Why the immigration surge under Biden is saving taxpayers money

By Chris Matthews

The Congressional Budget Office estimates new immigrants will boost federal revenues by $1.2 trillion

A wave of illegal border crossings in recent years has sparked heated debate over U.S. immigration policy, but official estimates suggest the surge in migration over the U.S.-Mexico has done wonders for the federal budget outlook.

The Congressional Budget Office estimated Tuesday that the immigration surge since 2021, which it expects to continue to 2026, will raise federal tax revenues by $1.2 trillion over the next ten years while only increasing spending by $300 billion.

See also: Trump's immigration plan could add trillions of dollars to national debt, fueling inflation and market jitters

The CBO said that most of the revenue increase comes from payroll taxes paid by immigrants on their earnings.

The news comes the same day the Biden administration announced a new program that it expects will help half a million spouses of U.S. citizens achieve lawful permanent resident status, which could enable many of those same residents to work legally.

Read more: Biden to announce deportation protection and work permits for spouses of U.S. citizens

Most of the increase in new immigration in recent years has come in the form of working-age adults who have crossed the border seeking asylum, and these individuals are typically given work authorization as they wait for their cases to be heard in immigration court.

Meanwhile, these same workers are denied most federal benefits that go to lower-income Americans, like Medicaid, until they have been in the country for five years or longer.

Earlier this month, President Joe Biden announced an executive order that will eliminate the ability of migrants to claim asylum during periods when border encounters are high.

The CBO estimates that 8.7 million more workers will have entered the country by 2026 than would have been expected prior to the surge.

It predicts that half of those 8.7 million will receive work authorization and will be as likely to pay taxes on their incomes as the rest of the population, given that payroll taxes are deducted from paychecks by employers.

"In addition to those direct effects on taxes paid by people in the surge, broad economic changes resulting from the surge affect [government] revenues," the CBO report said. "The surge in immigration leads to more economic activity, which in turn boosts income...as well as tax revenues from all sources."

These calculations only hold for the federal government, however.

Many state and local governments are struggling to deal with the unexpected growth in the immigrant population, given the added demand on schools and for healthcare services, which according to the CBO "are two of the largest categories of spending in those governments' budgets."

Yields on U.S. Treasury bonds BX:TMUBMUSD10Y have pulled back in recent weeks amid predictions that the Federal Reserve could reduce interest rates sometime this year, even as issuance has surged to service rising budget deficits.

-Chris Matthews

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-20-24 0505ET

Copyright (c) 2024 Dow Jones & Company, Inc.