The White House Council of Economic Advisers’ Imaginary Cost of Illegal Immigrants
The White House Council of Economic Advisers (CEA)—the president’s in-house think tank—released a report this month that purported to find that the average illegal immigrant imposes a lifetime cost on taxpayers of $166,716—or up to $1.9 trillion in total—and that “amnesty” would add to these costs, while deportation spending would cut the deficit.
These estimates are not credible. As I show in a recent Cato paper, illegal immigrants are net taxpayers, meaning that they pay more in taxes than they receive in benefits. Deporting them not only adds to the debt directly through spending on Immigration and Customs Enforcement but also indirectly through reduced tax revenue. Illegal immigrants as a group have actually reduced federal, state, and local deficits by roughly $1.7 trillion over the last three decades.
The Congressional Budget Office (CBO) found that recent illegal immigrants and asylum seekers who entered from 2021 to 2026 will reduce deficits by about $900 billion from 2024 to 2034. Earlier this year, it found that immigration policy changes from 2025 alone increased the budget deficit by $500 billion from 2026 to 2035.
CEA’s Imaginary Costs of Illegal Immigrants
The CEA writes:
Research shows that illegal aliens as a population are lifetime net recipients of government benefits. This is because they have lower incomes than the general population and evade taxes at higher rates than the general population. The Manhattan Institute has previously estimated the lifetime net fiscal burden for new illegal aliens at $130,000. CEA estimates that the average illegal alien imposes a net lifetime public cost of $166,716 by age 78.
Where are these costs coming from? CEA provides almost no methodological detail beyond citing the Manhattan Institute (MI) report, which estimates the fiscal effects of immigration on the federal budget. I wrote a paper-length response (a summary of which you can find here) identifying seven significant problems with the Manhattan Institute analysis (some of which were fixed in a revised version of MI’s report). Among other problems, MI assumed that deportations lead to massive, immediate cuts in defense spending. It never explains how this happens, but deportations have not, in fact, delivered cuts in those expenses.
The bigger problem relevant here is that MI assumed that illegal immigrants use welfare at the same rate as other immigrants of the same age and educational attainment. But that’s impossible. As CEA writes, “Illegal aliens today are barred from most federal means-tested social safety net programs.” MI admits that this poses a serious problem for its estimates of the cost of illegal immigration: “These numbers likely overestimate the costs of unlawful immigrants, since the CPS data do not distinguish by legal status and unlawful immigrants cannot claim Social Security, Medicare, and most federal welfare benefits.”
CEA tries to justify its conclusion by stating that illegal immigrants “have lower incomes than the general population and evade taxes at higher rates than the general population.” That’s true, but the drop in revenue is far less severe than the drop in benefits. That’s because most illegal immigrants work with borrowed identities, and their employers withhold payroll and income taxes from their paychecks. Illegal immigrants also pay directly or indirectly sales taxes and property taxes, while their work generates corporate profits that are also taxed.
Overall, although they have lower incomes and evade more taxes, they still pay significant amounts of tax. The first table shows federal, state, and local taxes and spending combined—which is Table 10 in Cato’s report—and the second shows just federal revenues and spending for comparison to the CEA and MI’s research. The average illegal immigrant paid 33 percent fewer taxes but received 49 percent fewer benefits over the last 30 years. The difference for federal taxes is even larger: a 40 percent decline in taxes versus a 72 percent decline in benefits.
I should note that we adopted conservative assumptions for illegal immigrant welfare use. We assumed they used benefits at 5 percent of the rate for programs they are categorically ineligible for to account for potential mistaken payments, fraud, or other unusual situations.
CEA’s calculations are even more problematic because, as a projection of future costs, they need to account for immigrants who leave the country before retirement (about 25 percent) and immigrants who die before the end of the projection to age 78 (about 30 percent). Nearly the only fact about its projection that CEA discloses in its report is that it ignores mortality and emigration, so it assumes 100% of illegal immigrants here now will live in the United States until age 78. This inflates the largest fiscal costs (Social Security and Medicare).
In my re-analysis of the Manhattan Institute’s report—correcting its false assumptions about welfare use—I find that recent illegal immigrants will reduce deficits in MI’s model by a net present value of $4.9 trillion over the next century. That’s a debt reduction of about $560,000 per illegal immigrant.
CEA’s Imaginary Cost of Ending Mass Deportation
It’s not enough for CEA to claim costs decades in the future, so CEA then claims that not deporting the current illegal immigrants—at a rate of 2.5 million per year—will impose net costs of up to $287 billion over the next 10 years. That implies a per-capita annual cost of about $3,400. We don’t know exactly what age the lifetime projection starts at, but if it starts at age 30, that produces a per-capita annual cost of $3,400. In other words, CEA appears to have taken a lifetime annual average and applied it to the next 10 years, even though the net costs occur at the end of someone’s life.
Even the lowest-skilled immigrants were net fiscal contributors during their working lives from 1994 to 2023, and remember, low-skilled illegal immigrants will be receiving far fewer benefits than the chart from our paper shows below. Yet the implication of CEA’s analysis is that illegal immigrants, who are mostly in the prime of their lives, will impose net costs on taxpayers. This is impossible, given their high employment rates and low welfare receipt rates, which is precisely why CBO finds such a large downside to deportations over the next 10 years. I should emphasize that the CBO’s estimate includes the US-born children of recent illegal immigrants who are eligible. But it’s not at all clear that arresting their parents would reduce their use of benefits. Impoverishing these children may increase their use of welfare.
CEA’s Imaginary Cost of Amnesty
Even though CEA’s baseline estimate of the cost of illegal immigrants almost certainly must already include the cost of Medicaid, food stamps, Medicare, and Social Security, it still separately estimates that granting “amnesty” would increase the cost of these items. Legalizing someone’s status would not automatically grant them the right to welfare benefits, but it could trigger eligibility depending on the type of status Congress granted them. Although this fact implicitly exposes the flaw in CEA’s initial estimate, CEA then appears to double-count these benefits: first as a cost of letting them stay and again as a cost of amnesty.
Although granting welfare benefits to this population is unnecessary and inadvisable, CEA’s calculated per-capita annual cost (about $4,200) is less than the per-capita annual net federal tax contribution from illegal immigrants over the last 30 years (about $4,600), and that’s before we account for how much higher their incomes would be and how much higher tax compliance would be if they had legal authorization to work.
Once we account for the cost of mass deportation—which CEA conservatively estimates at $148 billion or nearly $13,000 per illegal immigrant over 5 years—the only thing the CEA proves is that it would be nearly impossible to make mass deportation make fiscal sense.