Core Insights - The significant reduction in immigration and large-scale deportation policies are expected to negatively impact economic growth, contrary to claims that new budget proposals will boost growth above 3% [1][2] - The new budget allocates $70 billion for border security and $75 billion for domestic enforcement, which may lead to a decrease in population and labor force, adversely affecting economic growth [1][2] - A projected sharp decline in undocumented immigrants this year could lower U.S. GDP growth by 0.8 percentage points, given the historical average growth rate of about 2.5% [1][2] Immigration Policy Impact - If the Trump administration achieves its goal of deporting one million people annually, the economic drag could increase to 1.5 percentage points by 2027 [2] - The current U.S. economy is nearing full employment, with an unemployment rate of 2.7% for native workers in 2024, making the impact of reduced immigration on the labor market more pronounced [2] - The claim that limiting immigration will create job opportunities for native workers is challenged by data showing that native workers occupy only 1/8 of the jobs held by undocumented immigrants, which are often low-paying and physically demanding [2] Labor Market Dynamics - The complementary relationship between native workers and undocumented immigrants suggests that deportation may not create jobs for natives, as evidenced by past enforcement programs that reduced native employment rates and wages [2] - Automation and AI are unlikely to quickly fill the gap left by undocumented immigrants, as current AI applications primarily replace professional and clerical jobs rather than manual labor [3] - Strict immigration controls may deter STEM workers and students, delaying technological advancements and negatively impacting long-term productivity growth [3] Future Considerations - The U.S. faces a demographic challenge with an aging workforce and declining birth rates, necessitating a forward-looking immigration policy rather than merely reducing immigration and increasing deportations [3] - Without immigration, the U.S. population is projected to begin declining by 2033, which could constrain economic growth [3] - To achieve its economic growth objectives, the administration should reconsider its restrictive immigration policies [3]