The Attack on America

The Attack on America

     In our article America Burns, Washington Plays, the failure to tend to the matters of national security were identified. Apart from failing in the role as Commander-in-Chief, from shredding military moral by his homosexual agenda to subverting intelligence gathering by actions so numerous and publicly documented by even the traitorous liberal media as to preclude listing, the real and honest question might be simply asked: “What has Obama done benefiting America to fulfill his oath of office?” or expanding the question “What have his Democrat cronies in Congress done to fulfill their oaths of office?”.
 
    The answer to that and many other questions to past events of human success and failure are found in the valid historical record. Uncompromised and uncorrupted by human interference, imagination, or invention, historical truth provides a map to future political and economic success. The Framers met in secret for three weeks in Independence Hall to study the political history that provided the foundation for the Constitution. Along with science as they understood it in their time, truth must provide the structure and anchor to advance and elevate the human condition. Always inescapably dependent on truth, humanity has and always will move beyond reason resulting in the repetitive recurrent failures brought by following paths opened by the untruths, lies, and deceptions. Generated by arrogance, pride, and ignorance, political actions magnify the bad, the evil, the undesired, the destructive, the wasted, the diverted, the unwanted, etc. when immutable Law is transgressed. 
 
    The following is a partial list of the consequences of such political failure failing to “provide for the common defence” addressed in America Burns. It comes from the nonpublic version of the Defense Science Board report Resilient Military Systems and the Advanced Cyber Threat: Table 2.2 Expanded partial list of DoD system designs and technologies compromised via cyber exploitation.
Table 2.2 Expanded partial list of DoD system designs and technologies compromised via cyber exploitation
 
SYSTEM DESIGNS
 
Terminal High Altitude Area Defense
 
Patriot Advanced Capability-3
 
Extended Area Protection and Survivability System (EAPS)
 
F-35
 
V-22
 
C-17
 
Hawklink
 
Advanced Harpoon Weapon Control System
 
Tanker Conversions
 
Long-term Mine Reconnaissance System
 
Global Hawk
 
Navy antenna mechanisms
 
Global Freight Management System
 
Micro Air Vehicle
 
Brigade Combat Team Modernization
 
Aegis Ballistic Missile Defense System
 
USMC Tracked Combat Vehicles
 
Warfighter Information Network-Tactical (WIN-T)
 
T700 Family of Engines
 
Full Authority Digital Engine Controller (FADEC)
 
UH-60 Black Hawk
 
AMRAAM (AIM-120 Advanced Medium-Range Air-to-Air Missile)
 
Affordable Weapons System
 
Littoral Combat Ship
 
Navy Standard Missile (SM-2,3,6)
 
P-8A/Multi-Mission Aircraft
 
F/A and EA-18
 
RC-135 Detect./Collect.
 
Mk54 Light Weight Torpedo
 
    In the above list are over two dozen major weapons systems whose designs are critical to U.S. missile defenses and combat aircraft and ships. These weapons are primary components of the Pentagon’s regional missile defense for Asia, Europe and the Persian Gulf. Included are those for the advanced Patriot missile system (PAC-3); the Army’s Terminal High Altitude Area Defense (THAAD) system for shooting down ballistic missiles; and the Navy’s Aegis ballistic-missile defense system. Vital combat aircraft and ships, including the F/A-18 fighter jet, the F-35 Joint Strike Fighter, the V-22 Osprey, the Black Hawk helicopter and the Navy’s new Littoral Combat Ship are now compromised.
 
 
TECHNOLOGIES
 
Directed Energy
 
UAV video system
 
Specific Emitter identification
 
Nanotechnology
 
Dual Use Avionics
 
Fuse/Munitions safety and development
 
Electronic Intelligence Processing
 
Tactical Data Links
 
Satellite Communications
 
Electronic Warfare
 
Advanced Signal Processing Technologies for Radars
 
Nanostructured Metal Matrix Composite for Light Weight Ballistic Armor
 
Vision-aided Urban Navigation & Collision Avoidance for Class I Unmanned Air Vehicles (UAV)
 
Space Surveillance Telescope
 
Materials/processing technologies
 
IR Search and Track systems
 
Electronic Warfare systems
 
Electromagnetic Aircraft Launch
 
Rail Gun
 
Side Scan sonar
 
Mode 5 IFF
 
Export Control, ITAR, Distribution Statement B,C,D Technical Information
 
CAD drawings, 3D models, schematics
 
Software code
 
Critical technology
 
Vendor/supply chain data
 
Technical manuals
 
PII (email addresses, SSN, credit card numbers, passwords, etc.)
 
Attendee lists for program reviews and meetings
 
   On 26 July, 1920, H.L. Mencken, a journalist satirist critic, also a prominent Democrat, wrote an editorial for The Baltimore Evening.
“As democracy is perfected, the office of President represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be occupied by a downright fool and complete narcissistic moron.”

 

      This Memorial Day, in addition to honoring those who bought and paid for our freedom, we should accept our responsibility to “secure the Blessings of Liberty . . . . to . . . . our Posterity“!

     What more can we say?

CftC

“[R]eserved to the [S]tates” – Memorial Day 2013

“[R]eserved to the [S]tates”
 
    The Tenth Amendment of the Bill of Rights clearly and expressly states that “The powers not delegated to the United States by the constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”. Not just the Tenth Amendment but every provision of the Bill of Rights was so critical in the Framers’ intention that without the assurance that the First Congress would as a first responsibility enact them, the Constitution would not have been ratified. Prominent patriots such as Patrick Henry refused to even attend the Constitutional Convention because of fears of a Federal government. Others at the Constitutional convention were so fearful of the power of an unlimited Federal government that they refused to sign the Constitution.
 
    Needless to say, their worse fears have been realized by Congressional failure, judicial activism, and the ultimate failure of citizens in electing those violating their oath of office. Enabled by the lies and deceptions of those seeking political power, the Sixteenth and Seventeenth Amendments initiated and empowered the flagrant violation of the Framers’ and Founders’ original intention.
 
     The Sixteenth Amendment set up the funding of a Federal bureaucracy that has grown as an uncontrollable cancer stealing from working Americans. Errant legislators vote themselves and the bureaucracy unjust wages and benefits denied Americans “pursu[ing] …. happiness” while parasitizing and strangling equal opportunity and free enterprise — the very foundations of the Framers’ economic intention. Interestingly, Jefferson in earlier drafts of the Declaration of Independence used the word “property” instead of “happiness”. Whether in the form of taxes, regulations benefiting “special interests”, executive tyranny, judicial activism, or any other manifestation; government violating the Framers’ and Founders’ original intention and legislative failure at every government level and jurisdiction has robbed us of freedom and brought us the current economic and political disasters.
 
     Going hand in hand with Sixteenth Amendment in violating the original intention of the Constitution is the Seventeenth Amendment. Additionally fearful of a public majority, the Framers structured a Senate to be elected by state legislatures to provide the protections of a representative democracy. More than addressing the ubiquitous recurrent individual failures being magnified by political action, the Framers saw the Senate as a further protection of states’ rights. Again, by the actions of the current Senate we see the result of allowing the modification of the Framers’ intention. From legislative failure usurping states’ rights, failure to exercise confirmation and ratification authority bound by the original intention of the Constitution, unjust taxation and regulation, to failure to hold the tyrants of judicial activism accountable, and on and on; the Senate has failed miserably to uphold its oath of office.
 
     Understanding all of the above, the hope for America to reclaim the heritage envisioned by the Framers and Founders rests in the hands of the same American citizens from whose ranks came those we honor this Memorial Day. By electing only those loyal to the original intention of the Constitution to represent us on school boards, corporate boards, fire and police boards, union boards, in local and state governments, in legislatures, and in every other political body, we can reclaim the America those we honor this day of remembrance paid for.
 
     Thank you veterans. Our debt can only partly be repaid by protecting, preserving, and defending what you sacrificed for — the original intention of the Constitution of the United States of America. We must do no less to “preserve the blessings of liberty to ourselves and our posterity”.
 
May America bless God,
 
May 7, 2013

    During Easter Sunday, many millions of viewers who watched the History Channel’s record-breaking hit television series, “The Bible”  saw the conclusion to the series: the story of Jesus and his betrayal by one of his 12 disciples:  Judas.

    We have recently seen modern day “Judases” in the Republican Party who have forsaken their principles for 30 pieces of silver, or in this case for 3 years of 100% payments from ObamaCare’s socialized medicine scheme in return for the governors’ agreement to greatly expand an already-broken Medicaid system in their states; a system which is one of the most poorly-run health care systems in the entire world.

    ObamaCare  —  as it was when it passed Congress in 2010 with no votes from Republicans in either the Senate or the House of Representatives  —  remains highly unpopular amongst the American people.  How could it not be with the annual health care premiums for the average family ranging from $5,000 to $6,000 more than what Barack Obama promised they would be if the Democrat-controlled Congress passed ObamaCare.  Indeed, even one of the Democrat authors of ObamaCare, Senator Max Baucus from Montana, called ObamaCare a “train wreck” last month.   Earlier this month, Senate Majority Leader Harry Reid echoed those comments.

    John Kasich, Governor of Ohio  —  who was considered one of the chief cost-cutters in Congress as the House Budget Committee Chairman  —  was one of the first Republican governors to surrender to the wiles of the devil, or in this case, accepting the countless billions of dollars from the federal government for expanding Medicaid in his state.

    Other prominent Republican governors, who expressed their desire to set up ObamaCare exchanges in their states for their 30 pieces of silver, are Rick Scott from Florida; Chris Christie from New Jersey, Rick Snyder from Michigan and Jan Brewer from Arizona.  The other Republican governors who committed to ObamaCare’s Medicaid expansion in their states are North Dakota’s Jack Dalrymple; Tennessee’s Bill Haslem, Nevada’s Brian Sandoval; and New Mexico’s Susana Martinez.  If any of these governors had any hopes of being president, their decisions have now dashed such presidential hopes; at least in the Republican Party.

    As a result of such heresy, Chris Christie, among others, did not receive an invitation to speak at this year’s Conservative Political Action Conference, because Christie is “simply not a conservative in the eyes of organizers,” reported “The National Review” following his decision to accept massive Medicaid funding for his state from the federal government.

    These hundreds of billions in tax dollars for Medicaid expansion over the next decades will come from citizens of states whose responsible governors did not want to subject their citizens  —  or future governors and state legislatures  —  to the eventual huge cost of Medicaid expansion demanded by ObamaCare.  The states of these accountable governors will be penalized by not receiving any of the tens of billions being passed out during the first three years after a governor accepts Medicaid expansion.

    Principled Republican state legislators in these 9 states, are fighting back against their renegade governors.  All of the Republican governors, except North Dakota’s governor, Darylample, are getting push-back from their state legislators.

    Just last Friday, the Florida state legislature adjourned for the year after not approving Governor Scott’s plan to accept Judas silver, i.e. three years of 100% “free” ObamaCare money, followed by 90% “free” money from the federal government.  The only problem with these 9 Republican gubernatorial traitors is that the rest of us hard-working American taxpayers will have to pay for their states’ “free” Medicaid funding in future years to the tune of hundreds of billions of dollars.

    Today’s “The Wall Street Journal” editorial “Florida Flips Back” wrote, “The nine Republican governors who decided earlier this year to pump some helium into the ObamaCaare balloon and expand Medicaid forgot about that saving grace of American politics:  the separation of powers.  On Friday Florida became the latest state to reject the expansion, as Governor Rick Scott failed to convince the GOP-controlled legislature to approve his Medicaid flip.”

    The W.S.J. editorial goes on to say, “John Kasich in Ohio, Jan Brewer in Arizona and Rick Snyder in Michigan are also having trouble moving Medicaid legislation, and Jack Dalrymple in North Dakota is the only Republican so far who has sold a GOP legislature on expansion.  As the state legislative calendar winds down, perhaps as many as 24 states won’t expand.” That news could not be better for the Republican Party going into the 2014 mid-term elections and it is an important step to finally killing off ObamaCare.

    John Gizzi, “NewsMax” magazine columnist, reported last Thursday on the president’s derisive comment at his press conference on April 30th, about Republican governors who decided to implement ObamaCare exchanges and “then (had) their Republican-controlled legislatures say ‘Don’t implement,’ and won’t pass enabling legislation.”

    Gizzi reported, “Obama may have been referring specifically to the case of Tennessee Republican Gov. Bill Haslam, who sent out signals that he wanted to expand TennCare  — the name for Medicaid in the Volunteer State.”

    However, a supermajority in both of houses of the Tennessee state legislature told Governor Haslem to stuff his willingness to accept a massive expansion of Medicaid, thus forcing Haslam to back down and to state that Tennessee will not be participating in ObamaCare’s health care exchanges after all.

    Twenty-one responsible Republican governors know what lies ahead if they accept ObamaCare’s bribes.  Gizzi reported in his “NewsMax” article that these governors “know what they are doing in not participating in the exchange” (according to a Republican Capitol Hill staffer who has worked closely on ObamaCare implementation issues.)  “They know that between the cost and connecting disparate computer systems, this is not going to work in the long run.  So they are saying, ‘Let the feds try it.  Just leave me out of it.”

    Ironically, during this past week, evidence from an Oregon Medicaid study revealed that Medicaid is probably harming the Medicaid patients it is designed to help.   How many hundreds of billions of dollars have already been wasted on this ineffective welfare program? 

    Unfortunately, 9 Republican governors have aided and abetted the Obama administration in trying to greatly expand Medicaid in this nation.  Thankfully, the American people  —   through their state legislatures  —  are beginning to fight back.

The Attack on America, Wake Up America – Immigration

Wake Up America
 
    This Committee for the Constitution has written numerous articles in the “Wake Up America” series. Dealing with topics from 2nd Amendment rights violations to energy to global warming to healthcare, each can serve as a resource base for further studies and investigations of scientific and historical truths.
 
    The following is an article dealing with the immigration issue which as an issue itself has been repeatedly examined in many articles. In dire stark intolerable contrast, the article following by Tony Perkins of the Family Research Council which has itself been the target of the completely intolerant militarist terrorist agenda he writes about in War and Remembrance is a true call to arms for loyal Americans. Ridiculously, beyond all reason those seeking to destroy the America envisioned by the Framers would have loyal Americans be tolerant of those so intolerant of any ideology opposing or threatening their religions of intolerance, untruth, injustice, tyranny, and terror as to move them to burning, beheading, mutilating, and every other manner of utmost indescribable evil. Enough is enough! We need a leader rather than an incompetent socialist politician bent on destroying all that made America great!
 
CftC
 
Editor’s Choice 

Will the West [AMERICA] Wake Up?

By: Patrick J. Buchanan
5/24/2013 09:45 AM

    After a British soldier wearing a Help for Heroes charity T-shirt was run over, stabbed and slashed with machetes and a meat cleaver, and beheaded, the Tory government advised its soldiers that it is probably best not to appear in uniform on the streets of their capital. Americans, can you imagine anything more outrageous for any government to suggest to those who put their own lives on the line to provide the very freedoms they take fore-granted! By such statements that despicable Tory posture is not only unwilling to protect some of those who will give “their last full measure of devotion” to their nation, but are cowardly or tolerantly willing to have their “unalienable Rights” taken from them without a fight! (added by the CftC)

   Both murderers were wounded by police. One was photographed and recorded. His message:

    “There are many, many (verses) throughout the Quran that says we must fight them as they fight us. An eye for an eye and a tooth for a tooth. I apologize that women had to witness this today, but in our land women have to see the same. Your people will never be safe.”

    According to ITV, one murderer, hands dripping blood, ranted, “We swear by almighty Allah we will never stop fighting you.”

    Both killers are Muslim converts of African descent, and both are British born.

    Wednesday also, Stockholm and its suburbs ended a fourth night of riots, vandalism and arson by immigrant mobs protesting the police shooting of a machete-wielding 69-year-old.

    “We have institutional racism,” says Rami Al-khamisi, founder of a group for “social change.”

    Sweden, racist?

    Among advanced nations, Sweden ranks fourth in the number of asylum seekers it has admitted and second relative to its population.

    Are the Swedes really the problem in Sweden?

    The same day these stories ran, The Washington Post carried a front-page photo of Ibrahim Todashev, martial arts professional and friend of Tamerlan Tsarnaev, who, with brother Dzhokhar, set off the bombs at the Boston Marathon massacre.

    Todashev, another Chechen, had been shot to death by FBI agents, reportedly after he confessed to his and Tamerlan’s role in a triple murder in Waltham, Mass.

    Though Tamerlan had been radicalized and Moscow had made inquiries about him, he had escaped the notice of U.S. authorities. Even after he returned to the Caucasus for six months, sought to contact extremists, then returned to the U.S.A., Tamerlan still was not on Homeland Security’s radar.

    His father, granted political asylum, went back to the same region he had fled in fear. His mother had been arrested for shoplifting. Yet none of this caused U.S. officials to pick up Tamerlan, a welfare freeloader, and throw the lot of them out of the country.

    One wonders if the West is going to wake up to the new world we have entered, or adhere to immigration policies dating to a liberal era long since dead.

    It was in 1965, halcyon hour of the Great Society, that Ted Kennedy led Congress into abolishing a policy that had restricted immigration for 40 years, while we absorbed and Americanized the millions who had come over between 1890 and 1920.

    The “national origins” feature of that 1924 law mandated that ships arriving at U.S. ports carry immigrants from countries that had provided our immigrants in the past. We liked who we were.

    Immigration policy was written to reinforce the Western orientation and roots of America, 90 percent of whose population could by 1960 trace its ancestry to the Old Continent.

    But since 1965, immigration policy has been run by people who detest that America and wanted a new nation that looked less like Europe and more like a continental replica of the U.N. General Assembly.

    They wanted to end America’s history as the largest and greatest of Western nations and make her a nation of nations, a new society and a new people, more racially, ethnically, religiously and culturally diverse than any nation on the face of the earth.

    Behind this vision lies an ideology, an idee fixe, that America is not a normal nation of blood and soil, history and heroes, but a nation erected upon an idea, the idea that anyone and everyone who comes here, raises his hand, and swears allegiance to the Declaration of Independence and Bill of Rights becomes, de facto, not just a legal citizen but an American.

    But that is no more true than to say that someone who arrives in Paris from Africa or the Middle East and raises his hand to declare allegiance to the Rights of Man thereby becomes a Frenchman.

    What is the peril into which America and the West are drifting?

    Ties of race, religion, ethnicity and culture are the prevailing winds among mankind and are tearing apart countries and continents. And as we bring in people from all over the world, they are not leaving all of their old allegiances and animosities behind.

    Many carry them, if at times dormant, within their hearts.

    And if we bring into America — afflicted by her polarized politics, hateful rhetoric and culture wars — peoples on all sides of every conflict roiling mankind, how do we think this experiment is going to end?

    The immigration bill moving through the Senate, with an amnesty for 11 to 12 million illegals already here, and millions of their relatives back home, may write an end to more than just the Republican Party. 

Tony Perkins, Family Research Council
May 24, 2013 – Friday

    Ordinarily, America’s Memorial Day is the beginning of our summer holidays. We often observe the day by having local Scout troops place small American flags on the graves of fallen warriors. Many of us make sure to tell our children about service members’ sacrifice and use this time to explain to them the price of liberty. Freedom is not free, we tell them. And so, while we are grateful for a holiday, for extra time for family cookouts, church picnics, sports and games, for auto races, or sailboat regattas, we also recognize a somber undertone to the day.

    Today, our observance of Memorial Day must be tempered with a real disquiet. For the first time in 238 years of American arms, that shield of the republic, our all-volunteer military, is itself a target.

    In the last few months, militant atheizers have gained privileged access to our Defense Department. They are getting a sympathetic hearing from many there. These atheizers boast that they have made progress toward their goal of completely suppressing open expression of Christian faith in our armed forces. They want this and much more. They demand that anyone in uniform who shares his faith, who dares to proselytize, be court-martialed for treason and sedition.

    This anti-American demand is deeply offensive to tens of thousands of our soldiers serving today. To the great World War II generation, it would have seemed we had fallen under a hostile occupation. If you visit the American Cemetery in Normandy, you will see why this is so. There, you can see row upon row of white crosses. They stand like sentinels, on guard. It’s been called “the silent bivouac of the dead.” Especially poignant are the white Stars of David among those crosses.

    Those Jewish soldiers of World War II were doubly motivated to fight the evils of Nazism. They fought bravely for their country and they fought for their fellow Jews who were in danger of extermination. Seeing their headstones among the crosses is a powerful experience. It’s as if our Christian brethren are saying to the world: You’ll have to come through us to get at them.

    Consider the contrast: For years, a Jew-hating army psychiatrist was allowed to sound off about jihad. Maj. Nidal Hasan openly advocated Islamist violence against his fellow Americans, against those serving in the military with him. Those officers who protested against this were ordered to be silent. They were the ones whose careers were at risk.

    If Nidal Hasan had not acted out his murderous theology and taken the lives of fourteen innocent human beings (including one unborn child) at Fort Hood, he would presumably have been permitted to continue spewing his hateful ideology yet today. And he would not have been charged with proselytizing. His actions were sedition. They were treason. But Hasan’s brazen violations of his Oath of Office were condoned, excused, and even protected.

    And because someone opened the gates to real sedition and treason, mass murder stole into Fort Hood.

    The atheizers were not there to silence Nidal Hasan. We never hear them protesting about his rants. Political correctness doesn’t work that way. But the atheizers are trying to suppress the faith of Christians.

    That’s why we initiated a petition to Defense Secretary Chuck Hagel and started the American Hero Defense Fund. Our friend and colleague, retired Lt. Gen. Jerry Boykin, is spearheading this Family Research Council drive to defend the religious freedom of those in our armed forces who have so ably defended our freedom.

    I hope you and your family will truly remember on this Memorial Day. Please remember the sacrifices made by our men and women in uniform over the centuries. Let’s remember those patriot graves. And pass along to the next generation the accounts of their selfless service and valor.

    But this year, please do one thing more: Won’t you join our Christian defense ministry? Give us your prayers, your voice, your support. Write letters to local newspapers. Call in to local talk shows. Make sure your elected representatives know where you stand. Encourage your church’s leader to speak, to engage the culture. Let’s stand with our troops for God and country.


    Then there is the fiscal cost of the failed immigration control policies and laws.


The Fiscal Impact of Immigration

Small-government advocates should oppose amnesty and support selective immigration policies.

By Steven Camarota

May 14, 2013
 
    I have worked on the issue of immigration’s fiscal impact for a long time, having presented my first academic paper on the subject at the annual meeting of the American Sociological Association almost two decades ago. I can thus say with confidence that the Heritage Foundation’s recent report on the fiscal cost of illegal immigrants is the most detailed and exhaustive ever done on this topic.
 

The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer

By and Jason Richwine, Ph.D.
May 6, 2013

Executive Summary

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 Truth Will Out – Holder personally authorized Fox News surveillance

The Truth Will Out
 
    The Framers based the Constitution on science as they understood at the time and their study of history. They were realists who absolutely knew that “justice for all” was the prime requisite for the survival of any government. And, they accurately realized that justice demanded truth. Moving far beyond reason, the truth has been contaminated by those in our midst who seek to destroy the original intention of the Constitution. Only by utilizing the propaganda of lies and deceptions are the politicians that violate their oath of office able to continue their assault on “liberty and justice for all”.
 
    This Memorial Day loyal Americans must not let the sacrifices of all those who paid for our freedom be forgotten. “[W]e [must] take increased devotion . . . . that this Nation under God shall have a new birth of freedom — and that government of the people by the people for the people shall not perish from the earth.”
 
Politics

Holder personally authorized Fox News surveillance

By: John Hayward

5/23/2013

    It’s going to be hard for Attorney General Eric Holder to deploy his standard-issue Incompetence Defense to get out of this one.  He can’t claim he never saw the paperwork when he’s signature is all over it.  Unless maybe he’s going to drop the Sergeant Schultz routine and go for the Colonel Henry Blake gambit, and claim some Radar O’Reilly type at the Justice Department slipped the papers under his pen without telling him what he was signing.

    At any rate, NBC News broke the big story:


Attorney General Eric Holder signed off on a controversial search warrant that identified Fox News reporter James Rosen as a “possible co-conspirator”  in violations of the Espionage Act and authorized seizure of his private emails, a law enforcement official told NBC News on Thursday.

The disclosure of the attorney general’s role came as President Barack Obama, in a major speech on his counterterrorism policy, said Holder had agreed to review Justice Department guidelines governing investigations that involve journalists.

 

“I am troubled by the possibility that leak investigations may chill the investigative journalism that holds government accountable,” Obama said. “Journalists should not be at legal risk for doing their jobs.”


 

    How long would it have taken Eric Holder’s exhaustive review of the Fox News surveillance outrage to discover that Eric Holder was behind it, if a source hadn’t spilled the beans to NBC News? Does NBC News get bugged now?

    Maybe Holder will put himself on paid administrative leave, just like key IRS scandal figure Lois Lerner, who was reportedly given that brutal punishment after refusing to resign today. He recused himself from the Associated Press investigation, without filling out the legally required paperwork.  But he didn’t want to recuse himself from going after Fox News, eh?

    After a bit of embarrassed silence, the Justice Department declared that everybody from the Attorney General on down thinks that freedom of the press is just gosh-darn wonderful, and they wouldn’t dream of doing anything to stifle it:

    A Justice Department spokeswoman did not immediately respond to a request for comment. The Department of Justice later issued a statement about the review of media guidelines: “This review is consistent with Attorney General Holder’s long-standing belief that freedom of the press is essential to our democracy,” it said. “At the same time, the attorney general believes that leaks of classified information damage our national security and must be investigated using appropriate law enforcement tools.  We remain steadfast in our commitment to following all laws and regulations intended to safeguard national security as well as the First Amendment interests of the press in reporting the news and the public in receiving it.”

 

    The law enforcement official said Holder’s approval of the Rosen search, in the spring of 2010, came after senior Justice officials concluded there was “probable cause” that Rosen’s communications with his source, identified as intelligence analyst Stephen Kim, met the legal burden for such searches. “It was approved at the highest levels – and I mean the highest,” said the law enforcement official, who spoke on condition of anonymity. He said that explicitly included Holder.

The surveillance of Rosen, incidentally, included pulling the phone records of his parents.  ”My son and his wife call us all the time, and we talk about grandchildren.  We don’t talk about nuclear proliferation” said his father, attorney Myron Rosen.  ”The fact that they had our phone records, it shows how crazy they are, how desperate.”

Repetitive Failure to Uphold Their Oath of Office

 
Repetitive Failure to Uphold Their Oath of Office
 
    Either the current holder of the highest office of “honor and trust” is woefully incompetent following the advice and directions of enemies of the Constitution or he is complicit in the lies and deceptions decimating nearly every intention of the Framers. Far removed from any semblance of “justice for all”, this tyrant has embarked on an ill-concealed mission to destroy everything that made America great.
 
    The simple question is: Who originally appointed those he is now throwing to the wolves? If he appoints Office of Management and Budget (OMB) Controller Danny Werfel as acting commissioner of the Internal Revenue Service, did he not also appoint Steven Miller? Who appointed Sarah Hall Ingram to head the Tax Exempt division of the IRS, and who appointed her the ObamaCare enforcer?
 
 
Politics

White House defends IRS chief turned ObamaCare enforcer

By: John Hayward
5/20/2013

     In the Obama Administration, deploying the Incompetence Defense is no obstacle to receiving cash rewards and promotions.  Even though the former commissioner of the tax exempt organizations division of the IRS, Sarah Hall Ingram, was – at best – shockingly ignorant of widespread abuse in her department, she’s been promoted to chief enforcer of ObamaCare, and this weekend the White House made it clear that she still has their full support.  From the Washington Times

   A besieged White House dug in its heels Sunday and defended figures at the center of the unfolding Internal Revenue Service scandal while reiterating that President Obama knew nothing of the misdeeds inside the agency.

    White House senior adviser Dan Pfeiffer, appearing on four Sunday morning political talk shows, offered strong support for Sarah Hall Ingram, who led the agency’s tax-exempt division as it admittedly targeted conservative groups. She recently was promoted to chief of the health care reform office, tasked with implementing “Obamacare.

   Critics of the administration expect many more heads to roll as the true scope and intent of the IRS actions come to light, but Mr. Pfeiffer on Sunday strongly defended Ms. Ingram.

   “No one has suggested that she did anything wrong yet,” Mr. Pfeiffer said on “Fox News Sunday.”

   “Before everyone in this town convicts this person in the court of public opinion with no evidence, let’s actually get the facts and make decisions after that. There’s nothing that suggests she did anything wrong,” he said.

     Oh, I think there have been lots of suggestions that Ingram did something wrong.  What Pfeiffer really means is that we don’t have any evidence that she did anything illegal yet.  But under the most charitable interpretation of her conduct, she was a remarkably disconnected manager who claims to have been out of the loop on a massive scandal that numerous other IRS officials were well aware of, including those above her.  This is not a resume that would inspire public confidence in Ingram as head of the ObamaCare enforcement unit.  How do we know there won’t be widespread abuse by “low level rogue employees” in that department, while she remains blissfully ignorant until a massive scandal explodes in 2015 or 2016?

     No one in the chain of command that either coordinated, enabled, or ignored years of abuse has any business working for the IRS in any capacity, let alone a job where they would gain control over an even larger and more intrusive database.  We can afford to let investigations run their full course before we accuse Ingram of willfully inappropriate or criminal activity, but we already know she cannot be trusted with oversight duties, and it is urgently necessary to separate her from them.

     And it’s not just conservative pundits or Republican politicians calling for a thorough housecleaning. This is really just common sense.  Some mixture of malfeasance and supervisory blindness was at work in the IRS.  Neither can be tolerated, let alone rewarded. 

     As the Washington Times notes, the man who took over from Ingram only a couple of weeks ago, Joseph Grant, has already announced his “retirement” in the wake of the scandal.  It’s risible to describe that as a “head rolling,” since there’s no explicit connection to the scandal or declaration of penitence in his announcement.  (Grant was the deputy commissioner of the department during the time when abuses occurred.)  But it’s obviously not normal for someone to “retire” just days after receiving a promotion, and at least he’s out of the management mix going forward.

     When its past actions are questioned, this Administration always whines about “old news” and urges Americans to more “forward.”  A thorough housecleaning at the IRS is a crucial first step forward; nothing less could begin the restoration of public confidence in the agency.  Some of us think it will take more than management turnover to restore such confidence in full, but it’s an obvious beginning.

     We need a new management team of impeccable character and ability ( from the Oval office down and particularly in Congress – added & emphasis by the CftC ), not scandal holdovers who claim they don’t read their email, don’t talk to their subordinates, or aren’t good at math (the memorable admission of IRS official Lois Lerner, who just earned a “bushel of Pinocchios” from the Washington Post fact-checker for her damage control efforts.)  For the moment, the housecleaning can be accomplished without rancor or public humiliation, as long as it happens quickly.  It’s time for everyone else in the chain of command to join Joseph Grant in “retirement.”

Scandal-Tainted MF Global President Still Serving as EPA Financial Adviser

    Before he became president of MF Global, the bankrupt brokerage firm that lost $1.2 billion in client money, Bradley Abelow spent time as New Jersey’s treasurer and former Gov. Jon Corzine’s chief of staff. In those roles, Abelow served alongside Lisa Jackson, who led the state environmental protection department and eventually succeeded Abelow as Corzine’s chief of staff.

    Jackson now directs the Environmental Protection Agency in the Obama administration, and Abelow, despite a full-time job at MF Global, is still serving alongside her. The former Goldman Sachs executive holds the title of chairman for EPA’s Environmental Financial Advisory Board. Even though MF Global is embroiled in a major scandal and under federal investigation, the EPA still lists Abelow on its website as the head of the 27-member board.

    Abelow’s position is unpaid and the board’s work is advisory in nature. According to an EPA publication, the board plays “a vital role in helping EPA consider ways communities can effectively finance their environmental infrastructure costs as well as in exploring ideas for promoting opportunities for the growth of a green economy.”

    The Washington Times first reported Abelow’s role at EPA on Nov. 9, shortly after MF Global declared bankruptcy and revealed the $1.2 billion had gone missing. Since then, federal authorities have been investigating. Corzine and Abelow have also appeared before House and Senate committees to testify.

    During those hearings, not one member of Congress asked about Abelow’s chairmanship of the EPA’s Environmental Financial Advisory Board. The Washington Times reports, “Even as he finds himself the public face of a bankruptcy and admitted to lawmakers that he had no idea how client funds disappeared, Congress and the administration have voiced no public concern about Mr. Abelow’s role advising the $8.6 billion government agency on its finances.”

    In addition to his political ties to Corzine and Jackson, Abelow is also a prominent campaign contributor. The Times, citing data from the Center for Responsive Politics, reported donations of more than $90,000 to Democrat candidates and causes since 2007. Abelow made a $30,800 donation to the Democratic National Committee earlier this year and gave $10,000 to the Democratic Senatorial Campaign Committee last year. He gave the maximum to to President Obama’s this year and for his 2008 campaign.

Repeated Violation of Constitutional Intention Escalates To Crimes Against Working Americans

Repeated Violation of Constitutional Intention Escalates To Crimes Against Working Americans
 
    Many of the liberal pundits reject any comparison of Obama’s complicity in the Benghazi tragedy, the IRS discrimination, and the illegal accessing of phone records with crimes here-to-fore prosecuted. Instead of accountability, the propagandists try to invoke the rationalizations of situation and statistical ethics while completely ignoring the crimes themselves.
 
    Meanwhile the liberal socialist controlled Senate voted to extort an Internet tax from the working public to fund the undeserving to bribe them for their vote. Our domestic enemies in Congress continue to rob us of the freedoms clearly protected by the Bill of Rights.
 
WAKE UP AMERICA!
 

CftC

U.S. Opens Spigot After Farmers Claim Discrimination 

 

Stephen Crowley/The New York Times

Black farmers held a protest outside the Agriculture Department in Washington in 2002 tied to litigation about farm loan discrimination. More Photos »

By
April 25, 2013

     In the winter of 2010, after a decade of defending the government against bias claims by Hispanic and female farmers, Justice Department lawyers seemed to have victory within their grasp.

     Ever since the Clinton administration agreed in 1999 to make $50,000 payments to thousands of black farmers, the Hispanics and women had been clamoring in courtrooms and in Congress for the same deal. They argued, as the African-Americans had, that biased federal loan officers had systematically thwarted their attempts to borrow money to farm.

But a succession of courts — and finally the Supreme Court — had rebuffed their pleas. Instead of an army of potential claimants, the government faced just 91 plaintiffs. Those cases, the government lawyers figured, could be dispatched at limited cost.

    They were wrong.

     On the heels of the Supreme Court’s ruling, interviews and records show, the Obama administration’s political appointees at the Justice and Agriculture Departments engineered a stunning turnabout: they committed $1.33 billion to compensate not just the 91 plaintiffs but thousands of Hispanic and female farmers who had never claimed bias in court.

     The deal, several current and former government officials said, was fashioned in White House meetings despite the vehement objections — until now undisclosed — of career lawyers and agency officials who had argued that there was no credible evidence of widespread discrimination. What is more, some protested, the template for the deal — the $50,000 payouts to black farmers — had proved a magnet for fraud.

     “I think a lot of people were disappointed,” said J. Michael Kelly, who retired last year as the Agriculture Department’s associate general counsel. “You can’t spend a lot of years trying to defend those cases honestly, then have the tables turned on you and not question the wisdom of settling them in a broad sweep.”

     The compensation effort sprang from a desire to redress what the government and a federal judge agreed was a painful legacy of bias against African-Americans by the Agriculture Department. But an examination by The New York Times shows that it became a runaway train, driven by racial politics, pressure from influential members of Congress and law firms that stand to gain more than $130 million in fees. In the past five years, it has grown to encompass a second group of African-Americans as well as Hispanic, female and Native American farmers. In all, more than 90,000 people have filed claims. The total cost could top $4.4 billion.

     From the start, the claims process prompted allegations of widespread fraud and criticism that its very design encouraged people to lie: because relatively few records remained to verify accusations, claimants were not required to present documentary evidence that they had been unfairly treated or had even tried to farm. Agriculture Department reviewers found reams of suspicious claims, from nursery-school-age children and pockets of urban dwellers, sometimes in the same handwriting with nearly identical accounts of discrimination.

Yet those concerns were played down as the compensation effort grew. Though the government has started requiring more evidence to support some claims, even now people who say they were unfairly denied loans can collect up to $50,000 with little documentation.

    As a senator, Barack Obama supported expanding compensation for black farmers, and then as president he pressed for $1.15 billion to pay those new claims. Other groups quickly escalated their demands for similar treatment. In a letter to the White House in September 2009, Senator Robert Menendez of New Jersey, a leading Hispanic Democrat, threatened to mount a campaign “outside the Beltway” if Hispanic farmers were not compensated.

    The groups found a champion in the new agriculture secretary, Tom Vilsack. New settlements would provide “a way to neutralize the argument that the government favors black farmers over Hispanic, Native American or women farmers,” an internal department memorandum stated in March 2010.

     The payouts pitted Mr. Vilsack and other political appointees against career lawyers and agency officials, who argued that the legal risks did not justify the costs.

    Beyond that, they said it was legally questionable to sidestep Congress and compensate the Hispanic and female farmers out of a special Treasury Department account, known as the Judgment Fund. The fund is restricted to payments of court-approved judgments and settlements, as well as to out-of-court settlements in cases where the government faces imminent litigation that it could lose. Some officials argued that tapping the fund for the farmers set a bad precedent, since most had arguably never contemplated suing and might not have won if they had.

     “The fund is not politically accessible, it is only legally accessible,” said David Aufhauser, the Treasury Department’s general counsel from 2001 to 2003. “Otherwise, it is a license to raid the till.”

    A 2010 settlement with Native Americans was contentious for its own reasons. Justice Department lawyers argued that the $760 million agreement far outstripped the potential cost of a defeat in court. Agriculture officials said not that many farmers would file claims.

     That prediction proved prophetic. Only $300 million in claims were filed, leaving nearly $400 million in the control of plaintiffs’ lawyers to be distributed among a handful of nonprofit organizations serving Native American farmers. Two and a half years later, the groups have yet to be chosen. It is unclear how many even exist.

    The Times’s examination was based on thousands of pages of court and confidential government documents, as well as interviews with dozens of claimants, lawyers, former and current government officials and others involved in the cases over the past 14 years. Many officials spoke on the condition of anonymity, citing rules against disclosing internal government deliberations and, in a few cases, the desire not to be drawn into a racially charged controversy.

     Mr. Vilsack has said the compensation effort ushers in “a new chapter of civil rights at U.S.D.A.,” where “we celebrate diversity instead of discriminate against it.”

     In an interview, he said the payments had been fully justified and carefully controlled. Fraud has been a “really, really small part of it,” he added, pointing out that so far, three of every 10 claims had been rejected and only three claimants had been convicted of fraud.

     “We weren’t just writing checks for the heck of it,” Mr. Vilsack said. “People were not treated fairly, and in fact, even today there are damages as a result of folks who weren’t treated fairly.”

     Acting Associate Attorney General Tony West, who supervised the civil division and oversaw the handling of the cases, canceled an interview. Attorney General Eric H. Holder Jr. also declined to comment.

     Instead, the department provided senior officials, permitted to speak only on the condition of anonymity, who said that resolving the lawsuits averted potentially higher costs from an onslaught of new plaintiffs or losses in court. They also said the attorney general had broad discretion to settle litigation. “It was a priority for the administration to resolve the long-standing discrimination cases,” a senior official said, and give “farmers who believed they had been discriminated against a chance to seek redress.” Career Justice Department lawyers, who participated in that interview, declined to answer when asked if they favored the outcome of their cases, saying their advice is confidential by law.

     Senior White House and Justice Department officials also defended the use of the Judgment Fund. “Questions were certainly raised about whether this was something you could use the Judgment Fund to pay for,” a senior White House official said. “They considered the relevant legal standards and concluded it was.”

     Mr. Vilsack blamed disgruntled Agriculture Department employees for the criticism of the payouts, saying some simply refused to acknowledge the pervasiveness of discrimination. “There are a lot of agendas here, and you are opening up a Pandora’s box,” he said.

     But critics, including some of the original black plaintiffs, say that is precisely what the government did when it first agreed to compensate not only those who had proof of bias, but those who had none. “Why did they let people get away with all this stuff?” asked Abraham Carpenter Jr., who farms 1,200 acres in Grady, Ark. “Anytime you are going to throw money up in the air, you are going to have people acting crazy.”

Farmers Claim Discrimination

    Farmers routinely borrow money to carry themselves from high-cost planting season to harvest time; lack of credit can lead to barren fields. The original lawsuit, Pigford v. Glickman, filed in federal court in Washington in August 1997, argued that the Agriculture Department’s credit bureau, now called the Farm Service Agency, routinely denied or limited loans to black farmers while freely distributing them to whites.

     Two government reports that year found no evidence of ongoing, systemic discrimination. The Government Accountability Office reported that 16 percent of minority farmers were denied loans, compared with 10 percent of white farmers, but traced the difference to objective factors like bad credit. An Agriculture Department study also found “no consistent picture of disparity” over the previous two years.

     But the study concluded that decades of discrimination before then had cost African-American farmers significant amounts of land and income. Black farmers gave heart-rending accounts of loan officers who withheld promised money while crops withered, who repossessed their land and sold it to white cronies, who advised them to milk cows for white farmers rather than sow their own crops.

     Written discrimination complaints had fallen on deaf ears at the Agriculture Department, where the civil rights office had been disbanded during the Reagan administration.

     John W. Boyd Jr., a Virginia farmer who leads the National Black Farmers Association, was among those who pressed President Bill Clinton to settle the case. At a White House meeting in December 1997, Mr. Boyd said, he recounted how a loan officer denied him $7,500 and then handed a $150,000 check to a white farmer who had not even filled out an application.

     The same loan officer spat at him, he said, and later claimed that he had missed a spittoon. It was, Mr. Boyd said in an interview, “the most degrading thing that ever happened to me.”

     Just five months after the lawsuit was filed, and without the investigative step of discovery, the Justice Department opened settlement negotiations.

     There were certainly legal reasons to resolve the case. The presiding federal judge, Paul L. Friedman, was clearly unsympathetic to the government’s arguments. Moreover, the Justice Department was barred from appealing his certification of the lawsuit as a class action until after the case was over. That set the stage for a potentially long and costly battle.

     Still, “it was more a political decision than a litigation decision,” said one lawyer familiar with the administration’s stance. “The administration was genuinely sympathetic to the plight of these farmers.”

     Mr. Clinton asked Carol Willis, then a senior adviser to the Democratic National Committee who was known for his expertise in black voter turnout, to get involved. Mr. Willis said the president wanted to make sure his home state, Arkansas, benefited. Mr. Willis said he recruited Othello Cross, a Pine Bluff lawyer, to join the plaintiffs’ legal team.

     “It had been wrong for many years,” Mr. Willis said. “Clinton figured he had to try to right it.”

     So did Judge Friedman.

     He initially limited the class of potential claimants to African-Americans who had farmed between 1981 and 1996 and had previously filed written discrimination complaints. But his final order significantly expanded the class, admitting those who had only “attempted to farm.” And it threw out the requirement for a written bias complaint, stating that an oral complaint was sufficient if someone other than a family member attested to it in an affidavit.

    The Agriculture Department was partly to blame for the lack of records. It routinely discarded failed loan applications after three years, and it had badly mismanaged written discrimination complaints. Ninety percent of the farmers had no records either, plaintiffs’ lawyers said.

    The billion-dollar settlement, the judge’s opinion said, was designed to provide “those class members with little or no documentary evidence with a virtually automatic cash payment of $50,000.” Those with documentary proof could seek higher awards, a tack ultimately chosen by fewer than 1 percent of applicants.

     Justice Department lawyers worried about false claims. But the lawyer familiar with the Clinton administration’s stance said they had decided that “it was better to err on the side of giving money to people who might not qualify if they went through litigation than to deny money to people who actually deserve it.”

     Randi Roth, the settlement’s court-appointed monitor, said that whatever its shortcomings, the accord charted the most efficient legal remedy where records no longer existed. “The formula they agreed to had the checks and balances of an adversarial process with multiple levels of review,” she said.

    John C. Coffee Jr., a Columbia Law School professor and specialist in complex litigation, said that not requiring documentary evidence “was quite unusual, but there were also special circumstances.”

     Still, he said, “I don’t think they realized how much of an incentive they were creating for claims to multiply. It is a little bit like putting out milk for a kitten. “The next night, you get 15 kittens.”

‘It Just Went Wild’

    Delton Wright, a Pine Bluff justice of the peace, recalled what happened after word of the settlement reached his impoverished region: “It just went wild. Some people took the money who didn’t even have a garden in the ground.” He added, “They didn’t make it hard at all, and that’s why people jumped on it.”

     Mr. Wright, whose family owns farmland outside Pine Bluff, won his claim. So did two other applicants whose claims were virtually identical to his, with the same rounded handwriting, the same accusations of bias and similar descriptions of damages suffered.

     Now 57, with his memory weakened by what he said was a recent stroke, Mr. Wright said he could not recall details of the discrimination he encountered, much less explain the apparent duplicate claims.

     But Mr. Cross, the Pine Bluff lawyer, has his suspicions. “It got out of control,” said Mr. Cross, adding that he had filed about 1,500 claims, including Mr. Wright’s and the apparent duplicates. He estimated that up to 15 percent of Arkansas claims were fraudulent.

     Claimants described how, at packed meetings, lawyers’ aides would fill out forms for them on the spot, sometimes supplying answers “to keep the line moving,” as one put it.

     Even his own staff was complicit, Mr. Cross said; he discovered that four employees had been slipping unverified claims into stacks of papers that he signed. He did not inform the court monitor, he said, because “the damage was done.”

    On two floors of the Cotton Annex building in Washington, a 300-member team from the Farm Service Agency reviewed claims before adjudicators rendered their final decisions. In recent interviews, 15 current and former Agriculture Department employees who reviewed or responded to claims said the loose conditions for payment had opened the floodgates to fraud.

     “It was the craziest thing I have ever seen,” one former high-ranking department official said. “We had applications for kids who were 4 or 5 years old. We had cases where every single member of the family applied.” The official added, “You couldn’t have designed it worse if you had tried.”

     Carl K. Bond, a former Agriculture Department farm loan manager in North Carolina, reviewed thousands of claims over six years.

     “I probably could have got paid,” said Mr. Bond, who is black. “You knew it was wrong, but what could you do? Who is going to listen to you?”

     Accusations of unfair treatment could be checked against department files if claimants had previously received loans. But four-fifths of successful claimants had never done so. For them, “there was no way to refute what they said,” said Sandy Grammer, a former program analyst from Indiana who reviewed claims for three years. “Basically, it was a rip-off of the American taxpayers.”

     The true dimensions of the problem are impossible to gauge. The Agriculture Department insists that the names and addresses of claimants are protected under privacy provisions. But department data released in response to a Freedom of Information request by The Times are telling. The data cover 15,601 African-Americans who filed successful claims and were paid before 2009.

     In 16 ZIP codes in Alabama, Arkansas, Mississippi and North Carolina, the number of successful claimants exceeded the total number of farms operated by people of any race in 1997, the year the lawsuit was filed. Those applicants received nearly $100 million.

     In Maple Hill, a struggling town in southeastern North Carolina, the number of people paid was nearly four times the total number of farms. More than one in nine African-American adults there received checks. In Little Rock, Ark., a confidential list of payments shows, 10 members of one extended family collected a total of $500,000, and dozens of other successful claimants shared addresses, phone numbers or close family connections.

    Thirty percent of all payments, totaling $290 million, went to predominantly urban counties — a phenomenon that supporters of the settlement say reflects black farmers’ migration during the 15 years covered by the lawsuit. Only 11 percent, or $107 million, went to what the Agriculture Department classifies as “completely rural” counties.

     A fraud hot line to the Agriculture Department’s inspector general rang off the hook. The office referred 503 cases involving 2,089 individuals to the F.B.I.

    The F.B.I. opened 60 criminal investigations, a spokesman said, but prosecutors abandoned all but a few for reasons including a lack of evidence or proof of criminal intent. Former federal officials said the bar for a successful claim was so low that it was almost impossible to show criminality.

    In Arkansas, prosecutors rejected a test case against a Pine Bluff police officer who had admitted lying on his claim form. Paula J. Casey, the United States attorney in Arkansas in 2000, said that singling out one individual raised questions of selective prosecution.

     “The defendant could go to the jury and say: ‘Everybody else did this. Why am I standing here?’ ” she said.

    The claim period ended in late 1999, although the adjudication process dragged on for a dozen years. But the gusher of claims had only begun.

     “Once those checks started hitting the mailboxes, people couldn’t believe it,” said Mr. Wright, the Pine Bluff justice of the peace. “Then it dawned on them. ‘If Joe Blow got a check, I can get one.’ ”

Lawmakers Turn Up the Heat

    Some 66,000 claims poured in after the 1999 deadline. Noting that the government had given “extensive” notice, Judge Friedman ruled the door closed to late filers. “That is simply how class actions work,” he wrote.

    But it was not how politics worked. The next nine years brought a concerted effort to allow the late filers to seek awards. Career Agriculture Department officials warned that they might be even more problematic than initial claimants: in one ZIP code in Columbus, Ohio, nearly everyone in two adjoining apartment buildings had filed, according to the former high-ranking agency official.

    President George W. Bush was unreceptive to farmers’ repeated protests. But Congress was not: legislators from both parties, including Mr. Obama as a senator in 2007, sponsored bills to grant the late filers relief.

     Mr. Boyd said Mr. Obama’s support led him to throw the backing of his 109,000-member black farmers’ association behind the Obama presidential primary campaign. Hilary Shelton, the N.A.A.C.P.’s chief lobbyist, said Mr. Obama’s stance helped establish him as a defender of the concerns of rural African-American communities.

     Public criticism came primarily from conservative news outlets like Breitbart.com and from Congressional conservatives like Representative Steve King, Republican of Iowa, who described the program as rife with fraud. Few Republicans or Democrats supported him. Asked why, Mr. King said, “Never underestimate the fear of being called a racist.”

     Congress finally inserted a provision in the 2008 farm bill allowing late filers to bring new lawsuits, with their claims to be decided by the same standard of evidence as before. The bill also declared a sense of Congress that minority farmers’ bias claims and lawsuits should be quickly and justly resolved.

    Congress overrode a veto by Mr. Bush, who objected to other provisions in the bill. But as Mr. Bush left Washington, Congress had appropriated only $100 million for compensation, hardly enough to pay for processing claims.

    Within months of taking office, President Obama promised to seek an additional $1.15 billion. In November 2010, Congress approved the funds. To protect against fraud, legislators ordered the Government Accountability Office and the Agriculture Department’s inspector general to audit the payment process.

     But simultaneously, the Agriculture Department abandoned the costly and burdensome review process it had applied to earlier claims. As a result, according to internal government memos, the percentage of successful claims is expected to exceed that in the original 1999 settlement. More than 40,000 claims have been filed and are under review.

    In November, the G.A.O. concluded that antifraud provisions provided “reasonable assurance” of weeding out false claims, saying more than 3,100 suspicious applications had been identified. But as before, it noted, late filers need not document claims, leaving adjudicators to rely on assertions that they have “no way of independently verifying.”

Few Claims, Big Payout

     The Bush Justice Department had rebuffed all efforts to settle the parallel discrimination suits brought by Native American, Hispanic and female farmers. But now, the Obama administration’s efforts to compensate African-American farmers intensified pressure from members of Congress and lobbyists to settle those cases as well.

    Within the administration, Secretary Vilsack, a former Iowa governor who had briefly run for president, found an ally in Mr. West, who had been named an assistant attorney general after serving as a major Obama fund-raiser. Sweeping settlements with the three groups, Mr. West argued, would eliminate legal risks and smooth relations between the Agriculture Department and important constituencies.

     The Native-American case was clearly problematic for the government. The federal judge overseeing the case, Emmet G. Sullivan, had already certified the plaintiffs as a class, although only to seek changes in government practices and policies. He postponed a decision on whether they could seek monetary damages as a class.

    But Justice Department litigators were far from unarmed. If they lost on damages, case law suggested that the decision might be reversed. Depositions had revealed many of the individual farmers’ complaints to be shaky. And federal judges had already scornfully rejected the methodology of the plaintiffs’ expert, a former Agriculture Department official named Patrick O’Brien, in the women’s case.

     Mr. O’Brien contended that white farmers were two to three times as likely as Native Americans to receive federal farm loans in the 1980s and 1990s than were other farmers. But the government’s expert, Gordon C. Rausser, a professor of economics and statistics at the University of California, Berkeley, had produced a 340-page report stating that Mr. O’Brien’s conclusions were based “in a counter-factual world” and that Native Americans had generally fared as well as white male farmers.

    Professor Rausser was astounded when, with both sides gearing up for trial in late 2009, the government began settlement negotiations. “If they had gone to trial, the government would have prevailed,” he said.

     “It was just a joke,” he added. “I was so disgusted. It was simply buying the support of the Native-Americans.

    Agriculture officials predicted that only 5,300 Native Americans were likely to file claims. The plaintiffs’ lawyers, whose fees were to be based on a percentage of the settlement, estimated up to 19,000 claims.

    Only 4,400 people filed claims, with 3,600 winning compensation at a cost of roughly $300 million. That left $460 million unspent — of which roughly $400 million under the terms of the settlement must be given to nonprofit groups that aid Native American farmers.

    Ross Racine, the director of the Intertribal Agricultural Council, based in Montana, said his organization, with an annual budget of just $1 million, is perhaps the biggest eligible group. But many others are lining up to share the windfall, he said.

     “Everybody is looking at this money on the table and saying, ‘Give me some because I am a good guy,’ ” he said.

     The remaining $60.8 million will go to the plaintiffs’ lawyers, led by the Washington firm Cohen, Milstein, Sellers & Toll. In court papers, the firm argued that the size of the payment was justified partly by the fact that the settlement nearly equaled the maximum estimate of economic damages. Joseph M. Sellers, the lead counsel, acknowledged the unspent amount was unexpectedly big. But “absent a court order,” he said, “we don’t intend to return it.”

 ‘Divine Intervention’

    On Feb. 19, 2010, Alan Wiseman, a lawyer for the Hispanic farmers, strode into Federal District Court in Washington unusually upbeat. “Sometimes,” he told Judge James Robertson, “it takes divine intervention” to move the government.

     Over the past decade, his case had not gone well. Nor had the parallel lawsuit brought by female farmers.

     Judge Robertson had refused to certify either group as a class. The United States Court of Appeals had upheld him, stating in 2006 that the Hispanic plaintiffs had been denied loans “for a variety of reasons, including inadequate farm plans and lack of funds.” Nor had female farmers proved a pattern of bias, the court found.

     The Justice Department’s lawyers had definitively ruled out any group-style settlement. “Some of these folks have never made a loan payment in their entire history with U.S.D.A.,” Lisa A. Olson, the lead government litigator against the 81 Hispanic plaintiffs, told Judge Robertson in August 2009. “There may even be folks who are under criminal investigation.”

     Michael Sitcov, assistant director of the Justice Department’s federal program branch, told the judge that senior department officials agreed with career litigators that the cases should be fought one by one.

     But members of the Congressional Hispanic caucus and a group of eight Democratic senators, led by Mr. Menendez, were lobbying the White House to move in the opposite direction. They grew increasingly agitated as the plaintiffs’ cases appeared to falter.

     In a letter to Mr. Obama in June 2009, the senators noted that black farmers stood to receive $2.25 billion in compensation, but that Hispanic farmers, who alleged the same kind of discrimination, had gotten nothing. Should that continue, Mr. Menendez wrote that September, “Hispanic farmers and ranchers, and their supporters, will be reaching out to community and industry leaders outside of the Beltway in order to bring wider attention to this problem.”

     The issue came to a head after the Supreme Court refused to reopen the issue of class certification. The next month, on Feb. 11, 2010, Daniel J. Meltzer, principal deputy White House counsel, held the first of three meetings at which resolution of the case was discussed, records and interviews show. Among the attendees were senior Justice and Agriculture Department officials, including Mr. West, Associate Attorney General Thomas J. Perrelli, and Krysta Harden, then the assistant agriculture secretary for Congressional relations.

    Settlement negotiations began the next week. Judge Robertson expressed surprise at the news, “given the history of the case.”

     The decision to compensate potentially tens of thousands of Hispanics and women out of the Judgment Fund averted what was likely to be an uphill struggle with Congress. Nearly a year after the White House had asked for money to compensate the second wave of African-American farmers, Congress was still sitting on its hands. But there was sharp disagreement within the government over whether the claims from Hispanics and women met the Judgment Fund’s “imminent litigation” test.

     On the one hand, it was possible that absent a settlement, some people now filing administrative claims might have sued. Judge Robertson was expected to allow new plaintiffs for several more months. Although only 10 women had sued, their lawyers had obtained affidavits alleging discrimination from 2,000 others. Attorneys for the 81 Hispanic farmers also raised the vague specter of tens of thousands of plaintiffs.

     Even so, 10 years had passed since the litigation began. To some administration officials, the prospect of a huge last-minute rush seemed unlikely.

    In agreeing to the payout, the government did, for the first time, impose a greater evidentiary burden. While one major category of claimants — those who said their loan applications had been unfairly denied — remained eligible for payments of up to $50,000 without any documentation, others were required to produce written evidence that they had complained of bias at the time. The Hispanic plaintiffs were indignant.

     Adam P. Feinberg, who represents some of them, said: “Once the government puts a program in place for one racial group, even if it decides it is too generous, it cannot adopt a different set of restrictions for another racial group. It’s outrageous.”

    The claims process opened in late September, six weeks before the election. In the weeks before the March 25 deadline, facing far fewer claimants than expected, the Agriculture Department instructed processors to call about 16,000 people to remind them that time was running out, despite internal disquiet that the government was almost recruiting claims against itself. The deadline was then extended to May 1.

    So far, about 1,900 Hispanics and 24,000 women have sought compensation, many in states where middlemen have built a cottage industry, promising to help win payouts for a fee.

    Last October, a court-appointed ombudsman wrote that hundreds, perhaps thousands, of people had given money to individuals and organizations in the belief that they were reserving the right to file a claim under the second settlement for black farmers, only to learn later that their names had never been forwarded to the authorities. People familiar with that statement said it was directed in part at Thomas Burrell, a charismatic orator and the head of the Black Farmers and Agriculturalists Association, based in Memphis.

    Mr. Burrell has traveled the South for years, exhorting black audiences in auditoriums and church halls to file discrimination complaints with his organization’s help, in exchange for a $100 annual membership fee.

     In an interview last month, Mr. Burrell said he had dedicated his life to helping black farmers after biased federal loan officers deprived him of his land and ruined his credit. He said his organization had misled no one, and had forwarded the names of all those eligible and willing to file claims.

     “I have never advocated anybody file a false claim,” he said. “I have worked almost pro bono for this cause.”

     On a recent Thursday at the Greater Second Baptist Church in Little Rock, several hundred African-Americans listened intently as Mr. Burrell told them they could reap $50,000 each, merely by claiming bias. He left out the fact that black men are no longer eligible, and that black women are eligible only if they suffered gender, not racial, bias.

     “The Department of Agriculture admitted that it discriminated against every black person who walked into their offices,” he told the crowd. “They said we discriminated against them, but we didn’t keep a record. Hello? You don’t have to prove it.”

     In fact, he boasted, he and his four siblings had all collected awards, and his sister had acquired another $50,000 on behalf of their dead father.

     She cinched the claim, he said to a ripple of laughter, by asserting that her father had whispered on his deathbed, “I was discriminated against by U.S.D.A.”

     “The judge has said since you all look alike, whichever one says he came into the office, that’s the one to pay — hint, hint,” he said. “There is no limit to the amount of money, and there is no limit to the amount of folks who can file.”

    He closed with a rousing exhortation: “Let’s get the judge to go to work writing them checks! They have just opened the bank vault.”

Sarah Cohen contributed reporting, and Kitty Bennett and Ashley Southall contributed research.

Shades of Solyndra multiplied!

Agriculture Department reviewers found many suspicious claims
for compensation, some from nursery-school-age children. 
More Photos »

Social Security Program Statistics

Improper Payments Experience

The chart below* shows the improper payment experience for the SSI program for FYs 2009 ‑ 2011. We calculate the overpayment rate by dividing overpayment dollars by dollars paid.

SSI Improper Payments Experience FY 2009 – FY 2011 ($ in millions) including fraud and abuse
                                            FY 2009            FY 2010        FY 2011
Total Payments Dollars       $48,294           $50,276        $51,654
Overpayments Dollars         $4,040            $3,344          $3,791
Target Rate                          ≤4.00%           ≤8.40%          ≤6.70%
Actual Rate                          8.36%              6.65%           7.34%

Note: Total Payments represent estimated program outlays while conducting our payment accuracy reviews and may vary from actual outlays.

Historical data is also available in Excel format by clicking here.

*For more information regarding this statistical analysis, please visit our Performance and Accountability Report.

Improper Payments Targets

The chart below details the target SSI goals with respect to improper payments for FYs 2012 – 2014.

SSI Improper Payments Reduction Outlook FY 2012 – FY 2014 ($ in millions) including fraud and abuse 
                            FY 2012               FY 2013                FY 2014
                            Projected              Projected             Projected
                            Payments             Payments             Payments
                            Rate                      Rate                     Rate
Total                    $55,254                $57,875                $60,351  
Overpayments    $2,763 ≤5.00%    $2,894 ≤5.00%       $3,018 ≤5.00%

This data is also available in Excel format by clicking here.

The above table is for Social Security alone. Add to that all other welfare fraud and abuse in HUD, Agriculture (food stamps), Medicaid, the Obamaphones, etc. and there is a simple answer to our ballooning National debt that Congress would have us ignore.

 

The Fiscal Impact of Immigration

The Fiscal Impact of Immigration

Small-government advocates should oppose amnesty and support selective immigration policies.

By Steven Camarota

May 14, 2013
 
    I have worked on the issue of immigration’s fiscal impact for a long time, having presented my first academic paper on the subject at the annual meeting of the American Sociological Association almost two decades ago. I can thus say with confidence that the Heritage Foundation’s recent report on the fiscal cost of illegal immigrants is the most detailed and exhaustive ever done on this topic.
 
    The report’s lead author is Robert Rector, intellectual godfather of welfare reform. Rector finds that illegal-immigrant households use about $55 billion more in services than they pay in taxes each year. Under the Schumer-Rubio bill, they would begin to get permanent legal status (green cards) in about ten years and would access more programs; then, the annual costs would balloon to $106 billion a year. The total fiscal costs over the lifetime of illegal immigrants, if they receive amnesty, would be $6.5 trillion. Some, even on the right, have criticized his analysis, but the basic findings are unassailable for reasons I will explain.
 
    In the modern American economy, those with relatively little education (immigrant or native) earn modest wages on average and make modest tax contributions. Their low average incomes mean that they or their children can often access welfare and other means-tested programs. As a group, the less educated use more in services than they pay in taxes. Anyone who argues otherwise is either lying or grossly uninformed.
Education matters so much to the illegal-immigration debate because all researchers agree that about half of adult illegal immigrants have less than a high-school education, and another quarter have only a high-school education. The Heritage study identifies this as the key reason that letting illegal immigrants stay creates huge fiscal costs. As illegal immigrants are on average only 34 years old, the cost over the next five decades will be enormous.
 
    As the Heritage study points out, the average household in America receives more than $31,000 in government benefits and services — federal, state, and local, minus pure public goods such as defense and interest on the debt. Very roughly, this is the median income of a household headed by an immigrant with a high-school education or less. There is no way for these households to pay enough in taxes to cover even the average consumption of public services.
 
    What’s more, these households are relatively large and on average receive a good deal more in public services than $31,000. Until government is cut by at least half, the less educated will be a significant fiscal drain. This does not make the less educated bad people. It simply reflects the realities of the modern American economy and the existence of a huge administrative state.
 
    The accompanying figure shows welfare use and income-tax liability for households headed by an immigrant who has lived here for 20 years, and who thus is not a new arrival.
 
    The figure shows that 63 percent of households headed by immigrants who have not completed high school and have lived here for 20 years access one or more welfare programs, and 68 percent have zero federal income liability. Of households headed by an immigrant with only a high-school education (and who has lived here for 20 years), 49 percent use welfare and about half have no federal income-tax liability. While not a fully developed model like the Heritage study, the figure demonstrates why less educated immigrants are on average a net fiscal drain, even after they have been here for two decades.
 
    It is worth pointing out that 86 percent of immigrant households accessing the welfare system have at least one worker. But working does not eliminate one’s ability to collect welfare, particularly non-cash welfare and other means-tested programs, if one’s income is low enough.
 
    The graph includes both legal and illegal immigrants, which actually reduces the welfare use rates somewhat. That is, less educated legal immigrants have even higher welfare use than less educated illegal immigrants. This is why Heritage’s study finds that giving illegal immigrants legal status raises costs dramatically.
 
    Proponents of amnesty, led by the Cato Institute, have offered some rather silly arguments to attack Heritage. First, some critics contend that less educated immigrants are no worse for the nation’s fisc than less educated native-born Americans. This is mostly true. But it in no way justifies allowing into the country additional less educated immigrants, who will compound the problem.
 
    Some also argue that Rector’s methodology is non-standard because it looks at taxes paid and services used by households rather than individuals. In fact, this is the standard way to look at the issue. The National Research Council (NRC) used households in some of the fiscal analyses it did of immigrants, as did the Urban Institute in its tax studies in 1995 and 2006. Princeton economist Thomas Espenshade also used households in his fiscal analysis of New Jersey’s immigrants.
 
    The late Julian Simon, who was at Cato and shaped the institute’s views of immigration, used this approach as well, with data from the 1970s. But now that the numbers do not come out positive, Cato does not like Simon’s method. The way Heritage looked at the fiscal impact of immigrants is the main way most researchers have done this kind of work.
 
    The primary concern about looking at households is that this approach includes U.S.-born children, who critics argue should not be counted. But Simon himself pointed out that the fiscal impact must include both the immigrant and the family “he brings or acquires.” After all, the children are here only because their parents have been allowed into the country. It is also worth noting that the NRC study in 1997 did an analysis that excluded U.S.-born children, and it still found that less educated immigrants were a large fiscal drain.
 
    Others argue that because the Schumer-Rubio bill limits welfare access for the first ten years after legalization, there is nothing to worry about. But the Heritage study shows that illegal-immigrant households already receive about $4,500 a year on average from means-tested programs. The U.S.-born children of illegal immigrants have access to all programs, the ban does not apply to every program, and the administration of these programs is far from airtight. Finally, as the Heritage study makes clear, when the ten-year window expires, the costs explode.
 
    Another criticism of the Heritage study is that it does not take into account that the legalized illegal immigrants will do better over time. This is simply false; the Heritage study does assume that incomes will rise both with legalization and over time. But this does not mean that illegal immigrants will come even close to providing a net fiscal benefit to the nation. As the accompanying graph makes clear, even less educated immigrants who have lived in the United States for 20 years have very high welfare use and very low tax liability. Heritage’s findings simply reflect this fact.
 
    Probably the main argument of critics is that the economic benefits we gain from having access to immigrant labor will offset the fiscal costs. There is simply no evidence for this. The National Research Council study mentioned above, which was authored by many of the leading economists in the field, is the only study of which I am aware that tried to measure both the economic impact and the fiscal impact of all immigrants. That study found that the economic gain to the native-born from all immigrants was smaller than the fiscal drain created by all immigrant households. And that finding was for all immigrants, not only illegal immigrants, who have on average just ten years of schooling.
 
    In a recent paper for my organization, the nation’s top immigration economist, Harvard’s George Borjas, summarizes the economic literature and observes, “Immigration is primarily a redistributive policy.” As Borjas explains, the immigrants themselves may benefit a great deal by coming to America, but the gain to natives from illegal immigration is estimated at 0.06 percent of GDP: six one-hundredths of 1 percent.
 
    To assume that immigration creates large gains to natives, one must invent benefits that are not demonstrated in the academic literature. The worst example of ignoring the immigration literature is a widely cited op-ed piece by former McCain adviser Douglas Holtz-Eakin. I published a long critique of his article here.
 
    The central point of Holtz-Eakin’s “dynamic analysis” is the contention that immigration-induced population growth, by itself, will have a positive impact on the economy and public coffers. But to reach his conclusion, Holtz-Eakin ignores the economic literature showing that immigration only slightly increases the income of natives. He also ignores the literature on development indicating that population growth does not increase per capita GDP growth. Worst of all, he ignores the research that has examined the actual impact of immigration on public coffers, which shows that education at arrival is the key determinant of immigrants’ fiscal impact.
 
    To offset the enormous fiscal costs that the less educated create, illegal immigration would have to dramatically increase the income of natives. There is simply no objective research showing this is the case. Of course, immigration does make the economy larger. But, as Borjas points out, of the increase in the size of economy that immigration creates, “97.8 percent goes to the immigrants themselves in the form of wages and benefits.”
 
    It is true that immigrants came to America 100 years ago and did not create a large fiscal drain. But government was a tiny fraction of what it is today, so the arrival of low-income immigrants could not create a large fiscal drain. Heritage’s study, as well as common sense, makes clear that advocates of smaller government have to oppose amnesty and support very selective immigration policies until the day that government spending is cut dramatically. Otherwise the fiscal cost will be enormous.
 
Steven Camarota is director of research at the Center for Immigration Studies in Washington, D.C.
 
 

The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer

By and Jason Richwine, Ph.D.
May 6, 2013

Executive Summary

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.

Introduction

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.[1] 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.[2] 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.[3]

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.[4] (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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.[5]

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.[6]

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.[7]

 

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.[8]

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.[9]

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.[10]

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.[11]

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.[12] (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.[13]

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.[14] 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.[15]) 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.[16] 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.[17]

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.[18] 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.[19]

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.[20]

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,”[21] 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.[22] (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.[23] Following that framework, the present study:

  1. Excludes public goods costs such as defense and interest payments on government debt;
  2. 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.[24]
  3. Includes the welfare and educational costs of immigrant and non-immigrant minor children and assigns those costs to the child’s household;
  4. Assigns the welfare and educational costs of minor U.S.-born children of immigrant parents in the immigrant household; and
  5. 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.[25] 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.[26] 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.[27] 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).[28] 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.[29]

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.[30]

 

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.[31] 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.[32]

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.[33] 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.[34]

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.[35]

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.[36] (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.[37] 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.[38]

Table 8 and Chart 11 show the aggregate fiscal balance for all unlawful immigrant households in the three stages.[39] All of the figures in Table 8 and Charts 10 and 11 are adjusted for future inflation and presented in 2010 constant dollars.[40]

  • 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.[41] 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.[42] (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.[43] 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.[44]

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.[45] 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.[46] 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.[47] 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.[48] 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.[49]

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.[50] 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.[51]

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.[52]

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.

  1. 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.[53]
  2. Cheating in Amnesty. In the 1986 amnesty, an estimated 25 percent of the amnesties granted were fraudulent.[54] 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.
  3. 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.)
  4. 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.
  5. 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.
  6. 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.
  7. 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

  1. 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.
  2. 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.
  3. 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.[55] 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.[56]

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.[57] 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.[58] 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[59] 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.[60] 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.

Policy Issues

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.[61] immigration policy should be changed in the following ways to reduce the costs of unlawful and low-skill immigration to the taxpayer:

  1. 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.
  2. 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.
  3. 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.
  4. Ensure that any guest worker program is truly temporary and not a gateway to welfare entitlements.[62] 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.

  5. Reduce the number of legal permanent residence visas based on kinship and increase the number of visas allocated to high-skilled workers.[63] 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.

Conclusion

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.

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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.

Accounting Framework

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.[64] 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.[65]
  • 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.[66] 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.

Household-Based Analysis

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 Sources

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.[67]

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.[68]

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.[69]

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.[70]

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).[71] Additional data on public school attendance were taken from the October 2010 CPS.[72] Data on household expenditure were taken from the Bureau of Labor Statistics Consumer Expenditure Survey (CEX) for 2010.[73]

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.[74]

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.[75] 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.”[76]

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.[77] Data on Medicaid expenditures in institutional long-term care facilities were taken from “Medicare & Medicaid Statistical Supplement,” 2011 Edition.[78]

Data on the education levels of elderly persons in institutional long-term care facilities were taken from the National Long Term-Care Survey (NLTCS).[79] 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.[80]

 

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.[85]

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.[86]

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.[87] 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.[88]

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.[89]

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.[90] 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.[91]

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.[92]

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.[93] MSIS data and other data sources were used to determine the aggregate Medicaid spending going to elderly persons in nursing homes.[94] 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.[95] 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.[96]

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.[97]

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.[100] 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.[101]

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.[102]

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.[103]

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.[104] 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.[105] 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.[106] 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.[107] 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.[108] 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.[109] 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.[110]

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.

Revenues

  • 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.

Revenues

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,”.[113] 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.[114]

Non-Rivalrous Consumption. Everyone in a given community can use the good; its use by one person will not diminish its utility to others.
  • 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.”[115]

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.”[116] 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.[117] 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
References
 
[1] Michael Hoefer, Nancy Rytina, and Bryan Baker, “Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2011,” U.S. Department of Homeland Security, Office of Immigration Statistics, Population Estimates, March 2012, http://www.dhs.gov/xlibrary/assets/statistics/publications/ois_ill_pe_2011.pdf (accessed April 18, 2013). 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.

[2] 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.

[3] 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.

[4] 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.

[5] 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.

[6] 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).

[7] 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.

[8] 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.

[9] George J. Borjas, Heaven’s Door: Immigration Policy and the American Economy (Princeton, N.J.: Princeton University Press, 1999), p. 27.

[10] Ibid., p. 8.

[11] See Appendix Tables 1, 2A, 2B, and 2C.

[12] This figure includes persons in nursing homes. See Appendix A.

[13] 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.

[14] This figure includes property income earned by the government such as sale of assets or interest earned on assets.

[15] For example, the Census Bureau assigns Medicare costs in this manner in the Current Population Survey.

[16] 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.

[17] 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).

[18] National Research Council, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration (Washington, D.C.: National Academy Press, 1997), p. 303.

[19] 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.

[20] National Research Council, The New Americans, pp. 302, 303.

[21] Paul A. Samuelson, “The Pure Theory of Public Expenditure,” Review of Economics and Statistics, Vol. 36, No. 4 (November 1954), pp. 387–389.

[22] National Research Council, The New Americans, pp. 302, 303.

[23] 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.

[24] 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.

[25] 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.

[26] 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.

[27] No unlawful immigrant adults would be enrolled in government medical programs such as Medicaid and Medicare.

[28] 2010 was also a recession year; in a non-recession year, the average household would probably not have a fiscal deficit.

[29] 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.

[30] 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).

[31] 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.

[32] 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.

[33] The analysis assumes that, on average, the benefits would be one-third that amount during the interim period.

[34] Figures include post-recession adjustments.

[35] See Appendix D for details.

[36] All figures are in 2010 dollars and include all post-recession adjustments.

[37] 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.

[38] The figures include all post-recession adjustments.

[39] 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.

[40] All figures include post-recession adjustments. The estimated costs for Obamacare premium and cost-sharing subsidies are set at 2016 levels.

[41] 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.

[42] This figure includes all post-recession adjustments.

[43] This number could be expected to rise given future medical advances.

[44] 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.

[45] The analysis assumes that 5 percent of amnesty recipients would emigrate before retirement. The figures include all post-recession adjustments.

[46] The figures do not include any costs generated by the children of amnesty recipients after age 18.

[47] 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).

[48] 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.

[49] 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.

[50] 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, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareMedicaidStatSupp/2011.html (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).

[51] 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.

[52] 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.)

[53] 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.

[54] 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.

[55] 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.

[56] 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.

[57] National Research Council, The New Americans, p. 151.

[58] 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.

[59] 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).

[60] 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.

[61] 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.

[62] 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.

[63] 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.

[64] 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.

[65] 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.

[66] 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.

[67] U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2013: Historical Tables, (accessed April 5, 2013).

[68] 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).

[69] 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).

[70] U.S. Census Bureau, Federal, State, and Local Governments: 1992 Government Finance and Employment Classification Manual, http://ftp2.census.gov/govs/class/classfull.pdf (accessed April 24, 2013).

[71] 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).

[72] The analysis used an electronic version of the October 2010 CPS data from the National Bureau of Economic Research. See ibid.

[73] U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey 2010, (accessed April 8, 2013).

[74] 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).

[75] Congressional Research Service, “Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY 2002–FY 2004.”

[76] 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.”

[77] 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.

[78] U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, “Medicare & Medicaid Statistical Supplement,” 2011 Edition, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareMedicaidStatSupp/2011.html (accessed April 23, 2013).

[79] 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.

[80] 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).

[81] 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.

[82] 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.

[83] 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.

[84] 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.

[85] U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2006: Analytical Perspectives, p. 301.

[86] Ibid.

[87] U.S. Census Bureau, Federal State and Local Governments: 1992 Government Finance and Employment Classification Manual, sections 3.31 and 7.24.

[88] National Research Council, The New Americans, p. 308.

[89] 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).

[90] Data on attendance in public primary and secondary schools were taken from the October 2010 CPS.

[91] 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.

[92] Medicaid benefits in the CPS vary by state and beneficiary class.

[93] 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.

[94] Additional information on Medicaid spending is available from the authors on request.

[95] “CBO’s February 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage,”

(accessed April 23, 2013).

[96] This roughly matches CBO numbers.

[97] 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.

[98] 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).

[99] Ibid., pp. 29–33.

[100] 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.

[101] National Research Council, The New Americans, p. 272.

[102] Ibid., p. 304.

[103] Ibid.

[104] 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).

[105] 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).

[106] The estimate that half of this tax was paid by business was provided by the Tax Foundation.

[107] 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.

[108] 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, http://content.healthaffairs.org/content/25/6/1700.full (accessed April 23, 2013).

[109] 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).

[110] 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).

[111] U.S. Census Bureau, Historical Income Tables: People, Table P-24, (accessed April 23, 2013).

[112] Ibid., Table P-32, (accessed April 23, 2013).

[113] Samuelson, “The Pure Theory of Public Expenditure,” pp. 387–389.

[114] 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.

[115] 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).

[116] 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.

[117] National Research Council, The New Americans, p. 303.

 

The High Cost of Cheap Labor

 

 

August 2004
 

Table of Contents
Executive Summary
A Complex Fiscal Picture
Policy Implications
Summary Methodology
Introduction
Why Study the Fiscal Impact of Illegals?
Methodology
Data Source and General Principles
Estimated Tax Payments
Assigning Costs by Household
Adjustment for Under-Reporting in the CPS
Findings
Demographic Overview
Estimated Tax Payments
Costs by Household
Balance of Tax and Cost
The Fiscal Implications of Amnesty
Comparisons to Other Studies
Conclusion
Appendix
About the Author
 


About the Author

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.

    Policy Implications
    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.

    Summary Methodology
    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.


     

    Introduction

    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.


     

    Methodology

    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 http://www.census.gov/prod/2003pubs/fas02.pdf. 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,
    http://www.whitehouse.gov/omb

    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
    Issues.

    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 http://www.healthaffairs.org, 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.


     

    Findings

    Demographic Overview

     

  • 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


     

    Conclusion

    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.


     

    Appendix

    Appendix Table 1Appendix Table 5
    Appendix Table 2Appendix Table 6
    Appendix Table 3Appendix Table 7
    Appendix Table 4

     

     

     

     

     

     

     

     
     
     
     
     
       
     
     
     
     
     
     
     
     

Benghazi Unforgotten

Benghazi Unforgotten
 
    Several of our members who are high ranking military officers from the Air Force and Marine Corps have responded to our article on the Benghazi treason. Simply, these senior officers have discussed the lies and deceptions involved in the cover-up in detail. All feel that their present Commander-in-Chief is unfit for duty in that highest office of “honor and trust”.
 
    On two points in particular they are adamant.
 
  • 1.) F-16s at Aviano airbase are 1044 miles or 1680.2 kilometers from Bengazi. Their classified speed is above Mach 2 or approximately 1500 mph. They have a ferry range of over 2000 miles. It does not take a rocket scientist to understand that any “refueling’ issues allowing close air support to aid the Americans under attack in Bengazi described in the cover-up are pure lies. This discussion is apart from the fighter aircraft in Sicily 400 miles away described below. The base where they could land after their mission for refueling is thus only also 400 miles away.
  • 2.) Ground combat support was readily available. Records of military units near Libya need to be subpoenaed by Congress. In addition to the Special Ops forces and aircraft at Sigonella, just 400 miles away, particular focus should be on the location of MEB (Marine) amphibious ships locations in the Mediterranean at the time of the Benghazi attack. These ships have attack helicopters (Cobras) and Marines that can be transported via Ospreys in overwhelming force. If 10,000 Marines can destroy 40,000 Chinese reinforced NVA in a Tet attack over 50 years ago at Quang Tri, “What could 25 or 50 Marines equipped, supported, and trained as they are today do to perhaps 100 or even 250 Islamic jihadists attacking America?”, the generals and colonels ask.
 
    These 5 men who have served this “one Nation under God” loyally in combined excess of 150 years reiterate that their oath of office compels them to obey lawful orders, but under oath are by that same commission more than willing to “protect and defend the Constitution of the United States against all enemies, foreign and domestic”. We as patriots must do no less!
 
CftC

Protect and Defend! — Call it what you may.

Protect and Defend!
…. [M]ilitary officers in Tripoli were “furious” when they were told to stand down instead of trying to help the Americans under siege at the Benghazi consulate.
 
    An embassy of any country is recognized as sovereign territory belonging to the nation that is being hosted. All persons staffing that embassy on diplomatic visas even outside embassy grounds are treated as citizens under the jurisdiction of the country being hosted and are immune from any prosecution by the host country. The Benghazi attack was an attack on America and its citizens!
 
    In addition to warning Americans well before the 2012 elections of the betrayal of trust involved with the Benghazi tragedy, this Committee for the Constitution has posed three questions that have yet to be addressed regarding the failure to protect and defend American citizens in Benghazi. These questions focus on the failure to respond as the Constitution demands to the three requests to aid Americans under attack, and exist apart and beyond the attempted Obama cover-up of lies and deceptions. The first comes from the acknowledged fact that Obama’s people had evidence of the attack transmitted by the military drone overhead almost immediately at its onset.
 
    Secondly, embassy staff sent multiple requests for assistance for over 7 hours.
 
    Third, Ambassador Stevens was in direct contact via cell phone conveying the urgent need for assistance up until the time that he was sodomized and assassinated.
 
    The three questions arise from the also acknowledged and verified fact that apart from available military ground resources that should have responded, the flight time for a close air support military jet from Aviano is well under two hours. The three questions are: Why was none of the above requests to protect and defend Americans ever responded to?
 
    The Benghazi disaster and its accompanying cover-up are simply an egregious violation of the Constitution. “[P]rovide for the common defense” are words of unmistakable clarity and intention. Call it what you may.
 
CftC
 
Politics

    Hicks gave a moving, harrowing account of the night of the attack, sometimes visibly overcome by emotion as he spoke.  Nothing in his account gave even the smallest hint of any “spontaneous video protest.”  He was very clear about discussing events with Secretary of State Hillary Clinton that very night, at around 2 AM… and yet she, and the rest of the Administration, continued peddling a blatantly false narrative about a video protest for days afterward.  The full 30-minute video of Hicks’ description of the attack appears below.

    As for the Administration’s vows to bring the perpetrators to justice, Hicks testified that the “crime scene” was unsecured for seventeen days before the FBI was allowed access to it.  He blamed this in part on the false “spontaneous video protest” narrative pushed by U.N. Ambassador Susan Rice on the talk-show circuit, which led to “bureaucratic resistance for a long period” from the Libyan government.

    The Administration was considerably more determined to protect itself from political fallout.  Hicks testified that he was specifically instructed by the State Department to refrain from talking to congressional investigator, or allowing anyone under his command to do so. He said nothing of the kind had ever happened to him before, and he’s been in the foreign service for over two decades.

    Hicks recalled Hillary Clinton’s chief of staff, Cheryl Mills – a high-powered lawyer who worked on President Bill Clinton’s impeachment defense team, described in a January Washington Post profile as Hillary’s “guardian angel” – contacting him for a report after Rep. Jason Chaffetz (R-UT) met with him.  ”A phone call from that person is generally not considered to be good news,” said Hicks.  ”She was very upset.”  It’s hard to hear such testimony without concluding that Hillary Clinton orchestrated the cover-up.

    Speaking of Rep. Chaffetz, he asked a very good question during today’s hearings: we’ve been told that refueling tankers were unavailable to bring American aircraft to bear against the consulate attackers.  Why not?  Why wasn’t that precaution taken as the anniversary of 9/11 drew near, in an area the Administration (no matter what fantasies it sold to the American public) knew was dangerous?  Where was NATO during all this?

    Hicks said his “jaw dropped” and he was “stunned” after the Administration began pushing its false “video protest” story, while military officers in Tripoli were “furious” when they were told to stand down instead of trying to help the Americans under siege at the Benghazi consulate.  He contacted Beth Jones, who was the acting Assistant Secretary for Near Eastern Affairs, why Ambassador Rice spent a whole news cycle talking about some phantasmal video protest.  ”She said, ‘I don’t know,’” Hicks recalled.  ”The sense I got was that I needed to stop the line of questioning.”

    Hicks wasn’t the only one to offer emotional testimony.  Regional security officer Eric Nordstrom was moved to tears when he answered Hillary Clinton’s legendary “What difference, at this point, does it make?” effort to dismiss further inquiry into the Benghazi disaster and subsequent cover-up:

Incidentally, the full text of Hillary’s callous remark about the Benghazi attack was: “Was it because of a protest, or was it because of guys out for a walk one night and decided they’d go kill some Americans?  What difference – at this point, what difference does it make?”

It was neither of those things, and this shameless liar knew it all along.  Hicks’ testimony makes it clear that Hillary Clinton knew the consulate was hit by a coordinated terror attack, using precision mortar fire, no later than 2:00 AM that morning.  She was still lying about it when she had her “what difference does it make?” outburst in January 2013.

Everything the Obama Administration told the American people about Benghazi during the election was a deliberate lie – not a misunderstanding, not some talking points messed up by anonymous intelligence staffers, not a confused struggle to understand incomplete reports.  Obama lied, Hillary lied, Susan Rice lied… and they did it with calculated malice, knowing the full truth all along.  They made a political calculation that admitting the incident was an organized terrorist attack would expose them to devastating criticism about the weak security in Benghazi, their confused response, and President Obama’s apparent disinterest in the situation as it unfolded.

The behavior of committee Democrats during these hearings has been nothing short of a national disgrace.  Rep. Elijah Cummings (D-MD) professed admiration for the whistleblowers, but then set about trying to discredit their testimony before any of them said a word.  He drifted into a bizarre sermon about how “death is a part of life,” which must have had the families of the Benghazi dead grinding their teeth:

Every other Democrat on the committee tried to flog the discredited talking points about how Republican budget cuts supposedly set the stage for the Benghazi disaster – which, as an exasperated Oversight Committee chairman Darrell Issa had to remind them at one point, is not true, according to testimony right out of the State Department itself.

It doesn’t seem as if the Democrats came prepared to do much beyond wail about budget cuts.  Hilariously, Rep. Tammy Duckworth (D-IL) tried claiming they weren’t given time to prepare.  (Funny, I thought Benghazi happened “a long time ago,” according to the White House.)  Their confidence that the media would not cover these hearings, so they didn’t have to do anything but recycle the old talking point about budget cuts, must have been absolute.  We’ll soon know if it was justified.  If not, the Democrats’ conduct at the hearings may prove to be as damaging as the explosive testimony delivered by the whistleblowers.

 
The Clintons’ Fixer
The lawyer at the center of the Benghazi scandal is brilliant and fiercely loyal.
 
“Number one about Cheryl Mills, she is one of the smartest people with the highest standards of integrity that I met at the White House,” says Lanny Davis, the former special counsel to President Clinton, “which is a statement, because there were a lot of smart and a lot of honest people there.’
 
Wednesday’s House Oversight Committee hearing on the Benghazi attack and its aftermath centered unexpectedly on Mills, former secretary of state Hillary Clinton’s counselor and chief of staff. She is also one of the longest serving, most trusted, and most unflinching members of the former first couple’s inner circle.
 
If the GOP congressmen and whistleblowers who spoke at Wednesday’s hearing are correct, Mills stands at the center of the Obama administration’s attempt to put the lid on the Benghazi scandal. Ohio congressman Jim Jordan described Mills as “the person next to Secretary Clinton,” tracing the growing scandal to the highest echelons of the State Department.
 
“She is the fixer for the secretary of state, she is as close as you can get to Hillary Clinton, is that accurate?” he prodded. “Yes, sir,” responded Foreign Service officer Gregory Hicks. He went on to describe a phone call he received from Mills as the investigation into the attack unfolded. “I was instructed not to allow the RSO[regional security officer], the acting deputy chief of mission, and myself to be interviewed by Congressman Chaffetz,” he said, adding that he received a follow-up call from an irate Mills, who demanded details of his meeting with the congressman.
 
“I have no doubt that she had the right motives in wanting a State Department lawyer to be in the room,” Davis tells me. “She has very high standards of integrity, and she gets angry when they’re not complied with.”
 
Mills is, by all accounts, a formidable opponent. She played a central role in the scandals that marked President Clinton’s two terms in the White House, and she emerged unfazed and unscathed. She has been here before, and she is no doubt prepared for the showdown that the current political storm may bring.
 
Mills is perhaps best known for her unwavering defense of the former president during his impeachment trial. As a 33-year-old deputy White House counsel, she offered stirring testimony on the president’s behalf. Grainy C-SPAN footage shows her clad in a gray suit and pearls that provided a stark contrast to her baby face as, for over an hour, she defended the president against charges of obstruction of justice.
 
Addressing Republicans’ repeated appeals to the primacy of the rule of law, she told the Senate, “As a lawyer, as an American, and as an African American, it is a principle in which I believe to the very core of my being.” She continued, in soothing tones, “We cannot uphold the rule of law only when it is consistent with our beliefs, we must uphold it even when it protects behavior that we don’t like, or that is unattractive, or that is not admirable, or that might even be hurtful.”
 
The Washington Post’s Karen Tumulty, who calls Mills Hillary Clinton’s “guardian angel,” has drawn attention to the praise her testimony garnered from the media. The BBC labeled her “the shining star of the defense team” the following day, adding that she “slapped down” the obstruction-of-justice charge levied against the president. The Washington Post was similarly effusive, praising her, at turns, as “remarkable,” and “a legal star on the rise.”
 
Mills, the daughter of a lieutenant colonel in the Army, was raised in Germany, Belgium, and the United States. A Phi Beta Kappa graduate of the University of Virginia and a member of the law review at Stanford Law School, she has been connected to the Clintons since 1992, when she moved to Little Rock, Ark., to join the newly elected president’s transition team.
 
Heinlein’s Razor in Benghazi
It was both breathtaking incompetence and political malfeasance.
U.S. Consulate compound in Benghazi after the 9/11 attacks
 
    In a 1941 novella called Logic of Empire, the science-fiction writer Robert Heinlein has one character say to another, “You have attributed conditions to villainy that simply result from stupidity.” I was supposed to have read the story in a freshman lit class, which I decided was an unreasonable demand on my time. But Wikipedia tells me that the story is ostensibly about indentured servitude on Venus — and that it’s really about how a bunch of flawed, self-interested individuals with no particular malice unwittingly conspire (if you’ll indulge the contradiction in terms) in a great evil.
 
    The quote is thus a pithy encapsulation of the theme, and paraphrases of it — most notably “never attribute to malice that which is adequately explained by stupidity” — have entered the lexicon as “Heinlein’s razor.”
 
    Heinlein’s razor is surely on the minds of some who watched the Benghazi hearing in the House on Wednesday, at which America’s former top diplomat in Libya, Gregory Hicks, gave a disturbing insider’s account of the September 11, 2012, attacks, as well as of the parade of mistakes that constituted their prologue and aftermath. So what does Hicks’s testimony, as well as that of Mark Thompson and Eric Nordstrom, respectively senior counterterror and security officials in the State Department, tell us about the mix of incompetence and malfeasance that led to the Benghazi attacks and their aftermath?
 
We knew already that a number of decisions taken before September 11 made the eventual attack both likelier to occur and likelier to succeed. The whistleblowers made clear that those decisions were either made or improperly delegated by people at the highest levels. Specifically, Wednesday’s testimony suggests that, although Secretary of State Hillary Clinton had ordered Ambassador Chris Stevens to Benghazi on that day in part to work on the transformation of the U.S. facilities there into a permanent consulate, Clinton had decided (or allowed, against statute, the decision to be made for her) to leave a substandard security apparatus in place, and indeed had let security be reduced in the months before the attacks, even as security experts protested and reports of violence increased. This happened, according to the results of the Oversight Committee’s investigation, because the administration was in a great rush to “normalize” its presence in Libya, the better to portray it as a foreign-policy success story.
 
    This would appear to be negligence of a particularly gross sort. Since the only other excuse offered by the administration’s defenders in Congress for the baldly inadequate security is budget constraints, and since no one actually involved in the decision-making process seems to take that excuse seriously, it’s hard to read these decisions as “difficult choices” that reasonable people could disagree on. These weren’t “close calls”; they were blown calls. One point here for incompetence. And yet there remains room for conspiracy, or at least the suggestion of it, in the revelation that the preemptive warnings from Nordstrom and others were minimized in the official after-action report on the attack, and that experts such as Thompson were not even consulted.
 
    This brings to mind the cliché about Washington scandals: It’s not the crime that brings you down, but the cover-up. And it’s in the political aftermath of the attacks that we find things we can’t dismiss as mere stupidity. The most flagrant example comes from Cheryl Mills, Hillary Clinton’s chief of staff and fixer (and Bill’s lawyer during his impeachment), who instructed Hicks to break State Department protocol and refuse to talk to Representative Jason Chaffetz (R., Utah) without State lawyers present, and who chewed Hicks out when he said lawyers were excluded from one meeting because they lacked security clearance. That’s pure political damage control that, depending on whether ethical or legal boundaries were transgressed, could rise to the level of cover-up.
 
    More insidious, and more nebulous, than this is the administration’s increasingly strained and pathetic effort to blame the deaths of four Americans on a YouTube video. Here Hicks’s testimony is unequivocal and damning. The video “was a non-event in Libya,” he said, and there was no report from Tripoli, either during the attack or after it, that indicated it might have been a “spontaneous” demonstration gone awry, rather than a jihadist attack. This is why Susan Rice’s tour of shame on the Sunday shows “shocked” and “embarrassed” Hicks, who asked Clinton’s Near East deputy why Rice would say such things and was promptly told to discontinue that line of questioning.
 
    Since we still don’t know the administration’s decision-making process on post-Benghazi talking points — in part because the trail of e-mails has not been made public — we can’t say definitively how much forethought there was in the way they misrepresented reality. It is possible that there was no overarching “plan” to lie, no marching orders, no formal cover-up. It could well be that members of the administration just panicked and did whatever they could to avoid “al-Qaeda-backed attack kills Americans” headlines in the middle of a presidential campaign.
 
    Some of the people involved may not have even known they were lying, per se. They might have merely reasoned themselves into believing the video was the cause. Such a belief would certainly soothe the kind of mind that thinks all anti-American Islamic terrorism is “”blowback” or “chickens come home to roost.” Or they could have been somewhere between, engaging in classic political bull, exploiting the possibility that the video explanation might be true to distract from the far greater likelihood that it wasn’t.
 
    An administration isn’t a hive mind, it’s a crowd — and in a crisis, frequently a mob. So it’s likely that there was some of all this in the administration’s reaction to Benghazi, or that, à la The Logic of Empire, what started as a number of individuals trying to cover their own rear ends, or Madam Secretary’s, or Candidate Obama’s, morphed into official policy — and a great evil.
 
    A probably apocryphal story is told of the philosopher and logician Bertrand Russell’s wit. When he emerged from the delivery room where his wife had just given birth, a well-wisher asked Russell, “Is it a boy or a girl?” To which Russell replied, “Yes.”
 
    Conservative commentator Ken Gardner borrows a page from Russell in what is perhaps the best 140-character summary of what we’ve learned about Benghazi so far: “Was the Benghazi attack and its aftermath the result of incompetence or a dishonest coverup with media complicity? Yes. It was.”
 
— Daniel Foster is news editor of National Review Online
 
Bad Faith and Benghazi
Hillary Clinton’s “whatever” defense falls flat.
Hillary Clinton testifies before Congress on the Benghazi attack, January 23, 2013.
 
“Was it because of a protest or was it because of guys out for a walk one night and decided they’d go kill some Americans? What difference, at this point, does it make?”
 
That was how then–Secretary of State Hillary Clinton famously brushed off the question of when she knew that the attacks on the American consulate in Benghazi, Libya, on September 11 that killed Ambassador Chris Stevens and three other Americans were, in fact, a terrorist assault and not a “protest” of an anti-Islam video that got out of hand.
 
Clinton’s fans, in and out of the press, loved her defiant response, and they should be ashamed of themselves for it.
 
What Clinton was really doing there was deflecting attention away from the fact that she had lied. We now know, thanks to Wednesday’s congressional hearings and reporting by The Weekly Standard’s Steve Hayes, that administration officials knew from the outset the video had nothing to do with it. Intelligence sources on the ground in Libya and officials in Washington knew it was a terrorist attack from the beginning. The video was a “non-event in Libya,” according to Gregory Hicks, the man who inherited Stevens’s duties after the ambassador was killed by al-Qaeda-linked militants. The false video story was simply imposed from above by Clinton, President Obama, and their subalterns.
 
Let’s return to that lie in a moment.
 
The hearings exposed another lie. Obama and Clinton have insisted that they did everything they could to help the Americans besieged in Libya; they just couldn’t get help to them in time.
 
That’s simply untrue.
 
But even if that were true, it would still be a self-serving falsehood.
 
If you see a child struggling in the ocean, you have no idea how long she will flail and paddle before she goes under for the last time. The moral response is to swim for her in the hope that you get there in time. If you fail and she dies, you can console yourself that you did your best to rescue her.
 
But if you just stand on the beach and do nothing as the child struggles for life, saying, “Well, there’s just no way I can get to her in time,” it doesn’t really matter whether you guessed right or not. You didn’t try.
 
The White House and State Department insist they guessed right, as if that somehow absolves them of responsibility. They would have sent help if they could have, they claim, but they simply weren’t ready to deploy forces on September 11, the one day of the year you’d expect our military and intelligence agencies to be ready for trouble in the Middle East, particularly given that before his murder, Stevens warned of security problems in Benghazi.
 
But we know the administration ordered others who were willing, able, and obliged to come to the consulate’s rescue to “stand down.” They in effect told the lifeguards, “Don’t get out of your chairs.”
 
Though an unmanned drone was there to capture the whole thing on video, which must have been reassuring as the mortar rounds rained down.
 
Leon Panetta, who was the secretary of defense during the attack, mocked critics who wanted to know why the Pentagon didn’t scramble any jets from Italy to the scene. “You can’t willy-nilly send F-16s there and blow the hell out of place. . . . You have to have good intelligence.”
 
Never mind that real-time video of the attack is pretty good intelligence. An F-16 doesn’t need to blow anyone to hell to have an impact. As military expert and former assistant defense secretary Bing West notes, “99 percent of air sorties over Afghanistan never drop a single bomb.” Just showing up is often intimidating enough.
 
What motivated the White House and the State Department to deceive the public about what they did is unknown. Maybe it was incompetence or politics or simply understandable bureaucratic confusion.
 
But we do know they deceived the public. Which brings us back to the lies over the video. In the wake of Benghazi, the country endured an intense debate over how much free speech we could afford because of the savage intolerance of rioters half a world away. Obama and Clinton fueled this debate by incessantly blaming the video — as if the First Amendment were the problem.
 
Clinton and Obama both swore oaths to support and defend the Constitution. But after failing to support and defend Americans left to die, they blamed the Constitution for their failure. That’s what difference it makes.
 
—Jonah Goldberg is the author of The Tyranny of Clichés, now on sale in paperback. You can write to him at goldbergcolumn@gmail.com, or via Twitter @JonahNRO. © 2013 Tribune Media Services, Inc.

 
A Monstrous Cover-Up
The truth about Benghazi emerges.
Gregory N. Hicks speaks during hearings on Benghazi, May 8, 2013
 
    “There is no video that justifies an attack on an embassy,” the President of the United States told the United Nations last September 25, one of six “video” references in his speech. A fortnight after the deadly attack on America’s mission in Benghazi, Obama was still insisting that Innocence of Muslims, an obscure, anti-Islamic YouTube video, had fueled the mayhem. Presumably, a spontaneous protest spun out of control and unleashed lethal violence.
 
    As Wednesday’s sworn testimony by three State Department whistleblowers demonstrated, this was just one of many lies deployed by Obama and others high atop the U.S. government. These lies nurtured the myth that “al-Qaeda is on the path to defeat,” as Obama claimed at a Las Vegas campaign rally the evening after the Benghazi onslaught. With the truth kept conveniently obscured up to November 6 and beyond, Obama won reelection as the man who supposedly killed both Osama bin Laden and al-Qaeda. In fact, only the former is dead.
 
    The truth behind this monstrous cover-up finally is emerging, too late to defeat Obama at the polls, but perhaps in time to speed his early return to Chicago.
 
    In gripping testimony before the House Oversight and Government Reform Committee, these top diplomats broke their silence and shattered Team Obama’s carefully crafted post-Benghazi narrative.
 
    From the very start of this episode, U.S. officials called it an attack, rather than a video-driven protest.
“Greg, we are under attack,” Ambassador Stevens said in his last words to Deputy Chief of Mission Greg Hicks, just before Stevens’s cell phone clicked off on the night of September 11.
The Weekly Standard’s Stephen Hayes reports that two hours into the onslaught, at 6:08 p.m. Eastern Time, a State Department Operations Center alert, in Hayes’s words, “indicated that Ansar al Sharia, an al Qaeda–linked terrorist group operating in Libya, had claimed credit for the attack.”
In a newly revealed September 12 e-mail to State Department staffers, Acting Assistant Secretary for Near Eastern Affairs Elizabeth Jones recalls consulting Libya’s ambassador in Washington. Jones wrote: “I told him that the group that conducted the attacks, Ansar Al Sharia, is affiliated with Islamic terrorists.”
“The YouTube video was a non-event in Libya,” Hicks testified under oath Wednesday. “The only report that our mission made through every channel was that there had been an attack on our consulate. . . . No protest.”
    The father of the late Tyrone Woods says that, as his son’s remains were officially welcomed home on September 14, then–secretary of state Hillary Clinton approached him. She promised that Nakoula Basseley Nakoula — the Los Angeles–based, Egyptian-born Coptic Christian behind the anti-Islamic video – would be “prosecuted and arrested.” Never mind that producing anti-Islamic videos is not illegal, for now. (Nakoula remains in jail, nonetheless, for probation violations tied to unrelated crimes.)
 
    In the May 13 Weekly Standard, Stephen Hayes carefully documents how Team Obama sanitized the CIA’s initial talking points to erase al-Qaeda’s fingerprints on this attack and, instead, make it look like a demonstration gone crazy. A September 14 version of this document stated, “We do know that Islamic extremists with ties to al Qa’ida participated in the attack. . . . Ansar al Sharia’s Facebook page aims to spread Sharia in Libya and emphasizes the need for jihad to counter what it views as false interpretations of Islam.”
 
    By the time the State Department and the White House had whitewashed these talking points, a third version, on September 15, explained: “There are indications that extremists participated in the violent demonstrations.” Were these extremist Muslims? Extremist vegetarians? Extremist Rotarians? The scrubbed document does not say.
 
    If the records he cites are accurate, Hayes writes, “It is clear that senior administration officials engaged in a wholesale rewriting of intelligence assessments about Benghazi in order to mislead the public.”
 
    The next day, United Nations ambassador Susan Rice appeared on five Sunday-morning talk shows. Relying on the doctored talking points, she told Fox News’s Chris Wallace: “What sparked the violence was a very hateful video on the Internet.” Rice added, “It was a reaction to a video that had nothing to do with the United States.”
 
    “I was stunned,” Hicks testified, concerning Rice’s TV appearances. “My jaw dropped, and I was embarrassed.” He added that Rice never spoke with him before doing her interviews, even though — after Ambassador Stevens’s assassination — Hicks had become America’s top diplomat in Libya.
 
    The State Department’s Administrative Review Board was supposed to discover the truth about Benghazi. However, it now is being investigated by State’s inspector general to determine whether it adopted a don’t-ask-don’t-tell approach. The ARB never interviewed Hillary Clinton about her role in this disaster. Whistleblower Mark Thompson, a top State Department counterterrorism official, testified Wednesday that he had volunteered to speak with the ARB but was ignored.
 
    Team Obama has hindered Representative Jason Chaffetz (R., Utah) as he has tried to solve the Benghazi puzzle. “The first week of October, I did go to Libya,” Chaffetz told Fox News Channel’s Sean Hannity Wednesday night. “I did meet with Mr. Hicks. And we heard testimony that Mr. Hicks was coached ahead of time not to allow me to speak to three individuals there, including Mr. Hicks. The State Department had sent along a babysitter, a minder, to listen and take notes of everything I did.” Chaffetz continued: “The idea that a member of Congress trying to seek out the truth, and they are being told not to allow that member of Congress to have an individual conversation — I mean, that’s pretty stunning.”
 
    Hicks testified that State Department officials ordered that “we were not to be personally interviewed by Congressman Chaffetz.” He added that Clinton’s chief of staff, Cheryl Miller, called after he met with Chaffetz. “She was very upset with me,” Hicks said. “She delivered a blistering critique of my management style.”
 
    Hicks also ran afoul of State’s aforementioned Elizabeth Jones. “I asked her why the ambassador [Rice] said there was a demonstration when the embassy reported there was an attack,” Hicks explained. “The sense I got is that I needed to stop my line of questioning.”
 
    Hicks also testified that “I’ve been effectively demoted from deputy chief of mission to desk officer” — perhaps because he has failed to toe the Obama line.
 
    In addition to the three whistleblowers who came forward this week, 30 more Benghazi witnesses remain hidden and reportedly afraid to speak up. As American citizens, they should not have fear in their vocabulary.
 
    So, why this abundance of lies and obstruction?
 
    An al-Qaeda–affiliated terror group targeted an American diplomatic facility and killed four American public servants, including Washington’s first ambassador to be murdered on duty since 1979. These facts completely undermined the myth that al-Qaeda had been in retreat since SEAL Team Six liquidated Osama bin Laden in May 2011. So, Team Obama buried these inconvenient truths beneath a sand dune of lies.
 
    Since Obama’s Justice Department cannot be trusted to investigate itself, House Speaker John Boehner should assign a select committee to probe Benghazi, subpoena and immunize the 30 remaining survivors of the attack, and invite the sworn public statements of those who can detail what may be the biggest federal cover-up since Watergate.
 
    The American people — not least the families of Messrs. Stevens, Smith, Doherty, and Woods — deserve to know who perpetrated this fraud, no matter how far the mighty may fall.
 
— Deroy Murdock is a Manhattan-based Fox News contributor, a nationally syndicated columnist with the Scripps Howard News Service, and a media fellow with the Hoover Institution on War, Revolution, and Peace at Stanford University.

Misinformation, Or Simply More Lies and Deceptions?

Misinformation, Or Simply More Lies and Deceptions?

    This Committee for the Constitution has written extensively about government, its bureaucrats and politicians, feeding the public a steady diet of untruth and misinformation aided and abetted by the propaganda of the liberal media. Not only is the economic and fiscal crisis the direct responsibility of Congress led by the executive branch, the violation of their offices of “honor and trust” extends far beyond simply error or incorrect decisions. This is willful and knowing conduct relying on lies and deceptions in specific violation of the original intention of the Constitution of the United States and the Constitutions of the several states. The recent and on-going attempts of Congress and the Obama administration to exempt Congress and aides from the disaster of Obamacare clearly signals and evinces unconstitutional intention. Adding to the indictments are the previously discussed violations of our Second Amendment rights, the conspiracy and fraud of Soros’s Petro Brasilia collusion windfall, the XL pipeline veto benefiting Obama’s supporter Warren Buffet, the Pigford fraud perpetrated by Obama’s people, Bengazi, and the list goes on and on. The real tragedy is that such government failure and crime is tolerated by the public electing those so unworthy of trust.

    Whether it is about any of the above or any other topic of failed political action, moving beyond reason by ignoring or displacing the truths of science and history will lead any political entity to ultimate failure. The Framers and Founders were realists. “Relying on divine Providence”, they moved in the truths of science and history as they were aware of them at the time.

    The article below cites the preponderance of evidence from an economist relating to our Second Amendment rights. Likewise, there are similar volumes of truth published on everything from global warming to energy independence to healthcare reform. Every American wanting to reclaim our heritage should read Beyond Reason and The Attack on America to understand that those same fundamental truths recognized over two centuries ago in Independence Hall are now just as relevant in this time and in these circumstances of a Federal bureaucracy unchecked by the states united. Demanding that every politician at every level of government also read them and be willing to sign a contract to protect and defend the original intention of the Constitution would solve not only our economic and fiscal crisis but would accomplish all that the Preamble describes.

    If every patriot will pass this message on to all on their eMail lists, those receiving will do the same, and so on and so forth, the truth will be heard.

    Thank you for protecting and defending the original intention of the Constitution of the United States. May America bless God.

CftC 

Ann Coulter Letter

Coulter: America’s Most Feared Economist

    Some nut Dutch professor produces dozens of gag studies purportedly finding that thinking about red meat makes people selfish and that litter leads to racism — and no one bothers to see if he even administered questionnaires before drawing these grand conclusions about humanity.

    But Lott’s decades-long studies of concealed-carry laws have been probed, poked and re-examined dozens of times. (Most of all by Lott himself, who has continuously re-run the numbers controlling for thousands of factors.)

    Tellingly, Lott immediately makes all his underlying data and computer analyses available to critics — unlike, say, the critics. He has sent his data and work to 120 researchers around the world. By now, there have been 29 peer-reviewed studies of Lott’s work on the effect of concealed-carry laws. Eighteen confirm Lott’s results, showing a statistically significant reduction in crime after concealed-carry laws are enacted. Ten show no harm, but no significant reduction in crime. Only one peer-reviewed study even purported to show any negative effect: a temporary increase in aggravated assaults. Then it turned out this was based on a flawed analysis by a liberal activist professor: John Donohue, whose name keeps popping up in all fake studies purporting to debunk Lott.

    In 1997, a computer crash led to the loss of Lott’s underlying data. Fortunately, he had previously sent this data to his critics — professors Dan Black, Dan Nagin and Jens Ludwig. When Lott asked if they would mind returning it to him to restore his files, they refused. (One former critic, Carlisle Moody, conducted his own analysis of Lott’s data and became a believer. He has since co-authored papers with Lott.)

    Unable to produce a single peer-reviewed study to discredit Lott’s conclusions, while dozens of studies keep confirming them, liberals have turned to their preferred method of simply sneering at Lott and neurotically attaching “discredited” to his name. No actual discrediting ever takes place. But liberals think as long as they smirk enough, their work is done.

    Average readers hear that Lott has been “discredited” and assume that there must have been some debate they didn’t see. To the contrary, the leading source for the claim that Lott’s research doesn’t hold up, left-wing zealot Donohue, has been scheduled to debate Lott, one-on-one, at the University of Chicago twice back in 2005. Both times, Donohue canceled at the last minute.

    Donohue accuses Lott of libel for pointing this out. Suggestion for Mr. Donohue: Instead of writing columns insisting you’ve been libeled, wouldn’t it be better just to agree to a debate? It’s been eight years!

    Scratch any claim that Lott’s research has been “debunked” and you will find Donohue, his co-author and plagiarist Ian Ayres, or one of the three “scholars” mentioned above — the ones so committed to a search for the truth that they refused to return Lott’s data to him. (Imagine the consequences if Lott had been forced to admit to plagiarism, as Ayres has.)

    Donohue’s previous oeuvre includes the racist claim that the crime rate declined in the 1990s as a result of abortion being legalized in the ’70s. (Nearly 40 percent of the abortions since the 1973 case of Roe v. Wade were of black children.) This study was discredited (not “discredited”) by many economists, including two at the Federal Reserve Bank of Boston, who pointed out that Donohue’s study made critical mistakes, such as failing to control for variables such as the crack cocaine epidemic. When the Reserve economists reran Donohue’s study without his glaring mistakes, they found that there was “no evidence in (Donohue’s) own data” for an abortion-crime link.

    Curiously, the failure to account for the crack epidemic is one of Donohue’s complaints with Lott’s study. It worked so well against his own research study he thought he’d try it against Lott. The difference is: Lott has, in fact, accounted for the crack epidemic, over and over again, in multiple regressions, all set forth in his book.

    Donohue and plagiarist Ayres took a nasty swipe at Lott in the Stanford Law Review so insane that the editors of the Review — Donohue’s own students — felt compelled to issue a subsequent “clarification” saying: “Ayres and Donohue’s Reply piece is incorrect, unfortunate, and unwarranted.” When you have to be corrected on your basic anti-gun facts by an ABC correspondent — as Donohue was by “Nightline” correspondent John Donvan in a 2008 televised panel discussion — you might be a few shakes away from a disinterested scholar.

    But the easily fooled New York Times columnist Nicholas Kristof has repeatedly called Lott “discredited,” based on a 2003 article by charlatans Donohue and Ayres — a non-peer-reviewed law review article. In a 2011 column, for example, Kristof dismissed Lott’s book, “More Guns, Less Crime,” with the bald assertion that “many studies have now debunked that finding.”

    The details of the chicanery of Donohue, plagiarist Ayres, as well as all of Lott’s other critics, are dealt with point by point in the third edition of Lott’s More Guns, Less Crime. There, and in a number of published articles by Lott and others, you can see how his critics cherry-picked the data, made basic statistical errors, tried every regression analysis imaginable to get the results they want and lied about Lott’s work (such as Donohue’s claim that he neglected to account for the crack epidemic).

    Suffice it to say that of the 177 separate analyses run by all these critics, only seven show a statistically significant increase in crime after the passage of concealed-carry laws, while 90 of their own results show a statistically significant drop in crime — and 80 show no difference.

    “Discredited” in liberal lingo means, “Ignore this study; it didn’t come out well for us.”

trea·son  [tree-zuhn]

noun
1. the offense of acting to overthrow one’s government or to harm or kill its sovereign
2. a violation of allegiance to one’s sovereign or to one’s state.
3. the betrayal of a trust or confidence; breach of faith; treachery.
Question: On the Amendment (Inhofe Amdt. No. 139 )
Vote Number: 91                                                         Vote Date: March 23, 2013, 04:30 AM
Required For Majority: 1/2                                        Vote Result: Amendment Agreed to
Amendment Number: S.Amdt. 139 to S.Con.Res. 8 (No short title on file)
Statement of Purpose: To uphold Second Amendment rights and prevent the United States from entering into the United Nations Arms Trade Treaty.
Vote Counts:  YEAs (voting to protect, preserve and defend the Constitution) 53
                        NAYs (violating oath of office by failing to protect, preserve and defend the Constitution) 46
                        Not Voting  1
NAYs — 46 (oath of office?)
Baldwin (D-WI)
Baucus (D-MT)
Bennet (D-CO)
Blumenthal (D-CT)
Boxer (D-CA)
Brown (D-OH)
Cantwell (D-WA)
Cardin (D-MD)
Carper (D-DE)
Casey (D-PA)
Coons (D-DE)
Cowan (D-MA)
Durbin (D-IL)
Feinstein (D-CA)
Franken (D-MN)
Gillibrand (D-NY)
Harkin (D-IA)
Hirono (D-HI)
Johnson (D-SD)
Kaine (D-VA)
King (I-ME)
Klobuchar (D-MN)
Landrieu (D-LA)
Leahy (D-VT)
Levin (D-MI)
McCaskill (D-MO)
Menendez (D-NJ)
Merkley (D-OR)
Mikulski (D-MD)
Murphy (D-CT)
Murray (D-WA)
Nelson (D-FL)
Reed (D-RI)
Reid (D-NV)
Rockefeller (D-WV)
Sanders (I-VT)
Schatz (D-HI)
Schumer (D-NY)
Shaheen (D-NH)
Stabenow (D-MI)
Udall (D-CO)
Udall (D-NM)
Warner (D-VA)
Warren (D-MA)
Whitehouse (D-RI)
Wyden (D-OR)

         Is not violating one’s oath of an office of honor and trust not by definition to be called treason?

No argument for Obamacare’s repeal can top the simple fact that Members of Congress do not want it to apply to them.

    Instead of working on bills that would help the economy, right now the politicians are working on an Internet sales tax bill and a comprehensive immigration bill offering amnesty.

The Border Security, Economic Opportunity, and Immigration Modernization Act (S. 744)—commonly called the “Gang of Eight bill”delivers nothing new—other than the promise of spending a lot more money and running up our debt. ….Our government could cooperate more effectively with Mexico and the border states. Congress could modernize our legal immigrant and non-immigrant programs, including effective temporary worker programs. The government could enforce our workplace and immigration laws.  ….the promise of border security in this case is merely an excuse for a bloated bill that would promise anything to push amnesty, regardless of cost or practicality.

 WAKE UP AMERICA!