Last month, Robert Rector and Jason Richwine unveiled a Heritage Foundation study on the cost to taxpayers associated with "amnesty." Heritage is now shopping the study's $6.3 trillion figure as the cost of the Senate immigration reform bill, though the study's authors admit that the study's findings have nothing to do with the bill in question.
Regardless, many policymakers have repeated the study's findings. A number of conservative economists and policy scholars have taken a deeper look at the Heritage study, however, and found it to be completely unsound and unreliable. A summary of conservative criticisms is below.
The authors employ static scoring rather than dynamic scoring. This is the same error liberals make when they evaluate tax cuts: It ignores indirect fiscal effects that result from changes in economic growth. There is almost no consideration of wage increases that result from legalization, or the impact of an increasingly flexible labor market on economic growth.
The authors write that unlawful immigrant households generate annual earnings of $38,988. Tim Kane notes that "unless they expect readers to believe all this household income (a) generates no productive work and (b) is 100 percent remitted abroad, consuming nothing in the U.S. macro economy, then the report is misleading.
Sources: Alex Nowrasteh, "Heritage's Flawed Immigration Analysis." http://www.cato.org/blog/heritages-flawed-immigration-analysis
Tim Kane, "Immigration Errors." http://balanceofeconomics.com/2013/05/06/immigration-errors/
Josh Culling, “Immigration Analysis Should Include Costs and Benefits.” http://www.atr.org/immigration-analysis-include-costs-benefits-a7599
The study includes 4.5 million U.S.-born children – American citizens – in its calculation of 12.7 "illegal immigrants." Children born here are citizens. They are already eligible for public benefits and will be regardless of their parents’ status.
Source: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/
Two-thirds of the purported "fiscal deficit" generated by unlawful immigrant households is a sunk cost that will exist regardless of "amnesty". Roughly 40 percent of the spending Heritage projects will go toward U.S. citizens in the form of means-tested benefits and education spending for American children born to immigrants. This accounts for nearly two-thirds of the fiscal deficit generated by "amnesty," and it is already baked into the cake. The only way to eliminate this cost is to deport children who are U.S. citizens along with their undocumented parents.
Source: James Pethokoukis, "Isn't most of the supposed fiscal deficit from undocumented immigrants already baked into the cake? http://www.aei-ideas.org/2013/05/isnt-most-of-the-supposed-fiscal-deficit-from-undocumented-immigrants-already-baked-into-the-cake/
The authors calculate the total cost instead of the increased marginal cost of “amnesty”. The $6.3 trillion figure includes costs already associated with undocumented immigrants, regardless of their legal status. In the study, the authors concede that “The $6.3 trillion figure represents the lifetime fiscal costs of unlawful immigrant households after amnesty. It does not represent the increased fiscal costs of amnesty alone.”
In other words, many of the costs cited in this report are already borne by taxpayers, such as unlawful immigrants’ use of highways, public parks, and public education. To include these costs in the overall calculation is misleading.
Source: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/
The authors assume immigrants will maintain low skill, income, and education levels for life. Because their work assumes that immigrants are incapable of improving their lots in life, the costs associated with an individual immigrant do not decrease over time, nor do taxes paid increase.
Source: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/
The study ignores the fact that undocumented status hampers productivity. "Fear of discovery and deportation" likely prevents some undocumented immigrants from unleashing their full productive capacity, keeping their wages low and artificially constraining the labor supply. Upon legalization it should be assumed that some undocumented immigrants will move to better-paying jobs, and that some spouses currently living at home will find legal paid employment. Both would increase GDP and tax collections.
Source: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/
The authors exaggerate immigrant welfare use. A study by the Cato Institute found that low-income immigrants are less likely to use welfare than low-income native-born Americans. And when they do accept public benefits the dollar value in benefits they receive is less than low-income native-born Americans.
Source: Alex Nowrasteh, "Heritage's Flawed Immigration Analysis." http://www.cato.org/blog/heritages-flawed-immigration-analysis
The alternative comparison is absurd. The authors compare "amnesty" with an alternative in which all undocumented immigrants self-deport at age 55. They assume a baseline cost of $1 trillion under this scenario, making the “net cost of amnesty” $5.3 trillion. This is completely unrealistic.
Tim Kane, "Immigration Errors." http://balanceofeconomics.com/2013/05/06/immigration-errors/
Heritage ignores the economic cost of deporting all undocumented immigrants. The authors of the Heritage study are implicitly pushing for removal of all immigrants here illegally. A study by the Cato Institute, using dynamic analysis, found that the removal of all undocumented immigrants would yield a $2.6 trillion decrease in GDP growth over 10 years.
Source: Alex Nowrasteh, "Heritage's Flawed Immigration Analysis." http://www.cato.org/blog/heritages-flawed-immigration-analysis
Heritage ignores the fiscal cost of deporting all undocumented immigrants. The government spends $18,000 per immigrant apprehension. When factoring in detention and deportation, the overall cost of an enforcement-only approach would be hundreds of billions of dollars.
Source: Alex Nowrasteh, "Heritage's Flawed Immigration Analysis." http://www.cato.org/blog/heritages-flawed-immigration-analysis
This is not a compelling argument about illegal immigration; it is an argument against income redistribution and the welfare state. The authors draw the conclusion that illegal immigration is bad because of the fiscal costs it imposes on taxpayers via public benefits like education, health care, and direct welfare payments. But these costs apply to low-income Americans as well. The United States has a welfare problem, not an immigration problem. According to Diana Furchtgott-Roth, “If we're concerned that benefits are keeping people in poverty and impeding upward mobility, we should cut benefits, not immigrants.”
Sources: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/
Diana Furchtgott-Roth, “Let’s Cut Benefits, Not Immigration”. http://www.realclearmarkets.com/articles/2013/05/07/lets_cut_benefits_not_immigration_100304.html
Josh Culling, “Immigration Analysis Should Include Costs and Benefits”. http://www.atr.org/immigration-analysis-include-costs-benefits-a7599
The study assumes newly legalized immigrants will draw Social Security and Medicare payments in full for 50 years, which is not consistent with current law. "Current law includes a mandated 27 percent cut in Social Security benefits once the Social Security 'trust fund' has a zero balance, and a 13 percent cut in Medicare part A benefits when the Hospital Insurance 'trust fund' hits the wall." The trajectory of our entitlement costs is not sustainable, and it is unreasonable to assume 50 years of spending at the current level.
Source: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/
Heritage does not use the net present value to discount long-term costs. Over a 50 year period, costs should be discounted to today's value in order to present an honest accounting of the long-term liability. Keith Hennessy suggests that not using a net present value calculation nearly doubles the final cost number.
Source: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/
This is not a study of the actual legislation before Congress. The report uses the word “amnesty” 184 times, yet the Gang of Eight is not proposing amnesty. The bill imposes fines on those who came here illegally, and puts them on a long and onerous pathway to citizenship. The authors also admit this is not a study of the bill itself, though Heritage has been marketing it as such.
Sources: Diana Furchtgott-Roth, Let’s Cut Benefits, Not Immigration”. http://www.realclearmarkets.com/articles/2013/05/07/lets_cut_benefits_not_immigration_100304.html
This is a projection of cost to the government, not cost to the Nation. There are clear economic and cultural benefits to more legal immigration, most notably via higher GDP growth. It is a mistake to equate costs to the government with costs to the Nation.
Source: Keith Hennessey, "Eight problems with the Heritage immigration cost estimate". http://keithhennessey.com/2013/05/09/heritage-immigration-study-problems/