New study shows net federal budget benefits from immigration

New study on immigration is a reminder of the need to start over again and write an immigration bill based on fact not fear. Photo: AP Photo/Charles Rex Arbogast

WASHINGTON, June 24, 2013 — New research shows that the contributions from immigrants, especially those here illegally, to the government are enormously more than anyone realizes, largely because of income taxed to support  federal entitlement programs from which they recover few or no benefits at all.

A peer-reviewed article in the latest issue Health Affairs provides a thorough and surprising statistical analysis of one aspect of the larger picture of the largely uncredited net contributions which immigrants make to our social welfare programs. Titled “Immigrants Contributed an Estimated $115.2 Billion More to the Medicare Trust Fund than they Took Out in 2002-2009,” the article suggests that immigrants are substantially subsidizing Medicare for native-born retirees. By inference it suggests similar support to other programs like Medicaid, and especially Social Security.

SEE RELATED: Attempts to fix immigration bill are self defeating

This study confirms the findings of several previous studies, including a groundbreaking 1987 paper by Professor Douglas Massey which found that while 85 percent of illegal immigrants paid taxes, less than 3 percent received any kind of benefits. It also confirms a more recent report from the Mexican Migration Study at Princeton University, which found that 62 percent of immigrants paid Social Security taxes as 66 percent paid federal income tax withholding.

The researchers in the Health Affairs article found that immigrants (mostly illegal) contribute an average of 14.7 percent of the surplus money received by Medicare, adding up to $115.2 billion over a seven-year period and likely continuing at a level of about $18 billion per year at the current time. This is money received by the government and never returned to them, over and above any benefits which they may have received. Contrary to popular myth, many hospitals now file to recover the cost of treating non-paying aliens from Medicare and Medicaid, reducing this surplus.

The reasons for this surplus are largely demographic. In addition to the obvious fact that illegals using false social security numbers cannot recover any payments made into these systems, they also consume far fewer associated services because on average they are much younger and healthier than the general population. They are too young to qualify for Medicare.

Being young, immigrants are also healthier and less likely to need medical care. Also, most illegal workers come here temporarily and do not bring their families, so they have far fewer children needing medical care or other forms of assistance than the native population. They go back home before they are old enough to need or qualify for many benefits.

SEE RELATED: Obama Democrats don’t want border security

These figures allow us to draw additional conclusions beyond those in the study. The most significant would be regarding Social Security. We know that until recently, Social Security ran a substantial surplus every year; this study suggests why and how much of it is attributable to illegal immigrants. 

Just like Medicare and Medicaid, the roughly two-thirds of immigrants using false social security cards cannot file for any money back from social security. If they try, federal law now prohibits any payments to them. Because Social Security and Medicare contributions are collected together, this study suggests that there would be a corresponding surplus in Social Security to the surplus it finds in Medicare. This would be approximately $124 billion just for the year 2012, and a similar amount per year in other years.

The implications of this are significant. If we were to actually deport all of the illegal immigrants and close our borders, we would accelerate the bankruptcy of Social Security and all our other tax-based public welfare programs and place a devastating burden on the federal government. The close to $200 billion collected from immigrants is more than the total revenue collected annually from corporate taxation.

This new study mostly confirms and updates the findings of previous similar studies, but its release in the middle of the current immigration debate is significant. It’s a reminder that legislators who are working on immigration reform largely ignore the economic and demographic facts surrounding the issue. They are driven more by politics and the demands of special interests than by the realities of immigration and its effects.

SEE RELATED: The immigration reform headache

The immigration bill from the “gang of eight” should be opposed because it is bad law and attempts to legislate against natural demographic and economic forces, which is a formula for failure. It will not solve any of the problems we are currently dealing with, because it is the same kind of misdirected reform effort as previous legislation on this issue, and it could conceivably cost the government huge amounts of revenue.

As studies bring facts about immigration to light, it becomes more and more clear that we need to go back to the drawing board and think about this issue differently. There ought to be a Congressional study group which takes real data and legitimate research and uses that for recommendations of new policy, rather than simply repeating past mistakes on a larger scale.

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Dave Nalle

Dave Nalle has been writing political analysis since the 1980s for newspapers, magazines and now online journals. He is currently Execitive Director of the Center for Foreign Policy Priorities, is on the board of the Coalition to Reduce Spending, and served four years as National Chairman of the Republican Liberty Caucus.

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