per year, as do benefits. It makes little difference whether taxes and benefits are adjusted to fix the debt/GDP ratio immediately or in 2016. Under the first alternative, the average federal NPV declines slightly, from $105,000 to $102,000. Two factors account for this reduction. First, the earlier adjustment may actually lead to lower taxes for a number of years. Second, dealing with the impending budget crisis earlier means that it is sufficiently less severe later on that later taxes will be substantially lower. Also, the relative numbers of immigrants and natives change over time, so altering the timing of tax increases alters the relative burdens between the present value of tax payments by immigrants (including their descendants) and natives.

However, if the debt is allowed to grow with neither tax increases nor benefit cuts, then the positive impact at the federal level is dominated by the state and local negative impact, resulting in a negative total impact. In the status quo scenario, the debt/GDP ratio rises to 3.9 by 2050, and to 11.7 by 2100. This scenario clearly leads to unrealistic debt levels. We believe that the baseline scenario, or perhaps the immediate-adjustment scenario, offers the most realistic basis for assessing the fiscal impacts of immigrants.

It might be thought that, since none of these scenarios involves repaying the debt, nor even preventing its further growth, the calculations must be missing the full contribution of immigrants to the debt burden. In fact this is not so. The present value of all implied interest payments does equal the initial stock of debt under the scenarios with a fixed debt/GDP ratio. Under the no-targets case, debt never has to be controlled, and all interest payments can be made by borrowing rather than by raising taxes, so the effects of debt sharing are inconsequential.

In the baseline scenario, starting in 2016 the budget is adjusted so that the debt/GDP ratio is held constant thenceforth. The baseline adjustments are shared 50-50 between changes in taxes and in benefits. Here we examine the implications, first, of making all adjustments in taxes while leaving benefit schedules unchanged, and next, of making all adjustments in benefits. It makes a moderate difference (±$13,000) which way government budgets are adjusted, but not enough to affect our conclusions. With higher tax rates, immigrants make a greater contribution to meeting the costs of the retirement of the baby-boom generations, and so have a more positive federal and total impact than they would if benefits were reduced.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 denies certain means-tested benefits to noncitizens. The legislation did not define these programs and to date they have not yet been defined by regulations.

Front Matter (R1-R14)

Summary (1-13)

1 The Immigration Debate (14-19)

2 Background to Contemporary U.S. Immigration (20-75)

3 The Face of the U.S. Population in 2050 (76-134)

4 Immigration's Effects on Jobs and Wages: First Principles (135-172)

5 Immigration's Effects on Jobs and Wages: Empirical Evidence (173-253)

6 Do Immigrants Impose a Net Fiscal Burden? Annual Estimates (254-296)

7 The Future Fiscal Impacts of Current Immigrants (297-362)

8 The Social Dimensions of Immigration (363-406)

Biographical Sketches (407-412)

Index (413-434)