(Re)calculating the Economic Benefits of Immigration Reform

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(Re)calculating the Economic Benefits of Immigration Reform

Last week, Rep. Mike Honda (D-CA) made a compelling case for comprehensive immigration reform in Poltico, pointing out the various economic benefits of a legalization program. In response, Heritage Foundation analyst Jena McNeill fired off a sharp rebuttal which advanced several common immigration myths.

McNeill starts by saying "the left" never argues that “amnesty” will improve the economy, but insist comprehensive immigration reform will boost the economy. She’s absolutely right: supporters of comprehensive immigration reform like Rep. Honda maintain that it will yield significant economic benefits, but only if a path to legal status for undocumented immigrants (what McNeill calls amnesty) is part of the deal.

No one argues that legalization alone can solve the problems of our broken immigration system, because it won’t. Nor will enacting an enforcement-only immigration bill, similar to the one put forward by Sen. Orrin Hatch (R-UT). Comprehensive immigration reform will fully benefit the nation’s economy only if it measures up to its name. In addition to legalization and border enforcement measures, a comprehensive solution should include provisions for families and future workers to enter the country legally.

McNeill goes off track when she declares that comprehensive immigration reform is actually a “code phrase for amnesty,” invoked because Americans are against it. I’m all for decoding long-winded immigration terms, but this is wildly inaccurate. Comprehensive immigration reform is not a euphemism for “amnesty.” The phrase refers to a package of policies, in which a legalization plan is but one controversial component. According to the author, immigration reformers are playing word games because Americans “by and large don’t support amnesty. That’s why Americans supported the attempt by Arizona to actually enforce the law.” But this isn’t the full story. Several polls show that Americans who backed Arizona’s law also think undocumented immigrants living here should be able to do so legally, after paying fines and meeting other requirements. Americans want elected officials to combine enforcement measures with a firm but fair path to legal status. Sound familiar?

This approach would add a staggering $1.5 trillion to the U.S. GDP over the next ten years, according to an influential Center for American Progress study. In his op-ed, Honda also explains how newly legalized immigrants are likely to find better paying jobs, spend more in consumer dollars, and pay higher taxes. Indeed, research on the flawed 1986 legalization bill revealed lower poverty rates, higher homeownership rates and generally improved socioeconomic situations among legalized immigrants.

McNeill claims these economic gains are “likely obliterated” in light of low-skilled immigrants’ use of lavish “local, state and federal benefits, education, and services” which will continue even after “amnesty.” To support this assertion, McNeill cites a Heritage report from 2006 that finds low-skilled immigrants consumed more in services than they paid in taxes. Like most right-leaning studies of immigration’s fiscal impact, Heritage includes the costs of educating U.S. citizen and legal immigrant children in its accounting (The Congressional Budget Office, for example, does not). Obviously, public education costs money, but it isn’t a sunk cost; children in immigrant families who are students today will be workers and taxpayers down the road.

What about non-educational benefits? Actually, newly legalized immigrants under any comprehensive bill won’t be eligible to get means-tested benefits, like food stamps or student loans, for many years. Under the terms of a recent comprehensive bill introduced by Sen. Robert Menendez (D-NJ), most undocumented immigrants legalized today will wait eight years to become legal permanent residents, then as LPRs, must wait another five years to be eligible for most forms of assistance. At any rate, weighing the potential burden of new immigrants on the public benefits system is old news. Back in 2006, CBO and the Joint Committee on Taxation estimated that enacting the Comprehensive Immigration Reform Act of 2006, which included a legalization provision, would raise $66 billion in revenue for the federal government over ten years, much more than the $54 billion in projected federal spending.

Rep. Honda and other reform-minded members of Congress should continue to tout the real economics of a comprehensive immigration overhaul. Despite claims to the contrary, it’s clear that arguments against comprehensive immigration reform based on overhyped fiscal concerns don’t hold water.