Heritage Foundation

How much will immigration reform really cost?

May 8, 2013: 12:20 PM ET

Don't believe the Heritage Foundation's $6.3 trillion assumption.

immigration-reform-rally-614xaFORTUNE -- As U.S. lawmakers debate a Senate bill this week on far-reaching immigration legislation, it feels a little like 2007 all over again.

That was the last time Washington took up the biggest changes in America's immigration laws in more than 20 years. Negotiations quickly broke down, however, as lawmakers were deeply split on the Senate bill offering legal status to millions of undocumented immigrants while trying to secure the nation's borders. It also didn't help when the conservative Heritage Foundation released a report arguing reform would drag down the U.S. economy by costing the government trillions of dollars.

Now as lawmakers take another stab at reform (the Washington Post provides a nice rundown), the Heritage Foundation is laying out its case again. On Monday, the conservative think tank released a report claiming the Senate's bill would cost taxpayers $6.3 trillion in government benefits provided to immigrants over their lifetime -- a period of up to five decades.

"Here we go again. New Heritage study claims huge costs for Immigration Reform," tweeted Republican Sen. Jeff Flake of Arizona. He helped negotiate the latest bill.

Unlike 2007, Heritage's report comes at an unusually touchy time. While improving, the U.S. is still struggling with a weak jobs market. It also follows endless debates in Washington over austerity and government deficits.

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All this may add fire to anyone saying immigrants are a drain to the economy, but it's worth bearing in mind that allowing more immigrants to live and work legally in the U.S. may not be as costly as some would have us believe.

Anticipating Heritage's report, the libertarian Cato Institute released its own study countering the claim that immigrants are more trouble than they're worth. In fact, low-income immigrants use fewer public benefits than their native-born counterparts. And when they do receive benefits, the average cost per recipient is almost always less than for native-born recipients.

It's uncertain why. Needless to say, part of it is because non-citizens aren't eligible for many government programs. It may also be because of what experts call "the chilling effect," where immigrants aren't as likely to reach out for government help because of cultural influences, says Alex Nowrasteh, immigration policy analyst at Cato. They may view public help as shameful, or language barriers may be obstacles, or they've adjusted for years without assistance.

For instance with Medicaid, the average annual cost for 100 native-born adults would be about $98,400, while it would be approximately $57,200 for 100 non-native citizen adults, according to Cato. This also goes for the Supplemental Nutrition Assistance Program -- otherwise known as food stamps. In 2011, a higher share of low-income native citizens, 33%, received food stamps compared with 25% of naturalized citizens and 29% of non-citizens.

To be sure, taxpayers will pay more for immigration reform. What Heritage pays less attention to, and almost ignores, is how allowing more immigrants into the U.S. benefits the economy. Attracting the best and brightest workers from around the world would give the nation an economic edge -- a mantra echoed by America's top CEOs from Mark Zuckerberg of Facebook (FB) to Bill Gates of Microsoft (MSFT). Even Canada, Chile and the U.K. have realized this -- they offer special visas to entrepreneurs from around the world looking to launch businesses and hire workers.

It's at least worth asking if such benefits are worth the costs.

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