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Immigration Reform: What's It Going to Cost?

A petitioner holds a US flag during a naturalization ceremony.
Mandel Ngan | AFP | Getty Images
A petitioner holds a US flag during a naturalization ceremony.

One argument that helped bury immigration reform in 2006—after much debate, Congress failed to pass a final bill—was that it would inflict too heavy a burden on the U.S. economy.

The contention was that immigrants would flood the country, millions of citizens would lose their jobs, existing jobs would pay less, and the social safety net would fray from expanded enrollment. Bottom line: Growth would suffer.

Seven years later, opponents say reform is still too costly, but many analysts hold that avoiding change is far more so.

"From a pure dollar-and-cents perspective, doing reform just makes sense," said Michael Wildes, managing partner of the immigration law firm Wildes & Weinberg.

"If there's a fine associated with amnesty for those who are here illegally, that could fill the Treasury," Wildes said. "And more workers would be legally contributing to the economy by paying more taxes and spending money. It would just boost the economy."

The economy would benefit from granting workers in the U.S. illegally—an estimated 11 million people—both legal status and citizenship in 2013 rather than doing it gradually, according to a report released last month by the Center for American Progress. It projects that an amnesty program started this year will add $1.4 trillion to U.S. gross domestic product over 10 years.

A similar study from UCLA looked at the Immigration Reform and Control Act of 1986, the last time Congress passed such legislation, and concluded that giving amnesty to some 3 million people at the same time would increase their wages by 15 percent to 20 percent, immediately boosting the economy.

(Read More: Immigration Reform: Good or Bad for the Economy?)

Deporting workers, on the other hand, would be expensive—$2.6 trillion in GDP over 10 years, plus the costs of deportation, the study found. Deporting one person costs the U.S. $8,318, according to the Immigration and Customs Enforcement agency.

"We can't just deport individuals and families," said Christina Geer, an assistant professor of political science at Fordham University. "A lot of these kids don't even speak the language of their home country. And it's not economically feasible."

Workers here illegally don't necessarily reap the rewards of their economic contributions, said Jamie Longazel, a professor of sociology at the University of Dayton. Illegal immigrants paid more than $7 billion in Social Security in 2009—money that, at least for now, they can't collect.

"It's an irony that illegal immigrants are not entitled to many of the benefits they pay for," Longazel said. "Many people who are here legally or are native born receive benefits from those workers."

Legal immigrants—totaling about 30 million—are also a major economic force, according to a study by the Federal Policy Institute. They have opened about 30 percent of small businesses over the past two decades; an estimated 4.7 million workers are employed by immigrant-owned firms, accounting for nearly $776 billion in annual revenue.

The U.S. grants 140,000 temporary visas a year to foreign workers, and increasing that number must be part of immigration reform, said Scott Cooper, a partner in the corporate immigration law firm of Fragomen Del Rey Bernsen & Lowey.

"As an economy, we need more foreign-born workers to come here," Cooper said. "I know for a fact many automotive [businesses] are dying for people trained in the sciences and math, and we don't have enough here to fill the positions."

For those opposed to immigration reform, though, the numbers point in a different direction.

"We need to scale back legal immigration and make it harder to get into the country," said Ira Mehlman, a spokesman for the Federation of American Immigration Reform, a group that believes foreign workers are a drain on the economy.

"Immigrants take low-paying jobs that Americans might take at a higher wage," Mehlman said. "We also pay for their health care and other sorts of things they need. We fault the business community as well for this, as they provide a magnet for jobs."

At least one analyst is uncertain about the data. (Read More: Why Silicon Valley Wants Immigration Reform)

"I'm somewhat suspicious of reports on estimates for their contribution," said Jim Witte, director of the Institute for Immigration Research at George Mason University.

"It's difficult to get accurate information on illegal earnings, and it's hard to say what impact they have on others," Witte said. "For instance, competition from illegal workers may depress the wages of legal workers."

Whatever the viewpoint, economics are a major factor in immigration—no matter what direction reform takes.

The existing system costs the U.S. billions a year, according to a study by American Action Forum, a conservative think tank. For example, the study said, individuals and businesses spend $30 billion a year on paperwork and fees complying with the laws.

In an acknowledgement to the pressure and politics of cost cutting, reform talks in Washington now include possible exclusions of immigrants, legal or not, to Obamacare, which goes into wide affect next year.

In 2006, the Congressional Budget Office released a report stating the Senate version of health-care reform at that time would increase tax revenues by some $44 billion over 10 years, while increasing spending on social welfare programs by $48 billion over the same period. Many took that estimate to be as close as possible to being revenue neutral.

The fact that the House and Senate failed to reach agreement seven years ago shows the difficulty of assessing the real economic impact and cost of reform, said William Helfand, a lawyer who leads the employment and civil rights practice at Chamberlain Hrdlicka.

"I've seen the economic arguments on both sides of the issue, and you can't say anyone is inaccurate," Helfand said. "It's going to depend on what gets done, if something gets done. Right now, both sides are saying they're right economically if reform goes the way they see it."

"It's all conceptual right now," Helfand said. "Until we know what's in the bill, it's hard to say anyone is wrong."

By CNBC.com Senior Editor, Mark Koba.

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