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1 Effects of the Immigration Surge on the Federal Budget and the Economy 1 (July 23, 2024)

handle is hein.congrec/efsoteins0001 and id is 1 raw text is: Summary The number of people entering the United States has increased sharply in recent years. Most of the increase comes from a surge in people whom the Congressional Budget Office categorizes as other foreign nationals. Some of them have received permission to enter or remain in the country, and some have not; more detail on the composition of immigrants in that category is provided below. On the basis of pre-2020 trends, CBO would have expected the net immigration of people in that category to average around 200,000 per year.1 In the agency's pro- jections, the net immigration of other foreign nationals exceeds that rate by a total of 8.7 million people over the 2021-2026 period. In this report, CBO describes how that 2021-2026 surge in immigration affects its baseline budget and economic projections for the 2024-2034 period. That is, this report looks at the incremental impact of the immigration surge and not at the effects of all people who immigrated in those years or who previously immigrated and were already residing in the United States. In addition, only the surge's effects on federal revenues, mandatory spend- ing, and interest on the debt are examined in detail. The report provides a broad assessment of possible effects on federal discretionary funding; it does not include esti- mates of the surge's effects on state and local budgets. 1. 'The net immigration of other foreign nationals is the number of people newly categorized as other foreign nationals in a given year (whether they entered the country during the year or already resided in the United States under a temporary status that expired) minus the people who are no longer in that category because they emigrated or because they obtained a legal immigration status and are thus accounted for in another category. Net immigration rates exclude deaths of people in the category. To isolate the effects of the increase in immigration in its baseline budget projections and the economic forecast that underlies them, CBO constructed a counterfactual scenario in which that increase does not occur; instead, from 2021 to 2034, the net immigration of people in the other-foreign-national category totals 200,000 people per year (which, from 2027 on, is the same as in the base- line projections). The agency then created economic and budget projections for that counterfactual scenario and compared those outcomes with its economic forecast and baseline budget projections. The differences between out- comes under the two scenarios represent CBO's estimates of the effects of the surge in immigration. CBO's estimates of the effects of the immigration surge on the federal budget and the economy are very uncer- tain. The agency will continue to evaluate new data and other information as it becomes available. Budgetary Effects The increase in immigration boosts federal revenues as well as mandatory spending and interest on the debt in CBO's baseline projections, lowering deficits, on net, by $0.9 trillion over the 2024-2034 period (see Table 1).2 Some of the effects on the budget result from the increase in the number of people paying taxes and collecting fed- eral benefits. Other budgetary effects stem from changes in the economy over that period that are brought on by the surge, including increases in interest rates and in the productivity of workers who are not part of the surge. 2. Mandatory spending consists of outlays for most federal benefit programs-Social Security and Medicare, for example-and for certain other payments to people, businesses, nonprofit institutions, and state and local governments. Mandatory spending is generally governed by statutory criteria and is not normally constrained by the annual appropriation process. Notes: Unless this report indicates otherwise, all years referred to in describing budget projections are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. Years referred to in describing population and economic projections are calendar years. Numbers in the text, tables, and figures may not add up to totals because of rounding. The Congressional Budget Office has corrected this report since its original publication. Corrections are listed at the end of the report.

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