S. 744 Good for Billionaires but Not Working Americans
Published on July 2nd, 2013
Eric B. Rasmusen, Indiana University Business Economics and Public Policy professor, studied the Congressional Budget Office’s report on S. 744, and came away unimpressed with its conclusion that more immigration over the short term would be good for the country. The CBO claimed that S. 744 would trim the national debt by nearly $200 billion over the next 10 years.
Immigration advocates embraced the report, curiously released just a few days before the final vote, as proof positive that S. 744 would give the United States’ sagging economy a much needed shot in the arm by increasing total factor productivity (TFP). Much of the TFP increase the CBO projected would allegedly come through new high-skilled immigrants’ creativity.
Rasmusen is leery however because nowhere does the CBO report mention how many high-skilled immigrants would be added. He speculates, and we know, that most S. 744’s beneficiaries will be low-skilled workers. In his analysis, Rasmusen estimates that from 10 million new immigrant workers that S.744 would legalize and the millions more that would eventually come, about 95 percent will be low-skilled. If the CBO had used the actual ratio of low-to-high-skilled workers, Rasmusen wrote that “people would laugh” at its conclusion that TPF would rise if S. 744 becomes law.
In his nine-point review, Rasmusen’s points, four, six and seven debunk the propaganda S. 744 advocates advance and reinforce the arguments detractors make.
From point four:
“Increased inequality that the immigration bill would create has a number of negative economic consequences: higher crime costs, more government spending, reduced social trust, and a more volatile business cycle.”
"The report does not look at how the bill affects the welfare of Americans. Instead, it looks at how it affects output in the US, average wages, return to capital, and so forth. A lot of the effect is on foreigners— Mexican immigrants and European investors."
"The bill will allow a lot of low-skilled foreign labor to enter the United States (or remain here, if we think of the alternative as being enforcement of existing laws). This will drive down low-skilled wages and drive up the return to capital. The effect on middle- and high-skilled wages is unclear, but my guess is that it would increase them. In addition, the immigrants will compete with poor natives in the market for consumer goods and will drive up prices of items with limited supply— for example, low-quality housing. The dollar benefit to capital-owners will exceed the dollar loss to labor."
The CBO used selective data to arrive at its positive findings but it excludes other important considerations. For example, the report contains nothing about the negative consequences of wealth distribution from poor workers to the insatiably wealth-driven elite.
S.744’s two biggest promoters are Mark Zuckerberg and Michael Bloomberg. Zuckerberg’s net worth is $14 billion and Bloomberg’s is $27 billion.
When multi-billionaires like Zuckerberg and Bloomberg advocate for legislation that the business lobby, the Chamber of Commerce and immigration lawyers wrote, the public should be on high alert that its all about money.
Read what Rasmusen describes as his “little paper” here.