The CBO’s Unbiased Financial Assessment of CIR

Debate in the U.S. Senate rages on regarding the proposed comprehensive immigration reform (CIR) bill. However, the ultimate fate of this bill has long-rested, in part, on the answer to one key question – how much will it cost? On June 19, 2013, the Congressional Budget Office (CBO) answered this question with a definitive “not much.” More precisely, the CBO issued a report based on its analysis of the bill, which concluded that enacting the proposed CIR bill would actually lead to a significant reduction in the federal deficit.” Or, as the Washington Post put it, enacting CIR amounts to “a free lunch.” [See CBO: Immigration Reform is a Free Lunch, by Ezra Klein, Washington Post, WonkBlog, 18.Jun.2013.]

Long-time followers of Washington politics understand that, when it comes to resolving questions of cost, the CBO report is typically viewed as the gold standard. The CBO is responsible for providing “independent analyses of budgetary and economic issues to support the Congressional budget process,” and the CBO prides itself as being “strictly nonpartisan.” Naturally, the Office’s analysis of proposed legislation was greatly anticipated.

Some of the key predictions make in the report regarding the economic impact of passing this CIR bill include:

  • Reducing the deficit by more than $175 billion over the first decade, and $700 billion over the decade that follows
  • Increasing average wages by the year 2025
  • Increasing the amount of capital investment

Prior to issuance of the CBO report, no clear, objective answer related to the cost of the bill was available. Reports and studies had been issued in an attempt by various political and advocacy groups to frame debate on the bill. For instance, the Heritage Foundation released a widely disputed cost estimate that claimed the bill would cost taxpayers a gargantuan $6.3 trillion over 50 years. However, most observers have come to recognize that the findings made by any group with an obvious agenda can hardly be considered reliable as a source of information on this matter. The CBO, on the other hand, generally is understood to have “no skin in the game” – that is, the Office has nothing to gain or lose based upon its findings.

This is not to say that the report fails to find any chinks in the armor of CIR, at which opponents of the bill have already begun to take aim. The CBO noted, for example, that the bill would lead to a slight increase in the unemployment rate for the next several years, and as reported above, while it would ultimately cause an increase in average wages, it would cause a small decrease in wages and the per capita gross national product (GNP) over the short term. However, the report summary pointed out that:

“The estimated reductions in average wages and per capita GNP for much of the next two decades do not necessarily imply that current U.S. residents would be worse off, on average, under the legislation than they would be under current law. Both of those figures represent differences between the averages for all U.S. residents under the legislation – including both the people who would be residents under current law and the additional people who would come to the country under the legislation – and the averages under current law for people who would be residents in the absence of the legislation. As noted, the additional people who would become residents under the legislation would earn lower wages, on average, than other residents, which would pull down the average wage and per capita GNP; at the same time, the income earned by capital would increase.” [See CBO Releases Two Analyses of the Senate’s Immigration Legislation, by Doug Elmendorf, Congressional Budget Office WebSite,, 18.Jun.2013.]

Still, it seems clear that the overall long-term financial impact of this bill, per the CBO, is inarguably positive. Whether that will translate into votes, however, is still a question yet to be answered.

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Disclaimer: The information provided here is of a general nature and may not apply to any specific or particular circumstance. It is not to be construed as legal advice nor presumed indefinitely up to date.