The Wall Street Journal
April 17, 2013
A new study shows the potential economic benefits of reform.
The immigration debate is moving into high gear as the Senate Gang of Eight release their bipartisan reform plan this week. We’ll take some time to study the details. But for today let’s step back and consider the central question that’s been debated since the great wave of Ellis Island immigrants a century ago: Do foreign newcomers contribute more to the economy than they cost?
Republican Senator Jeff Sessions of Alabama, a reform opponent, contends that the net cost of the Senate plan zwould be enormous,” reaching about $40 billion a year in higher welfare, health care and other public benefits.
Mr. Sessions is right that legalizing as many as 11 million workers in an entitlement society will have public costs. It’s also worth noting, however, that the Gang of Eight draft summary says those newly legal workers won’t be eligible for either ObamaCare or most other welfare benefits for at least a decade, and maybe longer. They are already eligible for emergency medical care at hospitals, and their children are entitled to public education under the Supreme Court’s 1982 decision in Plyler v. Doe.
But the more important rebuttal is contained in a new study be Douglas Holtz-Eakin, former director of the Congressional Budget Office and now president of the American Action Forum, who finds substantial and “underappreciated” fiscal and economic benefits from more immigration. After surveying the economic literature and Census Bureau data, he sees a multitrillion-dollar gain in long-term U.S. economic output, higher per capita income growth, and lower budget deficits.
Mr. Holtz-Eakin, a free-market-leaning economist, argues that immigrants should be viewed as long-term investments. In the short term, the newcomers may cost more than they contribute, but as their job and language skills improve and their earnings rise over time, the net lifetime impact of most immigrants is positive.
“A benchmark immigration reform”—by which he means more visas to productive workers—”would raise the pace of economic growth by nearly a percentage point over the near term [and] raise GDP per capita by over $1,500,” he says. As middle-class Americans who have seen their real incomes decline in the last four years know, that’s a huge number.
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