Promise of immigration stimulus sparks dispute

Neil Munro White House Correspondent
Font Size:

Advocates say the Senate’s pending immigration bill will give the economy a shot in the arm,  but opponents counter that low-skill immigrants cost taxpayers more than they — or their U.S.-born children — can repay over many decades.

The stimulus aspect is important for the controversy, partly because advocates are looking for ways to offset the public’s worries about the cost of importing 30 million immigrants into an economy with 20 million unemployed or underemployed Americans.

Any economic boost would also be important because it would contradict the Heritage Foundation’s May 6 estimate that the legalization of 11 million illegal immigrants would cost Americans $6.3 trillion over the next five decades.

Advocates for the bill include progressive, libertarian and industry lobbies.

The Center for American Progress, for example, says the immigration bill will pump an extra $832 billion into the economy over 10 years. That’s roughly a 0.5 percent boost to the nation’s $15.7 trillion economy.

A report by Doug Holtz-Eakin, the director of the right-leaning American Action Forum, says the bill would provide a 10-year, $2.5 trillion increase in tax revenue for the federal government and boost per-capita income by $1,700 by the end of the decade.

A 2012 Cato study [pdf] predicted a $1.5 trillion boost to GDP over 10 years.

Advocates also lauded the Congressional Budget Office, which said May 2 it will use “dynamic scoring” to assess the bill’s impact on economic growth.

“The Congressional Budget Office has found that fixing our broken immigration system could help our economy grow [and] a proper accounting of immigration reform should take into account these dynamic effects,” said a guarded May 6 statement from the office of Rep. Paul Ryan, chairman of the House budget committee.

The CBO has yet to release it estimate of the bill’s impact, but warned that “those analytical changes would probably have only a modest impact on the estimated economic effects of changes in immigration policy.”

An infusion of low-skill immigrants will grow the economy because more people will be working and producing more value, said Derrick Morgan, Heritage’s vice president of domestic and economic policy.

But the important test, he said, is whether it raises the after-tax personal income of Americans.

The addition of the 11 million low-skill illegal immigrants won’t increase Americans’ per-capita income, said Heritage officials, because low-skill workers — no matter who they are — consume far more in benefits than they create and lower per-capita income.

“What the amnesty proponents are saying is that they can take someone from Mexico and Guatemala with a 10th grade education, plunk them into that [welfare] system and somehow, miraculously, that individual is going to pay more in taxes than they take out in benefits,” study author Robert Rector told reporters May 6.

“That is not only untrue — it is just profoundly implausible,” he added.

Less that one-quarter of the 11 million illegal immigrants have any education beyond high-school, said the Heritage officials.

The immigrants’ U.S.-born children won’t pay off the $6.3 trillion deficit, because they will be relatively unskilled, Rector added.

“There is no way in the world — even if all the second generation became college graduates — that they could pay back the $6.3 trillion,” he said.

In a late-afternoon press conference, Holtz-Eakin and several other advocates struck back at Heritage, saying its study ignored the economic benefits of immigration.

The immigration bill will boost the economy “by having more lower-skilled immigrants … that increase the productivity of higher skilled Americans,” said Alex Nowrasteh, the immigration policy analyst at the Cato Institute. For example, more university-trained women can go to work when immigrants provide day care, he said.

“Because we have a larger and more productive economy, everyone will be paying taxes as a result of being wealthier … [Heritage] massively underestimated the fiscal tax benefits,” Nowasteh said.

Heritage’s report also ignored other economy-boosting features of the bill, said Holtz-Eakin, including the inflow of higher-skill labor and the supply of agriculture workers.

But Rector dismissed Holtz-Eakin’s report of a $2.5 trillion gain.

“That is not a study — it is essentially a press release about a study that might be released at some point in the future,” Rector said.

Rector also told The Daily Caller that he had planned to study the other economic impacts of the bill, adding that his analysis includes the dynamic scoring demanded by critics.

For example, he said, the inflow of low-skill immigrants has “suppressed the wages of low-skill, vulnerable Americans workers. That results in tax losses and huge welfare increases for that [American] group, and that outweighs any other effect” of immigration that would benefit low-skill Americans, he said.

Also, an amnesty will incentivize additional illegal immigration, just as the 1986 amnesty spurred pressure for the 2013 bill, he said. “If we grant another amnesty, we are sending out a message to the world that we are going to have recurrent, repeated amnesties,” he said.

“We feel the best immigration system is the one that focuses on bringing high-skill immigrants in,” Rector said.

Follow Neil on Twitter