusion or exclusion of these individuals has very little impact on the fiscal balance of unlawful immigrant households.
 Compared to other households, unlawful immigrant households are more likely to be clustered households. They are more likely to contain unrelated individuals and sub-families in addition to the primary family within the household.
 George J. Borjas, Heaven’s Door: Immigration Policy and the American Economy (Princeton, N.J.: Princeton University Press, 1999), p. 27.
 Ibid., p. 8.
 See Appendix Tables 1, 2A, 2B, and 2C.
 This figure includes persons in nursing homes. See Appendix A.
 In measuring the distribution of benefits and services, this paper will count the value of each benefit and service as equal to the cost borne by the taxpayer to deliver it. The cost of any benefit to the taxpayer does not necessarily equal the subjective value the beneficiary may place on the benefit. For example, if the food stamp program provides a family with $400 per month in food stamp benefits, the family itself may value the food stamps at more or less than $400. Similarly, if a child receives public education costing $10,000 per pupil per year, the child’s family may subjectively value those education services as worth more or less than $10,000. While the question of recipient valuation of government benefits is an interesting one, this paper is concerned with the basic question of the distribution of benefits valued according to their costs to taxpayers.
 This figure includes property income earned by the government such as sale of assets or interest earned on assets.
 For example, the Census Bureau assigns Medicare costs in this manner in the Current Population Survey.
 Congressional Research Service, “Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY2002–FY2004,” CRS Report for Congress, March 27, 2006.
 This spending figure excludes means-tested veterans programs and most means-tested education programs. See Robert Rector, “Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending,” testimony before the Committee on the Budget, U.S. House of Representatives, May 3, 2012, (accessed April 8, 2013).
 National Research Council, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration (Washington, D.C.: National Academy Press, 1997), p. 303.
 Of this total, an estimated $67 billion represents the costs of financial obligations resulting from past public goods expenditures. These costs are entered in the public goods category in Table 1.
 National Research Council, The New Americans, pp. 302, 303.
 Paul A. Samuelson, “The Pure Theory of Public Expenditure,” Review of Economics and Statistics, Vol. 36, No. 4 (November 1954), pp. 387–389.
 National Research Council, The New Americans, pp. 302, 303.
 Chapter 6 of The New Americans provides a single-year analysis of the fiscal costs of immigration that employs much of the same methodology used in the present Heritage Foundation analysis.
 For example, in its analysis of immigration costs in California, the National Research Council study asserts that public services provided at the state level in California “include Medi-Cal health care coverage and AFDC and SSI income transfers, state aid for K–12 education, state support for higher education, state police, corrections, and recreation and state assistance to local governments. Services provided by local governments include local spending on K–12 education, community colleges, police and fire protection, transportation, libraries, public health, public works, general low-income assistance, and general government administration.” The study “assumes each of these services is a private good requiring a proportional increase in spending to protect services for native residents.” National Research Council, The New Americans, p. 278. Accordingly, the study assigns the cost of these services to immigrant households either according to their direct use of the benefit (based, like the Heritage study, on reported receipt in CPS data) or according to their share in the population.
 The exception to this principle is that Census imputes certain values into the CPS data based on the family’s reported income; these include the Earned Income Tax Credit, the Additional Child Tax Credit, federal and state income tax payments, FICA taxes, and school lunch subsidies. Census also imputes the value of Medicare and Medicaid benefits to households that report enrollment in those programs.
 The Consumer Expenditure Survey provided information on consumption of specific items relative to income for different age and education groups. These consumption-to-income ratios were applied to the CPS income data to estimate consumption levels for various families. For additional information, see Appendix D.
 No unlawful immigrant adults would be enrolled in government medical programs such as Medicaid and Medicare.
 2010 was also a recession year; in a non-recession year, the average household would probably not have a fiscal deficit.
 In this paper, the term “non-immigrant household” refers to households of persons born legally in the U.S. The term does not refer to foreigners with temporary or “non-immigrant” visas.
 This figure includes state spending on Medicaid but excludes expanded Medicaid and other benefits generated by the Affordable Care Act. See U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012: Analytical Perspectives, Table 32-1, “Policy Budget Authority and Outlays by Function, Category, and Program (in Millions of Dollars),” (accessed May 2, 2013).
 Catalina Amuedo-Dorantes, Cynthia Bansak, and Steven Raphael, “Gender Differences in the Labor Market: Impact of IRCA’s Amnesty Provisions,” American Economic Review, Vol. 97, No. 2 (May 2007), pp. 412–416.
 The levels of unemployment and food stamp benefits in 2010 were high because of the recession. The per-household unemployment insurance benefit levels have been adjusted downward by 66 percent in the interim and full amnesty phases to match anticipated non-recessionary benefits.
 The analysis assumes that, on average, the benefits would be one-third that amount during the interim period.
 Figures include post-recession adjustments.
 See Appendix D for details.
 All figures are in 2010 dollars and include all post-recession adjustments.
 If this figure seems implausibly high, recall that in 2010, the annual fiscal deficit for lawful immigrant households headed by persons without a high school degree (shown in Table 6) was $50,200 and that Obamacare will increase benefits for each low-income household by around $6,300 per household.
 The figures include all post-recession adjustments.
 The aggregate figures are based on a count of 3.74 million unlawful immigrant households. This figure includes the unlawful immigrant households that appear in the Current Population Survey plus an additional 1.15 million unlawful immigrants that DHS assumes exist but that do not appear in Census records. The unrecorded households are assumed to have the same fiscal characteristics as the unlawful immigrant households appearing in the CPS.
 All figures include post-recession adjustments. The estimated costs for Obamacare premium and cost-sharing subsidies are set at 2016 levels.
 Individuals would not receive both Social Security and Supplemental Security Income (SSI). The SSI costs within the average represent individuals who did not fulfill the requirements for Social Security benefits.
 This figure includes all post-recession adjustments.
 This number could be expected to rise given future medical advances.
 Costs would be considerably higher if amnesty recipients could bring parents into the country sooner and if parents on temporary visas were eligible for Obamacare.
 The analysis assumes that 5 percent of amnesty recipients would emigrate before retirement. The figures include all post-recession adjustments.
 The figures do not include any costs generated by the children of amnesty recipients after age 18.
 The National Educational Longitudinal Study of 1988 (NELS:88) is a nationally representative sample of 8th graders who were first surveyed in 1988 and followed up in 1990, 1992, 1994, and 2000. The data provide information on students’ educational outcomes as well as their parents’ educational attainment levels. They are the most recent data available on intergenerational educational mobility in the U.S. The data used in the analysis in Table 12 are based on the youths’ educational attainment at age 26. See U.S. Department of Education, Institute of Education Sciences, National Center for Education Statistics, “National Education Longitudinal Study of 1988 (NELS:88),” website, http://nces.ed.gov/surveys/nels88/ (accessed May 2, 2013).
 This assumes that public policies are unchanged: There is no great increase in tax rates on lower-skill workers, and there is no dramatic cut in government benefits to that group.
 The median unlawful immigrant worker earns $24,790 per year. FICA taxes on that salary would come to $3,770. However, if 45 percent of unlawful immigrants work off the books, the average payment per worker would by 55 percent of $3,770, or $2,070.
 All figures are in 2013 dollars. The Medicare figure is from U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, Center for Strategic Planning, “Medicare & Medicaid Research Review, 2011 Statistical Supplement,” Table 3.5, (accessed April 19, 2013). The Social Security benefit figure was calculated from Social Security Administration, “Benefit Calculators,” http://www.ssa.gov/cgi-bin/benefit6.cgi (accessed April 19, 2013).
 An alternative analysis might examine just the Social Security portion of the taxes and benefits. The Social Security portion of FICA taxes is 12.4 percent of wages; 35 years of contributions at the median unlawful immigrant wage would equal $108,000, and 18 years of benefits at $14,652 per year would yield $264,000—more than two dollars of benefits for each dollar paid. The analysis would be slightly different if the tax payments were saved and invested and then paid in retirement, but that will not occur.
 It might be argued that, while welfare and medical benefits may increase faster than inflation, the wages of former unlawful immigrants will also increase and the two effects will offset each other. This is highly improbable. Adjusted for inflation, the wages of low-skill workers have fallen over the past 50 years, but government welfare and medical spending per capita has soared. This pattern is unlikely to reverse in the future. (For an additional discussion of wage growth, see Appendix F.)
 Even if the extra uncounted immigrants do not currently have families and children in the U.S., they would tend to form families over time, thereby increasing fiscal costs.
 Steven A. Camarota, “Amnesty Under Hagel–Martinez: An Estimate of How Many Will Legalize If S. 2611 Becomes Law,” Center for Immigration Studies Backgrounder, June 2006, p. 3, Table 1.
 In 2010, 2 percent of profits, rental, and interest income equaled around $48 billion. Assuming a 40 percent aggregate tax rate on this income, total taxes would equal around $19 billion. Subtracting the worker’s share of corporate profits tax, which is already included in the basic calculations in this paper, would yield around $8.5 billion in indirect tax revenue.
 George J. Borjas, “The Labor Demand Curve Is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market,” Quarterly Journal of Economics, Vol. 118, No. 4 (November 2003), pp. 1335–1374.
 National Research Council, The New Americans, p. 151.
 See, for example, George J. Borjas, Jeffrey Grogger, and Gordon H. Hanson, “Immigration and the Economic Status of Black Men,” Economica, Vol. 77, No. 306 (April 2010), pp. 255–282; Hannes Johannsson, Stephan Weiler, and Steven Shulman, “Immigration and the Labor Force Participation of Low-Skill Native Workers,” in Solomon W. Polachek, ed., Worker Well-Being and Public Policy (New York: Emerald Group Publishing Limited, 2003), pp. 291–308; and Christopher L. Smith, “The Impact of Low-Skilled Immigration on the Youth Labor Market,” Journal of Labor Economics, Vol. 30, No. 1 (January 2012), pp. 55–89.
 Judith K. Hellerstein, Melissa McInerney, and David Neumark, “Spatial Mismatch, Immigrant Networks, and Hispanic Employment in the United States,” Annals of Economics and Statistics, No. 99/100 (July/December 2010), pp. 141–167; Fredrik Andersson, Simon Burgess, and Julia Lane, “Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employment,” Institute for the Study of Labor Discussion Paper No. 4423, September 2009, http://ftp.iza.org/dp4423.pdf (accessed April 15, 2013).
 If amnesty is enacted and unlawful immigrants have a 5 percent increase in wages as discussed earlier, the result would be an increase in GDP of 0.1 percent with most of the increase going to the former unlawful immigrants themselves.
 Edwin Meese III and Matthew Spalding, “The Principles of Immigration,” Heritage Foundation Backgrounder No. 1807, October 19, 2004. See also Edwin Meese III and Matthew Spalding, “Where We Stand: Essential Requirements for Immigration Reform,” Heritage Foundation Backgrounder No. 2034, May 10, 2007, and Robert Rector, “Amnesty and Continued Low-Skill Immigration Will Substantially Raise Welfare Costs and Poverty,” Heritage Foundation Backgrounder No. 1936, May 16, 2006, p. 13.
 A temporary guest worker program must be limited in scope and limited in duration; it must not be a pathway to legal permanent residence and citizenship. Guest workers should not bring their families to the U.S., since the inclusion of families would greatly increase costs to U.S. taxpayers, and to the extent permitted by the Fourteenth Amendment to the Constitution, the policy of birthright citizenship should not apply to children born to guest workers temporarily in the U.S. Participants should not be entitled to U.S. welfare and should not become eligible for future Social Security and Medicare benefits; employers should be required to cover medical costs of workers while they are in the U.S. Edwin Meese III and Matthew Spalding, “Permanent Principles and Temporary Workers,” Heritage Foundation Backgrounder No.1911, March 1, 2006.
 Rector, “Amnesty and Continued Low-Skill Immigration Will Substantially Raise Welfare Costs and Poverty”; Robert Rector, “Importing Poverty: Immigration and Poverty in the United States,” Heritage Foundation Special Report No. 9, October, 25, 2006, p. 29.
 Chapter 6 of The New Americans provides a single-year analysis of the fiscal costs of immigration that employs much of the same methodology used in the present Heritage Foundation analysis.
 For example, in its analysis of immigration costs in California, the National Research Council asserts, “Public services provided at the state level to California households include Medi-Cal health care coverage and AFDC and SSI income transfers, state aid for K–12 education, state support for higher education, state police, corrections, and justice, public works, government administration, transportation, environment and recreation, and state assistance to local governments. Services provided by local governments include local spending on K–12 education, community colleges, police and fire protection, transportation, libraries, public health, public works, general low-income assistance, and general government administration.” The study “assumes [that] each of these services is a private good requiring a proportional increase in spending to protect services for native residents.” National Research Council, The New Americans, p. 278. Accordingly, the study assigns the cost of these services to immigrant households either according to their direct use of the benefit (based, like the Heritage study, on reported receipt in CPS data) or according to their share in the population.
 The exception to this principle is that the Census imputes certain values into the CPS data based on the family’s reported income; these include the Earned Income Tax Credit, the Additional Child Tax Credit, federal and state income tax payments, FICA taxes, and school lunch subsidies. The Census also imputes the value of Medicare and Medicaid benefits to households that report enrollment in those programs.
 U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2013: Historical Tables, (accessed April 5, 2013).
 U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012: Analytical Perspectives, p. 220, Table 15.5, http://www.gpo.gov/fdsys/pkg/BUDGET-2012-PER/pdf/BUDGET-2012-PER.pdf (accessed April 5, 2013).
 Jeffrey L. Barnett and Phillip M. Vidal, “State and Local Government Finances Summary: 2010,” U.S. Census Bureau, September 2012, Appendix, p. 6, Table A-1, http://www2.census.gov/govs/estimate/summary_report.pdf (accessed April 5, 2013).
 U.S. Census Bureau, Federal, State, and Local Governments: 1992 Government Finance and Employment Classification Manual, (accessed April 24, 2013).
 The analysis used an electronic version of the March 2011 CPS data from the National Bureau of Economic Research. See National Bureau of Economic Research, “NBER CPS Supplements,” www.nber.org/data/cps.html (accessed April 23, 2013).
 The analysis used an electronic version of the October 2010 CPS data from the National Bureau of Economic Research. See ibid.
 U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey 2010, (accessed April 8, 2013).
 U.S. Department of Health and Human Services, Center for Medicare and Medicaid Services, Office of the Actuary, 2010 Actuarial Report on the Financial Outlook for Medicaid, December 2010, http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/MedicaidReport2010.pdf (accessed April 24, 2013).
 Congressional Research Service, “Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY 2002–FY 2004.”
 U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012: Appendix, (accessed April 8, 2013). See also Rector, “Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending.”
 U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, “Medicare & Medicaid Statistical Supplement,” Medicaid Tables 14.1–14.27, 2010 Edition, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareMedicaidStatSupp/2010.html (accessed April 5, 2013). This survey covers 2003.
 U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, “Medicare & Medicaid Statistical Supplement,” 2011 Edition, (accessed April 23, 2013).
 Duke University and National Institutes of Health, National Institute on Aging, National Long-Term Care Survey, 1999 Public Use Data Files National Long-Term Care Study (NLTCS), 1999 public use data set, http://www.icpsr.umich.edu/icpsrweb/NACDA/studies/09681 (accessed April 5, 2013). Produced and distributed by the Duke University Center for Demographic Studies with funding from the National Institute on Aging under Grant No. U01-AG007198. The NLTCS is a nationally representative sample of individuals aged 65 years and older in long-term care facilities.
 Board of Governors of the Federal Reserve System, 2010 Survey of Consumer Finances, http://www.federalreserve.gov/econresdata/scf/scf_2010.htm (accessed April 8, 2013).
 Hoefer, Rytina, and Baker, “Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2011.” The population of unlawful immigrants was relatively stable in this period; DHS estimates that the number of such immigrants in 2010 was 11.6 million.
 Ibid. Table 2 and its accompanying text state that the foreign-born population in the U.S. in January 2011 was 33.6 million. Of these, 1.65 million were not reported in the Census American Community Survey, leaving 31.95 million foreign-born persons who arrived after 1980 appearing in the survey. The estimated number of legal foreign-born residents was determined to be 22.1 million, of which 21.6 million appeared in the survey and 0.5 million were assumed to be outside the survey. The 31.95 million foreign-born persons in the ACS survey minus the 21.6 legal foreign-born persons in the survey left 10.35 million unlawful foreign-born persons in the ACS survey.
 Table 2 shows that there were an estimated 11.5 million unlawful immigrants in the U.S. in January 2011. Of these, 1,150,000 were an undercount, meaning that they did not appear in the Census American Community Survey. The remaining 10.35 million unlawful immigrants were recorded in the ACS.
 The primary analysis in this paper uses the March 2011 Current Population Survey. The data in this survey cover the prior 12 months; thus, they mainly represent conditions in 2010. Throughout the report, the March 2011 CPS data are referred to as 2010 data.
 U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2006: Analytical Perspectives, p. 301.
 U.S. Census Bureau, Federal State and Local Governments: 1992 Government Finance and Employment Classification Manual, sections 3.31 and 7.24.
 National Research Council, The New Americans, p. 308.
 If the CPS underreports benefits by 15 percent, the underreporting would be corrected by multiplying the CPS total by the inverse of 100 percent minus 15 percent (the inverse of 85 percent).
 Data on attendance in public primary and secondary schools were taken from the October 2010 CPS.
 U.S. Census Bureau, Governments Division, Public Education Finances: 2010, issued June 2012, http://www2.census.gov/govs/school/10f33pub.pdf (accessed April 23, 2013). Costs included both current expenditures and capital outlays.
 Medicaid benefits in the CPS vary by state and beneficiary class.
 The Current Population Survey reports some 118.75 million households in the U.S. in 2010; however, individuals in nursing homes are not included in the CPS. In the average month, there are some 1.49 million persons in nursing homes. The present analysis treats each single person in a nursing home or other long-term care facility as a separate household; each nursing home resident was then regarded as the head of his own household and was categorized among other households by his educational attainment. The 1.49 million persons in nursing homes were added to the CPS count of households to produce a total count of 120.2 million households used in the analysis.
 Additional information on Medicaid spending is available from the authors on request.
 “CBO’s February 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage,”
(accessed April 23, 2013).
 This roughly matches CBO numbers.
 CBO assumes there will be 56 million uninsured persons in 2017. Roughly 7 million would be ineligible for ACA benefits because they are unlawful immigrants. Another 8 million to 9 million would be ineligible for ACA because they had income over 400 percent of the federal poverty line. Thus, the number of uninsured persons who would be eligible for ACA benefits would be around 40.5 million. CBO says the number of ACA beneficiaries receiving exchange subsidies or expanded Medicaid in 2017 would be 35 million. The ratio of ACA beneficiaries to uninsured persons eligible for ACA would be roughly 86 percent.
 U.S. Government Accountability Office, Criminal Alien Statistics: Information on Incarcerations, Arrests, and Costs, GAO-11-187, March 2011, p. 11, http://www.gao.gov/assets/320/316959.pdf (accessed April 23, 2013).
 Ibid., pp. 29–33.
 Like the National Research Council study, The New Americans, the present study used average cost rather than marginal cost to assign costs to expanded population-based services. In congested urban areas where many unlawful immigrants live, the marginal cost of adding to public services such as roads may be greater than the average cost.
 National Research Council, The New Americans, p. 272.
 Ibid., p. 304.
 Joseph Henchman, “State and Local Property Taxes Target Commercial and Industrial Property,” Tax Foundation Fiscal Fact No. 342, November 21, 2012, http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff342.pdf (accessed April 23, 2013).
 The Bureau of Economic Analysis reports that tenant-occupied residential property comprised 21 percent of the value of all residential property. Therefore, 21 percent of the property tax on residences was assumed to fall on those properties. See U.S. Department of Labor, Bureau of Economic Analysis, “Fixed Assets Accounts Tables,” Table 5.1,
http://www.bea.gov/iTable/iTable.cfm?ReqID=10&step=1#reqid=10&step=3&isuri=1&1003=28 (accessed April 23, 2013).
 The estimate that half of this tax was paid by business was provided by the Tax Foundation.
 Charles T. Clotfelter, Philip J. Cook, Julie A. Edell, and Marian Moore, “State Lotteries at the Turn of the Century: Report to the National Gambling Impact Study Commission,” Duke University, April 23, 1999.
 Dana P. Goldman, James P. Smith, and Neeraj Sood, “Immigrants and the Cost of Medical Care,” Health Affairs, Vol. 25, No. 6 (November 2006), pp. 1700–1711, (accessed April 23, 2013).
 Sarital Mohanty, Steffie Wollhandler, David U. Himmelstein, Susmita Pat, Olveen Carrasquillo, and David Bor, “Health Care Expenditures of Immigrants in the United States: A Nationally Representative Analysis,” American Journal of Public Health, Vol. 95, No. 8 (August 2005), pp. 1431–1438, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1449377/ (accessed April 23, 2013).
 Leighton Ku and Brian Bruen, “The Use of Public Assistance Benefits by Citizens and Non-citizen Immigrants in the United States,” Cato Institute Working Paper, February 19, 2013, http://www.cato.org/publications/working-paper/use-public-assistance-benefits-citizens-non-citizen-immigrants-united (accessed April 23, 2013).
 U.S. Census Bureau, Historical Income Tables: People, Table P-24, (accessed April 23, 2013).
 Ibid., Table P-32, (accessed April 23, 2013).
 Samuelson, “The Pure Theory of Public Expenditure,” pp. 387–389.
 A third criterion is nonexclusion from benefit; it is difficult to deny members of a community an automatic benefit from the good. This aspect of public goods is not critical to the fiscal allocation issues addressed in this paper.
 James M. Buchanan, The Demand and Supply of Public Goods, Vol. 5, Collected Works of James Buchanan (Indianapolis: Liberty Fund, Library of Economics and Liberty, 1968) p. 5.4.3, www.econlib.org/library/Buchanan/buchCv5.html (accessed April 23, 2013).
 Thomas MaCurdy, Thomas Nechyba, and Jay Bhattacharya, “An Economic Framework for Assessing the Fiscal Impacts of Immigration,” in James P. Smith and Barry Edmonston, eds., The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration (Washington: National Academies Press, 1998), p. 16.
 National Research Council, The New Americans, p. 303.
Why Study the Fiscal Impact of Illegals?
Steven A. Camarota is Director of Research at the Center for Immigration Studies in Washington, D.C. He holds a master’s degree in political science from the University of Pennsylvania and a Ph.D. in public policy analysis from the University of Virginia. Dr. Camarota often testifies before Congress and has published widely on the political and economic effects of immigration on the United States. His articles on the impact of immigration have appeared in both academic publications and the popular press including Social Science Quarterly, The Washington Post, The Chicago Tribune, Campaigns and Elections, and The Public Interest. His most recent work published by the Center for Immigration Studies includes: Immigration in a Time of Recession: An Examination of Trends Since 2000; Where Immigrants Live: An Examination of State Residency of the Foreign-Born; Back Where We Started: An Examination of Trends in Immigrant Welfare Use Since Welfare Reform; and The Open Door: How Militant Islamic Terrorists Entered and Remained in the United States, 1993-2001.
This study is one of the first to estimate the total impact of illegal immigration on the federal budget. Most previous studies have focused on the state and local level and have examined only costs or tax payments, but not both. Based on Census Bureau data, this study finds that, when all taxes paid (direct and indirect) and all costs are considered, illegal households created a net fiscal deficit at the federal level of more than $10 billion in 2002. We also estimate that, if there was an amnesty for illegal aliens, the net fiscal deficit would grow to nearly $29 billion.
Among the findings:
Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household.
Among the largest costs are Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and free school lunches ($1.9 billion); the federal prison and court systems ($1.6 billion); and federal aid to schools ($1.4 billion).
With nearly two-thirds of illegal aliens lacking a high school degree, the primary reason they create a fiscal deficit is their low education levels and resulting low incomes and tax payments, not their legal status or heavy use of most social services.
On average, the costs that illegal households impose on federal coffers are less than half that of other households, but their tax payments are only one-fourth that of other households.
Many of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth. Thus, greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them.
If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion.
Costs increase dramatically because unskilled immigrants with legal status — what most illegal aliens would become — can access government programs, but still tend to make very modest tax payments.
Although legalization would increase average tax payments by 77 percent, average costs would rise by 118 percent.
The fact that legal immigrants with few years of schooling are a large fiscal drain does not mean that legal immigrants overall are a net drain — many legal immigrants are highly skilled.
The vast majority of illegals hold jobs. Thus the fiscal deficit they create for the federal government is not the result of an unwillingness to work.
The results of this study are consistent with a 1997 study by the National Research Council, which also found that immigrants’ education level is a key determinant of their fiscal impact.
A Complex Fiscal Picture
Welfare use. Our findings show that many of the preconceived notions about the fiscal impact of illegal households turn out to be inaccurate. In terms of welfare use, receipt of cash assistance programs tends to be very low, while Medicaid use, though significant, is still less than for other households. Only use of food assistance programs is significantly higher than that of the rest of the population. Also, contrary to the perceptions that illegal aliens don’t pay payroll taxes, we estimate that more than half of illegals work “on the books.” On average, illegal households pay more than $4,200 a year in all forms of federal taxes. Unfortunately, they impose costs of $6,950 per household.
Social Security and Medicare. Although we find that the net effect of illegal households is negative at the federal level, the same is not true for Social Security and Medicare. We estimate that illegal households create a combined net benefit for these two programs in excess of $7 billion a year, accounting for about 4 percent of the total annual surplus in these two programs. However, they create a net deficit of $17.4 billion in the rest of the budget, for a total net loss of $10.4 billion. Nonetheless, their impact on Social Security and Medicare is unambiguously positive. Of course, if the Social Security totalization agreement with Mexico signed in June goes into effect, allowing illegals to collect Social Security, these calculations would change.
The Impact of Amnesty. Finally, our estimates show that amnesty would significantly increase tax revenue. Because both their income and tax compliance would rise, we estimate that under the most likely scenario the average illegal alien household would pay 77 percent ($3,200) more a year in federal taxes once legalized. While not enough to offset the 118 percent ($8,200) per household increase in costs that would come with legalization, amnesty would significantly increase both the average income and tax payments of illegal aliens.
What’s Different About Today’s Immigration. Many native-born Americans observe that their ancestors came to America and did not place great demands on government services. Perhaps this is true, but the size and scope of government were dramatically smaller during the last great wave of immigration. Not just means-tested programs, but expenditures on everything from public schools to roads were only a fraction of what they are today. Thus, the arrival of unskilled immigrants in the past did not have the negative fiscal implications that it does today. Moreover, the American economy has changed profoundly since the last great wave of immigration, with education now the key determinant of economic success. The costs that unskilled immigrants impose simply reflect the nature of the modern American economy and welfare state. It is doubtful that the fiscal costs can be avoided if our immigration policies remain unchanged.
The negative impact on the federal budget need not be the only or even the primary consideration when deciding what to do about illegal immigration. But assuming that the fiscal status quo is unacceptable, there are three main changes in policy that might reduce or eliminate the fiscal costs of illegal immigration. One set of options is to allow illegal aliens to remain in the country, but attempt to reduce the costs they impose. A second set of options would be to grant them legal status as a way of increasing the taxes they pay. A third option would be to enforce the law and reduce the size of the illegal population and with it the costs of illegal immigration.
Reducing the Cost Side of the Equation. Reducing the costs illegals impose would probably be the most difficult of the three options because illegal households already impose only about 46 percent as much in costs on the federal government as other households. Thus, the amount of money that can be saved by curtailing their use of public services even further is probably quite limited. Moreover, the fact that benefits are often received on behalf of their U.S.-citizen children means that it is very difficult to prevent illegal households from accessing the programs they do. And many of the programs illegals use most extensively are likely to be politically very difficult to cut, such as the Women Infants and Children (WIC) nutrition program. Other costs, such as incarcerating illegals who have been convicted of crimes are unavoidable. It seems almost certain that if illegals are allowed to remain in the country, the fiscal deficit will persist.
Increasing Tax Revenue by Granting Amnesty. As discussed above, our research shows that granting illegal aliens amnesty would dramatically increase tax revenue. Unfortunately, we find that costs would increase even more. Costs would rise dramatically because illegals would be able to access many programs that are currently off limits to them. Moreover, even if legalized illegal aliens continued to be barred from using some means-tested programs, they would still be much more likely to sign their U.S.-citizen children up for them because they would lose whatever fear they had of the government. We know this because immigrants with legal status, who have the same education levels and resulting low incomes as illegal aliens, sign their U.S.-citizen children up for programs like Medicaid at higher rates than illegal aliens with U.S.-citizen children. In addition, direct costs for programs like the Earned Income Tax Credit would also grow dramatically with legalization. Right now, illegals need a Social Security number and have to file a tax return to get the credit. As a result, relatively few actually get it. We estimate that once legalized, payments to illegals under this program would grow more than ten-fold.
From a purely fiscal point of view, the main problem with legalization is that illegals would, for the most part, become unskilled legal immigrants. And unskilled legal immigrants create much larger fiscal costs than unskilled illegal aliens. Legalization will not change the low education levels of illegal aliens or the fact that the American labor market offers very limited opportunities to such workers, whatever their legal status. Nor will it change the basic fact that the United States, like all industrialized democracies, has a well-developed welfare state that provides assistance to low-income workers. Large fiscal costs are simply an unavoidable outcome of unskilled immigration given the economic and fiscal realities of America today.
Enforcing Immigration Laws. If we are serious about avoiding the fiscal costs of illegal immigration, the only real option is to enforce the law and reduce the number of illegal aliens in the country. First, this would entail much greater efforts to police the nation’s land and sea borders. At present, less than 2,000 agents are on duty at any one time on the Mexican and Canadian borders. Second, much greater effort must be made to ensure that those allowed into the country on a temporary basis, such as tourists and guest workers, are not likely to stay in the country permanently. Third, the centerpiece of any enforcement effort would be to enforce the ban on hiring illegal aliens. At present, the law is completely unenforced. Enforcement would require using existing databases to ensure that all new hires are authorized to work in the United States and levying heavy fines on businesses that knowingly employ illegal aliens. Finally, a clear message from policymakers, especially senior members of the administration, that enforcement of the law is valued and vitally important to the nation, would dramatically increase the extremely low morale of those who enforce immigration laws.
Policing the border, enforcing the ban on hiring illegal aliens, denying temporary visas to those likely to remain permanently, and all the other things necessary to reduce illegal immigration will take time and cost money. However, since the cost of illegal immigration to the federal government alone is estimated at over $10 billion a year, significant resources could be devoted to enforcement efforts and still leave taxpayers with significant net savings. Enforcement not only has the advantage of reducing the costs of illegal immigration, it also is very popular with the general public. Nonetheless, policymakers can expect strong opposition from special interest groups, especially ethnic advocacy groups and those elements of the business community that do not want to invest in labor-saving devices and techniques or pay better salaries, but instead want access to large numbers of cheap, unskilled workers. If we choose to continue to not enforce the law or to grant illegals amnesty, both the public and policymakers have to understand that there will be significant long-term costs for taxpayers.
Overall Approach. To estimate the impact of households headed by illegal aliens, we rely heavily on the National Research Council’s (NRC) 1997 study, “The New Americans.” Like that study, we use the March Current Population Survey (CPS) and the decennial Census, both collected by the Census Bureau. We use the March 2003 CPS, which asks questions about income, household structure, and use of public services in the calendar year prior to the survey. We control total federal expenditures and tax receipts by category to reflect actual expenditures and tax payments. Like the NRC, we assume that immigrants have no impact on defense-related expenditures and therefore assign those costs only to native-headed households. Like the NRC, we define a household as persons living together who are related. Individuals living alone or with persons to whom they are unrelated are treated as their own households. As the NRC study points out, a “household is the primary unit through which public services are consumed and taxes paid.” Following the NRC’s example of using households, many of which include U.S.-citizen children, as the unit of analysis makes sense because the presence of these children and the costs they create are a direct result of their parents having been allowed to enter and remain in country. Thus, counting services used by these children allows for a full accounting of the costs of illegal immigration.
Identifying Illegal Aliens in Census Bureau Data. While the CPS does not ask respondents if they are illegal aliens, the Urban Institute, the former Immigration and Naturalization Service (INS), and the Census Bureau have used socio-demographic characteristics in the data to estimate the size and characteristics of the illegal population. To identify illegal aliens in the survey, we used citizenship status, year of arrival in the United States, age, country of birth, educational attainment, sex, receipt of welfare programs, receipt of Social Security, veteran status, and marital status. This method is based on some very well-established facts about the characteristics of the illegal population. In some cases, we assume that individuals have zero chance of being an illegal alien, such as naturalized citizens, veterans, and individuals who report that they personally receive Social Security benefits or cash assistance from a welfare program or those who are enrolled in Medicaid. However, other members of a household, mainly the U.S.-born children of illegal aliens, can and do receive these programs. We estimate that there were 8.7 million illegal aliens included in the March 2003 CPS. By design, our estimates for the size and characteristics of the illegal population are very similar to those prepared by the Census Bureau, the INS, and the Urban Institute.
Estimating the Impact of Amnesty. We assume that any amnesty that passes Congress will have Lawful Permanent Residence (LPR) as a component. Even though the President’s amnesty proposal in January seems to envision “temporary” worker status, every major legalization bill in Congress, including those sponsored by Republican legislators, provides illegal aliens with LPR status at some point in the process. Moreover, Democratic presidential nominee John Kerry has indicated his strong desire to give LPR status to illegal aliens.
To estimate the likely impact of legalization, we run two different simulations. In our first simulation, we assume that legalized illegal aliens would use services and pay taxes like all households headed by legal immigrants with the same characteristics. In this simulation, we control for the education level of the household head and whether the head is from Mexico. The first simulation shows that the net fiscal deficit grows from about $2,700 to more than $6,000 per household. In the second simulation, we again control for education and whether the household head is Mexican and also assume that illegals would become like post-1986 legal immigrants, excluding refugees. Because illegals are much more like recently arrived non-refugees than legal immigrants in general, the second simulation is the more plausible. The second simulation shows that the net fiscal deficit per household would climb to $7,700.
Results Similar to Other Studies. Our overall conclusion that education level is the primary determinant of tax payments made and services used is very similar to the conclusion of the 1997 National Research Council report, “The New Americans.” The results of our study also closely match the findings of a 1998 Urban Institute study, which examined tax payments by illegal aliens in New York State. In order to test our results we ran separate estimates for federal taxes and found that, when adjusted for inflation, our estimated federal taxes are almost identical to those of the Urban Institute. The results of this study are also buttressed by an analysis of illegal alien tax returns done by the Inspector General’s Office of the Department of Treasury in 2004, which found that about half of illegals had no federal income tax liability, very similar to our finding of 45 percent.
As illegal immigration has increased dramatically over the last two decades, so has concern about its impact on American taxpayers. While other consequences are clearly important, the fiscal impact of illegal immigration is at the center of the ongoing debate. Surprisingly, few studies have attempted to measure the total fiscal effect of illegal immigration on the United States. Several studies have focused on all immigrants, making no distinction by legal status, and other researchers have examined either the costs imposed by illegals or the tax payments they make, but not both together. Most of this work has focused on the state and local level, giving little or no attention to the federal government. Focusing on the federal government, this study attempts to answer two related questions: First, what effect do illegal aliens have on the fiscal balance (all taxes paid minus all services used)? Second, what would happen to the fiscal balance if illegal aliens were legalized?
Why Study the Fiscal Impact of Illegals?
Concern over illegal immigration ranges from national security and the rule of law to the risk would-be illegals take to enter the country and their well-being once here. But the fiscal effects are a key part of the issue. In fact, much of the public’s anger over illegal immigration stems from the belief that illegals are a drain on taxpayers. Past policy responses to illegal aliens, such as barring them from welfare programs, were also driven by the desire to minimize fiscal costs. Thus, determining the actual fiscal impact of illegal immigration is critically important to formulating a policy response to illegal immigration.
The Fiscal Equation. Simply by living in the United States, illegals unavoidably impose some costs on government. Like all people, illegal aliens enroll their children in public schools, drive on the roads, and engage in a host of other activities that necessarily cost government money. They also unavoidably pay taxes. Even when they are paid “off the books,” they still pay excise and other types of taxes to the government. So the fact that illegal aliens cost public coffers money does not necessarily mean they are a net drain. Conversely, the fact that illegals pay taxes does not necessarily mean that they are a fiscal benefit. At least with regard to fiscal considerations, the key question is the balance between the taxes they pay and the services they use. This study attempts to estimate both their tax payments and costs in order to determine their net fiscal impact at the federal level.
Importance of Current Fiscal Impact. Almost all observers agree that illegal immigration is a problem. The fiscal impact of illegal immigration has enormous bearings on the question of what to do about illegal immigration. While employers may want access to immigrant labor, the fiscal costs to taxpayers must be considered. Understandably, employers can be counted on to ignore these costs because they are diffuse, borne by all taxpayers, while the benefit to businesses is obvious. Policy makers, however, must be sensitive to fiscal considerations. If there are net costs, then this could have a significant impact on the availability of public services or the tax burden on Americans. If the costs are very large, then the problem is certainly more urgent. And devoting significant resources to reducing illegal immigration may be justified because doing so would leave taxpayers with a significant net savings. On the other hand, if illegals impose little or no costs on taxpayers, this too should play some role in shaping policy.
Legalizing Illegals. Many politicians have indicated their strong desire to give illegal aliens legal status, but the fiscal implications of amnesty are almost never addressed. Since legalization should significantly change both the amount of taxes illegals pay and the level of services they use, it is absolutely essential to determine how amnesty might change the fiscal balance. If an amnesty would increase the net fiscal costs, then policymakers may want to consider other solutions. If amnesty creates a net fiscal benefit, then legalization might make sense. While factors other than the impact on federal coffers have to be taken into account, by estimating both the current fiscal impact of illegal immigration and the impact of amnesty, this report should provide at least part of an answer to the questions surrounding illegal immigration. Of course, it must be noted that this report does not address the fiscal impact at the state and local level and any complete accounting should examine those areas as well.
Probably the most important study on the fiscal effects of immigration was conducted by the National Research Council (NRC) in 1997.1 Our analysis relies heavily on the approach used in the NRC study as the basis for estimating the fiscal impact of immigration. The NRC actually reported two different estimates for the fiscal impact of immigration, a household-level analysis of the current fiscal impact and an intergenerational analysis looking at immigrants and their descendents over a 300-year period. Our analysis primarily follows the example of the NRC’s household level analysis because we are interested in estimating the current fiscal impact of illegals on the federal budget. However, we also report separate estimates for immigrants by education level as was done in the NRC’s intergenerational analysis.
Another important study was conducted in 1998 by the Urban Institute. That study only estimated tax payments in New York State, including some federal taxes. But unlike the NRC study, the Urban Institute New York study estimated tax payments for legal and illegal immigrants separately, though it did not consider service use. This is one of the only studies today that has examined tax payments by illegal aliens, and so we rely on some of that study’s approach as well.2 Other important studies that have examined the fiscal impact of immigration include a 2001 study of Florida, a 1997 study of New Jersey (which was included in the NRC study), and one in 1994 by the Center for Immigration Studies.3
Almost all fiscal studies of immigration attempt to measure the taxes paid by immigrant households and the services they use. This study follows the same approach. We also make the same implicit assumption of almost all fiscal studies, including the NRC’s: that if immigrants create a fiscal deficit, then taxes simply rise to cover the added expenses while services remain the same rather than taxes staying the same and services being reduced. Whether natives have to pay more to retain the same level of services or receive less in services for the same price, the outcome is still bad for them. Conversely, if illegal immigrants pay more in taxes than they use in services then this would be a clear benefit for natives because they could receive the same level of services but pay less in taxes.
Data Source and General Principles
Data Source. This report relies on the March 2003 Current Population Survey (CPS) collected by the U.S. Census Bureau. The March data, also called the Annual Social and Economic Supplement, includes an extra-large sample of minorities and is considered one of the best sources of information on the foreign-born.4 The foreign-born are defined as persons living in the United States who were not U.S. citizens at birth.5 For the purposes of this report, foreign-born and immigrant are used synonymously. The Survey includes most legal immigrants and is thought to capture roughly 90 percent of the illegal alien population. We use the term illegal alien or illegal immigrant to mean those who responded to the survey who are in the United States without authorization. All other foreign-born persons are referred to as legal immigrants, including those with Permanent Residence, those who are naturalized American citizens, and those living in the United States on long-term temporary visas, mainly guest workers and foreign students.
The CPS asks respondents about their income and program use in the calendar year prior to the Survey, so all fiscal estimates in the study are for 2002.6 Almost all past research on the fiscal impact of immigrants has relied on CPS or Decennial Census data, including the NRC and the Urban Institute studies. Information about actual taxes collected by the federal government by source comes from the Office of Management and Budget.7 Information on actual federal expenditures on means-tested programs comes from the Congressional Research Service.8 Information on other expenditures comes from a variety of government publications.9
Identifying Illegal Aliens. The CPS does not ask the foreign-born if they are legal residents of the United States. However, the Urban Institute, the former INS, and the Census Bureau have used socio-demographic characteristics in the data to estimate the size of the illegal population. To determine who are legal and illegal immigrants in the survey, this report uses citizenship status, year of arrival in the United States, age, country of birth, educational attainment, sex, receipt of welfare programs, receipt of Social Security, veteran status, and marital status. We use these variables to assign probabilities to each respondent. Those individuals who have a cumulative probability of one or higher are assumed to be illegal aliens. The probabilities are assigned so that both the total number of illegal aliens and the characteristics of the illegal population closely match other research in the field, particularly the estimates developed by the Urban Institute.
This method is based on some well-established facts about the characteristics of the illegal population. For example, it is well known that illegals are disproportionately male, unmarried, under age 40, have few years of schooling, etc. Thus, we assign probabilities to these and other factors in order to select the likely illegal population. In some cases we assume that there is no probability that an individual is an illegal alien. If an individual reports that he is U.S.-born or a naturalized citizen of the United States, then he is assumed not to be an illegal alien. Someone who reports that he is veteran or receives veteran benefits is also assumed not to be an illegal alien. Those individuals who report that they personally receive Social Security benefits, cash assistance under Temporary Assistance to Needy Families (TANF), Supplemental Security benefits (SSI), or who are enrolled in Medicaid are also assumed not to be illegal aliens. However, other members of a household headed by an illegal alien can receive these programs, mostly the U.S.-born children of illegals. It is worth noting that our findings show that only a tiny fraction of households headed by illegals receive cash welfare programs or Social Security benefits. However, a large share of children in illegal alien households use the school lunch program or are enrolled in Medicaid. Our methodology allows for such a possibility.
We estimate that there were 8.7 million illegal aliens in the March 2003 CPS. It must be remembered that this estimate only includes illegal aliens captured by the March CPS, not those missed by the survey.10 By design this estimate is very similar to those prepared by the Census Bureau, the former Immigration and Naturalization Service (INS), and the Urban Institute.11 Although it should be obvious that there is no definitive means of determining whether a respondent in the survey is an illegal alien, the findings in this study are consistent with previous research. For example, the Urban Institute estimated that in 2002 Mexicans accounted for 57 percent of the illegal population; our method finds 58 percent in 2003. Using 2003 data, we estimate that 88 percent of illegals arrived after 1990; the Urban Institute estimated 85 percent using 2002 data.12 Our results also produce estimates that are similar in other areas, such as age and workforce participation.
Unit of Analysis. We divide households between those headed by illegal aliens and all others. In reference to its fiscal estimates, the NRC states, “Since the household is the primary unit through which public services are consumed and taxes paid, it is the most appropriate unit as a general rule and is recommended for static analysis.”13 Because our study is also focused on “static analysis,” or current fiscal effects of illegal aliens, we also examine taxes paid and services used by households based on the nativity and legal status of the household head. Like the NRC study, we define households as all persons living together who are related. Persons living with individuals to whom they are unrelated or who live alone are considered their own household. This definition could also be referred to as a “family,” but following the NRC’s example, we call it a household.
In their study of New Jersey, Deborah Garvey and Thomas Espenshade also used households as the unit of analysis because “households come closer to approximating a functioning socioeconomic unit of mutual exchange and support.”14 Another reason for using households is that Census Bureau surveys are collected by household, making households the most appropriate use of the survey. Even so, it must be remembered that grouping by household, even the modified definition of household used in the NRC study and this report, means that many children born in the United States to illegal aliens are included in illegal alien-headed households even though these children are U.S. citizens by virtue of being born here. This seems perfectly reasonable since the presence of these children in the United States is a direct result of their parents having been allowed to enter and remain in the United States. Thus, counting services used by these children allows for a full accounting of the costs of illegal immigration.
Marginal vs. Average Costs. Like the NRC, we assume that average costs equal marginal costs. That is, an additional person or household using a program or service costs the same as those already using the service. This, of course, is not always the case. For example, the addition of a few new students to a half empty school costs relatively little because the school is already built and so no additional funding is needed for school construction. In such a situation the marginal costs of the new students are much less than average costs for the students already in the school. On the other hand, an additional group of students added to an already overcrowded school may require a whole new school to be built, thus making the marginal costs of the additional students much greater than the average cost. The NRC and others assume that marginal and average costs are equal and that these two tendencies should balance each other out over time.
Private vs. Public Goods. Some goods provided by government are pure public goods; that is, everyone living in the country benefits from receiving them. At the same time, the cost of providing them does not rise as the number of people living in the country increases. The most important example of this type of program is national defense. Like the NRC study, we assume that defense is a pure public good at the federal level, therefore no costs for providing defense are assigned to immigrant households. We further assume that, with the exception of means-tested programs for veterans, which illegals cannot use, all non-means-tested veterans programs are also pure public good. This means that the nearly $388 billion spent on defense and veterans programs in 2002 is assigned only to native households.
Interest on the National Debt and Federal Deficits. Following the example of the NRC, we do not include interest payments on the national debt in our calculations of costs because it is impossible to determine what share of the debt was incurred due to illegals. Obviously, illegal aliens who just arrived in the country have not contributed at all to past deficits or to the cumulative total of those deficits — the national debt. On the other hand, if immigrant households created a net fiscal burden in past years then they might account for a disproportionate share of the current national debt. Thus, like most previous studies, including the NRC, we do not count interest on the national debt as a cost for either immigrant or native households. This means that the study measures only the fiscal impact of illegal alien households on what the NRC calls the “primary” budget. The primary budget is comprised of all tax payments and all federal expenditures other than interest payments on the national debt.
Because debt interest payments ($170.95 billion) were slightly larger in size than the federal deficit ($157.80 billion) in 2002, the primary budget had a $13.15 billion surplus in 2002. However, we exclude from our analysis the $23.7 billion that the Federal Reserve earned from interest on federal reserve deposits, which come from investing in U.S. government securities. These monies are in effect the federal government paying itself and, although these monies are officially considered revenue, we do not count them as such in this report because we do not include the interest the federal government pays on the national debt as an expense. As a consequence, there was a $10.5 billion deficit ($85 per household) in the primary budget when interest earned on federal reserve deposits is excluded.
Economic Impact of Illegal Aliens. Like most studies of this kind, including the NRC’s, ours does not consider how illegal immigration or immigration more generally might affect public coffers indirectly by its impact on the economy. There simply is no consensus on the economic impact of immigration. To the extent that the issue has been studied, the impact on the nation’s economy is generally thought to be trivial relative to the size of the economy. In addition to its fiscal estimates, the National Research Council estimated that immigration created a net economic benefit to natives of between $1 billion to $10 billion in the mid-1990s, or an amount equal to one or two-tenths of 1 percent of the nation’s economy at that time. And these figures are for all immigrants, not specially for the one-fourth of the foreign-born who are illegal aliens. Moreover, the same study found that immigration reduced the wages of native-born workers who lack a high school education by about 5 percent. Not only would this reduction lower the tax payments of unskilled natives, but it would almost certainly result in higher use of means-tested programs by these workers, who roughly correspond to the poorest 10 percent of the workforce. Thus it is not clear that the economic impact of illegal immigration would have even a tiny net positive effect on the public coffers. A more recent study from the National Bureau of Economic Research suggests that immigration, legal and illegal, has a decidedly negative impact on the income of all Americans.15 If that study is correct and there is a net loss for native-born Americans, then the tax payments of immigrants are much lower, while their use of services is higher as result of their lower incomes. Because the actual economic impact is probably modest relative to the overall size of the U.S. economy and there is little agreement on whether the effect is positive or negative, we follow the example of almost all other studies and focus on the direct taxes and services illegals pay and use.
Estimated Tax Payments
All studies of this kind involve estimating payroll and other taxes paid by households based on their characteristics: primarily income, number of dependents, and home ownership. In this study, all taxes collected by the federal government are assigned to households. There is general agreement that excise taxes and payroll taxes, including those paid by employers such as unemployment, are ultimately borne by households. However, there is some debate about who actually pays corporate income tax–consumers or owners of capital. In this study we follow the example of the Office of Management and Budget and assume that owners of capital pay corporate income tax. All tax payments are adjusted to reflect actual total taxes collected by the federal government from each source for the year.16 We assign all taxes to U.S. residents and ignore the small share of persons living outside of the United States who pay federal taxes.
Payroll Taxes. There are four main payroll taxes collected by the federal government: income, Social Security, Medicare, and Unemployment Compensation. The Current Population Survey contains income tax and Social Security tax liabilities calculated by the Census Bureau for all tax-paying units in the Survey. In short, the Census Bureau uses data from the American Housing Survey, the Income Survey Development Program, and the Internal Revenue Service and combines this information with CPS data to create simulations of tax liabilities for all persons reporting income.17 We use the tax liability estimates from the Census Bureau to calculate federal income and Social Security tax liability for each household.18 We calculate both Medicare and Unemployment tax as a share of earning. Again, both the employee and employer share are assigned to households because previous research indicates that even the employer share of payroll taxes is ultimately borne by workers.
Corporate Income Tax. There is some debate about who actually pays corporate income taxes–owners of capital or consumers. The Office of Management and Budget in its estimates of the tax burden on American households distributes corporate income taxes based on each household’s share of capital income, and we do the same in this study. We calculate corporate income tax as a share of interest and dividend income as reported in the CPS.
Excise and Estate Taxes. In addition to payroll taxes, the federal government collects taxes on a number of goods, mainly tobacco, alcohol, transportation fuels, and tires. We follow the NRC study’s approach and allocate tobacco and alcohol taxes based on the number of people of drinking and smoking age in each household. Excise taxes, mainly the telephone tax and those collected for the highway and airport trust funds, are allocated as a share of household income. All tariffs collected on foreign goods are also assumed to be borne by consumers and are therefore allocated as a share of household income. Like the NRC study, we also allocated estate taxes to native households and to immigrant households that have been in the country for more than 20 years. Since the methodology we use to identify illegal aliens assumes that the vast majority of illegal aliens have been in the country for less than 20 years, the contributions of illegal aliens are very small.
Tax Compliance. While illegal aliens are assumed to pay their share of non-payroll taxes, payroll taxes collected by employers or income and other taxes paid by the self employed are a different matter. There is some research to indicate that only about half of illegal aliens are “paid on the books.”19 That is, income and other taxes are withheld from their pay. In their study of New York State, Jeffrey Passel and Rebecca Clark assumed 60 percent compliance. In their study of New Jersey, Clark and Zimmermann assumed a 56 percent compliance rate.20 New York and New Jersey are somewhat unusual because a smaller fraction of each state’s illegal population is employed in agriculture than is true nationally, a sector where being paid off the books is very common. However, we follow the same basic approach and assume that 55 percent of illegal aliens are paid on the books. We implement this by reducing the Income Tax and Social Security, Medicare, and Unemployment Tax of illegal households to 55 percent of their estimated tax liability.
Assigning Costs by Household<
The CPS asks respondents a host of questions about their use of means-tested and non-means-tested federal programs. Like the NRC study and virtually all other studies on this topic, we use these results to estimate immigrant and native use of federal programs. Because the CPS began asking many more questions about use of public services in 2001, we are able to make specific estimates for a larger number of programs than was possible at the time of the NRC study, which relied on the 1995 CPS and 1990 Census. It should be remembered that the March 2003 CPS, the data source used in this study, asks questions about use of federal programs in the calendar year prior to the Survey, therefore all estimates reported here are for 2002. In that year expenditures in the primary federal budget totaled $1.84 trillion.
Social Insurance. We use the results in the CPS to estimate household receipt of Social Security, Medicare, and Unemployment Compensation. We assume that illegals receive no federal disability because these payments primarily go to federal workers or coal miners with black lung. For Social Security, we use responses in the CPS on the amount received. The same is true of Unemployment Compensation. The Survey also asks about receipt of Medicare. (Contrary to the common perception, persons under age 65 can qualify for Medicare, mainly those with end-stage renal disease.) For Medicare, we assigned average costs of the program to those who indicated they received it. As already indicated, we assume that persons getting Social Security cannot be illegal aliens. However, in a few cases members of their family can use these programs. As a result, costs for these two programs for illegals are extremely low relative to the rest of the population, but not zero.
Food Stamps and Cash Assistance. The CPS asks respondents the size of the payment they receive from the following programs: Supplemental Security Income, Temporary Assistance to Needy Families (TANF), cash assistance for low-income veterans, food stamps, low-income energy assistance, and higher education assistance. We use the payments respondents report to directly estimate average cost by household. Because food stamp values are reported in the CPS using the standard definition of household, and because we use a modified definition of household, food stamp values received by households with multiple families are divided based on the size of the each family in the household.
Other Non-Cash Means-Tested Programs. The Survey also asks about receipt of the Women Infants and Children program (WIC) and Free School Lunch program21 and whether someone lives in public housing or receives a rent subsidy. For WIC, public housing, and rent subsidies we assigned average costs of each program to households receiving it. For Medicaid, the Census provides estimates by disability status for all beneficiaries in the CPS. Again, it should be remembered that only federal costs of the program are considered in this study. For social services provided by the TANF program, we assigned costs evenly to households based on receipt of TANF. For government subsidized daycare, which relatively few illegals use, we assign average costs for households that indicated in the CPS that they receive child care services. College students in non-illegal households are assumed to be getting Stafford student loans if the household income is less than $75,000 a year. For illegal households, student loans are assumed only if the college student himself is an American citizen. Thus, while there are a few college students from illegal alien households receiving student loans, the number is extremely small. Illegal alien households are assumed to impose no costs on programs designed only for refugees. The same is true for programs for low-income veterans because our methodology assumes that all persons who indicate they are veterans cannot be illegal aliens.
The Earned Income Tax Credit. Based on income and other family characteristics, the Census Bureau provides estimated payments for the Earned Income Tax Credit (EITC), which it includes in the public use files of the CPS. We assume that natives and legal immigrants receive their EITC payments, but for illegal aliens we assume that only the 55 percent who are paid “on the books” can receive the program. Furthermore, we assume that one-fourth of those who are paid on the books and who also qualify for the program actually get it. To implement this, we reduce the Census Bureau’s estimated EITC payments by 86 percent for illegal alien households. It should be noted that, officially, a valid Social Security number is required to collect the EITC. However, a Treasury Department Inspector General for Tax Administration report found that a small number of illegals without valid Social Security numbers did receive the EITC.22 Using this approach we estimate that illegal households only account for 1.5 percent of the total costs of the EITC. However, if they received the payments they qualify for based on their income and number of dependents they would account for more than 10 percent of the program’s total costs.23
The ACTC. In addition to the EITC, there is the Additional Child Tax Credit (ACTC), also called the refundable portion of the Child Tax Credit, which pays out a total of $5 billion a year to low-income workers with children. To estimate the cost of this program, we assign benefits to all native and legal immigrant households that have earnings over $10,000 and no federal income tax liability, based on the number of children under age 16 in the household. For illegals, we further assume that only 40 percent of those households that qualify based on our analysis of the CPS actually get the ACTC. This is much higher than for the EITC because illegals are explicitly allowed by law to get the credit. Thus they can receive the credit even if they do not have a stolen identity and Social Security number. If they don’t have a valid SSN, they can still get the credit by obtaining an Individual Taxpayer Identification Number (ITIN) from the IRS, which is not difficult, and filing a return using the ITIN. The 2004 report by the Treasury Department Inspector General for Tax Administration mentioned above found that, in 2001, 203,000 tax forms filed by illegals got a cash payment from the Child Tax Credit using an ITIN. These illegals received a total payment of $161 million in that year–even if the SSNs on their W-2 forms were not valid.
This amount indicates that about 30 percent of illegals we identified in the CPS receive benefits from the program. We adjust this up to 40 percent because the Inspector General’s report did not attempt to estimate receipt of the program by illegals who use stolen identities and Social Security numbers to file their returns; only use of the ITIN was considered. This adjustment has the effect of increasing the total cost of the program for illegals to $216 million in 2002.
Primary and Secondary Education. We allocate almost all of the federal funds for public education by household based on the number of school-age children in each household. The only exceptions are programs designed to assist schools that have a large number of children whose parents are migrants and those funds that specifically go to children with limited English. For programs designed specifically to improve the education of low-income children whose parents work in agriculture–mainly the Chapter I Migration Education Program — we assign costs based on whether the household head works in agriculture and the number of school age children in the household. To allocate federal funds for children with limited English, we use the 2000 Census to calculate the share of school-age children who reported that they spoke English less than very well. The 2000 Census showed that 29.2 percent of school-age children in immigrant households (legal and illegal) spoke English less than very well, compared to 2 percent of those in native households. We assume the same percentages existed in 2002 and assigned costs accordingly.
Uninsured. Research by Jack Hadley and John Holahan indicates that federal expenditures for the uninsured totaled $21.03 billion in 2002.24 We exclude from this total the $3.98 billion estimated to have been spent by the Department of Veterans Affairs on those without health insurance. (Illegals cannot receive health care from the VA and veteran benefits of this kind are treated as a pure public good in this analysis, so they are assigned only to native households). This means that $17.05 billion was spent by the federal government on the uninsured, not counting treatment from the VA. We then allocate these costs to households based on the number of uninsured persons per household.
INS, Federal Prisons, and Courts. We assign the net costs of the Immigration and Naturalization Service (expenditures minus fees the service collected), by household based on the distribution of immigrants (legal or illegal) who indicated they arrived after 1980.25 It should be noted that not all of the net costs of the INS are attributable to immigrant-headed households because some post-1980 immigrants live in native households. We estimate that about 8 percent of post-1980 immigrants live in households headed by natives and as such, native households account for 8 percent of the net costs of the INS.26 We do not include costs for running the immigration functions of the Department of State because this system is paid for by fees. As for the the federal prison system, it keeps track of whether inmates are citizens of the United States or not. In 2002, nearly 29 percent, or 39,000 inmates in the federal prison system were non-citizens. Based on prior research, we estimated that 59 percent of this total are illegal aliens.27 This translates into 17 percent of the federal prison population and thus 17 percent of the $4.1 billion prison budget can be attributed to illegal alien households. For the cost of administering the federal court system, we again assume that 17 percent of the costs are attributable to illegal households. This estimate is probably too low because non-citizens in 2001, the last year for which data is available, accounted for 38 percent of those arrested by federal agencies and 34 percent of those actually convicted in federal courts.28 This is significantly higher than the 29 percent of the prison population they represent. Nonetheless, we assign only 17 percent of the $4.7 billion federal court system budget to illegals in order to make our estimates more conservative.29 As is the case for the federal prison system, when later in this report we estimate costs for households headed by legal immigrants we assume that 16 percent of the costs of the federal courts are due to households headed by legal immigrants (naturalized and unnaturalized).
All Other Expenditures. Using the results from the methodology described above, we are able to estimate almost $1.1 trillion in federal spending, or 58 percent of the primary budget. In addition to specific programs, we account for $388.1 billion, or another 21 percent of the primary 2002 federal budget, that went to spending on defense and non-means-tested veterans programs. As already noted, only native households are assigned costs for defense and veterans programs because they are assumed to be pure public goods and as such legal and illegal immigrants impose no costs on these programs. The remaining $386 billion, or 21 percent of the primary budget, is assigned to all households equally. This totals $3,115 per household. These expenditures include highway and infrastructure maintenance, parts of the criminal justice system not accounted for already, subsidies to business, state aid, and all other services provided by the federal government. This is the same approach used by the NRC and almost all studies of this kind. It should be noted that allocating costs equally to all households may tend to underestimate the costs of illegals because illegal households are 17 percent larger on average than other households. All other things being equal, more people per household should mean higher average expenses. But we ignore this and assign costs equally to all households.
Adjustment for Under-Reporting in the CPS
Under-Reporting of Program Use. It is well established that respondents tend to understate both their income and use of social services in the CPS. This problem is well known by the Census Bureau and has been studied for some time.30 To correct for this problem, we adjust all social programs to reflect actual federal expenditure. This is based on the assumption that immigrants and natives are equally likely to under-report their use of social services. The NRC study also seems to have controlled for this problem.31 Adjustments of this kind may tend to understate program use by immigrants because they may be more reluctant to report use of means-tested programs in a government survey than other members of society out of a fear that this might constitute grounds for deportation. But we ignore this problem and assume that under-reporting rates are the same for all persons. As mentioned earlier, controlling all costs to actual expenditures has the added advantage of allowing us to estimate the costs of illegals not counted in the CPS. In effect, those who are counted are assigned costs for those who are missed by the survey. The same is true for non-illegal aliens who are missed by the survey. This means our cost estimates are for all illegals, even those the survey misses.
Under-Reporting of Income and Taxes. For tax payments, we adjust upward the income tax estimates calculated by the Census Bureau to reflect actual tax receipts. However, following the example of the Urban Institute in its study of New York State, we do so only for households with incomes of over $200,000 a year. This adjustment is based on the assumption that it is high-income households who under-report their income. While the Urban Institute first adjusted income for those with high income and then recalculated taxes, by adjusting tax receipts our approach has the same effect. For Social Security, we adjust payments for all taxpayers, not just those with high incomes, because only the first $84,900 of earnings was subject to the tax in 2002. Thus, under-reporting by high income earners does not matter. As is the case with costs, controlling all tax payments to the actual tax totals received by the federal government allows us to estimate the tax payments of illegals not counted in the CPS. In effect, those who are counted are assigned costs for those who are missed by the survey. The same is true for non-illegal aliens who are missed by the survey. This means that our tax estimates for all illegal and non-illegal households reflect the total taxes these populations pay, even those not counted by survey.
1 The National Research Council report entitled, “The New Americans: Economic, Demographic, and Fiscal Effects of Immigration” can be ordered or read online at http://www.nap.edu/books/0309063566/html
2The Urban Institute study is entitled “Immigrants in New York: Their Legal Status, Incomes, and Taxes,” by Jeffrey S. Passel and Rebecca L. Clark. A summary of the report can be found at http://www.urban.org/url.cfm?ID=407432
3The Florida study was conducted by the University of Florida and is entitled, “Facts about Immigration and Asking Six Big Questions for Florida and Miami-Dade.” Information about the study can be found at . The 1997 study of New Jersey is entitled “State and Local Fiscal Impacts of New Jersey’s Immigrant and Native Households,” and can be found in the edited volume “Keys to Successful Immigration: Implications of the New Jersey Experience,” edited by Thomas J. Espenshade, Urban Institute Press. Washington DC. The Center for Immigration Studies study is entitled “The Costs of Immigration: Assessing a Conflicted Issue,” by David Simcox, John Martin, and Rosemary Jenks.
4The survey is considered such an accurate source of information on the foreign-born because, unlike the decennial census, each household in the CPS receives an in-person interview from a Census Bureau employee. The 217,000 persons in the Survey, 23,000 of whom are foreign born, are weighted to reflect the actual size of the total U.S. population. However, it must be remembered that some percentage of the foreign born (especially illegal aliens) are missed by government surveys of this kind, thus the actual size of this population is almost certainly larger. The CPS data used in this study was provided by Unicon Research. www.unicon.com
5This includes naturalized American citizens, legal permanent residents (green card holders), illegal aliens, and people on long-term temporary visas such as students or guest workers, but not those born abroad of American parents.
6We supplement this data, where needed, with estimates derived from the 2000 Census because the Census contains several important pieces of information not found in the CPS, such as if a person speaks English well. We use this data to apportion the costs of providing for students who have limited English. The CPS, in contrast, does not ask a question about language.
7 Tables from the OMB showing taxes collected by source and year can be found at
8 “Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY2000-FY2002,” November 25, 2003. RL32233. Complied by Vee Burke.
9 Federal expenditures on primary and secondary education programs come from the Census Bureau report, “Federal Aid to States for Fiscal Year 2002,” which can be found at . Expenditures on Social Insurance Programs (Social Security, Medicare, and Unemployment Compensation) come from the OMB’s web site, http://www.whitehouse.gov/omb. Figures for non-citizens in federal prisons come from the Federal Bureau of Prisons web site, . The INS 2002 budget comes from the Department of Justice web site and can be found at: www.usdoj.gov/jmd/budgetsummary/btd/1975_2002/2002/html/page104-108.htm
10 Since all of the costs are controlled to the actual total taxes collected and total expenditures, our method has the effect of controlling for the undercount of illegal aliens, legal immigrants, and even natives.
11 The INS report that estimated seven million illegals in 2000, with an annual increase of about 500,000, can be found at . The Census Bureau report with an estimate of eight million illegals in 2000 can be found at www.census.gov/dmd/www/ReportRec2.htm (Appendix A of Report 1 contains the estimates). The Urban Institute is the only organization to release figures for the size of the illegal population based on the CPS. Urban estimates that, in March of 2002, 8.3 million illegal aliens were counted in the CPS, with an additional one million being missed. Assuming continual growth in the CPS, there were between 8.6 and 8.8 million in the March 2003 CPS. Urban’s estimates based on the March 2002 CPS can be found at http://www.urban.org/url.cfm?ID=1000587. Additional information was provided by Jeffery Passel of the Urban Institute in a May 24, 2004, telephone interview.
12 The fact that our results match those from the Urban Institute is not an accident because the probabilities assigned to variables such as citizenship status, year of arrival in the United States, country of birth, or any of the other variables discussed above, are designed to match the results of previous research in this area.
13 “The New Americans,” pp. 255-256.
14 “Keys to Successful Immigration: Implications of the New Jersey
Experience,” p. 143.
15 The NBER paper, authored by David E. Weinstein and Donald R. Davis, can be found at www.columbia.edu/~drd28/Migration.pdf.
16Actual taxes collected by source can be found at OMB’s web site,
17 A detailed discussion of how the Census Bureau estimates tax payment can be found in Census paper P60-186RD, “Measuring the Effect of Benefits and Taxes on Income and Poverty: 1992.”
18 In the case of Social Security, estimated tax payments from the Census Bureau are roughly doubled to reflect employer contributions.
19 See David North and Marion F. Houstoun, “Characteristics and Role of Illegal Aliens in the U.S. Labor Market,” 1976, Washington, D.C.: Linton and Co.; and Louis Rea and Richard Parker, “Illegal Immigration in San Diego Country: An Analysis of Costs and Revenues,” 1992. Report to the California State Senate Special Committee on Border
20 “Immigrants in New York: Their Legal Status, Incomes, and Taxes;” “Undocumented Immigrants in New Jersey: Numbers, Impacts and Policies” in “Keys to Successful Immigration: Implications of the New Jersey Experience.” Edited by Thomas Espenshade, 1997, Washington, D.C.: Urban Institute Press.
21 Although the CPS does not specifically ask about the breakfast program, we assign costs for this program to households based on use of the lunch program.
22 The Treasury Department Inspector General for Tax Administration report, # 2004-30-023, can be found at http://www.treas.gov/tigta/2004reports/200430023fr-redacted.html
23 There are two ways an illegal alien could have a Social Security number that allows him to file a return and get the EITC: First, a stolen or otherwise acquired number and matching name from someone authorized to work in the United States. Second, some illegal aliens have been issued Social Security numbers. This can include illegal aliens who have an application pending with the immigration service, such as asylum applicants. Even thought the individual is illegally in the country and the application has only a small chance of ever being approved, some are still given work authorization. As IRS publication 596 states (page 6), Social Security numbers that are “Valid for Work only with INS authorization” can receive the EITC. The person need not be a legal resident of the United States. While it is unknown how many illegal immigrants have illegally acquired Social Security numbers, the number is likely to be significant. If roughly half of the 5.7 million illegals in the 2003 CPS who hold jobs are paid on the books, then this means that roughly three million illegals have provided employers with a SSN or perhaps an Individual Taxpayer Identification Number (ITIN) that was accepted. The ITIN is not supposed to be used by employers to pay payroll taxes, but this restriction may not be completely enforced.
24 In a February 2003 study in Health Affairs, which can be found at , Hadley and Holahan estimated that the federal government spent $19.9 billion for the uninsured in 2001. An updated study for the Kaiser Family Foundation, which can be found at http://www.kff.org, estimated the figure was $23.5 billion in 2004. To estimate costs in 2002, we assume a constant rate of growth of 5.7 percent between 2001 and 2004, meaning that federal expenditures totaled $21.03 billion in 2002. Hadley and Holahan’s two studies indicate that care provided directly by the federal government, such as the VA, increased at an annual rate of 2.4 percent. As a result, we estimate that veterans expenditures in 2002 were $3.98 billion.
25 This is based on the assumption that the costs of administering the INS in 2002 were due to the presence of immigrants in the country either as legal immigrants who need a variety of services or as illegal aliens who are the subject of enforcement.
26 We also use statistics for the Coast Guard interdiction program which can be found at
27 According to the Justice Department, non-citizens comprised 28.8 percent of the federal prison population in 2002. Figures can be found at . An unpublished paper by Rebecca Clark and Scott Anderson from the Urban Institute, entitled “Illegal Aliens in Federal, State, and Local Criminal Justice Systems,” indicated that 57 percent of non-citizens in 1996 were illegal aliens and the share was increasing by 0.4 percentage points a year in the mid-1990s. Thus, by 2002, about 59 percent of non-citizens were likely illegal aliens. This means that 23,000 (22,978), or 17 percent, of the federal prison population were illegals. When later in this report we estimate costs for households headed by legal immigrants we assume that 11.8 percent (28.8 percent – 17 percent) of non-citizens in federal prisons are legal immigrants, and 4.5 percent of the federal prison population are naturalized U.S. citizens, which is their share of the nation’s total population. This means that 16 percent of federal prisoners are legal immigrants (naturalized and unnaturalized).
28 Information on those in federal courts can be found in the Compendium of Federal Justice Statistics:
29 The costs of the federal court system can be found at
30 See Appendix F in “Measuring the Effect of Benefits and Taxes on Income and Poverty: 1992” from the U.S. Census Bureau for a discussion of under-reporting of income and receipt of redistribution programs.
31 Footnote 32 on page 278 of the NRC report indicates that households that received redistribution programs like Social Security are identified in the CPS and then assigned the average benefit level. This would seem to control for under-reporting.
Characteristics of Illegal Households. Table 1 reports demographic information for households headed by illegal immigrants and all other households. Not surprisingly, it shows that on average households headed by illegal aliens have much lower average incomes and are somewhat larger in size than the average household in America. The lower income reflects not simply their legal status, but more importantly the fact that such a large share of illegals have little formal education. An estimated two-thirds of illegals who are household heads lack a high school diploma. This is important because it means that even if the illegal aliens were legal residents, their income still would be dramatically lower than the rest of the population. There is no single better predictor of income in the modern American economy than one’s education level. As a result, a large share of illegals are likely to remain poor even if given legal status. Table 1 also shows the share of households in which at least one person works. A much larger share of illegal households had at least one person working in 2002 than non-illegal households. Thus, any costs associated with illegal aliens do not reflect low rates of employment.
Illegal Household Use of Services. The lower portion of Table 1 shows the percentage of illegal households receiving Social Security and means-tested programs. There are very large differences in program usage between illegals and the rest of the population. Just as important, illegals’ use of different types of programs vary enormously. Only a tiny fraction of illegal households use Social Security or cash welfare programs compared to other households. One source of public dissatisfaction with illegal immigration is that some Americans believe that many illegal aliens are getting cash welfare payments. Table 1 shows that this is not the case. However, the share using Medicaid and food assistance welfare programs is quite high and substantially more than the share of non-illegal households.
It must be remembered that, for the most part, illegal households using programs like free school lunch or Medicaid are receiving these benefits on behalf of U.S.-born children, who under current law are awarded citizenship at birth. Of course, the costs of providing services to these children are very real for taxpayers and result from illegals having been allowed to enter and stay in the country. And having the federal government feed or provide medical care to their children is an enormous benefit to illegal aliens. Thus, in considering the consequences for public coffers, counting the costs of these programs is necessary, otherwise one would gain a very false sense of illegal immigration’s present costs. Nonetheless, the fact that it is the U.S.-born children receiving the benefits is still important, because it means that barring illegals from using programs would not significantly reduce costs. Their citizen children would continue to receive them. On the other hand, if the illegal families were made to return home, the costs would be eliminated.
Estimated Tax Payments
Payroll Taxes. Table 2 shows a breakdown of the estimated tax payments and services used by illegal alien-headed households. (More details about illegals’ payment of specific taxes and use of specific programs use can be found in the Appendix on p. 39.) In terms of tax payments, the table shows very large differences between illegal households and other residents. The largest difference is in federal income taxes. Illegal households pay only about one-fifth as much as other households. This is not surprising given their much lower incomes and larger family size. By design, households with modest incomes and large size are supposed to pay relatively little in taxes. This, coupled with the fact that only a little over half of illegals make payroll contributions, is the reason their payments are very low relative to other taxpayers. For taxes other than income tax, the difference between illegal households and all others is not quite as large. Because Medicare and unemployment are more regressive in nature than federal income tax, the contribution of illegals for these two taxes is about 37 percent that of other households’ contributions. And for Social Security, which is even more regressive, illegals pay 40 percent of the average household’s contribution.
It must be remembered that tax payments in the table are based on the assumption that only 55 percent of illegals pay payroll taxes, comprised of income tax, Social Security, Medicare, and unemployment insurance. If all of their income were subjected to taxation, illegals’ tax payments would rise significantly. Of course, if they paid all of their payroll tax liability, this would imply that they have legal status, which would also dramatically increase use of public services. This issue will be discussed later in this report.
Excise and Other Taxes. For excise and estate taxes, which are the most regressive, illegals pay 55 percent as much as other tax payers. In Table 2, estate and excise taxes are grouped together. Because illegals are very young on average, they pay very little in estate taxes. If only excise taxes are considered, the average tax payment of illegal households is 69 percent that of all households. Thus, there are significant differences in the relative size of payments illegals make to the various programs. The more regressive the tax, the closer the relative payments of illegal households are to the rest of the population. While the tax payments made by illegal aliens are much smaller on average than those of other households, illegals still do pay billions of dollars in taxes to Washington. In 2002, illegal households paid a total of nearly $16 billion to the federal government. The far right column in Table 2 shows that illegal alien tax payments constitute about 0.9 percent of all taxes collected. Because persons in illegal households constitute 3.6 percent of the nation’s total population, their tax payments are clearly less than their representation in the population as a whole. This fact by itself does not mean that they create a fiscal deficit, because the net effect of illegal households on public coffers also depends on their use of public services, which is discussed below.
Costs by Household
Social Security and Medicare. The lower half of Table 2 reports the estimated costs illegals impose on public coffers. The table shows that, in general, illegal households use much less in almost every type of service. In the case of Social Security and Medicare, illegal households use about one-twentieth as much as other households. And they account for less than two-tenths of 1 percent of the total cost of these very large programs. Moreover, it is also clear that illegals pay substantially more in Social Security and Medicare than they use, creating a net benefit for these two programs of over $1,800 a year per illegal alien household. This calculation actually understates the benefit illegals create for the trust funds of these two programs because Table 2 includes costs for Medicare part B, which is paid for by general funds. If only Medicare part A (the part of Medicare covered by the trust fund) and Social Security are considered, illegal households create a net benefit well in excess of $7 billion dollars a year for the trust funds of these two programs.
Welfare Programs. Table 2 shows that illegal households receive much less in cash assistance welfare programs. As already discussed, persons in illegal households comprise 3.6 percent of the total population, but their use of cash welfare accounts for 0.3 percent of costs for these programs. For food assistance programs, however, illegal households actually receive more of this type of program than non-illegal households, accounting for 5.6 percent of federal costs for these programs. This is mainly due to heavy use of the WIC and school lunch programs. For Medicaid, illegals receive less than other households, but their use of this very expensive program is still significant. It’s worth noting that although Table 1 showed a larger share of illegal households using Medicaid, figures in Table 2 show that on average they receive a lower payment. This mainly reflects the fact that it is typically only the U.S.-born children in the illegal households who are on Medicaid, while in other households with low incomes both parents and children can qualify for the program. Table 2 also shows that illegal use is much lower for all other welfare programs. But the table still shows that illegal households do use these programs to some extent.
Other Transfers to Households. For other transfers to households, the $442 illegal households are estimated to receive is about half of what non-illegal households get and certainly much less than their share of the total population. The programs included under this category are listed at the bottom of the table. Eligibility and use vary a great deal. For example, illegal aliens who work in the United States illegally are explicitly allowed to receive the Additional Child Tax Credit, which pays out a total of $5 billion a year to low-income workers with children. On the other hand, programs such as student loans can only be used by the tiny number of citizen children in illegal households who are enrolled in college. As is the case with most means-tested programs, illegals use considerably less than other households, but their use is not zero. Overall, illegal households account for less than 2 percent of the costs of these programs.
Prisons, Schools, the Uninsured, and Immigration. There are four areas where the estimated costs illegal households impose are much larger than for other households–treatment for the uninsured, federal aid to schools, federal prisons/courts, and the immigration system. Figures for the uninsured simply reflect the fact that such a large share of illegal aliens and their children lack health insurance. With more than half of persons in illegal households lacking health coverage, illegal households account for a very large share of the costs of treating the uninsured. As for schools, although they are primarily paid for by state and local governments, the federal government now provides more than $28 billion for primary and secondary education. Moreover, Washington gives schools some assistance in paying for children with limited English and for the children of agricultural workers. Not surprisingly, illegal households account for a disproportionate share of these programs. Illegal households impose very significant costs on the federal education budget, however, mainly because illegal households have more school-age children on average. The costs for the federal prison and court system are also significant because, although persons in illegal households account for about 3.6 percent of the nation’s total population, illegals now account for almost one-fifth of those in federal prison and others processed by the federal courts. Thus, they impose costs on that system that are disproportionally high relative to their share of the total population. This is also true for the immigration system. As indicated in the methodology section, the costs of the immigration system are assigned based on the distribution by household of post-1980 non-citizens. This probably understates the costs of illegals to the immigration system because enforcement alone, which is directed specifically at illegal aliens, accounts for two-thirds of the immigration budget. Nonetheless, it is certainly not surprising that illegal aliens account for a large share of the costs of the immigration system because so much of that system is focused specifically on them.
Balance of Tax and Cost
Illegals Create Large Net Costs. The bottom portion of Table 2 adds together the total tax payments and costs illegals impose on the federal budget. When defense spending is not considered, illegal households are estimated to impose costs on the federal treasury of $6,949 a year or 58 percent of what other households received. When defense spending is included, their costs are only 46 percent those of other households. However, they pay only 28 percent as much in taxes as non-illegal households. As a result, the estimated net cost per illegal household was $2,736. Whether one sees this fiscal deficit as resulting from low tax payments or heavy use of services is a matter of perspective. As already discussed, illegal households comprise 3.6 percent of the total population, but as Table 2 shows they account for an estimated 0.9 percent of taxes paid and 1.4 percent of costs. Thus, both their payments and costs are significantly less than their share of the total population. Since they use so much less in federal services than other households, it probably makes the most sense to see the fiscal deficit as resulting from low tax payments rather than heavy use of public services.
Total Deficit Created by Illegals. If the estimated net fiscal drain of $2,736 a year that each illegal household imposes on the federal treasury is multiplied by the nearly three million illegal households, the total cost comes to $10.4 billion a year. Whether one considers this to be a large sum or not is, of course, a matter of perspective. But, this figure is unambiguously negative and certainly not trivial. It is also worth remembering that these figures are only for the federal government and do not include any costs at the state or local level, where the impact is likely to be significant.
The Fiscal Implications of Amnesty
So far we have only considered the current fiscal impact of illegal alien households. In the following section we run two different simulations to estimate what would happen if illegal aliens in the United States were legalized. We assume that any amnesty that passes Congress will have Legal Permanent Residence (LPR, colloquially known as a “green card”) as a component. It is true that President Bush’s amnesty proposal in January 2004 envisioned temporary worker status for illegal aliens. At present, however, every major legalization bill in Congress provides illegals with LPR status at some point in the process. Moreover, because Republicans are divided between those favoring enforcement of immigration laws and those who want an amnesty, any legalization must have significant Democratic support to pass. But Democrats have made clear than they can only support an amnesty that gives permanent residence. While a two-step legalization — one that grants temporary status before permanent residence — is certainly possible, such a system would still result in permanent residence. Politically, it seems almost certain that any amnesty that actually passes Congress will award LPR status to illegals. But even if one makes the very unlikely assumption that an amnesty will be a pure guestworker program, the net fiscal deficit imposed by illegals indicates that unskilled workers who are not permanent residents still create large fiscal costs. As we have seen, this is partly because of their U.S.-born children, partly because like all people they necessarily place some demands on government, and partly because their low-income results in very low tax payments. All these things would still be true of unskilled guest workers.
General Impact of Amnesty. It is important to consider the likely outcomes of any amnesty: First, there should be a significant increase in tax compliance. (In the simulations below we assume that compliance rises from 55 percent to 100 percent.) Second, the average income of illegals should rise, as they would be freer to make decisions about employment and less likely to be exploited by employers. Third, use of public services will increase as the now-legal immigrants are eligible for many services from which they were barred as illegals. The actual size of these changes and their impact on the fiscal bottom line are explored below. It is also very important to realize that, if legalized, illegal aliens would not simply become just like legal immigrants in general because illegals are much less educated on average than legal immigrants. To run our legalization simulations we use the characteristics of illegals who are household heads and then assume that if they were legalized, they would pay taxes and use services like legal immigrant households headed by persons with the same characteristics.
Simulation One. We first report the education levels and country of birth of illegal households based on the education and country of the household head. Figure 1 reports the Mexican and non-Mexican share by education level of the illegal alien population. We divide illegals by their education level because, as already discussed, the single most important determinant of one’s income, and thus service use and tax payments, is education. This was one of the most important conclusions of the aforementioned NRC study. We further divide them by whether they are Mexican because all research, including this report, indicates that about 60 percent of illegals are from that country. Moreover, the NRC study found significant differences between households headed by Latin American immigrants and those from the rest of the world. Figure 1 reports the distribution of illegal alien household heads by their educational attainment and if they are Mexican. We then assume that if illegals were legalized they would use services and pay taxes like all legal immigrants with the same characteristics.32
Simulation Two. In the second simulation we again divide the illegal population by education and whether they are Mexican, but this time we assume that they would pay taxes and use services like legal immigrants who arrived in 1986 or after. That is, we again use the results from Figure 1 and assume that if legalized, they would use services and pay taxes like legal immigrants who have the same characteristics, but have arrived since 1986. The reason we assume that they would be like post-1986 legal immigrants is that illegals themselves are almost all post-1986 arrivals, the year the last amnesty for illegals was passed. Illegals are much more like recently arrived legal immigrants then they are like legal immigrants in general, who are older and have higher income but also use programs like Social Security. In addition, we exclude persons from the main refugee-sending countries because it is well established that refugees have the highest rates of public benefit receipt of any group of immigrants. These countries include: Poland, the former Yugoslavia, the Former Soviet Union, Afghanistan, Cambodia, Iraq, Laos, Vietnam, Nicaragua, Cuba, and Ethiopia. This second simulation is probably the most plausible.
Fiscal Impact of Legal Immigrants. Table 3 shows estimated federal taxes paid and services used in 2002 for legal immigrant households by education level and whether a person is from Mexico. The left side of the table is the basis for Simulation 1 and shows all legal immigrants regardless of when they arrived; the right side of the table shows the same figures for post-1986 non-refugees. One interesting finding of the table is that estimated tax payments are higher for all categories of legal immigrant households than the roughly $4,200 paid by illegal households in Table 2. The only exception is for post-1986 Mexicans without a high school education. Thus, those who contend that legalization would increase tax revenues are probably correct. Almost every category of legal immigrant pays more in taxes than do illegal households. Unfortunately, the table also shows that, in every case, total federal costs are also higher than the roughly $6,900 a year reported for illegal households in Table 2. Thus, those who are concerned that legalization would increase costs are also almost certainly correct.
(Click on Table for a larger version)
As expected, Table 3 shows that there is very wide variation in public service use and tax payments between groups. Overall service use and tax payments by household closely correlates with education levels of household heads. In both simulations, those with more than a high school degree are a large net fiscal benefit to the federal government, while those with only a high school education or less are a net fiscal drain. This is true whether the legal immigrant is from Mexico or not. It is also true whether one considers all legal immigrants or only post-1986 non-refugees. The difference between immigrants by education is truly enormous. For example, looking at households headed by post-1986 non-refugees, a legal immigrant without a high school degree creates a fiscal deficit on the federal government of more than $15,000 a year if he is Mexican and almost $11,000 if he is from the rest of the world. Conversely, for those with more than a high school degree, the benefit is over $5,000 a year if they are Mexican and more than $12,000 for non-Mexicans. The same pattern holds when all immigrant households are considered, regardless of year of arrival. Without question, the education level of legal immigrants is a key determinant of their fiscal impact. However, being from Mexico seems to matter as well.
Legalization Would Dramatically Increase Costs. Using the education levels and the share that is Mexican found in Figure 1 and combining them with the results from Table 3, we can then estimate the likely impact of legalization. Table 4 reports the estimated federal taxes paid and services used by legalized illegal alien households assuming they would pay taxes and use services like households headed by legal immigrants with the same characteristics. The first simulation assumes that illegals would pay federal taxes and use services like all legal immigrants with the same education level, regardless of when they arrived, while the second simulation assumes that they would have the impact of post-1986 legal non-refugee immigrants. Both simulations show that legalization would increase the net fiscal costs dramatically. Simulation 1 shows that the net fiscal costs to the federal government would increase from $2,736 to $6,022 per household. Simulation 2 shows the net fiscal cost would be even larger, increasing to $7,668 per household. Although net costs rise, estimated tax payments increase dramatically with legalization. They more than double in Simulation 1 and increase by 77 percent in Simulation 2. However, costs rise significantly as well. In both cases costs more than double, creating an average net fiscal deficit per household that is significantly more than that estimated for illegal alien households.
Interestingly, total costs per household are roughly the same in both simulations. In Simulation 1, legal immigrants are making significantly more use of Social Security and Medicare, while in Simulation 2 use of welfare, education, and other transfers to households are much higher. This reflects the different age structure of post-1986 immigrants compared to all immigrants. In effect, one can see Simulation 2 as the more immediate impact of a legalization, while Simulation 1 reflects the likely fiscal impact of legalized aliens in the long term. Either way, the results indicate that legalization would cause the net fiscal burden on taxpayers to increase substantially. It should be noted that, although legalization would substantially increase costs, this does not mean that legal immigrants overall are net drain on the federal government. It also worth noting that if only the relatively small share of illegal aliens with more than a high school degree were legalized, then there would be no fiscal deficit. But since so many illegals have only a high school degree or less, legalizing all illegals would create a large fiscal deficit.
Would Welfare Reform Hold Down Amnesty Costs? In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which barred some legal immigrants who arrived after 1996 from using certain welfare programs. Since many legal immigrants used in Simulation 2 to estimate the costs of amnesty arrived before 1996, perhaps our estimates overstate the costs, at least with regard to welfare programs. Table 5 provides a detailed breakdown by program for all of the costs estimated in this study. The table shows that legalization under Simulation 2 would increase costs by a total of $8,173 per household. (The same total found in Table 4) Of that increase, $5,588, or about 68 percent, is the result of increased costs due to cash payments from TANF, SSI, and in-kind benefits received from food stamps and Medicaid, the four main programs covered by PRWORA. While certainly a large share of the costs, it still leaves an increase of $2,585 per household in non-PRWORA covered programs.
More importantly, analysis of the CPS shows that households headed by recently arrived legal immigrants actually do make significant use of these welfare programs. Table 6 reports estimated use of these four programs for households headed by legal immigrants from Mexico and the rest of the world, excluding refugee countries. The table shows that, in 2002, households headed by a legal immigrant from Mexico who arrived in 1996 or later and who lacks a high degree received $7,900 on average from these four programs and those with only a high school degree received $3,817.33 For post-1996 households headed by legal non-refugees from countries other than Mexico without a high school degree, the figure is $5,464 per household, and for those with only a high school degree the figure is $2,462. By contrast, the figure for illegal aliens is only $860 per household.
Table 6 also shows that if we assume that illegal households, once legalized, would use welfare like non-refugee legal immigrants who arrived in 1996 or later with the same education, then welfare costs would be $5,430 per household, very similar to the $5,588 in Simulation 2. It must be remembered that, as originally shown in Table 3, legal immigrants with little education make very extensive use of welfare programs because their incomes are very low and because they receive these programs on behalf of their U.S.-born children. This is especially true for Medicaid, by far the costliest program. Welfare reform has not changed these basic facts. Given this reality, it is very difficult to see how a dramatic rise in welfare costs could be avoided if there was a legalization.
Amnesty Would Increase Incomes. Although the net fiscal burden would increase dramatically as a result of a legalization, this does not mean that the income of illegals would remain unchanged. Table 4 shows a dramatic increase in payroll taxes and this partly reflects increases in household income that would occur if illegals were legalized. In fact, analysis shows that whether they are Mexican or not and no matter what their educational attainment, legalization would significantly increase the income of illegal aliens. Figure 2 reports the estimated income of legalized illegal households under Simulations 1 and 2. Like the estimates in Table 4, they are based on the assumption that, if legalized, illegal households would have average incomes like their legal counterparts controlling for whether the household head is Mexican and for education levels. Under Simulation 1, their income would be 29 percent higher, and under Simulation 2 incomes are 15 percent higher. Of course, the much higher incomes in Simulation 1 partly reflect the longer time that all immigrants have lived in the United States and not simply the fact that they have legal status. But Simulation 2 shows that even when analysis is confined to more recent arrivals, incomes still increase substantially. While our overall conclusion indicates that legalization would increase fiscal costs, perhaps the improvement in the income and economic well being of illegal households could be used to justify legalization. Certainly, Figure 2 indicates illegals would likely benefit significantly from obtaining legal status.
Comparisons to Other Studies
There is always some uncertainty associated with any fiscal estimate of immigrants, especially illegal aliens. However, the overall results of this study are consistent with other work that has looked at this question.
NRC Study. As mentioned at the beginning of this report, the 1997 study by the National Research Council (NRC) is probably the most sophisticated report ever to examine the impact of immigration on public coffers in the United States. While that report did not consider the legal status of immigrants, it did divide immigrants by education. The overall findings of that report showed that the education level of immigrants was critically important in determining their income, tax payments, service use, and resulting net fiscal impact. They found that during his lifetime an immigrant without a high school education imposed a net fiscal drain on taxpayers of $89,000; for those with only a high school degree it was $31,000. The NRC study also found that for those immigrants with more than a high school degree the fiscal benefit was $105,000. While we report estimates for only legal immigrants for a single year, our analysis by education found in Table 3 is strongly supported by the NRC’s findings.
Urban Institute Study of New York State. One of the few studies to specifically estimate illegal immigrant tax payments at the federal level by household was done by the Urban Institute in 1998. That study used the CPS to estimate 1994 tax payments for illegal households in New York State, including some federal taxes. Although our study is designed to measure the fiscal impact of immigration at the national level, we ran separate estimates for federal tax payments for illegal-headed households in New York State so we could compare them to those of the Urban Institute. The Urban Institute only examined federal income tax, Social Security, and unemployment insurance, and we did the same. We estimated that the average illegal household in New York State paid $5,538 in these three taxes in 2002, compared to $4,568 estimated for tax year 1994 by the Urban Institute. Adjusted for inflation between 1994 and 2002, this is $5,463 or only 1.4 percent less than our estimate for 2002.34 Of course, illegal immigration to New York State and the federal tax code has changed since 1994. Nonetheless, our average estimates are very similar to those developed by the Urban Institute when adjusted for inflation.
Treasury Department Report. The results of our study are also buttressed by an analysis of illegal alien tax returns done by the Inspector General’s Office of the Department of Treasury in 2004.35 That study found that 55 percent of illegal aliens who filed income tax returns using tax identification numbers had no federal income tax liability. While higher than the 45 percent estimated in this study, it must be remembered that this figure was only for those who filed tax returns using a tax identification number. These are all individuals who expected refunds, otherwise they would not have gone to the trouble of getting tax identification numbers and filing a return. But like our estimates, the Inspector General’s report indicates that roughly half of illegals have no tax liability, reflecting their very low incomes and large number of dependents.
32 Although we included them in the costs for non-illegal households in Table 2, we exclude costs for the small number of federal programs that specifically aid refugees because if legalized, illegals should not access these programs.
33 These recently arrived unskilled legal immigrants are relatively small in number and so the survey should be interpreted with some caution, but in the case of both Mexicans and non-Mexicans, use of welfare programs by recently arrived unskilled immigrants (excluding refugees) is quite high.
34 Table 6 on page 103 of the Urban Institute study has the estimates by type of tax.
35 The Inspector General’s Office of the Department of the Treasury report # 2004-30-023 can be found at http://www.treas.gov/tigta/2004reports/200430023fr-redacted.html
It is often suggested that “matching a willing worker with a willing employer” is all that matters when it comes to immigration policy. The fiscal costs of illegal immigration indicate that focusing only on workers and employers is grossly inadequate. If the presence of large numbers of unskilled workers lowers prices for some goods and services, but at the same time increases the burden on taxpayers, then this may not be a good deal for the country. Put simply, the mere fact that employers want more workers, and foreigners wish to work in this country, does not mean that Americans necessarily benefit from their coming. This fact must be considered when formulating policy.
Low Levels of Education Create Deficit. The findings of this study show that the primary reason illegal households create a fiscal deficit at the federal level is that their much lower levels of education result in low incomes and tax payments that are only 28 percent that of other households. Thus, even though the costs they impose are estimated to be only 46 percent those of other households on average, there remains a significant net deficit. Whether one considers their use of services low is a matter of perspective. Because illegals are not even supposed to be in the country, many Americans are angered by the fact that they receive any services at all. This is especially true of transfers to households like food stamps or cash payments from the Child Tax Credit. Although many Americans are upset about their use of public services, there is little evidence that illegals come to America to take advantage of public benefits. Most illegal aliens come for jobs, and the vast majority are in fact employed. But low levels of education mean they unavoidably create large costs for taxpayers.
As Long as Illegals Remain, So Will Costs. The relatively low receipt of services by illegals is important from a policy perspective because it means that the amount of money that can be saved by further efforts to curtail their use of public services is probably very limited. As already discussed, the average illegal household is estimated to receives less than half as much in services from the federal government as do other households, even though their households are 17 percent larger on average. This, coupled with the fact that benefits are often received on behalf of their U.S.-born children who are awarded citizenship at birth under current law, means that it is very difficult to avoid many of the costs as long as the illegal aliens remain in the country. In addition, if they are allowed to stay, most of the costs they impose will be for programs whose use is difficult to prevent politically or as a practical matter. For example, denying illegals benefits such as the Women, Infants, and Children nutrition program might encounter significant political opposition. And incarcerating illegals who have been convicted of crimes is an unavoidable cost of having a large illegal population. Thus, if we want to avoid the costs, we must look to alternatives other than trying to cut them off from public services.
Amnesty Would Dramatically Increase Costs. One of the key findings of this report is that legalization would dramatically increase the costs of illegal immigration. If illegals were given green cards and began to pay taxes and use services like legal immigrants with the same education levels, the net annual fiscal deficit at the federal level would likely increase from $2,736 to $7,668 per household under the most likely scenario. Total costs could grow from $10.4 billion a year to $28.8 billion. The costs increase dramatically because unskilled immigrants with legal status, which is what most illegal aliens would become, can access government programs but still tend to make very modest tax payments. This is because the modern American economy offers very limited opportunities to those with little education, regardless of legal status. Though we estimate that household income might rise by 15 percent with legalization and average tax payments would increase by 77 percent as more illegals would be paid off the books, their average household incomes would still remain one-third below that of other households. At the same time, service use would rise dramatically because legal immigrants are eligible for most programs, and they typically have much less fear about using them than illegal aliens. This does not mean that low-income legal immigrants use more in services than low-income native-born Americans. The fiscal deficit is created by the fact that so many illegal aliens are unskilled and thus have low income.
What’s Different About Today’s Immigration. Many native-born Americans observe that their ancestors came to America and did not place great demands on government services. Perhaps this is true, but the size and scope of government was dramatically smaller during the last great wave of immigration — not just means-tested programs, but expenditures on public schools and roads were only a fraction what they are today. Thus the arrival of unskilled immigrants in the past did not have the negative fiscal implications that it has today. Moreover, the American economy has changed profoundly since the last great wave of immigration, with education now the key determinant of economic success. The costs that unskilled immigrants, or unskilled natives for that matter, impose should not be seen so much as a failings on their part, but instead as a reflection of the nature of the modern American economy. Put simply, large-scale unskilled immigration is incompatible with current economic conditions and an extensive welfare state. If the fiscal costs are to be avoided, then our immigration policies need to reflect current fiscal and economic realities and the number of unskilled immigrants, legal or illegal, should be reduced.
The Bottom Line. This report has focused on only the fiscal impact of illegal aliens at the federal level. It is almost certain that they also create a large fiscal deficit at the state and local levels.36 Thus, the results in this report only deal with part of the costs of illegal immigration. On the other hand, it must be remembered that this report says nothing about the overall fiscal impact of households headed by legal immigrants. The fact that unskilled immigrants who are legal residents impose large fiscal costs on federal coffers does not mean that legal immigrants overall are a drain on federal coffers. Many legal immigrants are highly skilled. That having been said, we find strong and convincing evidence that the costs of illegal immigration are significant at the federal level and those costs would grow dramatically if illegals were legalized. Of course, there are many other issues to consider when deciding what do to about illegal immigration. But given the costs of illegal aliens and of any amnesty, it would probably make more sense to enforce immigration laws and reduce illegal immigration. Reducing the supply of unskilled labor would force employers to increase wages and invest in labor-saving devices in order to meet their labor needs.
If we instead chose to increase the number of unskilled workers in the country through immigration, then we at least have to understand that such a policy has negative fiscal consequences. Perhaps legalizing illegal aliens may be justified on humanitarian grounds, or as a way to improve relations with other countries. Conversely, enforcement might make more sense because it reduces job competition for unskilled Americans, or for national security reasons. But this analysis shows that, at least with regard to the federal budget, there is a high cost to unskilled illegal alien labor and this must be part of any policy discussion.
36 Although they did not look at illegals separately, the NRC study found that in California and New Jersey (the two states they examined) immigrants from Latin America and the Caribbean, where the vast majority of illegals come from, were a significant fiscal drain. By using Census Bureau data that include both illegals and legals, their fiscal analysis is really a combined estimate of the entire foreign-born population both legal and illegal.