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Buyer Beware: White House Sells Amnesty with Dubious Keynesian Economics

Posted By Robert Rector On August 27, 2013 @ 9:40 am In Security | Comments Disabled

We've tried amnesty before [1]

The White House last week released a report claiming that granting amnesty and citizenship to illegal immigrants would increase the income of Americans by $791 billion over the next decade. Most of this bump in income would go to the former illegal immigrants themselves, but the White House also claimed that amnesty would add roughly 2 million new jobs over the same period.

Where did these figures come from? The White House document [2] is based on a report from the Center for American Progress (CAP). The CAP study [3] assumed that if illegal immigrants were granted amnesty and citizenship, their wages would increase by a full 25 percent. This is an extreme assumption. Data from the federal government’s last amnesty for illegal immigrants, in 1986, indicate a wage increase of roughly 5–10 percent.

The White House report asserts that granting citizenship to illegal immigrants would create nearly 2 million new jobs for current citizens over the next decade and boost their income by roughly $130 billion over the same period. These figures are generated by the CAP authors’ Keynesian economic assumptions: The hypothetical increase in the wages of amnesty recipients generates greater consumer demand; this, in turn, “ripples through the economy,” creating new jobs and higher income.

Such simplistic assumptions, in which boosting consumer demand or government deficit spending is the pathway to national prosperity, have been discredited for decades. Nonetheless, the left habitually uses Keynesian economics to argue that spending on welfare programs such as food stamps boosts jobs and gross domestic product.

It is no surprise that the Obama White House would use outmoded Keynesian theories to promote amnesty and vastly increased immigration. It is surprising that so many Republicans [4] in the House appear to be buying the Keynesian snake oil.

Moreover, both the White House and the CAP study ignore the obvious fact that amnesty and citizenship would make 11.5 million illegal immigrants eligible for Social Security, Medicare, Obamacare, and more than 80 different means-tested welfare programs such as food stamps and public housing. The average illegal immigrant is 34 years old and has a 10th-grade education. At that age, education levels would increase very little after amnesty.

Both U.S. citizens and current legal immigrants with such education levels are voracious tax consumers: The government benefits they receive vastly exceed the taxes they pay. For example, legal immigrants without a high school diploma receive $5 in government benefits for every $1 in taxes paid each year. This imposes an annual net cost of $37,000 per household [5] on taxpayers.

Under the Senate-passed amnesty bill (S. 744), each current illegal immigrant would receive more than $900,000 in government benefits over his lifetime while paying around $300,000 in taxes—a net cost of more than $600,000 to taxpayers. Even if the wages of amnesty recipients were to soar by 25 percent, the long-term costs per recipient would be more than $500,000. The overall cost to taxpayers after amnesty, as Heritage has calculated, is likely to exceed $6 trillion [5].


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URL to article: http://blog.heritage.org/2013/08/27/buyer-beware-white-house-sells-amnesty-with-dubious-keynesian-economics/

URLs in this post:

[1] Image: http://blog.heritage.org/wp-content/uploads/tumblr_mnkugb92IM1r5wy5wo1_1280.jpg

[2] White House document: http://www.whitehouse.gov/sites/default/files/our-broken-immigration-system-august-2013.pdf

[3] The CAP study: http://www.americanprogress.org/issues/immigration/report/2013/03/20/57351/the-economic-effects-of-granting-legal-status-and-citizenship-to-undocumented-immigrants/

[4] so many Republicans: http://nationalreview.com/corner/356401/boehner-super-pac-aides-push-senate-immigration-bill-jonathan-strong

[5] $37,000 per household: http://www.heritage.org/research/reports/2013/05/the-fiscal-cost-of-unlawful-immigrants-and-amnesty-to-the-us-taxpayer

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