Tag: border wall

The Cost of the Border Wall Keeps Climbing and It’s Becoming Less of a Wall

Social scientist Bent Flyvbjerg described the selection of government-funded infrastructure projects as “survival of the unfittest” because proponents of those projects systematically exaggerate the benefits and underestimate the costs.  President Trump’s proposed border wall with Mexico provides a striking example of this: A wall along the border with Mexico will likely cost about $59.8 billion to construct.

The Office of Management and Budget (OMB) recently sent a letter to Congress where it argued that $5.7 billion would pay for approximately 234 miles of a new physical steel barrier along the border.  That new estimate comes to about $24.4 million per mile.  This new OMB estimate is 41 percent more costly than the approximately $17.3 million per mile construction costs that the Department of Homeland Security (DHS) estimated just a few years ago, 2.7 times as expensive as Mitch McConnell and Paul Ryan estimated, and 5 times as expensive as Trump’s lowest estimate

Even worse, the $24.4 million per mile estimate does not include the large cost overruns for government construction projects.  Applying a conservative 50 percent cost overrun estimate to building the border fence brings the total price tag to approximately $36.6 million per mile.  Building a steel fence along the remaining 1,637 miles of Mexican border not covered by pedestrian fencing would cost approximately $59.8 billion, excluding any maintenance costs. 

There are a few caveats about the above estimate.

First, the 50 percent cost overrun estimate is conservative.  A small sample of large construction projects selected by my colleague Chris Edwards shows that cost overruns boost total project costs by an average of 3.3 fold.  The cost of the border fence is thus very likely to be more than double what I estimate above.

Second, this estimate is for the steel bollard barrier and not a concrete wall.  In other words, the currently proposed steel border fence is far cheaper than the concrete and steel wall originally proposed by President Trump.  Making it out of concrete could more than double the price.

Third, our cost estimate does not include the low-ball $864,353 annual per mile cost of maintaining the current border fence – which is likely a lot less expensive than repairing the barrier that has been proposed by Trump. 

Fourth, the OMB’s cost estimate per wall is more in line with previous Trump administration requests than estimates made by organizations that are ideologically committed to building a wall regardless of the cost to taxpayers.    

Since 2017, administration officials at the OMB have been relatively consistent in estimating that the government cost of building a border wall is around $24 million per mile.  However, the incentives for and history of government agencies systematically underestimating the costs of government construction projects makes this the lowest possible estimate.  If it is built for about $24.3 million per mile than it would be the first time that a large government construction project has come in at or below cost in a very long time.

The cost of the border wall keeps getting higher, the border wall keeps becoming less of a wall, and the administration keeps promising that it will cover less and less of the border.  At this rate, President Trump might end his administration with less fencing than he began it. 

A Potential Border Wall Compromise

President Trump recently backed off his demand for $5 billion in funding for his border wall, likely averting a government shutdown around Christmas.  However, the political debate over funding for border wall will merely reemerge in the New Year.  Besides new court decisions regarding DACA, there is little to break this deadlock.  Some of the suggestions below offer additional avenues on which to negotiate.  

One of President Trump’s persistent claims is that the wall will secure the border and he recently implied that Border Patrol agents are substitutes for such a barrier.  In that case, I have a suggestion for Congressional Democrats who will be negotiating with the President over the wall in the next several years:  If you must fund the wall in exchange for the DREAM Act or DACA, have Border Patrol pay for it.

This idea is simple in concept – just fire Border Patrol agents and use their saved salaries to fund the construction of the border wall.  As of the middle of 2018, the 19,338 Border Patrol agents had an average annual salary of $61,064.  Altogether, they were paid about $1.18 billion in 2018.  The savings from firing all of them in one year wouldn’t come close to funding the $25 billion or so to build the entire border wall and would only go a small portion of the way toward President Trump’s more modest $5 billion request, but it’s a start.

Of course, the government should not fire all the Border Patrol agents.  Some are necessary to patrol the border even if Congress liberalizes the immigration system.  But this is Washington, DC, and politics being what it is, we all must compromise.  If Congress instead fired half of all Border Patrol agents and instituted a policy of no new net hiring, that would free up $590.4 million per year for the construction of a border wall.  In 8 years and 5 months, about $5 billion in savings could be diverted to the wall.

Mexico Is Not Sending Its Murderers: Homicide Rates on the Mexican Border

President Trump tweeted this morning that, “One of the reasons we need Great Border Security is that Mexico’s murder rate in 2017 increased by 27% to 31,174 people killed, a record! The Democrats want Open Borders. I want Maximum Border Security and respect for ICE and our great Law Enforcement Professionals!”  He tweeted this because he’s spent the last few days stating that he would shut down the government if Congress did not adopt his proposed immigration reforms in the upcoming budget debate, especially the funding for the construction of a border wall.

Besides the political motivation for his tweet, President Trump seems to have assumed that crime in Mexico bleeds north into the United States, so more border security is required to prevent that from happening as murder rates begin to rise again in Mexico.  Although illegal immigrant incarceration rates are lower than they are for natives, illegal immigrant conviction rates in the border state of Texas are lower for almost every crime including homicide, and the vast majority of evidence indicates that illegal and legal immigrants are less crime-prone than natives, the President’s specific claim that murder rates spread from Mexico to the United States is different from most of the existing peer-reviewed literature. 

My colleague Andrew Forrester and I ran some simple regressions to test whether higher homicide rates in Mexican states that border the United States spread northward to U.S. states on the other side of the border.  It doesn’t make much sense to compare Mexican crime in the Yucatan Peninsula with that in Maine but, if President Trump’s theory is correct, then we should expect to see it cross from Baja California to California, for instance.  Homicide data for the Mexican border states come from the Mexican National Institute of Statistics and Geography.  American homicide data come from the Uniform Crime Reporting statistics at the FBI (files here).  Homicide rates in states in both countries are per 100,000 state residents which allows an apples-to-apples comparison.  We used data from 1997 through 2016 but were not able to include 2017 because U.S. crime data is still unavaiable for that year.  We decided to look exclusively at U.S. and Mexican border states because those are where we would expect crime to bleed over if such a thing happened. 

Figure 1 shows a negative relationship between homicide rates in U.S. border states and Mexican border states with a negative correlation coefficient of -0.46.  The coefficient is nearly identical when American homicide rates are lagged one year.  Although we did not include other controls, there is a negative relationship between homicides on the American side and the Mexican side.  In other words, when Mexican homicide rates go up then American rates tend to go down and vice versa.     

Homicide Rates in U.S. and Mexican Border States

Figure 2 shows the same data but with years on the X-axis.  Mexican border state homicide rates vary considerably over time, especially when that government decided to try to crack down on drug cartels, but U.S. border state homicide rates trended slowly downward over the entire time.  There is a negative relationship between Mexican homicide rates and homicide rates in U.S. border states. 

Homicide Rates in U.S. and Mexican Border States

Our figures and regressions above might not be capturing the whole picture.  Perhaps crime travels from Mexican border states and goes directly into the U.S. state that it is bordering.  That could be the source of President Trump’s worry.  We tested that in Figures 3-6 where we looked at how homicide rates in Mexican states contiguous to U.S. states are correlated with homicide rates there. 

The Border Wall Still Cannot Pay for Itself

Steven Camarota of the Center for Immigration Studies (CIS) responded to our criticism of his claim that the border wall will pay for itself. Most of Camarota’s comments confuse the multiple and different simulations that I published with David Bier. He only responds to a handful of our points and then spends most of his space attacking a section called “A Better Cost Estimate Should Include These Variables.” We did not incorporate any of the suggestions from that section into our corrected version of his fiscal analysis.

The only changes we made in our headline findings, relative to Camarota, were that we adjusted for the border crosser age of arrival in 2015, adjusted for the education level for 2015 border crossers, and used an actual cost estimate for the border wall. We also copied Camarota’s methods for our additional simulations but clearly stated the changes we made and why.

Camarota’s comments are in the block quotes, my responses are below.

“[D]espite the Cato blog post being titled ‘The Border Wall Cannot Pay for Itself’, their own cost estimates would simply mean that a border wall would have to stop 16 to 20 percent of those expected in the next decade to pay for itself (as opposed to 9 to 12 percent in my estimate).”

Camarota misread our response. The point of generating a new estimate from his assumptions was to demonstrate how flawed his report was by showing that small changes drastically change his results.  These are not our “own estimates,” but rather, they would have been his estimates if he had bothered to use more up-to-date and precise numbers.  Instead, Camarota pretends that our updates are a comprehensive fiscal cost estimate despite the fact that we have an entire section dedicated to explaining what sorts of other factors a good estimate would need to include.

Cato argues for excluding state and local costs. Cato makes the argument that costs at the state and local level should not be counted, even though this information is available from the NAS study and I included it in my analysis. The only reason they give for not including these costs is that ‘the federal government will actually be paying for the wall.’ This is a very odd argument. The federal government often considers the costs of its policies at the state and local level, so why should building a wall be any different? These costs are real and have to be paid for by the same taxpayers who pay for the federal government.”

Camarota’s comment is perplexing. In the “Calculating the Fiscal Cost Section” of our blog, we used the average net present value flows for consolidated federal, state, and local governments in Table 8-12 of the NAS report. Camarota used that same table in his paper. We even averaged the net fiscal costs for all eight tables like Camarota did. The only exception is that we controlled for the age of the border crossers.  Camarota’s passage is actually criticizing one of the three additional simulations we ran later in the blog with different assumptions.  A person reading his criticism would inaccurately assume that we used a different table from the NAS than we really did.

Senator Cruz’s Border Bill Cannot Pay for the Wall

Senator Ted Cruz (R-TX) recently introduced the Ensuring Lawful Collection of Hidden Assets to Provide Order Act, also known as the “El Chapo Act,” to fund President Trump’s proposed border wall.  The media reports that Cruz’s bill is similar to one introduced by Representative Jim Sensenbrenner (R-WI) in February.  Cruz’s bill would apportion some money seized from drug lords like El Chapo to the construction of a border wall. 

There are several problems with this idea.

First, cash seizures cannot pay for the border wall.  The inspector general at the Department of Justice found that the DEA, ATF, and FBI only seized assets and cash worth $5.36 billion from 2007 through 2016.  A raid in Mexico in 2007 yielded $205 million in seized cash.  The agencies spent those funds, gave them to local or state law enforcement, or returned some of them to victims.  As my colleague David Bier and I wrote, building and maintaining a border wall over the next decade will cost about $44 to $99 billion.  If 100 percent of the seized funds from 2007 to 2016 went toward border wall construction, then 126 to 310 miles of it would have been built by now along the roughly 2000 mile long border.  That amounts to an average of 14 to 35 miles a year. 

Even if the federal government seized all $14 billion from El Chapo (it won’t), that would at most cover a third of the decade-long cost of the border wall and likely no more than a seventh.         

Second, just because money seized from Mexican drug dealers is funneled to paying for the wall doesn’t mean that Mexico would be paying for the wall.  That money was going to be seized anyway by the federal government and mainly spent by U.S. law enforcement agencies.  By redirecting the flow toward the construction of a border wall, this bill will make those U.S. law enforcement agencies pay for it in foregone revenue.  A redirection of revenue that was already coming in cannot be a new stream of revenue to pay for a border wall.  At best, it is an accounting trick to make it look like Mexico is paying for the wall.  I am not endorsing the government’s seizure of drug money, the War on Drugs, or even the current budgets of other U.S. law enforcement agencies – I am merely pointing out that other U.S. agencies will be foregoing these funds.  I doubt that Congress or the Trump administration will let their revenues shrink, so taxpayers will likely plug any spending gap caused by the redirection of funds toward a border wall.

Third, much of the disagreement over the cost of the border wall concerns the cost of eminent domain.  Most of the land that the government will need to seize through eminent domain to build the border wall is in Texas where most of the land along the border is privately owned – which is one reason why 61 percent of Texas adults oppose the border wall.   

Fourth, the stock of illegal immigrants is at its lowest point in a decade and annual cross-border apprehensions are at or near a 17-year low.  Even if a border wall was a cheap and effective way to stop illegal immigration, the sustained collapse in cross-border apprehensions makes it a silly expenditure.  It’s like a perfectly healthy person putting their formerly broken-but-now-healed arm in a cast 9 years after the injury healed.

In essence, Cruz’s bill would redirect seized drug money in order to fund further seizures of private property along the border and to pay for an expensive wall that is unnecessary.

The Border Wall Cannot Pay for Itself

Recent budget talks between the White House and Congress shows that President Trump puts a high value on funding the construction of a border wall. Crucial to this debate is how much a border wall will cost to construct and maintain. Center for Immigration Studies (CIS) published a brief report purporting to show that building a wall along the southern border would pay for itself if it keeps out only 160,000 to 200,000 border crossers over the next decade. That means the border wall would only have to deter about 9 to 12 percent of all illegal border crossers who would have successfully made it into the United States during that period. The report uses a variety of assumptions that unrealistically lower the cost of the wall as well as inflate the fiscal cost of border crossers.

We used more recent and precise data to update CIS’s analysis without altering its methodology. Simply using newer numbers—with no changes to the report’s unrealistic underlying assumptions—proves that the border wall cannot pay for itself. Despite fanciful promises to the contrary, a border wall is too expensive and will deter too few illegal immigrants to pay for itself—even under assumptions that are extremely generous to those who support a wall.

Updating CIS’ Analysis

The first update was to factor in a more recent estimate of the cost of a border wall. The CIS study chose to rely on a statement made by Senator Majority Leader Mitch McConnell (R-KY) rather than any actual cost estimate. We used an official estimate from the Department of Homeland Security (DHS) issued after the majority leader’s comment. This placed the cost of building a 1,250-mile border wall at $21.6 billion, or $17,280,000 per mile, that includes all costs such as the condemnation of private property through eminent domain. We also include the yearly maintenance costs. 

The second is that we adjust CIS’ fiscal cost estimate by controlling for the age of the border crossers. The National Academy of Sciences (NAS) fiscal cost estimates show that the immigrant age of arrival is vital for estimating their fiscal impact. CIS used the 2010 education level of Mexican illegal immigrants as a proxy for the education level of all future border crossers. We used the March CPS to adjust for this by assuming that the education of future illegal immigrants will be more similar to those arriving in 2015 than 2010. We further divided up the illegal border crossers by age and education to get a more accurate view of their potential fiscal impact. 

Will Republicans Expand ObamaCare?

Back when the GOP was selecting its nominee for president last year, I warned my Republican friends that on ObamaCare, Donald Trump might be worse than Hillary Clinton:

Good ol’ partisanship would stop Hillary Clinton from expanding ObamaCare even a little. A faux opponent like Trump could co-opt congressional Republicans to expand it a lot.

I even quipped that a President Trump might sell out ObamaCare opponents for 10 feet of border wall.

It looks like my prediction was eerily accurate. Even as the House Republican leadership and President Trump claim they are moving legislation that would repeal and replace ObamaCare (it wouldn’t), Trump is offering to expand ObamaCare in return for Democratic cooperation in funding a new border wall.

ObamaCare requires participating insurers to offer more comprehensive coverage to low-income enrollees, with the understanding that Congress would compensate insurers for that added cost. The thing is, the Democratic Congress and president that enacted ObamaCare never appropriated funding for those so-called cost-sharing subsidies. President Obama initially recognized the lack of an appropriation, but then began issuing those subsidies anyway–because ObamaCare would have collapsed if he hadn’t.

By that time, Republicans had taken over the House of Representatives, and they sued the Obama administration in federal court for encroaching on Congress’ power of the purse by spending federal funds without an explicit appropriation. A federal judge sided with the House. She ruled that paying those cost-sharing subsidies “violates the Constitution,” and ordered that they stop, pending an appeal, which the Obama administration timely filed.

That was the state of play when President Trump took office. His administration now has three choices.

  1. It can declare that it agrees with the court’s ruling and enforce the court order. This would mean ending the illegal payments that are the only reason ObamaCare is still on the books. If Trump ends those illegal subsidies, it is likely that even more insurers will announce they are leaving the Exchanges. As I have written elsewhere, taking this step would create even more pressure on Congress to repeal ObamaCare, particularly the law’s community-rating price controls that are causing health insurance markets to collapse.
  2. It can appeal the lower court’s ruling. This is the strategy the Obama administration pursued. It would be an awkward step given that Trump’s attorney general Jeff Sessions and Secretary of Health and Human Services Tom Price have each stated they believe these payments are unconstitutional.
  3. It can ask Congress to appropriate the subsidies. This may be the most politically awkward option of all. It would mean the first legislative change that congressional Republicans and the Trump administration make to ObamaCare would not be to repeal it, but to expand it. Funding cost-sharing subsidies would mean Republicans would be providing more money for ObamaCare than a Democratic Congress did at the height of its power.

According to Reuters, the Trump administration has chosen option #3:

President Donald Trump put pressure on Democrats on Sunday as U.S. lawmakers worked to avoid a government shutdown, saying Obamacare would die without a cash infusion the White House has offered in exchange for their agreement to fund his border wall…

Spending legislation will require Democratic support to clear the Senate, and the White House says it has offered to include $7 billion in Obamacare subsidies to help low-income Americans pay for health insurance, if Democrats accept funding for the wall.