Huge Net Costs from Trump’s New Executive Order Cutting Refugees

President Trump today issued a revised version of his infamous executive order to temporarily ban the issuance of new green cards and visas for nationals from Iran, Syria, Yemen, Libya, Somalia, and Sudan. The new order dropped Iraq, which eviscerated Trump’s argument that the list of banned countries is based on an existing list in U.S. law. The order also cuts the number of refugee admissions by about 37 percent compared to the post-1975 average number of annual refugees admitted—from 79,329 per year to just 50,000. However, there were 110,000 refugees scheduled to be admitted in 2017 so the actual decrease in refugees this year is a whopping 55 percent under this executive order. The Trump administration thinks this new order addresses many of the legal challenges made against the first version.

Introduction

When the first version of this order was signed at the end of January, Cato’s research showed that the actual domestic terrorism risk from nationals of those six countries was minor and that the order stands on shaky legal ground. For this iteration of the executive order, I intend to show that the permanent decrease in refugees costs native-born Americans more than we’d save from fewer terrorism deaths. This cost-benefit analysis does not look at the cost of temporarily reducing green cards and other visas.

Results

If Trump’s refugee reduction eliminated all deaths from refugee terrorists then it will cost native-born Americans about $159.4 million per life saved, which is about 10.6 times as great as the $15,000,000 per statistical life estimates if the average number of refugee admissions had stayed at 79,329 going forward (Figure 1). In other words, such a policy would reduce your annual chance of dying a terrorist attack committed by a refugee on U.S. soil from one in 3.64 billion per year to zero at a cost of $159.4 million per life saved. 

However, President Trump’s executive order is not decreasing refugee flows by 37 percent in 2017. The Obama administration slotted 110,000 refugee admissions for 2017, so this year’s reduction is actually 55 percent. If I assume that the new 110,000 annual admission figures would have been the new normal in the absence of Trump’s executive order, the economic costs increase to $326 million per life saved for a 100 percent reduction in your chance of dying in a refugee terrorist attack on U.S. soil. The economic costs incurred are about 21.7 times as great as the cost for a single death by refugee terrorist in this scenario (Figure 1). 

Figure 1

To break even, Trump’s decrease in the refugee program would have to save one life per year if the average number of 79,329 refugee admissions had continued or about two lives per year if President Obama’s boosted refugee numbers are considered the new baseline. Regardless, there would have to be an unrealistically large and sustained increase in deaths committed by refugee terrorists in attacks on U.S. soil to justify this reduction in numbers.  By expending so many resources to save each statistical life, this executive order will actually kill more people.  Those expended resources could have been more effectively used to save more lives in other areas than by further reducing an already minor threat.  

Methods

The above cost-benefit analysis is similar to that which Greg Ip at The Wall Street Journal published but with some minor changes.

I estimate the economic benefits of refugees to American natives. This figure is known as the immigration surplus which ignores all of the economic benefits to the immigrants themselves and instead focuses entirely on the economic benefit to native-born Americans. George Borjas estimates the immigration surplus at 0.24 percent of America’s $17.194 trillion GDP. Over 43 million immigrants are currently living in the United States. From 1975 to the end of 2015, about 3.3 million entered as refugees. I assume that 1/3 of those refugees are deceased. From this, I am able to make a rough estimate of the annual immigration surplus per refugee that I further decrease by 50 percent because refugees tend to be poor (although this doesn’t matter as much for the immigration surplus). The result is that each refugee increases the wages of native-born Americans by $476.61. I then multiply that lost immigration surplus per year by the number of fewer refugees admitted. I then take the chance of dying annually in a refugee terrorist attack and divide it by the current U.S. population to estimate how frequently a death would occur if the chance remains constant which estimates a death by a refugee terrorist once ever 11.4 years. Multiplying the wage loss by the number of refugees who have been locked out by the number of years it would have taken for another refugee-terrorist death yields the $159.4 million cost per life saved. 

Yearly economic benefit for Americans from all immigrants is $41,265,600,000 according to lowest estimates from Borjas ($17.194 trillion times 0.24 percent). Multiply that by .0503 (percent that’s refugee) to get $2,077,246,422. Divide that by the stock of immigrants currently alive who entered as refugees (2,179,170) to get $953.24 wage benefit to all Americans per year, per refugee. I then assume that they only add half that amount because they are poor so the result is $476.61 immigration surplus per refugee per year.