How Changes in Immigration Policy Might Affect the Federal Budget

During the past two years, the Congress has considered proposals to modify the nation's immigration system. The Border Security, Economic Opportunity, and Immigra-tion Modernization Act (S. 744), passed by the Senate in June 2013, addresses multiple facets of immigration policy, including changes to the existing visa system, improvements in border security and law enforcement, and changes to the status of people who currently live in the country without legal authorization. Other proposals have focused on one component of immigration policy-for example, improving border security or changing cer-tain aspects of the visa system. Whether the proposals involve broad or narrow changes to immigration policy, they could have a variety of consequences for both citi-zens and noncitizens, for the federal government, and for state and local governments. This Congressional Budget Office (CBO) report examines some of those proposals and how such changes would affect the federal budget. When estimating the budgetary consequences of immi-gration reform, CBO considers various factors. Depend-ing on the details of proposed legislation, changes to immigration policy could have a significant effect on the size and composition of the noncitizen population and, as a result, on rates of participation in federal programs and the payment of taxes. For that reason, when estimating the budgetary effects of proposals, CBO considers the demographic and labor force characteristics of foreign-born people, their eligibility for and participation in fed-eral programs, their tax liability, changes in the economy, and a number of other factors. If proposals were com-bined into a single, more comprehensive immigration bill, estimates of the budgetary effects would take into account the complex interactions among the various pro-visions; the net effect would not be a simple summation of the individual effects.