CATO “ forgets” time value of money

CATO Institute recently shared their analysis of what they call “Immigrants’ Recent Effects on Government Budgets: 1994–2023.” They claim that immigrants have reduced our deficit. However, they ignore the time value of money. We all know that a dollar today is worth a lot more than a dollar 20 or 30 years in the future. But CATO treat all dollars the same and sums them all up.

If we take into account the time value of money, it looks like immigrants who never finished high school cost the Government quite a bit and even college graduates are about a wash.

Note that this is just the cost to the Government. It does not include the value of a larger population has on our GDP and economic well-being.

The Founders had three criteria for new immigrants: their qualifications; their assimilation; and their allegiance.

I support immigration. A lot of immigration. But legal immigration, with a mix of merit based (engineers, scientists, entrepreneurs, doctors, mathematicians, etc.) and opportunity-based (people who want to work hard, adopt American values, and get ahead). No doubt there are highly capable, hard working people throughout the world that want to integrate into US society with its freedom and norms.

I am not sure why CATO chose to significantly underestimate the effect on Federal deficits.