In just one year, the Trump administration’s highly visible crusade against immigration has brought new entries into the U.S. to a grinding halt. The demographic consequences are already starting to show up in economic data, and could soon worsen the increasingly dire state of the nation’s $38.8 trillion (and growing) national debt.
But if net immigration to the U.S. stays in the red, the primary long-term effects would be fiscal in nature, as a shrinking workforce will do no favors for the country’s national debt. The Deloitte researchers wrote that immigration tends to have a “positive effect on the federal deficit, allowing revenue to rise faster than expenditure.”
Because immigrants are likely to be of working age and employed, they also paid nearly $100,000 more in taxes than the average native-born American, the study found. In their absence, national debt would reach approximately 200% of GDP, rather than the currently estimated 120%.
Even the Penn-Wharton study added a caveat to its finding that deportations might raise low-skilled wages: High-skilled workers, who make up nearly two-thirds of the U.S. workforce, would likely see their own wages decline because they rely on low-skilled labor to maximize their productivity, according to its analysis.
As for the national debt, the benefits of immigration are only likely to accrue with time. Later generations of immigrants tend to pay more in taxes as educational attainment and incomes rise, according to the Cato Institute’s report, which called children of immigrants “the most potent fiscal engine this country has ever seen.” Should Trump’s immigration crackdown cause a sustained decline in new entries, that engine will be much less powerful than it could have been.
