RAISE Act Would Save American Taxpayers $1.9 Trillion Over Next Decade

the RAISE Act could save American taxpayers $1.9 trillion in welfare payments to immigrants

The RAISE Act Will Save America Trillions in Government Handouts Over the Next Decade

According to research compiled by Robert Rector, The Heritage Foundation’s senior research fellow on domestic policy, the RAISE Act could save America trillions of dollars in welfare, healthcare, and other social services over the coming decades.

The RAISE Act would manage this ending chain migration, which could reduce overall immigration levels by up to 50%, and by prioritizing immigrants who have economically valuable skills, which would be determined according to an objective points-based system.

Before getting into the numbers, it is worth exploring what chain migration is, and why it is of particular concern.  The Heritage Foundation sums it up nicely:

Chain migration starts with a foreign citizen who is given a green card. This individual is allowed to bring in his or her nuclear family consisting of a spouse and minor children.

Once the original immigrant and his or her spouse become U.S. citizens, they can petition for their parents, adult sons and daughters, and adult siblings and brothers and sisters-in-law to also enter.

This second group can bring their minor children. Once they become citizens, the brothers and sisters in law and parents can petition for their siblings, in-laws, and parents to legally enter the U.S.

Essentially, chain migration is something of a loophole, whereby the first immigrant can eventually bring his entire family into America, even if they lack the ability to enter the country on merit.  This is part of the reason why so many communities slowly turn into immigrant enclaves: people naturally settle in the same places as their family.

And just to be clear, the number of people entering the country in this way is enormous: 400,000 people enter America every year because of chain migration—that is, roughly 40% of all legal immigrants.

The RAISE Act would end chain migration entirely.

Low Skilled Immigrants are a Tax Burden on American Citizens

The crux of the Heritage Foundation’s argument against mass immigration is that most of the immigrants who arrive in America via non-economic channels are, not surprisingly, not economically viable.  That is, they consume far more in government services than they consume.

In fact, it is estimated that low-skilled immigrants (those without a high school degree) receive $4 in government benefits for every $1 they pay in taxes.

This is because America’s tax system is progressive (redistributive), meaning that it taxes people with lower incomes less, and provides them with a host of benefits.  Therefore, those with few skills (and meager earnings), end up consuming far more in government benefits than they pay in tax

Measuring the economic consequences of this redistribution is difficult, but a report published by the National Academy of Sciences called The Economic and Fiscal Consequences of Immigration attempted to do just that.

The report looked at both legal and illegal immigrants, and considered variables such as:

…routine government services such as police and fire protection, highways and sewers; public education costs; benefits from over 80 means-tested welfare programs such as Medicaid, food stamps, the earned income tax credit, and housing vouchers; and other government direct benefits including Social Security, Medicare, and Unemployment Insurance.

and included in its analysis considerations of “taxes paid at the federal, state, and local levels, including personal income taxes, FICA taxes, sales taxes, excise taxes, property, and business taxes.”

Basically, the report was comprehensive, and left few stones unturned (although it did fail to take into account remittance payments, which can be significant).

The report found that each low-skilled immigrant (roughly 40% of all legal immigrants, and the majority of illegal immigrants) costs American taxpayers a net present value of negative $170,000.

That number seems large, but it underestimates the true cost.  Net present value is the amount that the government would need to raise today, and invest at a yield of 3% above inflation, to meet their lifetime net fiscal costs of said immigrant.

Of course, this isn’t the way the government does things, it spends money as soon as it gets it (and therefore doesn’t have access to the interest payments): in reality, the lifetime net fiscal costs for each low-skilled immigrant work out to $476,000 according to the Heritage Foundation.

New Low Skilled Immigrants Will Cost American Taxpayers $1.9 Trillion Over the Next Decade

If we look at these figures by decade, we can get a sense of the true costs of chain migration into America: assuming that the immigration system is not reformed, we can expect some 4.7 million low-skilled immigrants to enter America over the next decade.

The net present value of these immigrants to taxpayers would be roughly $670 billion—the government would have to raise this money, and invest it in high-yield assets in order to pay for them.  This is a horrible idea, but it’s better than what we are currently doing.

According to the Heritage Foundation, the true net cost for the next decade’s worth of low-skilled immigrants is $1.9 trillion (in constant 2012 dollars).

This number could be significantly higher if it included remittance payments, and used a larger estimate for illegal immigration into the US (the figure seems to me to greatly discount the number of illegal immigrants who are likely to arrive).

Either way, the figure is enormous.

And of course, there are other ways that mass immigration hurts the economy.  It is high time we took a critical look at our immigration policy, and re-calibrated it so that it puts the interests of Americans above foreigners.

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About Spencer P Morrison 160 Articles
J.D. B.A. in Ancient & Medieval History. Writer and independent intellectual, with a focus on applied philosophy, empirical history, and practical economics. Author of "Bobbins, Not Gold," Editor-In-Chief of the National Economics Editorial, and contributor to American Greatness. His work has appeared in publications including the Daily Caller, the American Thinker, and the Foundation for Economic Education.