As the battle over immigration reached a chaotic climax in the U.S. Senate earlier this month, the Congressional Budget Office held a press conference nearby. The director's explanation of the latest economic forecasts seemed disconnected from the political drama unfolding a few blocks away. However, the analysis was closely related to immigration policy.
The nonpartisan Budget Office, which estimates future tax revenues and government spending, continues to predict that the country will spend trillions of dollars more than it takes in. The increase in the budget deficit is primarily a result of high interest rates and an increase in the number of people receiving Medicare and Social Security benefits. , an increase in medical costs. In addition, revenues plummeted in 2017 after Republicans passed a tax cut bill for corporations and the wealthy.
However, economists expect the budget deficit and national debt to be smaller than last year. One of the main reasons is that they expect increased immigration to boost the U.S. economy.
Here are some of CBO's most shocking predictions for the next decade.
- The U.S. workforce will grow by an additional 5.2 million people, primarily due to increased immigration. These would boost the country's gross domestic product by a total of 2%.
- Immigrant workers will add $7 trillion to the U.S. economy and $1 trillion in federal tax revenue over the next 10 years.
- New immigrants will prevent U.S. population decline. They will be the source of population growth in the United States by 2042.
CBO's 96-page report showed how dependent the U.S. economy and national budget are on immigrant workers. Their estimates include both illegal and legal immigrants.
“We continue to assess the impact of immigration on our revenues and expenditures,” Secretary Philip Swagel said at a Feb. 7 briefing.
Much of the political debate about immigration focuses on the record number of asylum seekers and illegal immigrants who crossed the southern border last year.
Giovanni Peri, an economics professor at the University of California, Davis, said there are other reasons for the surge in immigration. Namely, in 2022, the U.S. government began processing a backlog of applications from foreign nationals for green cards and work permits that had been put on hold during the coronavirus pandemic.
Last year's surge in immigration was not historic, Peri explained, but simply a return to pre-pandemic levels. He believes the most shocking news in the CBO report is that it clearly states that the U.S. population will begin to decline in 2042, with no expected increase in immigrant workers.
“The growth of the U.S. workforce is fundamentally dependent on immigration,” Peri said, noting that the pandemic and stricter immigration policies under the Trump administration have reduced the population of working-age immigrants by two. Research shows that. a million.
Peri's research shows that more older workers have decided to retire during the pandemic, and the U.S.-born population is getting older. Immigrants arriving are overwhelmingly young and seeking job opportunities.
As more Americans retire, new immigrant workers will assume primary responsibility for expanding the workforce and funding Social Security.
The social security system has been in trouble for years. Payroll taxes on workers and businesses fund benefits paid to millions of retired workers. However, there simply isn't enough labor to cover the cost.
In 1960, each person retired or diagnosed with disability was supported by approximately 5.1 workers, but that rate has declined since then. In 2022, the number of workers per beneficiary was 2.8. Therefore, current payroll tax levels are no longer sufficient to sustain the program.
Several years ago, the federal government began adding to savings funds for retired workers. And if nothing changes, those savings accounts will be depleted by 2033, just as the last baby boomer generation reaches retirement age. That leaves the government with just enough money to pay 77 cents of every dollar it owes retirees.
The Social Security Administration lists a number of reasons for the crisis, but these are basically the only ones. More Americans are retiring and living longer. And American adults aren't having enough children to replace all the workers leaving the workforce.
The agency's estimates show that immigration could help save the Social Security system. Not just legal immigrants, but illegal immigrants as well.
Illegal immigrants and people with legal status pay billions of dollars into Social Security each year through payroll taxes. The more immigrants there are, the longer the Social Security system will remain insolvent, based on estimates from a 2023 report from the System Administration Board. That's because immigrants are, on average, much younger than the entire U.S. population, and they are far from retiring. Additionally, many illegal immigrants pay social security contributions but are not allowed to receive benefits.
Social Security system directors earlier this year asked lawmakers to raise payroll taxes, cut benefits, or both.
Increasing immigration would also help.