Why discuss Illegal Immigration and the National Debt together? The two topics are an excellent juxtaposition of emotion driven bad policies that lead to a lowering of overall freedom, the lowering of the standard of living for those the government is supposed to serve, and the eventual takeover of government by the government and its elites. Make no mistake, illegal immigration and the national debt are both primary tools in the socialist toolbox.
You can’t “Fundamentally Transform” this Nation without Destroying its Social and Economic Foundations First!
Costs of Illegal Immigration
Trying to determine the actual costs of illegal immigration is as difficult as trying to determine how many illegal aliens (IA) are in the United States at any one time. The conservative Federation for American Immigration Reform pegs the IA population at 12.5 million while other alternative sources put the number much higher, 20-30 million. Wikipedia estimates that the IA population could be as high as 20 Million. 12.5M seems to be conservative and is quoted by the left and right. But, if the population is 20 million, then the overall net costs could be higher.
But, in the past two years, we have seen a dramatic shift in the make-up of illegal immigration at our Southern border and this shift is adding even higher costs to the processing and care of the new illegal immigration population. Historically, most of the illegal immigrants came from Mexico into the US. Some sought to stay here permanently while others came on a seasonal basis for seasonal work. Today, the majority of illegal immigrants are seeking asylum and are coming out of Central America and consist of family units or unaccompanied minors.
This shift puts a tremendous new burden on our Customs and Border Patrol, Health and Human Services, and other federal agencies. Care of minors and family units requires extensive healthcare services as well as investigative services to ensure that the adults with the children are actually the parents or guardians of the children. Today, there are over 2,000 IA who have been detained at the border are now quarantined as they have infectious diseases such as mumps, chicken pox, and other diseases that have been pretty much eradicated in the US. IA net costs estimates do not include any costs for treating US citizens who have been infected due to contacts with IA and their children.
Net Immigration Costs-12.5M IA
That said, lets assume that the 2018 costs of illegal immigrants entering and living in the US is still indicative of today’s 2019 costs. At a high level, there are a number of cost components that are provided by the Federal Government then by State and Local Governments. (The percentage shown next to the cost is the % of the Federal Government Spending ($4.1TT) less Social Security and Medicare ($1.63T) or $2.47T total spending)
- Federal Costs of Illegal Aliens: $45.8B (1.85%)
- Federal Education-$1.6B
- Federal Medical Costs-$17.1B
- Federal Justice Expenditures-$13.1B
- Federal Welfare Programs-$5.8B
- Meals in Schools-$1.003B
- Supplemental Nutrition Assistance-$1.96B
- Women, Infants and Children Care-$1.098B
- Temporary Assistance for Needy Families-$1.785B
- Federal Tax Receipts (all taxes) From Illegal Aliens-$22.1B
- Net Federal Costs from Illegal Aliens: $30.4B (1.23%)
- State and Local Costs of Illegal Immigrants: $88B
- State Educational Expenditures; $44.4B
- State Medical Expenditures: $12.1B
- State Justice Expenditures: $10.8B
- State Welfare Expenditures: $2.9B
- State Taxes Collected (All taxes) from Illegal Aliens: $3.5B
- Net State and Local Costs from Illegal Aliens: $85B
- Net Federal, State and Local Impact of Illegal Aliens: $115.4B (4.7%) (Note 1)
Hidden Costs of Illegal Immigration
There are many other costs that are not quantified such as those associated with having to provide an extensive Multi-Lingual components to our overall education system due to IA children. Increased medical costs to citizens as a result of formerly eradicated diseases being reintroduced into our general population. With over 12M IAs willing to work for low wages, what is the cost to our economy and to our workers for IAs artificially depressing our wages? Well, assuming IA keeps lower incomes depressed by $3.00/hour, and there are 12M illegal aliens in the workplace, this would decrease overall wages and our GDP by $74,880,000,000. Yes, that is BILLIONS. Adding this to the net cost of supporting IA you are almost to $200B Per Year! No wonder the left want to artificially set the minimum wage to $15.00/hr!
The other cost is that of law enforcement. Open border supporters state falsely that ‘immigrants” commit less crime that do US Citizens. This is false narrative as they add legal immigrants with the illegal immigrant numbers; do not include crimes such as document fraud, fraudulently applying for government benefits, drug offenses and offenses committed in sanctuary cities that are ignored altogether.
The bottom line is that illegal immigrants are 3 times more likely to commit a crime than a US Citizens and lawfully present aliens.
Negative Impact of Illegal Immigration
One key takeaway is that IAs do NOT contribute to the US economy and are actually a negative in terms of cash flow in the amount of $115,400,000,000 per year! That is equal to about $375 per year for every citizen, men, women and children in the US!
President Trump submitted a Budget for the Veterans Affairs Department for 2019 in the amount of $198,000,000,000. The IA net costs if eliminated would pay for over half of the VA costs!
In spite of what you hear to the contrary, IAs receive the following services from the FEDERAL GOVERNMENT today. This does NOT include the services that they receive from State and Local governments that are over and above these Federal services:
- They receive $943,200,000 for Primary and Secondary Education Support;
- They receive $541,694,040 for LEP-Limited English Proficiency Title III support;
- They receive $206,140,000 for Migrant Schooling Title IC support.
- They receive $$8,200,000,000 in Uncompensated Hospital Expenditure costs;
- They receive $1,242,990,372 for Medicaid Births (children are automatically US citizens)
- Their healthcare contributes $3,458,475,000 to Medicaid Fraud.
- They receive $4,234,129,200 in Medicaid for US Born Kids of Illegal aliens. (children are automatically US citizens)
- They add $1,240,000,000 to our Federal Incarceration costs.
- They add $3,218,000,000 to our Enforcement and Removal Costs.
- They add $5,968,729,360 to our Customs and Border Protection costs (much could be eliminated with a wall.)
- They add $1,126,840,000 to Other ICE operations.
- They add $210,000,000 to our State Criminal Alien Assistance Program.
- They add $168,120,000 to our Executive Office for Immigration Review.
- They add $1,200,000,000 to our Alien Minor program.
- They add $16,920,000 to our Byrne Grant Program (note 1)
- They add $1,003,000,000 to our Meals in Schools.
- They add $1,963,416,000 to our Supplemental Nutrition Assistance Program. (SNAP)
- They add $1,097,829,360 to the Women Infants and Children program.
- They add $1,785,000,000 to the Temporary Assistance for Needy Families program.
Illegal immigration is expensive and a drag on our economy in terms of costs and just as important, it is a drag on the wages of our low-end wage earners who struggle to make ends meet ($75B/yr). Illegal immigrants do not pay their way and are a drag on our economy in terms of depressing wages, lowering our GDP, adding to our national debt, and endangering our citizens with higher per capital violent crime rates than that of US citizens.
Our National Debt Crisis
Most American taxpayers complain about taxes in all forms while glossing over the US National Debt and its potential impact on their lives. Today, we, you and me, are on the hook for over $22 Trillion in debt and each man, woman and child in the US owes over $67,000 of this debt! The annual interest for 2019 on the debt is $363 Billion which is almost 8% of the total Federal Budget for 2019! With $363 Billion, you could fund about 50% of the military; or, you could fund 62% of Medicare; or, you could fund 39% of Social Security; or, you could fund the Entire Discretionary Spending for the 2020 Presidential budget for the Departments of Agriculture, Commerce, Education, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Justice, and Labor! So, interest expense isn’t cheap!
Separate Out Social Security and Medicare From the US Government Budget!
The Federal Budget is so convoluted that it is incomprehensible to the average person, even those with an accounting degree. In order to “simplify” the Federal Budget, we should separate those programs that are supported by taxpayer contributions into their own “accounts” as you would in business. The two largest, Social Security and Medicare should be separated and any program, such as Social Security Disability, should be moved out of Social Security and into a safety net group of benefits that would include Medicaid, SS Disability, CHIP, ACA and other marketplace subsidies, and all forms of welfare including SNAP (food stamps). SOCIAL SECURITY, BY LAW CANNOT EVER ADD TO THE NATIONAL DEBT, PERIOD! MEDICARE CAN.
By separating these two programs out of the Central Federal Budget citizens will be able to see and monitor of these two large programs, including any shortfall in funding they may experience. IF YOU CAN ACTUALLY SEE A PROBLEM, YOU CAN FIX IT!
Another benefit would be to see and understand that the Social Security Fund holds 50% of the US Intergovernmental debt totaling over $3 Trillion dollars! The Medicare Fund holds over 3% or $184,800,000,000 of US Intergovernmental securities. In other words, your funds are LOANING money, at a ridiculously low rate to the Federal Government in order for it to operate! The reader should understand that by law the Social Security and Medicare trustees can only invest in low yielding US treasury securities. They are not allowed to invest in the US economy in lets say the S&P 500 that yields orders of magnitude times that of the US securities. For example. In 1928 you invested $100 each in the S&P 500, 3 Month T-Bills, and 10 Year Treasury Bonds. In 2018, They would be worth: (Note 3)
- S&P 500: $382,850 (minus my $100 investment)
- 3 Month T-Bill: $2,063 (minus my $100 investment)
- 10 Year Treasury Bond: $7,308 (minus my $100 investment)
It is easy to see that by restricting the Social Security and Medicare trust funds to the 10 Year Treasury Bonds we are getting screwed big time in terms of return on investments. I was born in 1945 and if we look at these same funds today, they would have a present value of:
- S&P 500: $382,624 (minus my $100 investment)
- 3 Month T-Bill: $1,944 (minus my $100 investment)
- 10 Year Treasury Bond: $7,129 (minus my $100 investment)
Politicians are Lying to You!
Your politicians, especially on the Progressive-Left but also many conservatives, tell you that it is too risky to invest in our economy! The amounts shown above include the past 90 years and also include the Great Depression, many recessions including the 2008 Great Recession! Even including those catastrophic financial meltdowns, the S&P 500 went from our $100 investment to $382,850! Rather than projecting that Social Security and Medicare funds would be depleted by 2030, those funds would be secure into the next century if even 50% of the money had been invested in the S&P 500! Heaven forbid if we actually saw an increase in the Social Security benefits!
The other benefit would be that the Social Security and Medicare funds could FUND OR RETIRE THE ENTIRE US DEBT!
Back to the Budget and the National Debt
OK, let’s remove Social Security and Medicare out of the President’s FY 2020 Budget and see where we are. (We are using the President’s budget as it is the latest indicator we have for revenue and spending. BUT, with a Democrat House, the spending numbers for social programs are going to be lobbied for increases.)
- 2020 Expenditures-$4.746T
- 2020 Social Security ($1.102T)
- 2020 Medicare ($.679T)
- Net 2020 Budget Expenditures ($2.965T)
- 2020 Revenue-$3.645T
- 2020 Social Security Revenue: ($.949T)
- 2020 Medicare Revenue: ($.289T)
- Net 2020 Budget Revenue: ($2.407T)
- 2020 Deficit Less SS and Medicare ($.558T)
- 2020 Deficit With SS and Medicare ($1.101T) Note 4
Remember, both Social Security and Medicare are still projected to be solvent per current funding through 2030. Social Security by law CANNOT add to the National Debt.
So, what is left in the budget?
- Discretionary Spending
- Defense Spending: $726B
- Non-Defense Spending: $700B
- Total Discretionary Spending: $1.426T
- Mandatory Programs (Less SS & Medicare)
- Medicaid, ACA & other Subsidies: $418B
- Basic Health Exch. Subsidies: $50B
- Other Mandatory Programs: $587B
- Infrastructure Allowance: $5B
- Interest: $479B
- Total Mandatory (Less SS & Medicare): $1.539T
- Total Spending: $2.965T
- Total Receipts (Less SS & Medicare): ($2.407T)
- Total Deficit: ($558T)
It is easy to understand that the first bucket is Defense Spending. President Trump’s budget calls for $726 Billion to be spent on the military FY 2020. But what is the Non-Defense spending that is $700 Billion? Well, this is the cost to run the government and includes treasury, education, VA, etc.. It is basically the entire non-military executive branch operating costs.
The President’s budget includes cuts to every executive department while taking money out of the Corps of Engineers and the DHS for additional wall funding. Congress fought President Trump in the last two fiscal years against his CUTTING the cost of government via cutting non-defense discretionary spending. There are tons of fat in the executive bureaucracy, and even whole departments that could be eliminated, but until we get a fiscally conservative Congress the President will have to do the best he can.
Mandatory Spending Programs (Not Including Social Security & Medicare):
This grouping adds $1.539 Trillion in spending to the budget. The description, “Mandatory” is a bit misleading as the definition is spending that Congress legislates outside of the annual appropriations process, usually less than once a year. In short, these programs are mainly on auto-pilot with automatic increase triggers of 6-8% Per year! So when you hear that the President is “cutting” some of this spending, he is actually asking for a REDUCTION IN THE PERCENT INCREASE IN SPENDING. THE ACTUAL DOLLARS ARE INCREASED!
Below is a chart of all Mandatory Spending including Social Security and Medicare to help you visualize what is included from 2015. Most of the non revenue generating healthcare amount shown, $985.7 billion, is for Medicaid. Food and agriculture is included in this protected group as this department administers Food Stamps (SNAP). Also included is the cost for the VA, Federal Unemployment, transportation and federal employee benefits.
2% Plan: So, how can we eliminate the $558 Billion dollar Discretionary & Mandatory Spending Deficits Spending and start paying down the deficit? President has included in the 2020 budget is “two-penny” plan where all spending would be cut by 2% except for the military, Social Security and Medicare. The goal is to eliminate deficit spending within 5-7 years through budget cuts and economic growth. Once deficit spending turns positive, then the deficit will start to shrink.
Welfare Reform: All Welfare programs, Medicaid, CHIP, SNAP etc., need to be streamlined and simplified under a single agency to eliminate duplication and abuse. Many estimates point to $200B in waste and fraud alone in these programs.
Stop Illegal Immigration: Build the wall, eliminate chain immigration, Visa Lotteries, open amnesty laws, make E-Verify mandatory and with stiff penalties, deport Visa overstays, and make it illegal for illegal aliens to receive any welfare assistance. By eliminating the costs of illegal immigration discussed at the top of this article, we can save an additional $200B and provide decent wage increases for entry-level positions and add to our GDP.
Eliminate Department Overlap: Eliminate Wasteful or Duplicate Federal Department Functions: The department of Energy, Education, Veterans Affairs, Health and Human Services, Interior, Agriculture and others can be streamlined and in some cases folded into another agency. Most function as grant administrators rather than perform an actual function or add to the overall output of our economy. Energy, Agriculture and Interior have a lot of synergy and could be combined; Labor and Education are synergistic by their very nature.
There are many more cost saving measures that can be undertaken but it will take a fiscally conservative Congress to work with the President to accomplish them. The current crop of socialist that are overtaking the Democrat Party are not going to sit by and watch this happen quietly!
Add US Economy Investments to Social Security and Medicare Trust Funds:
Open both funds so the administrators can start investing some of the revenue and surplus into market securities such as the S&P 500. Gradually allow a percentage of market securities to be included to perhaps a cap of 50%. This would allow for the 10 year treasury bonds to provide somewhat a buffer in the event of a prolonged market downturn. But, even during the Depression, the 10 year bonds did not do any better than market securities.
This move would allow Social Security and Medicare to become self-funding in perpetuity. Medicare does need some streamlining and cost cutting but the current administration is already addressing much of this and their moves will lower healthcare costs overall to the US consumer. Just think, instead of your “$100 investment” in 10 Year Treasuries being worth $7,308 over the past 90 years, you could have added $191,275 to your $100 investment! (50% investments in the S&P 500). Politicians will screw this one up big time!
The crisis at the border is not only a current immigration, asylum, humanitarian, health and crime issue, it is a long-term economic and social crisis. The costs and the wage depression impacts are unsustainable to say the least. The very core social fabric is at risk as well as our historical norms and mores. Eventually the costs and wage depression associated with illegal immigration will swell to $500,000,000,000 if current levels of illegal entry are not checked substantially.
The national debt is real and it is important. It is also too much for the current Congress to deal with. Without a fiscally conservative, gutsy group of men and women in Congress they will keep kicking the ball down the field and ignoring the debt. You should know that without doing much of anything, the annual federal spending will rise at 6-8% per year as the Congress has basically put the budget process on auto-pilot! The President’s “2-Cent” plan does not have a chance in this 116th Congress as the House Democrats will block it and the Mitch McConnell wimpy RINOs don’t have the stomach for a fight that is truly for the soul of this country.
2020 is right around the corner. All this can be solved by your vote for fiscally conservative politicians…
Note 1: Federal Spending used much of the State and local spending for these programs originate with the Federal Government.
Note 2: The Edward Byrne Memorial State and Local Law Enforcement Assistance Grant Program or the Byrne Formula Grant Program is a federal grant provided to states from the U.S. Department of Justice (DOJ) Bureau of Justice Assistance (BJA) division. This grant aims to help law enforcement agencies enforce and strengthen local and state laws designed for serious offenders or violent criminals.
Note 3: Link to Investment Table Comparisons: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
Note 4: Some SS and Medicare revenue and expenditures include non core outlays for disability and other welfare expenditures.