Tag: Congressional Budget Office (CBO)

Another Documentation of the U.S. Need for Immigrants   

Just yesterday this blog published a lengthy post about how the problems in the U.S. asylum system were promoting increases in U.S. immigration that were benefiting the U.S. economy.[1]

Now the New York Times has published a lengthy article focusing on the positive impact of new immigrants to this country with its declining and aging population.[2]

The Example of the State of Maine

The State of Maine has the oldest population in the U.S. with a median age of 45.1. Its “native-born employees either leave the work force or barrel toward retirement.” This especially presents  a problem for the State’s annual $1 billion business of catching, cleaning and selling the lobsters off its Atlantic coast. As Ben Conniff, a founder of the State’s lobster processing plant (Luke’s Lobster), put it, “Folks in Maine are generally not looking for manufacturing work, especially in food manufacturing.”

In response, the founders of this company started Lift All Boats “to supplement and diversify the fast-aging lobster fishing industry. It aims to teach minorities and other industry outsiders how to lobster and how to work their way through the extensive and complex licensing process, and about half of the participants have been foreign-born.” And Maine’s state legislators are creating an Office of New Americans to attract and integrate immigrants into the work force.”

The Rest of the U.S.

“Nationally, even with the barriers that prevent some immigrants from being hired, the huge recent inflow has been helping to bolster job growth and speed up the economy. . . . The new supply of immigrants has allowed employers to hire at a rapid pace without overheating the labor market. And with more people earning and spending money, the economy has been insulated against the slowdown and even recession that many economists once saw as all but inevitable as the Federal Reserve raised interest rates in 2022 and 2023.”

“Ernie Tedeschi, a research scholar at Yale Law School, estimates that the labor force would have decreased by about 1.2 million people without immigration from 2019 to the end of 2023 because of population aging, but that immigration has instead allowed it to grow by two million.” In the longer run, “economists think the immigration wave could also improve America’s labor force demographics . . . even as the native-born population ages, with a greater share of the population in retirement with each year.”

“In fact, immigration is poised to become increasingly critical to America’s demographics. By 2042, the Congressional Budget Office estimates, all American population growth will be due to immigration, as deaths cancel out births among native-born people. And largely because immigration has picked up so much, the C.B.O. thinks that the U.S. adult population will be 7.4 million people larger in 2033 than it had previously expected.”

“Immigration could help reduce the federal deficit by boosting growth and increasing the working-age tax base.”

However, “nobody knows how long today’s big immigration flows will last. Many are spurred by geopolitical instability, including economic crisis and crime in Venezuela, violence in Congo, and humanitarian crises across other parts of Africa and the Middle East.” This, as we in the U.S. know, has sparked a lot of political unrest over this development.

Nor does anyone know about the future course of the U.S. economy. If it slows, “fewer immigrants might want to come to the United States, and those who did might struggle to find work . . . [and] compete against American workers for jobs, particularly those with lower skill levels.” However, “recent economic research has suggested that immigrants mostly compete with one another for work, since they tend to work in different roles from those of native-born Americans.”

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[1] Problems in U.S. Asylum System Help Promote Increases in U.S. Immigration, dwkcommentaries.com (April 11, 2024).

[2] Smialek, Immigrants in Maine Are Filling a Labor Gap. It May Be a Prelude for the U.S., N.Y. Times (April 12.2024).

Alarming Federal Government Fiscal Challenges

On August 29th Dana Milbank of the Washington Post wrote an alarming column on the federal government’s fiscal challenges. Moreover, it was not his own opinion he was voicing, but rather that of the Semiannual Report of the nonpartisan Congressional Budget Office that was issued on August 27, 2014.

The CBO Report, Milbank says, shows that “the long-term fiscal disaster, predicted for some time, has crept into the short term.” Here are the particulars for that conclusion from the Report itself:

  • The foundation for the report is the CBO’s own economic forecast that “the economy will grow slowly this year . . . and then at a faster but still moderate pace over the next few years;” that “inflation is expected to remain below the Federal Reserve’s goal, and interest rates on Treasury securities . . . are projected to rise considerably.”
  • Another basic CBO assumption is “current laws governing federal taxes and spending generally remained unchanged.”
  • Federal debt held by the public will reach 74 percent of gross domestic product this year, more than twice what it was at the end of 2007 and higher than in any year since 1950. In a decade, it will hit 77 percent; in 25 years, 100 percent.
  • “85 percent of the federal government’s spending increases between now and 2024 will be consumed by just three items: Social Security (which will claim 28 percent of the increase), Medicare and other health-care programs (32 percent) and interest on the debt (25 percent). Spending on everything else — military and domestic programs alike — would fall to the lowest proportion of the economy since at least 1940, when such statistics were first collected.”
  • “The persistent and growing deficits that CBO projects . . . would have serious negative consequences, including . . . Increased federal spending for interest payments, Restraining economic growth in the long term, Giving policymakers less flexibility to respond to unexpected challenges, and Eventually increasing the risk of a financial crisis (in which investors would demand high interest rates to buy the government’s debt).”

These problems, says Milbank, will come “because of the cowardice of leaders on both sides, who have avoided serious changes to the tax code and to Medicare and the other ‘mandatory’ spending programs.”

Milbank’s comments came before the release of a report by Northwestern University economist, Robert Gordon, claiming that the CBO’s modest projection of U.S. economic growth over the next decade is unattainable. Gordon for several years has argued that reduced labor productivity, reduced labor market participation and meager capital investment have adversely affected the U.S. economy’s ability to grow. Thus, under Gordon’s analysis, the fiscal challenges facing the federal government will only be worse.