So…That Immigration Bill

If anyone reads this regularly, they know I’ve done a few posts about the economics of migration (here, here, and here). That’s because freer migration is the single best thing for the world economy. Since that statement isn’t at all controversial, and Latinos voted against Republicans in droves in the last election, it was natural that a bipartisan immigration bill passed the senate. The bill, while still flawed, was progress in the right direction. However, it died in the House, where Republicans refused to let it come up for a vote. 

So what would the immigration bill have done for the economy? It would have been a net benefit. The CBO found that, over the next 20 years, passage of the immigration bill would increase GDP by 5.4%, and reduce federal debt by $300 billion. Average wages would be 0.5% higher[1]; the rate of return on capital investment would be higher. Immigrants added to the population would “participate in the labor force at a higher rate”, or because they would be both less skilled and work at lower wages, on average (the bill would also allow for more skilled immigrants), they would be employed at a higher rate[2]. Overall, the bill would increase the productivity of capital and labor, meaning it would be profitable to employ more of both. Illegal immigrants who would obtain legal status would see a wage increase of 12%, and increased productivity. It would lead to a higher return on savings, which, combined with increased wages would lead to a higher savings rate.

To make the bill more palatable to some of the more skeptical Republicans, the bill would spend a ridiculously wasteful amount of money on border security to stop illegal border crossings. Despite the fact that border crossings have already fallen dramatically, and were doing so before the Great Recession. As The Economist put it:

“America’s border with Mexico is already bristling with motion detectors, floodlights, cameras and barricades of different sorts. The number of border patrol agents has doubled in the past decade…The federal government spends $18 billion a year manning the ramparts, more than it does on the Federal Bureau of Investigation and the Drug Enforcement Administration put together. Yet academic studies suggest that other things, such as the state of the economy and the birth rate in Mexico, affect the flow of illegal immigrants far more than the sums spent trying to keep them out.”

But Republicans in the House refuse to consider the bill. Their objection wasn’t that it included wasteful spending that would not be offset by cuts elsewhere, but because it doesn’t go far enough in “securing the border”. Or, that’s just the polite excuse for xenophobia. While the ignorant xenophobic strain goes through both parties, it is especially hypocritical of “budget hawk” republicans. They have failed to pass a bill that would reduce the deficit and increase economic growth. Yet each time the debt ceiling comes up for a vote, our potential default is used as a bargaining chip / publicity stunt. This illustrates just how ill-conceived a debt ceiling is. It simply allows members of congress to increase the debt (such as voting for permanent tax cuts) and then vote against paying for it to save face.





1. With most of the increase going to the middle 3 quintiles, though all quintiles would see a real average wage increase.

2. Oh shit, there goes the whole drain on government resources argument.