Polling consistently shows that Americans are concerned about the surge in immigrates entering the county in recent years. While there certainly are many legitimate reasons for those concerns, it is also true that a larger population drives higher economic growth. Higher growth also increases tax receipts for all levels of governments, including the federal government. Higher levels of an immigrant population will also increase government outlays. But according to a recent report by the Congressional Budget Office, the surge in immigration is going to result in almost a trillion dollars of more revenue for the federal government than it will cause in expenses.

The CBO projection is primarily based on its conclusion that the surge in immigration will result in a U.S. population that is nearly 9 million higher than its baseline projection. Its projections assume that increase took place/will take place during 2021-2026. It expects that immigration after 2026 will return to historical norms of slightly over one million new residents per year.¹

The CBO’s estimates are based on some assumptions which are questionable. First, the CBO assumes that about half of the new immigrants will be legally employed. There are significant restrictions on immigrants’ ability to legally work while in the U.S. For example, those here claiming asylum, but whose case has not been adjudicated, are not allowed to work unless granted special permission. However, that permission is routinely granted after about six months. The CBO also estimated that the compliance rate of those working would be 85%. Clearly, the CBO’s estimate that half of those eligible will go through this process and 85% would start having payroll taxes deducted from their paychecks, as opposed to working for cash in the underground economy, could be well off the mark.

It is also important to note that the CBO included a significant caveat, that while immigration will likely benefit the federal government’s finances, it will likely take a toll on state and local budgets. Increased revenues to state and local governments are not as a direct effect as the effect on increased payroll taxes for the federal government. Also, the costs associated with a larger immigration population fall more heavily on state and local governments.

However, the important point the CBO report drives home is the link between population and economic growth. Those who long for a less crowded America must also recognize that fewer people also means fewer people buying groceries, eating out at restaurants, buying cars and building or renting homes. It means lower, perhaps even, negative economic growth. Slow or no economic growth will affect everyone and would have devasting impacts on federal budget, especially the entitlement programs like Social Security and Medicare. So, be careful what you wish for.

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Note 1 – The CBO return to normalcy in the immigration numbers could obviously be dramatically affected by the election results. If Trump is true to his promises, immigration could fall well below one million per year. One factor that has significantly reduced the number of people entering the country is that the Biden administration reversed its policy of allowing people to claim asylum between ports of entry in May 2023. Whether a Harris administration would allow asylum claims between ports of entry is an unknown at this point.