Yes Obama's Amnesties Do Increase Deficits

Conn Carroll
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Posted: Feb 25, 2015 2:00 PM
Yes Obama's Amnesties Do Increase Deficits

Yesterday I asked White House Press Secretary Josh Earnest to justify White House claims that President Obama's immigration executive actions reduce federal deficits in light of a letter from the Congressional Budget Office showing that they increase on-budget deficits by $8.8 billion. 

Earnest then claimed that I was reading the letter wrong, and that the letter actually said that Obama's immigration actions reduced deficits by $8 billion.

I then acknowledged that Earnest was half right. That if you consider the unified budget, in other words if all federal taxes, including payroll taxes, go into just one big general fund, then the CBO letter did say that Obama's immigration actions do reduce deficits by $7.5 billion over ten years.

But that is not how federal budgets work. Payroll taxes are required, by law, to go to the Social Security Trust Fund where they are required, by law, to be saved to pay for future Social Security benefits. 

Once we take these Social Security payroll taxes out of the picture, as federal law requires us to do, Obama's executive actions actually increase deficits over the next ten years.

Earnest then responded, "Well, I may have somebody who is more steeped in the budgetary details. My understanding is that this would have a positive impact on our deficit precisely because for the first time what we’d be doing is we’d be bringing people out of the shadows and actually making them pay taxes. That would be a good thing for the life of Social Security. It would be a good thing for our economy. And ultimately, it would be a good thing for the deficit. But we can have somebody follow up with you on your -- on what may be a more detailed question."

It has now been more than 24 hours. I have emailed Earnest and his assistants three times and have received no explanation.

That might be because the CBO letter clearly states that while Obama's immigration executive actions do increase non-Social Security payroll tax revenues by $5.24 billion, they also increase direct federal spending by $14.87 billion, netting an on-budget deficit of $8.8 billion.

The bulk of that increased direct spending comes from $10.25 billion in Earned Income Tax Credit benefits, $1.5 billion in health care spending, and $1.1 billion in Supplemental Social Security spending.

And as far as Earnest's claims about Obama's executive actions being "a good thing for the life of Social Security," according to the Social Security Administration, Obama's executive action would only delay bankruptcy of the Social Security Trust Fund by an entire 3 months (it s scheduled it go bankrupt in 2033) and it would harm Social Security net cash flow for every year after 2045.

Either way, both short- and long-term, Obama's executive amnesties are a terrible deal for American taxpayers.

UPDATE: The White House has responded, but only "on background" so I can't quote them. They do admit that Obama's executive actions do increase on-budget deficits. But they also claim that the "on-budget" concept is not a good picture of federal revenues and spending.

You can watch the full exchange below: