In a new report, “Effects of the Immigration Surge on the Federal Budget and the Economy”, the CBO concludes that the huge rise in inadmissible migrants during the Biden administration will reduce the federal deficit by an average of $90 billion per year over the next ten years. Although I understand Congress’s desire for hard numbers, the CBO should have declined to produce an estimate rather than publish one that by its own admission is so lacking in precision and comprehensiveness.
CBO projections are by their nature imprecise, but the problem is magnified when we know relatively little about the population under study. Indeed, in warning that the published estimates are “highly uncertain,” the CBO lists the size of the surge population, its demographic profile, its legal status going forward, and its broader economic impact as “major sources of uncertainty.”
Even if we leave aside those uncertainties, the results cannot be meaningful when so much spending is omitted. While the report includes the projected costs to non-discretionary federal programs such as Medicaid and food stamps, it excludes the surge’s impact on discretionary spending. Increased federal costs associated with border enforcement, migrant processing, transportation, education, law enforcement, infrastructure, and land management all enter the CBO’s ledger as zeroes.
The CBO excludes those discretionary programs not because the surge will leave them untouched – it certainly will not – but because the degree to which Congress will appropriate more funds for them rather than reallocate existing funds is unknown. The CBO does note that if federal discretionary costs rise in the same proportion that the surge swells the U.S. population, then taxpayers would be responsible for another $20 billion annually.
In addition to the missing federal discretionary costs, the report also suffers from two familiar limitations. First, as the CBO acknowledges, immigration tends to impose greater net fiscal costs on state and local governments, but its report includes only the impact on the federal budget. Most of the visible costs associated with the surge – emergency shelters and housing shortages, strains on hospitals and schools, overburdened infrastructure, and so on -- are costs borne by state and local taxpayers and therefore not part of the CBO’s analysis. The second familiar limitation is the 10-year budget window, which captures the surge population’s initial contributions to Social Security and Medicare but excludes almost all of the benefits they eventually will receive from those programs.
The exclusions of federal discretionary spending, state and local spending, and most Social Security and Medicare benefits are all understandable in the sense that they are hard to measure. Nevertheless, these exclusions are fatal to any attempt to assess the actual fiscal impact of the border surge. In this situation, the CBO should have avoided producing any report at all rather than publish one in which the caveats swallow the headline.