Jeffrey Miron
President Trump’s suspension of immigrant visas for 75 countries took effect on January 21. The pause affects those who seek to immigrate to the US permanently, not short-term visitors like tourists or students. The administration’s rationale for the freeze is to reduce the fiscal burden of immigrants, asserting that “[foreign nationals]…extract wealth from the American people.”
However, America’s fiscal issues don’t arise from the impacts of new immigrants; rather, they stem from existing, overly generous transfer programs. A recent financial report by the Bureau of the Fiscal Service warns that entitlement spending, particularly Medicare and Social Security, is on an unsustainable path. Indeed, the CBO projects that spending on Medicare and Social Security as a percentage of GDP is increasing at a far higher rate than federal revenue growth due to aging demographics.
It is important to clarify that the unsustainable nature of such transfer programs is independent of the participation of immigrants. According to this study, legal immigrants consumed “24% less welfare and entitlement benefits than native-born Americans” in 2023. This is largely because immigrants arrive young, thus entering entitlement programs later, and take many years to naturalize.
Moreover, the same legal immigrants actually reduce the strain on transfer programs as their tax contributions far outweigh their fiscal burden. A 2024 study states that “legal immigrants increase natives’ welfare [because their] tax contributions…greatly exceed the benefits they receive, thereby reducing the tax burden on natives.” Quantitatively, this study examining the net fiscal effect of immigration found that in 2023, immigrants paid $1.3 trillion in taxes while only receiving $761 billion in benefits. In fact, over the 30-year period from 1994 to 2023, immigrants had a positive net fiscal impact of $14.47 trillion. Even after considering second-generation immigrant children, the figure remains positive at $7.93 trillion.
Finally, most transfer programs already partially or fully exclude immigrants. For example, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 bars legal immigrants from federal benefits for 5 years or until they naturalize, while programs like Medicare require 40 quarters of Medicare taxes before eligibility.
In conclusion, America’s fiscal challenges arise not from public spending on immigrants but from the unsustainable generosity of its transfer programs. Even as legal immigrants consume fewer benefits and contribute more via taxes, an aging population and increasing structural costs only increase the federal deficit. The root causes of spending imbalances are missed by the Trump administration’s immigration restrictions and are better addressed by reducing the welfare state—independent of immigration—or by further restricting immigrant access to the welfare system.
Cross-posted from Substack. Eric Jin, a student at Southridge School, co-wrote this post.