Conservatives Hit Back At Heritage's $6 Trillion Immigration Reform Estimate

Posted: May 06, 2013 9:30 PM

The intra-conservative war over the working immigration reform legislation was ramped up today when the Heritage Foundation's economic analysis gave the opposition a major piece of ammunition in the form of a study showing that the reform legislation could cost $6.3 trillion.

Conservatives who have been proponents of immigration reform legislation jumped to discredit the Heritage study as it made the rounds this morning. Rep. Paul Ryan questioned its methodology, saying "the Congressional Budget Office has found that fixing our broken immigration could help our economy grow. A proper accounting of immigration reform should take into account these dynamic effects.”

The principal criticism of the Heritage study is precisely that it does not take into account the effects of immigration on economic growth. Conservatives in the past have criticized economic modeling for leaving out projections of economic growth - on tax cuts, for example - but some are defending the Heritage Foundation's methodology.

Sen. Jeff Sessions trumpeted the results of the study. "The study puts to rest the contention that the bill will benefit American taxpayers, reduce our deficits, or strengthen our already endangered Social Security and Medicare programs," Sessions said in a statement. Sen. Sessions has been one of the leading skeptics of the comprehensive immigration reform legislation on Capitol Hill.

Other conservative coalition groups like Americans for Tax Reform and the American Action Forum jumped on the dynamic scoring issue today, noting the inconsistency apparent in the Heritage Foundation's approach. ATR's Josh Culling said on a media call this afternoon that "though Heritage is a treasured ally... this report looks only at the cost side of the economic equation and completely ignores any economic benefit."

The Heritage Foundation report acknowledges a certain amount of growth that would take place but cautions growth-enthusiasts that the prosperity might not be widely-shared:

While it is true that unlawful immigrants enlarge GDP by roughly 2 percent, the problem with this argument is that the immigrants themselves capture most of the gain from expanded production in their own wages. Metaphorically, while unlawful immigrants make the american economic pie larger, they themselves consume most of the slice that their labor adds.

Former CBO director and President of the American Action Forum Douglas Holtz-Eakin challenged that line of thinking in an AAF policy brief last month:

There would be effects above and beyond that of greater population as well. Labor force participation rates are higher among the foreign born, especially among males and later in work careers. Similarly, the rates of entrepreneurship among immigrants are higher than among the native born population, raising the possibility of greater innovation and productivity growth in the aftermath of immigration reform. Finally, the combined effect of these impacts on economic growth would allow greater productivity growth through the embodiment effect on quality of capital goods.

While the Heritage Foundation has stood by their study's methodology as sound with regard to National Academy of Sciences standards, Holtz-Eakin questioned their defense today. "Their methodology is absolutely not the same as the National Academy of Sciences... the NAS tries to estimate the impact of immigration on the size of the economy, which Heritage does not do."

The debate over the comprehensive immigration reform legislation has been crackling ever since Marco Rubio emerged as the conservative face of the Gang of Eight, and among Capitol Hill staffers it threatens to explode to a full blaze. The Heritage Foundation's report today adds fuel to the fire. As Mediaite's AJ Delgado tweeted,

It's clear that the Gang of Eight will need more conservatives beyond its four Republican members in order to pass through the Senate - to say nothing of how a comprehensive immigration reform legislation would pass through the House of Representatives. Today's Heritage Foundation study could prove the dividing line between grassroots conservatives who see the legislation as a sellout and Republicans who see it as full of the compromises necessary to get something passed.