The Heritage Foundation’s new report on the fiscal costs of legalization for unauthorized immigrants concluded that it will cost taxpayers $6.3 trillion. Yesterday, I listed some reasons why I think this number is much too high, and on Wednesday, explained why I thought John Locke would say, “Keep immigration. Reform welfare.” Today, I want to look at the broader economic implications of the Heritage study.
“Government policy should limit immigration to those who will be net fiscal contributors,” the authors concluded, “avoiding those who will increase poverty and impose new costs on overburdened U.S. taxpayers.” This conclusion means that Heritage believes that anyone who is not contributing more in taxes than they receive in taxes is an economic liability, hurting the economy and “increasing poverty.”
But this conclusion that only immigrants who will be “net fiscal contributors” are economically valuable and that the rest “increase poverty” applies equally to lower-wage Americans. “Following amnesty,” the report states, “the fiscal costs of former unlawful immigrant households will be roughly the same as those of lawful immigrant and non-immigrant households with the same level of education.”
In fact, according to Heritage, its conclusion applies to anyone without a college degree, meaning 70 percent of Americans, under the Heritage formula, “increase poverty.” In fact, the Heritage report readily admits this fact: “Poorly educated households, whether immigrant or U.S.-born, receive far more in government benefits than they pay in taxes,” it concludes.
The question for Heritage is simply this: do they believe that America would be just as prosperous, or even more prosperous, if that 70 percent left the country? The contention of those of us who have taken issue with Heritage’s conclusion is not that the welfare is beneficial, but the value of these workers extends far beyond their tax contributions. It is unimaginable that a mass exodus of 70 percent of the country would result in income gains, and if that’s true, it totally undermines Heritage’s main conclusion that allowing low-skilled workers to stay here will be “ruinously expensive.”
“If you consider all the factors related to the amnesty – and, believe me, this is comprehensive – that it will have a negative long-term impact on our gross domestic product,” Heritage President Jim DeMint told ABC News’ This Week. But this conclusion cuts against a host of economic research showing that immigration has positive effect on GDP. Based on this research, the Bush administration’s White House Council of Economic Advisers found in 2007 that “annual wage gains from immigration are between $30 billion and $80 billion” to natives. As I mentioned previously:
In 2012, UCLA economist Raúl Hinojosa-Ojeda incorporated economic growth into his analysis and found legalization would raise GDP by $1.5 trillion over ten years. Economist Douglas Holtz-Eakin’s admittedly rudimentary analysis found that economic growth due to immigration reform would reduce the deficit by $2.5 trillion… In 2012, the Department of Agriculture looked at the economic impact of cutting the unauthorized population in half over 15 years. It found that it would reduce U.S. wages by 1 percent, $150 billion.
These facts are glossed over in the report and never factor into Heritage’s final analysis. Heritage was certainly not wrong to draw attention to the fiscal impact of immigration reform, but before it jumped to the conclusion that it will increase poverty and that conservatives should oppose it, it should have looked at the economic evidence, and gave earnest consideration to the implications of its report. America would not be better off without 70 percent of its workforce—we’d be much, much poorer.