The Democrats’ Dilemma: Immigration and the Welfare State

By | 2018-01-16T15:10:26+00:00 January 16th, 2018|
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The Democrats used to be the party of the working class: they supported trade unions and believed in the welfare state. Their goal was to smoothe capitalism’s rougher edges, to humanize modern industrialism, and to give the common man a fair shake. One may find fault with their methods, but their stated goals were laudable and most of them were sincere in their beliefs.

Fast forward to 2018. The Democrats are the party of the elites. Their new mantra is “open trade and open borders,” as Hillary Clinton told Wall Street bankers in a private speech. Remember, it was the Democrats who supported President Obama’s Trans-Pacific Partnership, a “free trade” deal that would have gutted American industries. And it is Democrats who currently oppose President Trump’s attempts to stop illegal immigration, which hurts America’s poor.

The Democrats don’t care about American workers. They care about winning elections.

At this point, the chorus of “progressive” rhetoric reaches fever pitch: “but we need immigrants to support the welfare state,” they say—”we need immigrants to pay for our pensions and healthcare!” But saying it does not make it so.

In truth, immigration is destroying the welfare state, in America and throughout the West. Here’s how:

Mass immigration destroys the welfare state because immigrants receive more in benefits than they pay in taxes. This is not true for every immigrant—some never collect government handouts—but it is true for the overall immigrant population. Studies from across the Western world prove this point.

A recent, and comprehensive study from the National Academies of Sciences, Engineering, and Medicine found that although immigration is (theoretically) revenue-neutral in America, not all immigrants are created equal. Half of all immigrants actually receive more in government assistance than they pay in taxes, but thankfully they are balanced out by the other half. Specifically, immigrants who came to America for family reasons, or arrived as refugees, cost a net present value of $170,000.

Net present value is how much money the government would need to invest today, at a yield of inflation plus three percent, to pay for said immigrant’s tax deficit over the course of his expected lifetime. Of course, the government does not do this—it spends only as it receives. Therefore, looking at net present value creates artificially low expectations.

According to the Heritage Foundation, each noneconomic immigrant more realistically costs a net of $476,000 in welfare payouts. And, of course, this does not account for any increases in government programs. Applying this more realistic figure to the original study means that immigrants consume far more in government services than they contribute to them. In fact, if immigration levels remain unchanged, those arriving over the next decade would cost American taxpayers a net of $1.9 trillion over their lifetimes. The welfare state is already struggling: immigration will make a bad problem worse.

Another important study, conducted by Denmark’s Ministry of Finance, found that immigrants were a net drain on that nation’s welfare state. In fact, non-EU immigrants, and their descendants, consumed 59 percent of the tax surplus collected from native Danes. This is not surprising, since some 84 percent of all welfare recipients in Denmark are immigrants, or the direct descendants of immigrants. The bottom line: immigration is a net burden on Denmark.

Likewise, a study conducted by Canada’s Fraser Institute, a think tank, found that mass immigration costs Canadian taxpayers some $24 billion per year—and this was using data from nearly a decade ago. The number has since increased significantly, as Canada has one of the highest immigration rates in the world.

Finally, a study from the University College of London found that immigrants consumed far more in welfare than they paid in taxes. Specifically, the study looked at the Labour government’s mass immigration push between 1995 and 2011. They found that immigrants from the European Economic Area made a small, but positive net contribution to the British economy of £4.4 billion (or just over $6 billion)  during the period. However, during the same period non-European immigrants (primarily from South Asia, the Middle East, and Africa) cost the British economy a net £120 billion (or $165.5 billion).

The origin-based economic differences are actually exacerbated by the UK’s generous welfare state: while European immigrants often left their extended families at home, to be cared for by their respective government, immigrants from the Third World generally brought their families with them, knowing that British taxpayers would care for them. From the immigrant’s perspective, this is a rational choice, but does it make sense for British taxpayers? No.

Together, these studies show that mass immigration won’t save the welfare state, instead, it will hasten its insolvency. In the end, immigrants won’t pay for our pensions, we’ll pay for theirs.

For decades, Democrats campaigned on promises of cradle-to-grave care for low-income Americans, while at the same time they’ve allowed millions of immigrants to come to America and collect welfare—without ever having contributed a dime to the public purse. This is not only unfair, it’s unsustainable. The welfare state is collapsing under its own weight, and mass immigration is only making this bad problem worse.

It’s time we forced the Democrats to choose between the welfare state and mass immigration.

About the Author:

Spencer P. Morrison
Spencer P. Morrison is a writer and author of Bobbins, Not Gold. He is the editor-in-chief of the National Economics Editorial. Follow him on Twitter @SPMorrison_.