Why the Immigration Bill Won't Cost $6.3 Trillion

PHOTO: RallyJoe Klamar/AFP/Getty Images
Demonstrators seeking change in immigration policy march on May Day in Los Angeles.

Legalizing undocumented immigrants will cost $6.3 trillion over 50 years, according to a report released on Monday by the Heritage Foundation, a conservative think tank.

But wait. A report by another conservative think tank, the Cato Institute, says immigration reform will yield $1.5 trillion in GDP gains over 10 years. A much different scenario.

Economists generally agree that immigration reform will bring some economic benefits. Yet Heritage came up with a figure deep in the red. Here are some of the reasons why:

1. Scoring

There are different ways to evaluate or "score" the cost of legislation. The Heritage Foundation chose to use a method known as "static" scoring. This basically means that the organization looked at the impact of legalization, but without factoring in how an immigration reform bill could potentially improve the economy.

See Also: Immigration Cost: Statistically Sound Data or Biased Research?

Both liberal and conservative critics have dismissed the report on those grounds. The Cato report, for example, uses a method known as "dynamic" scoring, which attempts to account for the projected economic conditions and contributions of newly legalized immigrants.

2. Points of Comparison

One of the more knowledgeable critics of the Heritage report was Tim Kane, a guy who tackled a similar task for Heritage in 2006. He's now the chief economist for the Hudson Institute, another conservative think tank.

He noted that the report warns of the costs of legalizing undocumented immigrants, but it never clearly explains the costs of maintaining the status quo, with 11 million people living in the shadows.

Kane estimates that the status quo would cost $3.5 trillion over the same time period outlined in the report. Again, that figure wouldn't account for positive economic changes that would accompany reform, because the researchers chose to use static instead of dynamic scoring.

3. Cost of School

One of the biggest costs associated with undocumented immigrants is the expense of public education for children. But that needs some qualification.

Kids in the U.S. have the right to an education regardless of their immigration status or that of their parents. So that's a cost we'll face regardless of whether immigration reform passes or not.

Education costs make up 30 percent of the total amount of services that Heritage estimates undocumented immigrants will use (see their chart on page 24). So including education artificially inflates Heritage's overall price tag of the bill.

4. The Poor Stay Poor

As several people have pointed out, the basic conceit of the Heritage report is that poor people with low levels of education have little chance at mobility in U.S. society. According to the researchers, that means that even if undocumented immigrants are granted legal status, they'll likely still use more government services than the average American.

On its face, it's true that those that are poor tend to need additional assistance. What Heritage isn't telling you, though, is if these immigrants get legal status, they will be able to make more money, which in turn has a broader benefits for the economy.

The Heritage report also assumes this trend will continue for a half century. Most Americans probably hope to see a day where the wealthy don't tower over the lower and middle classes, and where someone who works hard has a chance to earn more over time.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the conservative American Action Forum, summed up the Heritage view of undocumented immigrants this way: "There is no American dream. They start in poverty. They end in poverty. Their kids are in poverty."

The Takeaway

While economists may argue over the numbers, the basic conceit of the report isn't wrong. People with low levels of education tend to use more government services, and roughly half of undocumented immigrants who are the head of their household have less than a high school degree, as Heritage points out.

However, the Heritage report downplays the broader positive impact that would come with legalizing undocumented workers. Their wages would go up and so would the GDP.

The decision to ignore those benefits gives the impression that Heritage was looking to make an argument against immigration reform, not provide a realistic figure on its economic impact, according to UCLA professor Raúl Hinojosa-Ojeda. He authored the Cato report on immigration reform, as well as a similar report for the Center for American Progress, a liberal think tank.

"More and more of these so-called think tanks very much have a political agenda, surprise, surprise," he said. "And they'll cook the numbers to meet their political agendas."