CBO Forecasts Immigration Surge to Propel U.S. Economic Growth and Reduce Deficits Over Next Decade

The Congressional Budget Office (CBO) has projected that a significant increase in immigration to the United States over the next decade will lead to substantial economic benefits, including higher growth, expanded federal revenues, and reduced budget deficits. As the nation gears up for the 2024 presidential election, immigration remains a pivotal issue, with the CBO’s findings underscoring the profound impact of foreign workers on the U.S. economy.

According to the CBO, the net immigration of individuals without work authorization is expected to surpass previous estimates by 8.7 million between 2021 and 2026. This influx is projected to boost the U.S. Gross Domestic Product (GDP) by nearly $9 trillion over the coming decade. Additionally, interest rates are anticipated to rise by 0.1 percentage point by 2034 as a result of this growth.

CBO Director Phillip Swagel emphasized the significance of these projections, stating, “Those increases in GDP and interest rates are key drivers of projected increases in federal revenues and spending related to the [immigration] surge.” The CBO estimates that the increase in immigration, along with the inclusion of immigrants’ children, will lower federal deficits by $990 billion between 2024 and 2034, while federal revenues are expected to rise by $1.2 trillion during the same period.

However, the CBO also highlighted the uncertainty surrounding these projections, noting that they are based on current legislation and that subsequent actions are unlikely to drastically alter the outlook.

This report comes amid heated political debates over immigration policy. The Biden administration recently issued an executive order aimed at preventing unlawful immigrants from seeking asylum at the Southern border, while the Republican party, led by former President Trump, continues to advocate for stricter immigration controls.

Economically, some of the nation’s top policymakers, including Federal Reserve Chair Jerome Powell, have pointed to the recent increase in immigration as a key factor in easing labor shortages. “We’ve seen labor force supply come up quite a bit through immigration and through recovering participation,” Powell remarked, noting that this trend is continuing primarily through the immigration channel.

Despite the positive economic outlook tied to immigration, the overall U.S. budget situation remains concerning. The CBO forecasts that deficits will climb from an estimated $2 trillion in 2024 to $2.8 trillion by 2034, reaching nearly 7% of GDP. Public debt is expected to rise from 99% of GDP this year to a record 122% in 2034. Furthermore, next year, interest costs are projected to account for a larger share of GDP than at any point since the CBO began reporting in 1940.

The CBO also adjusted its forecasts for economic growth, inflation, and unemployment, anticipating that the Federal Reserve will lower the federal funds rate in early 2025 in response to slowing inflation and rising unemployment.

As the nation navigates the complexities of immigration and its impact on the economy, the CBO’s report serves as a crucial resource for policymakers and the public alike, highlighting both the potential benefits and challenges that lie ahead.