Penn Wharton Budget Model Projects Nearly $1 Trillion Deficit Increase from Trump's 10-Year Deportation Plan

The Penn Wharton Budget Model (PWBM) projects that former President Donald Trump's proposed 10-year mass deportation policy could increase federal deficits by nearly $1 trillion. This significant fiscal impact, specifically an estimated $986.8 billion over a decade, was highlighted in a recent analysis by the academic institution. The projection underscores the potential economic consequences of such an immigration crackdown, drawing attention from various policy experts.

The projected deficit surge stems from a combination of substantial enforcement costs and a significant loss of tax revenue. PWBM's analysis indicates that the 10-year policy would incur approximately $561.4 billion in new outlays for border security and interior enforcement. Concurrently, the removal of unauthorized immigrants, many of whom contribute to income and payroll taxes, would result in a $300.4 billion decline in federal revenues from 2025 to 2034.

Beyond the direct fiscal costs, the policy is anticipated to have a broad negative impact on the U.S. economy. The PWBM forecasts a 3.3 percent reduction in Gross Domestic Product (GDP) by 2034 under the 10-year deportation scenario. Additionally, the average wage across the economy is projected to fall by 1.7 percent, reflecting a contraction in the overall workforce and economic activity.

The analysis reveals varied wage effects across different skill groups. High-skilled workers are expected to see their wages decline by 2.8 percent by 2054, as unauthorized low-skilled workers often complement their roles. Conversely, authorized low-skilled workers might experience a temporary wage increase, potentially up to 5.0 percent by 2034, due to reduced competition. Furthermore, the Social Security program faces considerable strain, with projections indicating a $133 billion reduction in revenue over ten years and an accelerated depletion of its trust fund.

The implications of such a policy have drawn sharp reactions. White House officials, responding to similar analyses, have argued that these economic models overlook the broader costs associated with illegal immigration, such as impacts on crime, housing, and emergency services. They assert that prioritizing American workers aligns with the administration's goal of fostering economic growth and enforcing immigration laws.

The tweet by David J. Bier, stating "> Trump's immigration policy will increase deficits by nearly $1 trillion, says Penn Budget lab," encapsulates the core concern raised by the PWBM's findings. The comprehensive study underscores the complex interplay between immigration policy and national economic health, prompting ongoing debate about the long-term fiscal and economic consequences of large-scale deportation efforts.