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Diana Furchtgott-Roth: Heritage report misses immigration mark

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Opinion,Diana Furchtgott Roth,Columnists,Immigration,Heritage Foundation

With its new study putting the cost of immigration reform at $6.3 trillion, Heritage Foundation economists Robert Rector and Jason Richwine have managed to contradict findings by the Congressional Budget Office, President George W. Bush's Council of Economic Advisers and numerous academic economists.

Contrary to empirical evidence, the deceptive Heritage report assumes no increased economic efficiency from immigration, no benefit from additional workers and no economic mobility.

It also doesn't discuss numerous advantages to national security from legalizing and making it easier to track America's 11 million undocumented workers.

Heritage released its over-the-top estimate in an attempt to derail the Senate immigration bill sponsored by the bipartisan Gang of Eight, including Sens. Marco Rubio, R-Fla., Lindsay Graham, R-S.C., Charles Schumer, D-N.Y., and Richard Durbin, D-Ill.

Rector and Richwine assume that all undocumented workers will choose naturalization and that all will be eligible for government programs. But Federal Reserve Bank of Dallas economist Pia Orrenius told me on Monday that "less than half of currently eligible Mexicans have naturalized. Overall, only about two-thirds of eligible immigrants have naturalized."

Many return home, having paid Social Security taxes without collecting any benefits.

Congressional Budget Office Director Douglas Elmendorf, in a May 2 letter to House Budget Committee Chairman Paul Ryan, R-Wis., wrote that the 2006 comprehensive immigration bill would have generated about $107 billion over 10 years in extra revenues, and that this estimate is "a useful guide to the general nature of economic changes that CBO would currently project from changes in immigration policy."

In June 2007, President George W. Bush's Council of Economic Advisers concluded that the benefits of immigration more than outweigh the costs. According to the CEA, Americans gain $37 billion per year -- or more than $150 per person -- from immigrants.

Technology Policy Institute fellow Arlene Holen has estimated that if no green card or H-1B visa constraints had existed from 2003 to 2007, an additional 182,000 foreign graduates in science and technology fields would have contributed $14 billion to GDP in 2008, including $2.7 billion to $3.6 billion in tax payments.

The Heritage report shows that after those estimated 11 million immigrants have received legal status, the federal deficit per household declines by $2,000 per year, before they qualify for welfare benefits.

Once they qualify for benefits -- and the report erroneously assumes all will be eligible for government programs -- the deficit rises by $15,000 per household annually from current levels.

These numbers illustrate the need to cut entitlements for everyone, not to cut immigration.

More than 47 million people, the vast majority of whom are native-born Americans, are on food stamps almost four years after the beginning of the economic recovery.

Means-tested benefits, health care under the Affordable Care Act, and retiree benefits are increasingly expensive, and these costs need to be brought under control.

Immigrants complement the skills of native-born Americans because there are proportionately more adults without high school diplomas, and more adults with PhDs in math and science.

Immigrants increase economic efficiency and raise Americans' wages by reducing labor shortages in low- and high-skilled markets. Their educational backgrounds fill holes in the native-born labor market.

Due to this increased efficiency, University of California economist Giovanni Peri has calculated that immigration raised wages of native-born Americans by six-tenths of a percent during the period from 1990 to 2006.

Increased immigration would expand the American workforce and encourage more business startups. Businesses ranging from Apple Inc. to apple growers would be able to find additional workers in America.

The Heritage report defies common sense. More legal immigration increases the chance that economic growth occurs within our borders, and that we continue to hold the lead in future innovation.

Washington Examiner Columnist Diana Furchtgott-Roth (dfr@manhattan-institute.org), former chief economist at the U.S. Department of Labor, is a senior fellow at the Manhattan Institute for Policy Research.

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Diana Furchtgott-Roth

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The Washington Examiner