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May 23, 2013
'Conservative' economists claim amnesty will boost economy (they're wrong)
Posted by Laura
Expect a lot of fanfare from the release of a document signed by 100+ economists who claim that immigration amnesty will be a major boon to the economy. American Action Forum, headed up by former McCain economic adviser Douglas Holtz-Eakin claims, contends that legalizing the millions of illegal aliens currently here will lead to "positive impact on population growth, labor force growth, housing, and other markets will lead to more rapid economic growth." Unconcerned by the billions in additional federal spending just on Obamacare alone, the economists see “a positive impact on the federal budget."

It seems as though what they are saying is that we will let in a whole lot of new people, and that those people will buy things, including housing, and that this will cause the economy to grow. That seems like a pretty simplistic analysis. What if all the new people vote in such a manner that the Democrats develop a permanent and overwhelming majority, as has happened in California? What would be the impact of all those liberal tax and spend programs on the economy? What about the impact of a world in which the EPA's powers are virtually unlimited? Or the impact of a world in which liberals on the Supreme Court are free to go after business in every possible way? Or the impact of a world in which liberals are the ones negotiating all of our trade agreements with other countries? Have they taken any of this into account?

Remember: passing this bill means that you support the California option -- you support changing the country so that conservatives will never again have the chance to govern. I don't see how anyone who believes in the free market will think that's good for the economy.

Now they also cite some CBO figures, which seem almost trivial to me. If the best the CBO can do is say that immigration reform will lower the deficit by $300 billion over 10 years -- that would only be $30 billion per year, which is a rounding error in our federal budget. Those effects are so small that they could easily be overwhelmed by other developments -- such as massive new taxes imposed with the votes of illegal aliens.

In short, this all seems like the same-old fantasy stuff the GOP Establishment is always selling to itself -- only look on the bright side of any idea you have, and never consider what could go wrong. It may be idealistic, and it may even be a pleasant way to live -- but it is not conservative.

Additionally, it is worth noting that many of the most prominent of the economists signing on to immigration reform have gotten major issues wrong before. Former Bush and Romney adviser Glenn Hubbard, for example, recently argued that the well-to-do should pay more in taxes through the elimination of deductions. As the Heritage Foundation noted: "The flaw in Hubbard’s argument is that he presumes that somebody must pay more tax before Congress and the President can agree to the spending cuts Hubbard prefers. Hubbard’s is ultimately not a budgetary judgment, because nothing about the budget compels higher taxes." At the 2005 Council on Foreign Relations event, Hubbard also downplayed concerns about the growing federal deficit. "[W]e’ve had now a decade of people saying we will have a necessary collapse. The truth is as an economics profession we don’t know what the critical threshold for a country like the United States is for current account deficit relative to GDP."
05/23/13 11:28 AM
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