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Expanded Immigration Would Reduce The Federal Deficit, Some Conservatives Say
By Jim Tankersley
The Washington Post
April 8, 2013
http://www.washingtonpost.com/business/economy/expanded-immigration-would-reduce-the-federal-deficit-some-conservatives-say/2013/04/08/a388e8cc-a07b-11e2-9c03-6952ff305f35_story.html
Conservative champions of opening the flow of legal immigration into the United States are invoking economics in hopes of winning Republican lawmakers’ support — specifically, the idea that more immigration will increase growth and cut the federal budget deficit.
The American Action Forum, a conservative think tank, will release an analysis on Tuesday that projects that an overhaul of immigration laws could boost gross domestic product growth by a percentage point each year over the next decade. That growth would produce tax revenue that would reduce federal deficits by a combined $2.5 trillion, according to the group’s president, the economist Douglas Holtz-Eakin.
“It’s very important to recognize that this is a core economic policy decision,” Holtz-Eakin said in an interview. “Let’s acknowledge the value” of immigrants, he added.
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Holtz-Eakin, Americans for Tax Reform and Cato all contend that the right way to evaluate an immigration expansion bill is through what lawmakers call “dynamic scoring,” which is to say, by considering both the potential costs to the economy from the bill and the possible benefits of increased economic growth spurred by it.
In his new analysis, Holtz-Eakin predicts that those benefits would be substantial, for several reasons. Immigrants will add to the labor force, he says, helping to reverse a decline in workforce participation that began a decade ago — and boost the economy’s potential for growth in the process. Those added workers also could raise productivity, he says, because research shows that immigrants tend to be more entrepreneurial than native-born residents.
Using census estimates for “high immigration” to the United States versus “low immigration” as a guide, Holtz-Eakin calculates that a bill expanding immigration would raise GDP growth from an average of 3 percent annually to 3.9 percent over the course of a decade.
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