8 May 2013

Conservative Criticism of the Heritage Foundation’s 2013 Immigration Study

Rep. Paul Ryan: “The Congressional Budget Office has found that fixing our broken immigration system could help our economy grow. A proper accounting of immigration reform should take into account these dynamic effects.” (Rep. Paul Ryan, Statement to Press, 5/6/13; David M. Drucker, “Ryan Critical of Heritage Immigration Study,” Roll Call, 5/6/13)

Former Heritage Foundation Economist Tim Kane: “A new Special Report from the Heritage Foundation has come to my attention, and I am disappointed in its poor quality.” (Tim Kane, Op-Ed, “Immigration Errors,” Balance of Economics, 5/6/13)

Kane: “The pileup of outlandish Heritage estimates presents a credibility hurdle.” (Tim Kane, Op-Ed, “Immigration Errors,” Balance of Economics, 5/6/13)

Kane: “At best, the authors make a compelling case that the U.S. welfare system is dysfunctional. That is true with or without a guest worker program, or with green cards for STEM, or with much of anything to do with immigration.” (Tim Kane, Op-Ed, “Immigration Errors,”Balance of Economics, 5/6/13)

Kane: “The report’s authors may sincerely believe that unlawful immigrants are costly, but their study clearly makes assumptions to prove that point, while ignoring research to the contrary.” (Tim Kane, Op-Ed, “Immigration Errors,” Balance of Economics, 5/6/13)

Kane: “The most glaring error is the weak alternatives comparison. This paper asserts a cost of ‘amnesty’ as if migrants are only costly if a new piece of legislation passes. What is the cost of the status quo? Table 8 (p 24) purports to make this comparison but it is confusing (calling it a phase) and sketchy — avoiding a direct comparison of the bottom line cost. The 3.15 T number is my own estimate … it really is incumbent on the authors to provide this themselves, and not offering such a number raises questions. The details are no better: no Obamacare costs for the status quo? A tripling of direct welfare costs triple after legislation passes yet tax revenues hardly budge?” (Tim Kane, Op-Ed, “Immigration Errors,” Balance of Economics, 5/6/13)

Kane: “There is no dynamic analysis. The authors estimate fiscal benefits only (and weakly), but ignore economic benefits entirely. This fails the longtime Heritage claim to support dynamic analysis in tax and security policy. Charts 5 and 6 on page 16 show a net UIHH (unlawful immigrant household) fiscal deficit of $14,387. Note that this is based on annual UIHH earnings of $38,988.  Unless they expect readers to believe all this household income (a) generates no productive work (e.g., makes product, mows lawns, nurses the sick, and starts businesses that hire other Americans) and (b) is 100% remitted abroad, consuming nothing in the U.S. macro economy, then the report is misleading. Millions of migrants cannot help but add to the GDP, and more importantly to specialization and growth. Dynamically, there are at least two huge channels of positive feedback into the productive side of U.S. economy – think of less expensive farm produce and greater demand for housing.” (Tim Kane, Op-Ed, “Immigration Errors,”Balance of Economics, 5/6/13)

Kane: “The net effect of this Special Report does real damage to the cause of dynamic analysis. For more than a decade, Heritage has called on CBO to add dynamic analysis to its tax reform studies. … And now, ironically, I can only hope CBO does an analysis of immigration reform that will show how skewed the Heritage immigration work has become. Will it be a plus or minus for reform? I don’t know, but I trust it will be honest even if undynamic.” (Tim Kane, Op-Ed, “Immigration Errors,” Balance of Economics, 5/6/13)

Washington Examiner: “Immigration estimates should include long-term costs” (Philip Klein, “Immigration estimates should include long-term costs,” Washington Examiner, 5/6/13)

Cato: “Word is our pro-free-market brethren at the Heritage Foundation will release a new study on the fiscal impact of immigration reform in time for the congressional debate. It will be an update to a 2007 study that played a key role in derailing immigration reform then. While the 2007 study was influential, it was fatally flawed …  Hopefully Heritage’s updated version will correct for those criticisms and others, or else its analysis must be judged as lacking.” (Alex Nowrasteh, “Scoring Immigration Reform Correctly,” CATO, 5/4/13)

“The key flaw in Heritage’s 2007 study is its use of static fiscal scoring, rather than dynamic fiscal scoring, to evaluate that year’s immigration reform bill. … A statically scored prediction assumes the bill will not affect the rest of the economy – which is highly unrealistic. A dynamically scored prediction, on the other hand, assumes that the bill will affect the rest of the economy, also changing tax revenue and government spending. Since increased immigration will increase the size of the economy, it will also increase tax revenue and some government spending. It’s important to factor those increases into any scoring model. Heritage’s 2007 study did not. The Congressional Budget Office (CBO) has adopted dynamic scoring for the coming immigration bill for reasons they explain here.” (Alex Nowrasteh, “Scoring Immigration Reform Correctly,” CATO, 5/4/13)

“Using dynamic scoring to predict the effects of legislation is as relevant for immigration reform as it is for tax cuts. Allowing more legal immigration, and legalizing those here, will increase the number of workers and entrepreneurs in the U.S., necessarily growing the size of the economy. Capital accumulation and land improvements then catch up to the population growth. Those effects boost GDP, ergo tax revenue.” (Alex Nowrasteh, “Scoring Immigration Reform Correctly,” CATO, 5/4/13)

“Heritage’s former president supports dynamic scoring, and now so does the CBO, at least for immigration.  For the sake of an honest debate, I sure hope Heritage’s upcoming report does too.” (Alex Nowrasteh, “Scoring Immigration Reform Correctly,” CATO, 5/4/13)

Cato’s Alex Nowarasteh: “So far, this Heritage study is as flawed and error-prone as the 2007 version. Their net-fiscal cost accounting is non-dynamic and does not take account of changes in the economy that would result from immigration, including an increase in GDP, native worker productivity, and in wages for the majority of American workers that all result in higher tax revenue. Still reading through it though so I might be pleasantly surprised.” (David Drucker, “Cato Analyst: Heritage Study Flawed,” Roll Call, 5/6/13)

“Cato’s Alex Nowrasteh was even more outspoken saying ‘how disappointed’ he was that Heritage abandoned conservative dynamic scoring (i.e. the impact a piece of legislation’s impact on the economy). He accused Heritage of not following years of their own work, which has striven to look at the impact on behavior of changes resulting from reforming the tax code and other innovations. ‘They ignored GDP, they ignored productivity,’ he said in reeling off the list of items in the Gang of 8 legislation left out of Heritage. Cato’s study, which did use dynamic scoring, found that immigration reform would add $1.5 trillion in growth over ten years while forcing out 11 million immigrants (the Heritage solution) would lower GDP by $2.6 trillion over ten years.” (Jennifer Rubin, “Conservative leaders slam Heritage for shoddy immigration study,” The Washington Post, 5/6/13)

American Enterprise Institute’s Jim Pethokoukis: “OK, here’s what vexes me:

According to the Pew Hispanic Center, 80% of the children of undocumented parents were born here — some 4.5 million kids — and are thus US citizens. Americans.
Of that nearly $25,000 ($24,721 to specific) in government benefits and services going to undocumented households, education spending averaged $13,627 in 2010, while means-tested aid (going mainly to the U.S.-born children in the family) averaged $4,497. So we are talking roughly $18,000.
In other words, around 40% of the spending under ‘amnesty’ would be going toward US citizens. And that accounts for nearly two-thirds of the fiscal deficit. In other words, two-thirds of the fiscal deficit is already baked into the cake unless you are going to deport all those undocumented immigrant parents, and they take their children with them. I mean, is that the counterfactual here? Really?” (James Pethokoukis, “Isn’t most of the supposed fiscal deficit from undocumented immigrants already baked into the cake?” AEI, 5/6/13)

American Enterprise Institute’s Madeline Zavodny: “What the report reveals is not the broken nature of our current immigrant system — something we already know — but rather the broken nature of our welfare state. The report notes that the average US household headed by someone without a high school degree received, on average, $35,113 more in government benefits than it paid in taxes in 2010. The report then notes that many unauthorized immigrants have low education levels and, if allowed to legalize their status, would eventually become eligible for government benefits just like everyone else. This would result in billions more flowing to those households every year than they pay in taxes. The problem here is not offering legal status to a population that largely has been working hard, paying taxes, and contributing to the economy. The problem is the growth of government programs, the perverse incentive effects that those programs create, and the failures of our education system.” (Madeline Zavodny, “Thoughts on earned legalization and the Heritage immigration study,” AEI, 5/6/13)

Americans for Tax Reform’s Joshua Culling: “Americans for Tax Reform (ATR) pushed back today on a Heritage Foundation study that found a net fiscal cost of $6.3 trillion associated with S.744, the immigration reform bill pending in the United States Senate. The primary flaw in this analysis is that it considers only costs and ignores benefits. But even the cost estimate itself is vastly overblown.” (Joshua Culling, “Immigration Analysis Should Include Costs and Benefits,” Americans For Tax Reform, 5/6/13)

Culling: “The Heritage Foundation is a treasured ally in the conservative movement and a pillar of the conservative policy community. However, this study is every bit as flawed as its 2007 iteration. This static analysis takes into account none of the universally-accepted economic benefits of immigration, choosing only to focus on costs. But the costs estimates are unfairly inflated. The authors count overall household costs, which often includes benefits paid to native-born, low-income American spouses and children of immigrants. Those costs would exist regardless of the immigration status of one’s partner; this is an indictment of our current welfare state, not proposed immigration reforms. ATR has worked tirelessly to reform our unsustainable entitlements, and will continue to do so. We should not put a pro-growth reform of our broken immigration system on hold while we do so. In fact, America should welcome more legal immigrants to pay into the system without receiving benefits and boost the economy while we work toward sustainable reform. Lawmakers and the American public should rely on an accurate accounting of immigration reform’s costs and benefits. Unfortunately, this study inaccurately reflects only one side of the ledger. Even the establishment Congressional Budget Office, which Heritage, ATR, and others have excoriated for employing only static models, will take economic growth into account when it scores the bill. I had hoped the same of the conservative movement’s happy warrior for dynamic scoring, the Heritage Foundation.” (Joshua Culling, “Immigration Analysis Should Include Costs and Benefits,” Americans For Tax Reform, 5/6/13)

Culling: “Among the study’s flaws: This is a static fiscal score, not a dynamic analysis. Conservatives believe that policy changes should be evaluated in a way that takes both costs and benefits into account. Unfortunately, the authors of this study do not attempt to measure indirect fiscal effects, and their impact on GDP growth and federal revenues. After listing possible aspects of immigration reform that could be scored dynamically, the authors write, “Because figures are imprecise, none of the indirect fiscal effects discussed in this section is included in the fiscal analysis in this paper.” But measuring these economic effects is imperative to a thorough analysis of the bill. A Cato Institute analysis using a dynamic model to evaluate proposed changes similar to those in S.744 projected a net GDP increase of $1.5 trillion in the decade immediately after passage.” (Joshua Culling, “Immigration Analysis Should Include Costs and Benefits,” Americans For Tax Reform, 5/6/13)

Culling: “Among the study’s flaws: … It lumps native-born Americans into the overall cost of immigration by calculating costs by household, rather than by individual. Many undocumented immigrants are married to U.S. citizens or have citizen children. To the extent that low-income American family members receive government benefits, they are treated as immigrant-related costs in this study – massively inflating the overall cost estimate. The study ignores that many Americans receiving public benefits would do so regardless of immigration.” (Joshua Culling, “Immigration Analysis Should Include Costs and Benefits,” Americans For Tax Reform, 5/6/13)

Culling: “Among the study’s flaws: … America has entitlement, welfare, and education crises, not an immigration crisis. While the overall cost specific to immigration is inflated, the authors are correct to point out our spiraling entitlement and welfare costs must be addressed. Thankfully, Republicans in the House and Senate are committed to tackling this problem. It must be resolved regardless of immigration levels. Rather than conceding the growth of the welfare state, the authors should acknowledge that a growing workforce, supplemented with foreign workers, is imperative to economic growth while focusing on restricting the runaway growth of government.” (Joshua Culling, “Immigration Analysis Should Include Costs and Benefits,” Americans For Tax Reform, 5/6/13)

American Action Forum’s Doug Holtz-Eakin: “Economist Douglas Holtz-Eakin, former director of the Congressional Budget Office, said the Heritage study ignores key factors like the possibility of illegal immigrants moving up the economic ladder. ‘There’s no upward mobility,’ he told FoxNews.com. ‘They’re frozen’ in low-paying jobs. Holtz-Eakin said the estimate assumes ‘no American dream’ for those who attain legal status.” (“Study pegs cost of immigration bill’s mass legalization at $6.3 trillion,” FOX, 5/6/13)

Holtz-Eakin: “It’s a study that is biased against finding any kind of success, and there’s a lot left out.… You’ve got a comprehensive bill that's under consideration. It has border security, employer verification, agriculture programs, H1-B’s, temporary worker programs, a change in core-visa system toward merit-based. You throw all of that out and analyze strictly on the merits of one narrow provision where you assume 100% take-up and no economic progress, it doesn’t seem like a fair reading of the bill.” (Elizabeth Schulze, “Conservatives Spar over Economics of Immigration Reform,” CNBC, 5/7/13)

“The prize for candor, though, went to American Action Forum’s Douglas Holtz-Eakin, who stated flatly, ‘It really misleads.’ Without dynamic scoring, H1-B visas, a guest worker program, and the other economic pluses from immigration reform and with a load of ludicrous assumptions (e.g. everyone would qualify for government benefits and take them) Heritage, he said, ‘gets a really big number.’ He continued in describing the Heritage view of immigrants, ‘There is no American dream. They start in poverty. They end in poverty. Their kids are in poverty.’” (Jennifer Rubin, “Conservative leaders slam Heritage for shoddy immigration study,” The Washington Post, 5/6/13)

Holtz-Eakin: “I read this in many ways as not a study that casts doubt on the value of immigration reform but as a ringing endorsement of the need for entitlement reform.” (Stephen Dinan, “Report: Legalizing illegal immigrants to cost $6.3 trillion,” Washington Times, 5/6/13)

Manhattan Institute’s Diana Furchtgott-Roth: “A misleading Heritage Foundation report by economists Robert Rector and Jason Richwine concludes that legalizing undocumented workers will cost America $6.3 trillion over the immigrants' lifetimes. The report is deceptive because it assumes, contrary to empirical evidence, no increased economic efficiency from immigration and no economic mobility. It doesn’t discuss numerous benefits to national security from legalizing and making it easier to track America’s11 million undocumented workers.” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

Furchtgott-Roth: “If we’re concerned that benefits are keeping people in poverty and impeding upward mobility, we should cut benefits, not immigrants.” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

Furchtgott-Roth: “Yes, as the authors point out, America has a welfare problem. Over 47 million people, the vast majority native-born Americans, are on food stamps almost four years after the beginning of the economic recovery. Means tested benefits, healthcare under the Affordable Care Act, and retiree benefits are increasingly expensive, and these costs need to be brought under control for everyone. But that’s not the same as an immigration problem.” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

Furchtgott-Roth: “The report refers to the legalization process as ‘amnesty,’ deliberately overlooking the penalties required to be paid by undocumented workers in order to receive legal status. The term ‘amnesty’ is a misreading of the immigration bill, inserted to prevent the bill from becoming law.” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

Furchtgott-Roth: “The report assumes all will choose naturalization and all will be on welfare.Federal Reserve Bank of Dallas economist Pia Orrenius told me on Monday, ‘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.” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

Furchtgott-Roth: “The report assumes that immigrants stay poor, contrary to data on income mobility from the U.S. Department of the Treasury. In an analysis of individuals’ tax return data, Treasury economists Gerald Auten and Geoffrey Gee found considerable mobility between income groups during the periods 1987 to 1996, and 1996 to 2005. Over 50 percent of taxpayers moved to a different fifth of the income distribution, and over 50 percent of those who started in the bottom fifth moved to another fifth. One reason for moving to another quintile was marriage. The Treasury data show a clear picture of high income mobility for the vast majority of workers. Using a sample of individuals aged between 25 and 64, Auten and Gee found that 56 percent of those in the lowest fifth had moved to a higher fifth 10 years later. Almost 30 percent went to the second fifth, and 27 percent moved up two or more fifths. The Heritage report doesn’t mention the Treasury study.” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

Furchtgott-Roth: “Further, the Heritage report neglects multiple ways that immigration benefits U.S. economic growth and native-born Americans. Here are examples. Immigrants Raise Wages of Native-Born Americans … America Needs More High-Skill Workers … America Needs More Low-Skill Workers … Immigrants Generate GDP and Tax Revenue … Immigration Improves America’s Demographics … Uncle Sam Could Sell Visas and Work Permits” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

Furchtgott-Roth: “By neglecting benefits of legal immigration, the Heritage report presents a misleading view of reform legislation under discussion in Congress.” (Diana Furchtgott-Roth, “Lets Cut Benefits, Not Immigration,” Real Clear Markets, 5/7/13)

CNBC’s Larry Kudlow: “It seems to me it would be a pity if we used a static analysis rather than a more dynamic analysis of what could be a great case for people are coming to America.” (CNBC, 5/6/13)

“Stephen Moore, an economist and Wall Street Journal writer, said many economists challenge the notion that immigrants are a net cost to the country. He told Fox News despite the Heritage findings, there are other studies showing the legalization will be an economic boon that could grow the economy — in turn alleviating the country’s deficit problem. ‘You’ve got to look at both sides of the equation,’ Moore said. ‘Yes, the immigrants will use benefits, no question about that, but as they become more productive citizens and they come out of the shadows, a lot of economists — myself included — think they’ll become more productive and they'll pay more taxes.’ He noted many immigrants are entrepreneurial, starting businesses that grow the economy.” (“Study pegs cost of immigration bill’s mass legalization at $6.3 trillion,” FOX, 5/6/13)

 “Most compelling was Jimmy Kemp, son of the late congressman Jack Kemp, who (in a gravelly voice that sounded a little like his dad’s) was damning. ‘My dad was a significant supporter of immigration reform.’ Objecting strenuously to the idea that immigration reform weakens the economy by adding workers, he exclaimed, ‘People are not a drain on society.’ Saying it was ‘surprising they took a static approach,’ he said bluntly, ‘You can’t lead from a place of fear.’” (Jennifer Rubin, “Conservative leaders slam Heritage for shoddy immigration study,” The Washington Post, 5/6/13)

Governor Haley Barbour: “The @Heritage #immigration study is misleading & designed for headlines. The study isn't a serious analysis for good policy. @BPC_Bipartisan” (Twitter, @HayleyBarbour, 5/6/13)

Governor Barbour: “This study is designed to try to scare conservative Republicans into thinking the cost here is going to be so gigantic you can’t possibly be for it.” (Stephen Dinan, “Report: Legalizing illegal immigrants to cost $6.3 trillion,” Washington Times, 5/6/13)

Senator Jeff Flake: “Here we go again. New Heritage study claims huge cost for Immigration Reform. Ignores economic benefits. No dynamic scoring.” (Twitter, @JeffFlake, 5/6/13)

Senator Jeff Flake has a 97% score from the Heritage Action for America. (Heritage Action Website, Accessed 5/6/13)

Courtney Parella

Communications Director