In Washington, bad news is generally released on Friday. On Friday, December 15, 2017, the non-partisan Congressional Budget Office (CBO) released its cost estimate of S. 1615, the DREAM Act of 2017. The news was not good for that legislation.
The bill would direct the Department of Homeland Security (DHS) to cancel removal and grant conditional lawful permanent resident (LPR) status to illegal aliens and aliens in Temporary Protected Status (TPS)) who: were physically present in this country for the four years prior to enactment; were under 18 years of age when they initially entered the United States; are not inadmissible on criminal, security, terrorism, or other grounds; are not persecutors; have not been convicted of certain federal or state offenses; and have fulfilled specified educational requirements.
The bill provides a waiver for the criminal removability bars "for humanitarian purposes or family unity or if the waiver is otherwise in the public interest."
It would also provide for conditional lawful permanent resident status for aliens who have received Deferred Action for Childhood Arrivals (DACA), unless the alien had engaged in conduct rendering the alien ineligible for DACA since gaining that status.
Finally, the bill provides for removal of the conditions on that LPR status, and contains a confidentiality provision barring release of information provided by applicants for conditional LPR status or DACA, subject to limited exceptions.
That estimate states:
CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting S. 1615 would increase direct spending by $26.8 billion over the 2018-2027 period. Over that same period, CBO and JCT estimate that the bill would increase revenues, on net, by $0.9 billion — a decline in on-budget revenues of $4.3 billion and an increase in off-budget revenues [Social Security taxes] of $5.3 billion.
In total, CBO and JCT estimate that changes in direct spending and revenues from enacting S. 1615 would increase budget deficits by $25.9 billion over the 2018-2027 period, boosting on-budget deficits by $30.6 billion and decreasing off-budget deficits by $4.7 billion over that period.
It also "estimates that providing higher education assistance for newly eligible people under S. 1615 would cost $1.0 billion over the 2018-2022 period."
As the CBO explains:
The bill would affect direct spending by conferring eligibility for federal benefits — health insurance subsidies and benefits under Medicaid and the Supplemental Nutrition Assistance Program (SNAP), among others — provided that those applicants met the other eligibility requirements for those programs.
With respect to direct spending, CBO finds that S. 1615 would increase earned income and child tax credits by $5.5 billion between 2018 and 2027. It finds that the bill would increase spending for Medicaid by $5.0 billion during that period, and would increase direct spending for SNAP benefits by $2.3 billion in that timeframe. Direct spending for Supplemental Security Income (SSI) benefits would increase by $900 million during that 10-year period under the bill. Finally, the bill would increase Social Security spending (which is off-budget) by $600 million, and Medicare spending by $300 million between 2018 and 2027. Federal direct spending for assistance for higher education would also increase, by $500 million in that timeframe under the bill, CBO estimates. Most significantly, however, "CBO and JCT estimate that enacting S. 1615 would increase outlays for subsidies for health insurance purchased through the marketplaces by $11.8 billion over the 2018-2027 period."
In reaching the $0.9 billion revenue increase figure, CBO assumes that more employees would work "on the books", and therefore report their income, increasing revenue, "mostly in the form of Social Security taxes, which are categorized as off-budget." It finds, however, that "increased reporting of employment income would result in increases in tax deductions by businesses. ... As a result, corporations would report lower taxable profits and pay less in income taxes." In addition: "Noncorporate businesses, such as partnerships and sole proprietorships, also would report lower taxable income, which would decrease individual income taxes paid by the partners and owners." Finally:
CBO and JCT estimate that there would be a $1.2 billion decrease in revenues over the 2018-2027 period associated with increases in the nonrefundable portion of the premium assistance tax credit provided through the health insurance marketplaces established under the Affordable Care Act.
Therefore, CBO concludes, the increases in revenues "would be mostly offset" by the decreases.
In the longer run:
CBO estimates that enacting S. 1615 would increase net direct spending by more than $2.5 billion and on-budget deficits by more than $5 billion in at least one of the four consecutive 10-year periods beginning in 2028. Several factors would drive an increase in spending on federal benefits:
- The direct beneficiaries of S. 1615 would continue to naturalize, making them eligible to sponsor immediate relatives for LPR status without an annual limit.
- The later recipients of conditional LPR status and all family-sponsored legal permanent residents would exceed five years in LPR status, conferring eligibility for full Medicaid benefits and SNAP. (Legal permanent residents who naturalize after five years also would become eligible for SSI.)
- Both the direct beneficiaries of S. 1615 and their family members who later receive LPR status would pay enough years of payroll taxes to become eligible for Social Security and Medicare.
In reaching these conclusions, CBO estimates that 3.25 million aliens would potentially be eligible for conditional lawful permanent resident status, but that not all of them will apply for that status or be approved. Consequently, CBO estimates that approximately two million aliens would be granted conditional lawful permanent resident status under that bill. Conditions would be removed for 1.6 million of those aliens, and "roughly 1 million of the 1.6 million people receiving unconditional LPR status would become naturalized U.S. citizens during the 2018-2027 period, and that a substantial number of people would naturalize in the following decades."
Needless to say, S. 1615 will have a significant effect on the federal deficit. Deficit reduction has long been a goal of congressional Republicans. For example, Sen. Jeff Flake (R-Ariz.), one of the cosponsors of the bill, states on his home page that he "has long fought the expansion of the federal government and the growing national debt," and that the "lack of fiscal discipline is a threat to our economic growth and our national security."
It will be interesting to see whether the sponsors of this bill put their principles were the people's money is.