A Huge Difference in the Effect on GDP

In addition to big increases in government spending, deportation leads to a decline in business activity and in tax revenue. For the nation as a whole, lower business activity leads to a steep decline in the gross domestic product (GDP) and an increase in the federal debt. A 2016 Center for American Progress study1 found that removing seven million unauthorized workers nationally, about five percent of the U.S. workforce, would result in an average yearly loss of $434.4 billion. Over a decade, this would amount to a loss of $4.7 trillion in gross domestic product and a loss of $900 billion in federal government revenues. This study concluded that GDP would immediately drop 1.6% and would eventually drop 2.6%. The federal deficit would increase close to a trillion dollars by 2026.

gdp annual nationwide loss due to deportation

douglas holtz-eakin 22013 research by Douglas Holtz-Eakin,2 formerly Congressional Budget Office Director under President H. W. Bush and currently President of the conservative American Action Forum, concluded that allowing unauthorized immigrants to become permanent residents has, in contrast, a much better outcome for the U.S. economy. It would raise the pace of U.S. economic growth by nearly a percentage point over the near term and by 3 to 3.9% over ten years. Holtz-Eakin estimated that allowing unauthorized immigrants to become permanent residents would reduce the deficit by $2.7 trillion by giving unauthorized immigrants the opportunity to participate more productively in the labor market.

david cay johnston 2

Pulitzer Prize winner David Cay Johnston, who reported for the New York Times for many years on tax policy, wrote about a July 7th memo from Mick Mulvaney,3 Director of the White House 0ffice of Management and Budget.  Mulvaney indicated that the budget will make big increases in military spending and immigration policing, but will reduce the federal civilian workforce. Johnston noted that Mulvaney's memo asserts that spending much more on the military and on Homeland Security, whose main task is to deport as many noncitizens as possible, will increase economic growth.  Johnston commented:

"As someone who has studied and written about economics for a half century, I cannot recall ever reading an economics text linking more spending on war-fighting capacity and immigration policing with faster economic growth. Instead, defense and policing costs are usually described as necessary, but unproductive, a drag on an economy."

References

1.  Edwards, Ryan and Ortega, Francesc.  “The Economic Impacts of Removing Unauthorized Immigrant Workers:  An Industry- and State-Level Analysis.”  Center for American Progress, September 21, 2016.
https://www.americanprogress.org/issues/immigration/reports/2016/09/21/144363/the-economic-impacts-of-removing-unauthorized-immigrant-workers/

2. Holtz-Eakin, Douglas.  “Immigration Reform, Economic Growth, and the Fiscal Challenge.”  American Action Forum, April, 2013.
https://www.americanactionforum.org/wp-content/uploads/sites/default/files/Immigration%20and%20the%20Economy%20and%20Budget.pdf

3.  Johnston, David Cay.  “Trump’s Budget Shows How He Is Building a Police State.”  Alternet, July 19, 2017
http://www.alternet.org/trumps-police-state-vision-america-laid-out-white-house-budget-documents