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Is Amnesty affordable?

Most Americans understand that the resources of government at all levels are limited, and there is a point at which increasing taxes becomes counterproductive, since it takes dollars out of the economy, limiting employment opportunities and commerce, and eventually resulting in less revenue.

The Obama Administration is moving forcefully to allow vast numbers of illegal immigrants to remain in the United States. The salient question is:  How does this help Americans, both citizens and legal residents?

Last year, The Heritage Foundation researched the issue and found that the cost of direct benefits, means-tested welfare, public education, and population-based services will be deeply burdensome to already over-taxed citizens:

“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.

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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.”

James Walsh, writing in the Daily Signal, emphasized that:

“The president refuses to acknowledge that the United States is faltering under the weight of an escalating national debt of $40 trillion within a decade. He refuses to acknowledge that the national debt is increasing partly because of the escalating numbers of undocumented aliens — a ghost population that threatens the financial solvency of the United States.”