A deficit twist you might not expect
Budget headlines usually sound like doom, but this one has a twist. A new Cato Institute white paper asks a simple question: Did immigrants add to deficits or help shrink them? It compiles taxes paid and benefits received from 1994 through 2023 at the federal, state and local level using a national accounting model (the NASEM–Cato model), and then reports cumulative results across that 30-year window.
The goal is not a feel-good story or a scare story. It is a spreadsheet style look at what came in and what went out. And it lands right in the middle of today’s loud immigration debate.
What Cato says in one line
Here is the headline number from the Cato Institute study. The paper estimates immigrants produced roughly $14.5 trillion in total savings from 1994–2023 after adding avoided interest on debt (about $3.9 trillion in interest savings). The paper treats this as a long-run fiscal result, not a one-year windfall.
It is a cumulative estimate, not a check the government cashed overnight. Think of it like a long running tab that kept getting smaller. The authors say the effect cut deficits by about one-third over that period.
Why the study looks beyond Washington
The Cato Institute approach is basically taxes minus spending. On the tax side, it counts revenue like income taxes, payroll taxes, sales taxes, and other collections tied to work and consumption. On the spending side, it counts benefits and services such as retirement programs, health programs, schools, and other public costs.
One key detail is scope, because the model combines federal, state, and local budgets, not just Washington. Another is population, because it includes immigrants who are citizens, lawful residents, and noncitizens. That broad scope is why the findings are meant to be national, not a story about one city.
Why interest changes the total
Debt is expensive, and interest is where budgets start to spiral. The Cato Institute adds interest savings to its running balance, arguing that smaller deficits mean less borrowing over time. Over decades, that compounding effect can outweigh the original gap.
Cato reports that roughly $3.9 trillion of the total $14.5 trillion comes from avoided interest payments on debt — a large component that amplifies the cumulative effect over decades. Critics note this makes results sensitive to assumptions about baseline borrowing and discounting, so differences in interest modeling can materially change the headline total.
Education is the biggest split
The Cato Institute breaks down results by education, and the gap is huge. The paper finds college-educated immigrants generate far larger net fiscal contributions on average because higher earnings generally lead to higher tax payments and lower per-capita benefit use; Cato reports college-graduate immigrants accounted for about $11.7 trillion in savings versus $2.8 trillion for non-college immigrants over the period.
The study also finds that non-college immigrants can still be net positive over time. The difference is pace, because lower wages often mean lower tax payments each year. This is why the paper keeps returning to jobs, skills, and years of work.
Noncitizens are a major piece
When people say “immigrant,” they often picture a citizen or a green card holder. The Cato Institute separates out noncitizens, including many temporary workers and undocumented residents. In its accounting, that group makes up a large share of the total debt reduction.
A simple reason is that many noncitizens pay payroll and sales taxes while having limited access to some benefits. That does not mean they use no services, especially locally. It means the balance can look different depending on what gets counted and how eligibility is treated.
The cost side sparks debate
Even supporters of immigration usually admit that costs exist. Schools are a big one, because education spending is largely state and local, and shows up quickly when populations grow. Health care and public services can also see strain in fast-growth areas.
The Cato Institute argues immigrants still come out ahead in total. Other researchers can get different results by changing time windows or how they treat children and long-run outcomes. So when you hear one big number, the smartest follow-up is what is included and what is not.
Why 2023 stands out
Year to year, the balance is not flat. The Cato Institute paper says fiscal savings grew to $878 billion in 2023. The report links the jump to higher tax revenue and the way earnings rise as people work more years.
Another driver is demographics. Many immigrants arrive as working-age adults, so early years can skew toward payroll tax contributions. Over time, the picture changes as households age, which is why the paper tracks a full 30-year span.
Social Security is part of the backdrop
Retirement math is not just about checks, it is about how many workers pay in. The Social Security Trustees report says there were about 2.7 covered workers for every OASDI beneficiary in 2023, and the ratio has been sliding. When that ratio falls, each worker supports a larger share of the system.
Immigration fits into this in a practical way. More working-age residents can mean more payroll tax revenue, which helps cash flow. But communities also need housing, schools, clinics, and roads to keep pace with growth.
How it compares to National Academies
The National Academies have also studied immigration’s fiscal effects, and they stress time horizons. Their work notes that first-generation immigrants can be a net cost in some state and local budgets, often tied to education. But long-run impacts can improve as later generations earn more and pay more taxes.
That is why smart discussions avoid one snapshot. A five-year window can look very different from a thirty-year window. It also explains why local experiences can feel different from national averages.
What the CBO is signaling
Immigration is not just a cultural debate; it is a budget input. The Congressional Budget Office’s long-range outlooks treat workforce size and economic growth as major factors shaping deficits. When the labor force grows more slowly, tax revenue growth tends to slow too.
Budget forecasts are not destiny, but they guide policy fights. CBO projections also highlight how interest costs and aging programs drive the long view. That backdrop is why a paper about immigration and deficits gets attention fast.
What Americans are saying now
Public opinion on immigration is rarely all in one direction. Gallup reported that the share of Americans who wanted immigration to decrease fell from 55% in 2024 to 30% in 2025. That shift suggests more people are moving toward keeping levels steady or even increasing them.
At the same time, many voters still want rules enforced and systems run cleanly. You can hear the split in everyday talk: some focus on labor and taxes, while others focus on border control and local strain. A steady takeaway is that the impacts are measurable, even when values differ.
Curious how a proposed $1 million visa could change who gets in, who gets left out, and what “merit” would even mean in practice? Check out our next slideshow on how Trump’s $1 million visa move could reshape immigration.
Why this study is getting attention
This Cato Institute study is getting extra buzz in 2026 because it clashes with the mood of the moment. While headlines focus on tougher enforcement, deportations, and new restrictions, this report says immigrants still produced a long-run fiscal surplus from 1994 to 2023. In plain terms, it argues they paid more into government budgets than they took out, which is not what many readers expect right now.
It also hits a nerve because it mixes two big fears in one story: taxes and national debt. If the study is even close, it suggests immigration is not just a border issue; it is also a budget story. And that is the kind of angle that makes readers stop scrolling and actually read.
Want the twist behind how tighter immigration enforcement is reshaping campus life and job paths? Check out our next slideshow on how Trump’s immigration crackdown is unexpectedly boosting American students.
What’s your take on this study’s bottom line, and do you think immigration helps or hurts the U.S. budget where you live? Share your thoughts and your view in the comments.
This slideshow was made with AI assistance and human editing.
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