Democrats Propose More Welfare for Immigrants

By Steven A. Camarota

Wednesday, October 13, 2021

 

The most expensive provision in the reconciliation bill is the new, enhanced child tax credit (CTC). For families who pay no federal income tax, the new CTC provides a cash benefit of up to $3,600 for each child under age 6 and $3,000 for each child ages 6 to 17 — more than twice the amount that families can receive from the old “additional child tax credit” (ACTC) that the CTC would replace. The new program also would do away with the old ACTC’s work requirements, making it very much like traditional cash welfare. The New York Times wrote that it has “the makings of a policy revolution” because it creates a guaranteed income for parents.

 

Any “revolution” intended to address a social problem should cause us to reflect on why the problem exists in the first place. And yet neither the program’s critics nor its supporters have acknowledged the enormous role that immigration policy plays in adding to child poverty in the U.S. If child poverty is a social problem requiring large, no-strings-attached income transfers, then why do we have an immigration policy that adds to the problem, making it ever more difficult and costly to address? If we want to have less poverty in America, we are going to have to look hard at policies on immigration, legal and illegal.

 

In 2019, before the COVID lockdowns caused a spike in poverty, about 31 percent of children with U.S.-born parents had incomes below 200 percent of the poverty line. Virtually all of these families in or near poverty will receive the new CTC. For children with an immigrant parent (legal or illegal), the rate is 43 percent. One-third of all children in or near poverty have an immigrant parent, legal or illegal. These children are almost all American citizens, and their success in America should be important to all of us. But the challenges they face are an indication of the major role that immigration has had — and will continue to have, barring a policy change — in exacerbating child poverty.

 

If the new CTC passes in its proposed form, we will be spending roughly $95 billion a year on cash payments, about three times what the old ACTC cost. Based on income and number of dependents, my colleague Karen Zeigler and I estimate that 57 percent of legal-immigrant-headed families with children will get cash from the new program, as will 79 percent of illegal-immigrant-headed families. By comparison, 52 percent of native-headed families will receive payments.

 

As with the old ACTC, if illegal-immigrant parents do not have Social Security numbers themselves, they can simply get an Individual Taxpayer Identification Number (ITIN) to become eligible for the new program. We estimate that illegal immigrants will receive $8.2 billion a year in cash payments — about triple what they would have received from the old ACTC. We also estimate that legal immigrant families will receive an estimated $17.2 billion from the new CTC. Legal immigrants will get so much more than illegal immigrants from the new program because most low-income immigrants are here legally.

 

The key reason that immigrants tend to be poorer is their generally lower levels of education. Based on our analysis of Census Bureau data, 46 percent of illegal immigrant families with children are headed by a person who did not graduate from high school, as are 16 percent of legal immigrant families. For the native-born, the corresponding figure is 5 percent. Even immigrants with at least a high-school diploma have lower incomes relative to natives. This is partly because those with a high-school or college education received in a foreign country are much less skilled than their native-born counterparts on average. This makes these foreign degrees less valued in the U.S. labor market.

 

One solution we sometimes hear is to continue mass immigration but to restrict immigrant access to welfare. Experience shows this is not practical. For one thing, illegal immigrants are already disqualified from most programs, and new legal permanent residents have to wait five years before they can get most welfare programs. But despite these restrictions, about half of households headed by legal and illegal immigrants receive some form of welfare. This is mainly because they receive benefits on behalf of their U.S.-born citizen children. Plus, the restrictions do not apply to some programs, and a number of states give out welfare on their own with fewer restrictions.

 

The presence of so many low-income immigrants and their children creates enormous political pressure to address the issue. The massive growth in the uninsured population was one of the chief justifications for Obamacare, for example, and it was largely driven by immigration. As for the new CTC, I am told by congressional staffers that there was discussion behind the scenes about limiting immigrants’ access to the new benefit, but Republican members of Congress feared it would be unseemly to try to bar poor people, particularly poor children, from government help.

 

A revised CTC in one form or another will likely be signed into law soon. When immigrants end up making heavy use of it, we should remember that they receive benefits not because of laziness or any other kind of character defect. After all, immigrant parents are slightly more likely to work than native-born parents. Rather, immigrants use welfare simply because they have low incomes in a country that transfers a lot of money to low-income people, especially those with children.

 

We face a plain choice on this issue: We can either hold down the cost of such transfers in the future by enforcing our laws against illegal immigration and by reforming the legal selection system to emphasize skills, or we can resign ourselves to live with the social, political, and fiscal consequences of constantly adding to the low-income population through current immigration policy.