The Economic Benefits of Fixing Our Broken Immigration System

Or at least that’s what they want you to think. Immigration reform is a cornerstone issue for this administration now. They even posted a “whiteboard” on the front page of their website to explain the economic benefits.

WH Immigration WB
As I wrote here and here, the immigration system is not broken. and Obama is not doing this to help the economy. However, as with all things governmental, the devil is in the details.

So, once again directly from the White House website, it’s time to go to the “tale of the tape” and see how their numbers stack up against common sense reality.

According to the White House –

…enacting the Senate immigration reform bill will increase real GDP relative to current law projections by 3.3 percent in 2023 and 5.4 percent in 2033 – an increase of roughly $700 billion in 2023 and $1.4 trillion in 2033 in today’s dollars…

So, that equates to $70 billion dollars a year for the next twenty years. According to the most recent census data, the average median salary of a working American was $45,559. Just for ease of calculations, I will round that up to $50,000.

Now, this is where real math — not that government facsimile — makes a mockery of politicians.

There are roughly 11 million criminals…I mean illegal immigrants. Assume that all 11 million were of working age and earned $50,000 year. You would end up with $550 billion in gross salary. (That’s how government math works, you see. It’s all based on projections of the best case scenario.)

First off, all 11 million are not of working age. All 11 million will not find work or earn $50,000. (As I mentioned in “Out of the Shadows”, it is safe to assume that there will be fair amount who will enroll in programs to get all of the free stuff Obama is giving away.)

That’s how the real world works .

So, that 11 million needs to come down, but I am going to go with roughly a 60/40 split in terms of the number who can/will work v/s the number who can’t/won’t work — and use 6 million.

So, 6 million people earning $50,000 a year would give you $300,000,000,000 — but wait a minute, as legalized immigrants…they don’t have to turn over all of their money now would they? The assumption here is that they would pay taxes just like everyone. So, let’s correct that oversight on my part — shall we?

According to The Tax Policy Center, the average federal tax rate was approximately 17.4% in 2009 (which is the most recent year they have data). Then there would be the state and local taxes they would have to pay as well. So, to average out all of the varying rates, we will use 22% for the total tax rate for our newly employed 6 million immigrants.

Now, let’s get down to business — $50,000 x 22% = $11,000. So, the assumption I am making is that each immigrant will pay $11,000 a year in taxes. Now, to the math, 6 million x $11,000 = $66 billion.

Oh, dang — where is that other $4 billion going to come from? Should I even mention that these newly minted legalized immigrants would also be allowed to take deductions? What about those who choose not to pay? That makes the gap even bigger, doesn’t it?

But according to Obama, legalizing illegal immigrants will grow the economy by $70 billion a year for the next twenty years. So, with reasonable assumptions, I have shown that to be entirely inaccurate.

But I will give them their $70 billion for now…just to prove another point about Obamacare.

The proponents will tell you that legalized criminals will not be eligible for any of the tax credits, subsidies, as provided by Obamacare. OK…what about the law passed in 1986 stating that no hospital can deny an individual treatment due to an inability to pay for such treatment? (That will costs Americans money.) How about the part of Obamacare that says all employers with 50 or more full-time employees (30 hours or more) have to provide those employees with insurance? (That will costs Americans money.)

Hmmm…so many conundrums…but I digress. Let’s get back to the numbers, shall we?

When Obamacare became law, the initial projects were $940 billion over a 10-year period (for only six years of services). That would equate to $94 billion a year. So, with the added $70 billion from legalized immigrants, we are still $24 billion in the hole.

But when has the government even been close on their earliest projections. Some of the more recent CBO projections have Obamacare coming in at $1.8 trillion over a 10-year period. That would equate to $180 billion a year. So, with the $70 billion from immigrants, we would still be in $110 billion in the hole.

Last, and most certainly not least, the waiting period on receiving federal benefits would end and we would have up to 11 million new recipients who would become eligible — even if the proponents were entirely accurate.

Now, if you were to look at that whiteboard posted on the White House website, they are making a ton of assumptions –

  • The best and the brightest immigrants would choose to stay here.
  • The best and the brightest immigrants would start businesses here and be successful at it.
  • That immigrants would even spend all of their money here and not send it back home to help out the family.

So many suppositions that are never entirely accurate. Even if the potential growth is accurate and there is another $70 billion a year — what is the costs of amnesty? There are going to be costs!

The Heritage Foundation has it coming in at a minimum of $2.6 trillion. The Center for Immigration Studies has the costs of amnesty ranging from $10 billion to $29 billion a year. (That would take a major bite out of the $70 billion in growth, wouldn’t it?)

Despite Obama’s rose-colored view of his own ideas, the reality is that legalizing criminal immigrants is not going to improve anything. Quite the contrary will actually occur — things will get much worse.

How can I be so certain you ask?

I haven’t even mentioned a single word about the 11.8 million unemployed Americans who are looking for work and would love to have all of this support from the federal government.

Welcome to Reality!! I hope you enjoy your stay.

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One Response to The Economic Benefits of Fixing Our Broken Immigration System

  1. Pingback: Obamanomics – Another Failure of Liberal Economics

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