A new Special Report from the Heritage Foundation has come to my attention, and I am disappointed in its poor quality. Heritage.org asserts on its main page in the biggest font I have ever seen (and I worked there for years) “The COST of Amnesty TO YOU > $6.3 Trillion.” Here we go.
It must be remembered that the same analysis was done by the same author in 2007, then warning the cost of amnesty was $2.6 Trillion (HT Andrew Stiles). But the current report indicates that the status quo cost of unlawful immigrant households is roughly half of the amnesty cost, which means YOU are already paying $3.15 Trillion. By this logic, the status quo (thanks to inaction six years ago) is more expensive than if reform had passed in 2007, to the tune of half a trillion dollars. The pileup of outlandish Heritage estimates presents a credibility hurdle.
The report’s authors may sincerely believe that unlawful immigrants are costly, but their study clearly makes assumptions to prove that point, while ignoring research to the contrary. Here are just a few observations:
- The most glaring error is the weak alternatives comparison. This paper asserts a cost of “amnesty” as if migrants are only costly if a new piece of legislation passes. What is the cost of the status quo? Table 8 (p 24) purports to make this comparison but it is confusing (calling it a phase) and sketchy — avoiding a direct comparison of the bottom line cost. The 3.15 T number is my own estimate … it really is incumbent on the authors to provide this themselves, and not offering such a number raises questions. The details are no better: no Obamacare costs for the status quo? A tripling of direct welfare costs after legislation passes yet tax revenues hardly budge?
- There is no dynamic analysis. The authors estimate fiscal benefits only (and weakly), but ignore economic benefits entirely. This fails the longtime Heritage claim to support dynamic analysis in tax and security policy. Charts 5 and 6 on page 16 show a net UIHH (unlawful immigrant household) fiscal deficit of $14,387. Note that this is based on annual UIHH earnings of $38,988. Unless they expect readers to believe all this household income (a) generates no productive work (e.g., makes product, mows lawns, nurses the sick, and starts businesses that hire other Americans) and (b) is 100% remitted abroad, consuming nothing in the U.S. macro economy, then the report is misleading. Millions of migrants cannot help but add to the GDP, and more importantly to specialization and growth. Dynamically, there are at least two huge channels of positive feedback into the productive side of U.S. economy – think of less expensive farm produce and greater demand for housing.
At best, the authors make a compelling case that the U.S. welfare system is dysfunctional. That is true with or without a guest worker program, or with green cards for STEM, or with much of anything to do with immigration.
The net effect of this Special Report does real damage to the cause of dynamic analysis. For more than a decade, Heritage has called on CBO to add dynamic analysis to its tax reform studies. I could not agree more. And now, ironically, I can only hope CBO does an analysis of immigration reform that will show how skewed the Heritage immigration work has become. Will it be a plus or minus for reform? I don’t know, but I trust it will be honest even if undynamic.
UPDATE: A friend from Heritage kindly pointed out to me some pages in the study that address my objection #1. I stand corrected. Unfortunately, the fact that the report’s authors actually did a status quo comparison does not help the credibility of the report. It demolishes it. The key material is all on page 30. Let me quote two sections:
As noted, there currently are few unlawful immigrants over age 50. … If one assumes that under current law, most unlawful immigrants will return to their country of origin around age 55, the lifetime fiscal costs of unlawful immigrants under current law are comparatively low: only around $1 trillion.
Okay … but who would seriously assume that? No evidence suggests illegal immigrants have their 55th birthday party and, like it’s Logan’s Run or something, head across to Tijuana or Toronto. This is the equivalent of “if we just assume Syrians and Israelis wake up tomorrow and realize they’re just one big happy family, we can disband the U.S. Navy and all its costs.” Later, the text says:
However, there is a loophole in existing law that may allow many or most current unlawful immigrants to achieve lawful status … the open-ended provision of green cards to the foreign-born parents of U.S. citizens. A majority of adult unlawful immigrants have children who were born in the U.S.
So, the report admits it is making a flawed assumption and its $1T status quo cost estimate is baloney. What exists is de facto amnesty, exactly what Senator Marco Rubio said was the justification for a comprehensive reform, with triggers, with e-verify, etc. Make realistic assumptions and Poof! there are no net costs to comprehensive reform.