Immigrants Reduced US Deficits by $14.5T Since 1994(cato.org)
cato.org
Immigrants Reduced US Deficits by $14.5T Since 1994
https://www.cato.org/blog/cato-study-immigrants-reduced-deficits-145-trillion-1994
28 comments
I will not read anything the Cato Institute puts out, they are disingenuous partisans. They do not include the cost caused by the children, such as education and healthcare, they do not even include the cost of welfare to the children or to the household, since the children are legally citizens. It's very easy to say that immigrants are good for the economy when the greatest expenses are attributed to non-immigrants. Do not listen to Cato or read their articles, you would just be feeding yourself lies.
Why would you include costs incurred by children?
That would be constant between natural born citizens and immigrants.
This critique makes no sense.
That would be constant between natural born citizens and immigrants.
This critique makes no sense.
The costs incurred by the children of immigrants are obviously a cost of immigration, but in Cato's analysis, the more expensive the children of immigrants are, the better immigrants look in comparison to natives. If every child of immigrants increased the deficit by 50 million dollars, Cato says that immigration should be increased because citizens increase the deficit so much. This is clearly deceit to supoort their favored conclusions.
How is this calculated for citizens? Does my "cost to society" include my education, etc. or was that factored in to my parents' costs? The former seems like a much more natural way to calculate it, but I'm unfamiliar with how these are done in practice.
It's generally the former, your net fiscal impact includes your education and other childhood expenses. That is a reason why immigration is supposedly so good, another country spent their money raising them but your country gets the tax contributions from the worker. (This does not necessarily mean that the immigrant is actually a net taxpayer, as many european countries have found out.)
Such analysis generally distinguish between non-immigrants, first generation immigrants, and second generation immigrants. Rarely third generation too, and also separates based on the education level, legal or illegal, and country of origin.
Given than in western countries immigrants generally remain and have children who will get government assistance such as free education, one should take into account second generation data as part of immigration.
I am no erudite who has read a million papers, but I haven't seen any analysis for Europe that compares citizens and non-citizens, and for good reason, it's not informative. Here for example two different groups are mixed, non-immigrants and second generation immigrants. Given the lower socioeconomic status of most immigrants, the greater aid given to the second generation might eliminate any savings caused by the first generation, but in this article the cost of second gen is used to make the first generation look better compared to non-immigrants.
This might have been a mistake, but people on Twitter explained it to senior Cato members, and their answers make it clear that it was not a mistake but a deliberate decision. So they are deceivers, even if they do not technically say anything false.
Such analysis generally distinguish between non-immigrants, first generation immigrants, and second generation immigrants. Rarely third generation too, and also separates based on the education level, legal or illegal, and country of origin.
Given than in western countries immigrants generally remain and have children who will get government assistance such as free education, one should take into account second generation data as part of immigration.
I am no erudite who has read a million papers, but I haven't seen any analysis for Europe that compares citizens and non-citizens, and for good reason, it's not informative. Here for example two different groups are mixed, non-immigrants and second generation immigrants. Given the lower socioeconomic status of most immigrants, the greater aid given to the second generation might eliminate any savings caused by the first generation, but in this article the cost of second gen is used to make the first generation look better compared to non-immigrants.
This might have been a mistake, but people on Twitter explained it to senior Cato members, and their answers make it clear that it was not a mistake but a deliberate decision. So they are deceivers, even if they do not technically say anything false.
Thanks for explaining, but I have to strongly disagree. If the costs for children of citizens are counted as part of the childrens' net fiscal impact ("citizen cost"), and the costs for the children of immigrants are also counted as part of the childrens' net fiscal impact (again "citizen cost"), then i fail to see the problem with Cato institute's methodology. It's fundamentally the same as if immigrants had zero children, but US citizens of comparable socioeconomic circumstances had an equivalent number of children. It gets factored in for the children; not the parents, and it happens consistently.
There is always an implicit argument that immigration is bad or good for the economy. In Cato's analysis, the worse children of immigrants are, the better immigration looks.
It is not the same as if citizens had children, because no matter if their children are fiscally beneficial or not, we have no option but to accept them. For immigrants it is different, one would only allow immigration if it benefits the citizens, and their children might change the answer. In this case, you can say that the costs of increasing the number of children of such socioeconomic status is greater than the benefits brought by their immigrant parents.
But in this analysis, the worse the children of immigrants are, the better raising immigration looks. This would not be a problem if this article instead of citizen/non-citizen used first, second gen, and non-immigrant, as is the standard. It would be more clear and informative. But Cato refuses.
It is not the same as if citizens had children, because no matter if their children are fiscally beneficial or not, we have no option but to accept them. For immigrants it is different, one would only allow immigration if it benefits the citizens, and their children might change the answer. In this case, you can say that the costs of increasing the number of children of such socioeconomic status is greater than the benefits brought by their immigrant parents.
But in this analysis, the worse the children of immigrants are, the better raising immigration looks. This would not be a problem if this article instead of citizen/non-citizen used first, second gen, and non-immigrant, as is the standard. It would be more clear and informative. But Cato refuses.
That's the deal with America - we have no option but to accept the children - all the children - because that's how the Constitution is written. That's also how the data is structured. You've hypothesized, but haven't tried to defend, the notion that immigrants' children are a net negative. So far as I can tell, your suggestion that Cato modify their study is based only on your belief that it will lead to the outcome you want. There's any number of ways that the data can be sliced to support different hypotheses. For instance, Cato could discount citizens if their children emigrate from the US. If Cato has chosen to keep their methodology consistent between both groups, even though it doesn't cover all hypotheticals, that seems like a good decision. What I am trying to understand, and this is an earnest request, is whether there's a reason to change the methodology that doesn't require your hypothesis (second-generation Americans are a net drain on the economy) to be assumed to be true in order for the new methodology to make sense.
You don't have to accept children that don't exist from parents that aren't in the country yet. If the children are bad enough you can refuse to even let the parents inside in the first place.
Changing the methodology would lead to greater clarity. If in reality it's the opposite of what I believe and the second generation is better than non-immigrants, it wouldn't show with this methodology. If the second generation is better than even the first, we wouldn't know. If the second gen is equal to non-immigrants we don't know. More knowledge is always better. Data may support infinite hypothesis, but more data will lead to more correct ones.
As for my belief that the second generation is a drain, I know it's not very scientific, but it's based on a few things: I believe at least 30% of people are net taxtakers, though I've seen claimed up to 80%(probably due to pensions and elderly healthcare). Stereotipically latino immigrants, who would be farm workers, meat packers and construction workers would have children with similarly low socioeconomic status, and they are more than let's say, software developers with H1B. And Cato's behaviour: If the whole truth benefitted them they would use it. It's very reasonable to suspect they are a net drain, enough that any studies should not assume without looking that they aren't.
Changing the methodology would lead to greater clarity. If in reality it's the opposite of what I believe and the second generation is better than non-immigrants, it wouldn't show with this methodology. If the second generation is better than even the first, we wouldn't know. If the second gen is equal to non-immigrants we don't know. More knowledge is always better. Data may support infinite hypothesis, but more data will lead to more correct ones.
As for my belief that the second generation is a drain, I know it's not very scientific, but it's based on a few things: I believe at least 30% of people are net taxtakers, though I've seen claimed up to 80%(probably due to pensions and elderly healthcare). Stereotipically latino immigrants, who would be farm workers, meat packers and construction workers would have children with similarly low socioeconomic status, and they are more than let's say, software developers with H1B. And Cato's behaviour: If the whole truth benefitted them they would use it. It's very reasonable to suspect they are a net drain, enough that any studies should not assume without looking that they aren't.
You can't actually compare apples to apples immigrants to Europe and immigrants to the United States because the way immigration is conceptualized into legal systems are quite different. For one, the US, in spite of what the president attempts to proclaim, absolutely has a jus soli system of granting citizenship in addition to a partial jus sanguinis system that makes the determination complicated when citizenship is passed paternally and hinges on the year of birth and legitimization/recognition by the father for a variable number of years. This means that not even every person born outside of the US and entered the country later in life is necessarily an immigrant, and also conceptually there's no such thing as "second generation immigrant", since if they are born outside of the country and do not have citizenship when entering the country with intention to stay, they are immigrants. Otherwise, they are not immigrants. While the determination of whether someone is a citizen or not is actually a potentially complicated process that requires a court to adjudicate, it's only really relevant as a defense to orders of removal in the domestic context, as otherwise it's a consular processing matter that is resolved before the person enters the country. Although how one's actual status may be determined in a variety of circumstances and ways, it results in what's effectively binary - you are an immigrant, or you are not. Contrary to popular usage, "illegal" or "undocumented" is not a descriptor that has a set legal meaning and some are in illegal status for very short periods of time due to bureaucratic inefficiencies, and others are effectively relegated to second class citizenship with literally no chance of adjusting their status, period. While these are meaningful distinctions to make when talking about the issue, when it comes to calculating economic impact, because entitlements are broadly speaking not available to those who do not have legal permanent residency at the very least, the binary, thanks to the legal fiction of 'status', creates a bright line that splits bot along "legal" and "illegal" but "immigrant" and "non-immigrant" in reality.
While thanks to legally enforced discrimination based on the distinct American construction of race and ethnicity there are economic advantages and disadvantages that on the whole affects those considered by the state to be part of said minority group, it's not discrimination that results in immigrants across the board being economically disadvantaged. The immigration policies of the country have in fact so favored educated, white collar migration that there's literally no viable legal way for unskilled or lower-skilled workers to migrate at all, and this has been true legally since the mid 1960s and enforced fully since the early 80s. In absolute numerical terms, the most disadvantaged groups in the country are actually, broadly speaking, the offspring of persons trafficked over via the Atlantic slave trade and those whose ancestors entered when the country officially had open borders (true for all until 1882, and to most Europeans until 1924). I understand that the policy does not resemble the policy of any European country today and so may not be intuitive to those who don't have in depth domain knowledge on the background and legal landscape, which includes most Americans. I know this because I have an Area Studies degree and have practiced immigration law and so while I can't tell you how to obtain a divorce, form a trust, or legally dodge taxes, this happens to be a niche that I worked full time in, and Cato's studies follow how the administrative agencies in charge of immigration and the demographics of migration in this country have decided to demarcate the population. Some of the legal language is copied verbatim from the 1880s but since congress refuses to implement meaningful fixes beyond addressing nonexistent problems since the Clinton administration, one has to work with the data that exists, not the data that we wish existed.
It also is quite obvious to anyone who actually knows how the system works. Everyone is required to pay income taxes federally and many on the state level as well, but immigrants do not receive most entitlements. Even those present legally are not entitled to the full slate of public entitlements that form the bulk of the deficit that grows year after year. Without social security numbers, they can nevertheless obtain taxpayer IDs (ITIN) that follow the same format, but do not generally have withholdings and do not benefit from tax credits except those that benefit their US citizen children, which of course are meant for, and really only sufficient, for their children. Most immigration benefits are funded by the applicants and are not cheap and with no guarantee that they will receive the benefits. It's accurate to say that many not only are many immigrants stuck in an eternal situation of taxation without representation, but in fact they are paying to fund their own persecution, coerced by the state of course. The ponzi-like structure of social security is kept afloat in part thanks to immigrants paying into it but unable to benefit from it later. While most who talk about taxation as theft are really speaking metaphorically, for immigrants who receive no benefits but are forced to pay for everyone else's and have no say in the matter at all, it's far more literal, and kafkaesque.
Your proposed methodology may very well be valid for Europe, but in America it would be essentially impossible to conduct a study on the entire population to begin with, and studies that uses heuristics show the opposite than what your assumptions indicate. Cato is a policy think tank and while its publications may be of interest to the general public, the focus is on promoting policies in the classical liberal tradition and meant for members of congress, federal and state government decision makers, and others who can influence policy. It's not their job to explain immigration law to people on twitter, and frankly, those people don't care about what the law actually is anyway. They ask questions clearly without understanding the context that the paper actually explains, and nobody is obligated to chew the meal they cooked for you as well, you know.
While thanks to legally enforced discrimination based on the distinct American construction of race and ethnicity there are economic advantages and disadvantages that on the whole affects those considered by the state to be part of said minority group, it's not discrimination that results in immigrants across the board being economically disadvantaged. The immigration policies of the country have in fact so favored educated, white collar migration that there's literally no viable legal way for unskilled or lower-skilled workers to migrate at all, and this has been true legally since the mid 1960s and enforced fully since the early 80s. In absolute numerical terms, the most disadvantaged groups in the country are actually, broadly speaking, the offspring of persons trafficked over via the Atlantic slave trade and those whose ancestors entered when the country officially had open borders (true for all until 1882, and to most Europeans until 1924). I understand that the policy does not resemble the policy of any European country today and so may not be intuitive to those who don't have in depth domain knowledge on the background and legal landscape, which includes most Americans. I know this because I have an Area Studies degree and have practiced immigration law and so while I can't tell you how to obtain a divorce, form a trust, or legally dodge taxes, this happens to be a niche that I worked full time in, and Cato's studies follow how the administrative agencies in charge of immigration and the demographics of migration in this country have decided to demarcate the population. Some of the legal language is copied verbatim from the 1880s but since congress refuses to implement meaningful fixes beyond addressing nonexistent problems since the Clinton administration, one has to work with the data that exists, not the data that we wish existed.
It also is quite obvious to anyone who actually knows how the system works. Everyone is required to pay income taxes federally and many on the state level as well, but immigrants do not receive most entitlements. Even those present legally are not entitled to the full slate of public entitlements that form the bulk of the deficit that grows year after year. Without social security numbers, they can nevertheless obtain taxpayer IDs (ITIN) that follow the same format, but do not generally have withholdings and do not benefit from tax credits except those that benefit their US citizen children, which of course are meant for, and really only sufficient, for their children. Most immigration benefits are funded by the applicants and are not cheap and with no guarantee that they will receive the benefits. It's accurate to say that many not only are many immigrants stuck in an eternal situation of taxation without representation, but in fact they are paying to fund their own persecution, coerced by the state of course. The ponzi-like structure of social security is kept afloat in part thanks to immigrants paying into it but unable to benefit from it later. While most who talk about taxation as theft are really speaking metaphorically, for immigrants who receive no benefits but are forced to pay for everyone else's and have no say in the matter at all, it's far more literal, and kafkaesque.
Your proposed methodology may very well be valid for Europe, but in America it would be essentially impossible to conduct a study on the entire population to begin with, and studies that uses heuristics show the opposite than what your assumptions indicate. Cato is a policy think tank and while its publications may be of interest to the general public, the focus is on promoting policies in the classical liberal tradition and meant for members of congress, federal and state government decision makers, and others who can influence policy. It's not their job to explain immigration law to people on twitter, and frankly, those people don't care about what the law actually is anyway. They ask questions clearly without understanding the context that the paper actually explains, and nobody is obligated to chew the meal they cooked for you as well, you know.
I am not aware of all the nuances of the immigration system, but legal and illegal seem a flawed but still somewhat useful measure. Though legal includes both farm workers and software developers and doctors, which makes it even less useful.
And that immigrants do not get most entitlements because the system doesn't work that way seems flawed. The official numbers say that there are 14 million illegal immigrants in the US, and the trustworthiness of those numbers is questionable. It is clear the system is not working properly.
And if Cato wants to talk in public Twitter they should expect questions and answers. And I'm not talking about trolls and haters, but when they respond to intelligent, respectful, high-quality comments from people who know about the subject, with snark and arrogance, with emotional arguments, and sleazy and disingenuous replies, pretending to not understand simple concepts, I don't believe that they are acting in good faith or care about the truth.
I understand that the US has Jus Solis and as such the children of immigrants are legally equivalent to the children of citizens, but that doesn't mean that the economic effect of the children of immigrants should be attributed to all citizens. There is an implicit question and answer of whether immigration is economically beneficial, and the effects of immigration include the children. If the child of every immigrant raised the deficit by a hundred million one would be crazy to support immigration, even if the parents reduced the deficit by a million. Not so in Cato's analysis. It would in fact make increasing immigration look better. For this reason separating between the children of immigrants and non-immigrants would be the correct thing to do, even if legally they are the same. It would be more difficult to do but not impossible at all. If Congress does not collect the data, Cato could do it themselves, or convince Congress to collect it. It is not impossible, they just refuse because it would harm their favored proposal.
And that immigrants do not get most entitlements because the system doesn't work that way seems flawed. The official numbers say that there are 14 million illegal immigrants in the US, and the trustworthiness of those numbers is questionable. It is clear the system is not working properly.
And if Cato wants to talk in public Twitter they should expect questions and answers. And I'm not talking about trolls and haters, but when they respond to intelligent, respectful, high-quality comments from people who know about the subject, with snark and arrogance, with emotional arguments, and sleazy and disingenuous replies, pretending to not understand simple concepts, I don't believe that they are acting in good faith or care about the truth.
I understand that the US has Jus Solis and as such the children of immigrants are legally equivalent to the children of citizens, but that doesn't mean that the economic effect of the children of immigrants should be attributed to all citizens. There is an implicit question and answer of whether immigration is economically beneficial, and the effects of immigration include the children. If the child of every immigrant raised the deficit by a hundred million one would be crazy to support immigration, even if the parents reduced the deficit by a million. Not so in Cato's analysis. It would in fact make increasing immigration look better. For this reason separating between the children of immigrants and non-immigrants would be the correct thing to do, even if legally they are the same. It would be more difficult to do but not impossible at all. If Congress does not collect the data, Cato could do it themselves, or convince Congress to collect it. It is not impossible, they just refuse because it would harm their favored proposal.
almosthere(2)
Let's tell Singapore, a high-trust country with exceptional quality of life and extremely strict, borderline eugenic immigration policies, I'm certain they're missing out!
Your comment implies that the CATO study results are not true due to the Singapore example.
However, pointing to a different country that achieved success with “eugenic” immigration (it’s not even clear what you mean given that Singapore has had very high immigration but for the sake of argument let’s assume it’s the opposite of whatever the study here found) does not invalidate or disprove that the U.S. deficit reduced due to U.S. immigration.
It’s the kind of logical fallacy one would hope a 4 year old would grow out of, and yet…
However, pointing to a different country that achieved success with “eugenic” immigration (it’s not even clear what you mean given that Singapore has had very high immigration but for the sake of argument let’s assume it’s the opposite of whatever the study here found) does not invalidate or disprove that the U.S. deficit reduced due to U.S. immigration.
It’s the kind of logical fallacy one would hope a 4 year old would grow out of, and yet…
[deleted]
Singapore's immigration system is fundamentally different from what the modern American system have morphed into. It is far easier to enter Singapore without a visa when compared to the US, and while the EB-5 investor visa program caused an absurd moral panic in the US and ended up getting limited to such an extent that it basically is no longer a real viable path to gain legal permanent residency in the US, Singapore's government has broad discretion - which it exercises in reality, so it's not something written just for show - to significantly shorten residency requirements (from 10 years down to 12 months in some cases) and allows for highly skilled or investors to gain citizenship, not the convoluted visa-change-of-status-adjustment-of-status-naturalization train that privileges European countries first and foremost while making it extremely difficult for even skilled or even US educated nationals of Mexico, the Philippines, India, and China to gain permanent residency. On the lower-skilled side neither country allows a pathway for migrant laborers to stay regardless, although perversely the American system implicitly encourages not just marriage but consummation as proof of validity which is brought up in interviews for adjustment of status. The immigration system automatically equates marriage with sex and heavily privileges "family-based immigration" to such an extent that it basically incentivizes marital rape via official policy. Singapore doesn't do that, and countries that have marital-based immigration systems don't tend to be this explicit about it.
I don't know how you get "eugenic" out of the Singaporean nationality law, full stop. Income or skill is not genetically bound, after all. The US, in fact, does have explicitly eugenics-based criteria in its naturalization process in that it retains the quota that existed in some form since 1882 but simply added a step in front so that it can claim to have removed to quota from where it was while maintaining a de facto quota system that only affects four nations - one it once colonized, two it has a history of vilifying in overt racist terms. In addition, even though USCIS employees are not doctors and are not trained in diagnosing or determining mental illness and its potential impacts or lack thereof, one is frequently asked at the citizenship interview if one had been diagnosed with a mental illness, and since stating an untruthful answer is grounds for removal and also a minor but extremely easy to prove felony, even erroneous diagnoses or conditions that pose no danger like ADHD may result in rejection of otherwise eligible applications. Since there's no "cure" for many of these conditions it puts the applicant in a sort of limbo, and this is asked after background checks and a ridiculously thorough vetting process that essentially had been going on for 8-10 years had been passed. On that front, I think America has Singapore beat.
I don't know how you get "eugenic" out of the Singaporean nationality law, full stop. Income or skill is not genetically bound, after all. The US, in fact, does have explicitly eugenics-based criteria in its naturalization process in that it retains the quota that existed in some form since 1882 but simply added a step in front so that it can claim to have removed to quota from where it was while maintaining a de facto quota system that only affects four nations - one it once colonized, two it has a history of vilifying in overt racist terms. In addition, even though USCIS employees are not doctors and are not trained in diagnosing or determining mental illness and its potential impacts or lack thereof, one is frequently asked at the citizenship interview if one had been diagnosed with a mental illness, and since stating an untruthful answer is grounds for removal and also a minor but extremely easy to prove felony, even erroneous diagnoses or conditions that pose no danger like ADHD may result in rejection of otherwise eligible applications. Since there's no "cure" for many of these conditions it puts the applicant in a sort of limbo, and this is asked after background checks and a ridiculously thorough vetting process that essentially had been going on for 8-10 years had been passed. On that front, I think America has Singapore beat.
So immigrants earn so little they can’t put aside any savings? Or somebody is. Not the flex Cato thinks it is.
The government’s red ink is our black ink. The trouble is “safe savings” doesn’t have the same air of doom about it.
The government’s red ink is our black ink. The trouble is “safe savings” doesn’t have the same air of doom about it.
Where did you get that assertion?
The article literally says that they earn more because they work more hours on average.
The article literally says that they earn more because they work more hours on average.
For the deficit to reduce we overall have to be saving less.
Are you talking about trade deficit?
This is about deficit in government spending.
Immigrants pay more in taxes than they receive in benefits.
This is about deficit in government spending.
Immigrants pay more in taxes than they receive in benefits.
For the deficit in government spending to reduce the private sector has to save less. They are one and the same thing.
The immigrants are spending all they get. Nothing to do with taxes.
Learn how the accounting works
The immigrants are spending all they get. Nothing to do with taxes.
Learn how the accounting works
On the surface, there's absolutely zero connection between public debt and private (personal) savings. If there's a hidden connection, you're going to have to explain it, because it's not clear at all how they are one and the same.
What is a gilt or a Treasury? It is a private saving certificate bought by people in exchange for bank deposits they have previously accrued.
Those bank deposits are transferred to Treasury by deleting the bank deposit and by the bank transferring central bank credits back to the Treasury.
Where did those bank deposits originate from? From the government transferring central bank credits to the payee bank and the payee bank then crediting the deposit account.
If the individual chooses to hold the bank deposit, then the bank itself will purchase the government security with the credits it received from the central bank when government made its payment.
Does that clear it up for you?
The full gory details in the UK case is here: https://doi.org/10.1080/00213624.2025.2533726
Those bank deposits are transferred to Treasury by deleting the bank deposit and by the bank transferring central bank credits back to the Treasury.
Where did those bank deposits originate from? From the government transferring central bank credits to the payee bank and the payee bank then crediting the deposit account.
If the individual chooses to hold the bank deposit, then the bank itself will purchase the government security with the credits it received from the central bank when government made its payment.
Does that clear it up for you?
The full gory details in the UK case is here: https://doi.org/10.1080/00213624.2025.2533726
Thank you for clarifying. That's certainly a theory.
We're essentially offloading the cost of raising people from childhood and much of their education to get fully grown workers who will accept lower wages. This in turn becomes a Ponzi scheme that no doubt has economic benefits but is also unsustainable without ever increasing immigration and does produce negative externalities (inflationary plus social disarray).
Also, even if we are on board with this reverse colonialism, are all immigrants contributing to the same degree? Surely the benefits could be maximized...