According to Fox News Sunday's Chris Wallace, the conservative Heritage Foundation is set to release a report that claims immigration reform will cost taxpayers billions of dollars. But Heritage's analysis is reportedly based on a 2007 study that was widely discredited by experts for its faulty methodology and dubious conclusions.
On KFTK's Allman in the Morning, Wallace stated that he plans to host Heritage Foundation president and former Republican Sen. Jim DeMint to introduce the report this weekend. Wallace said that the report will show that the proposed Senate immigration reform bill will “cost the Treasury billions of dollars” because “people would be eligible for Obamacare and various welfare programs.”
In fact, as Wallace himself noted, undocumented immigrants who are granted legal status under the Senate bill will not be eligible for federal public benefits or subsidized health care for at least a decade. Moreover, immigrants are less likely than native-born Americans to rely on such programs.
Wallace went on to criticize the conservative myth that immigrants come to the United States to gain access to government benefits.
Here are five facts media should know about the Heritage Foundation's previous problematic immigration report:
1) 2007 Heritage Immigration Study Used Flawed Methodology
In 2007, in the midst of debate over a comprehensive immigration reform bill, Heritage released a report by senior fellow Robert Rector claiming that legalizing undocumented immigrants would cost taxpayers at least $2.6 trillion because of immigrants' eventual access to Social Security and other public benefits.
Heritage touted the $2.6 trillion number as the “net retirement costs of amnesty” after concluding, based on what it claimed was 2004 data, that “each elderly low-skill immigrant imposes a net cost (benefits minus taxes) on the taxpayers of about $17,000 per year.” The report then made a number of absurd assumptions, including that the majority of newly-legalized immigrants would stay in low-skilled, low-wage jobs their entire working life and would all draw from said government benefits at retirement:
If the government gave amnesty to 10 million adult illegal immigrants, most of them would eventually become eligible for Social Security and Medicare benefits or Supplemental Security Income and Medicaid benefits.
However, not all of the 10 million adults given amnesty would survive until retirement at age 67. Normal mortality rates would reduce the population by roughly 15 percent before age 67. That would mean 8.5 million individuals would reach age 67 and enter retirement.
Of those reaching 67, their average remaining life expectancy would be around 18 years. The net cost to taxpayers of these elderly individuals would be around $17,000 per year. Over 18 years, the cost would equal $306,000 per elderly amnesty recipient. A cost of $306,000 per amnesty recipient multiplied by 8.5 million amnesty recipients results in a total net cost of $2.6 trillion.
The report compounded those errors by claiming that the number of undocumented immigrants at the time was greater than what was being reported, and added that the “amnesty population” would further surge because once legalized, immigrants could sponsor other family members to come to the U.S. to take advantage of government benefits.
Rector later conceded “that the children of immigrants generally become more educated than their parents,” but nevertheless concluded that “their wages still would not offset the burden to other taxpayers.”
2) Heritage Report Was Widely Discredited By Economic, Immigration Experts
Experts widely dismissed the study as flawed, saying it used faulty methodology and reached dubious conclusions.
The libertarian Cato Institute argued that the “2007 report's flawed methodology produced a grossly exaggerated cost to federal taxpayers of legalizing unauthorized immigrants while undercounting or discounting their positive tax and economic contributions - greatly affecting the 2007 immigration reform debate.”
In his analysis of the Heritage study, Cato immigration expert Alex Nowrasteh cited a number of “serious errors” with the report, including that the report relied “on static scoring rather than dynamic scoring, making the same mistake in evaluating the impact of increased immigration on welfare costs that the Joint Committee on Taxation makes when scoring the impact of tax cuts.” Nowrasteh continued:
Heritage should use dynamic scoring techniques to evaluate the fiscal effects of immigration reform. For example, Heritage should assume that wages and gross domestic product are altered considerably because of immigration policy reforms. In contrast to that economic reality, immigrant wages, gross domestic product, and government welfare programs are unrealistically static in Mr. Rector's study.
His study largely ignores the wage increases experienced by immigrants and their descendants over the course of their working lives, how those wages would alter after legalization, and the huge gains in education amongst the second and third generation of Hispanics. Heritage is devoted to dynamic scoring in other policy areas - it should be so devoted to it here too.
Nowrasteh also pointed out:
Heritage counts household use of government benefits, not individual immigrant use. Many unauthorized immigrants are married to U.S. citizens and have U.S. citizen children who live in the same households. Counting the fiscal costs of those native-born U.S. citizens massively overstates the fiscal costs of immigration.
A similar examination by former Cato director of Trade Policy Daniel Griswold called the Heritage conclusions “grossly exaggerated” and noted that the “children of immigrants typically outperform their parents in terms of educational achievement and income.”
Economist Edward P. Lazear, former chief economic adviser to President George W. Bush, criticized the Heritage report as flawed because it lacked a “multi-year context” and “focuse[d] solely on low-skilled households that would be barred from receiving 'the vast majority of welfare benefits' under the president's proposal.”
In a piece on the report's conclusions, FactCheck.org wrote that it was “based on questionable assumptions” and noted that “other experts have criticized it as inflated.” FactCheck.org added:
The foundation acknowledges that the $2.6 trillion may be high because the report “assumes that all illegal immigrants residing in the U.S. would receive amnesty.” That's actually a false assumption because not all illegal immigrants would be eligible. Eligibility would depend on such factors as whether the person has a criminal record and how long he or she has lived and worked in the U.S.
On the other hand, the foundation argues that the $2.6 trillion may underestimate the price tag because Medicaid and Medicare costs are likely to exceed the rate of inflation, so the $17,000 per year estimate will “almost certainly” be higher even after adjusting for inflation.
The Sacramento Bee reported in June 2007 [via Nexis] that the Rand Corporation's James P. Smith, who “is considered one of the leading researchers on immigration and was chairman of a National Academy of Sciences panel that produced a report in 1997 still regarded as the most objective fiscal-impact study done yet,” called the report's cost estimate “excessive.” The article continued:
Immigrants without high school educations, the report agreed, may receive more in benefits than they pay in taxes during their lifetime.
However, Smith said, the children of low-skilled immigrants “do pretty well” when it comes to the American dream of climbing the educational and career ladder.
“Even a native-born low-skilled worker is going to end up a negative (in taxes vs. benefits),” Smith said.
3) Republican Leaders, Conservative Groups Denounced Heritage Report
The 2007 Heritage report has also been rejected by conservative groups and Republican leaders. As the Wall Street Journal's Washington Wire blog reported, the conservative Americans for Tax Reform headed by Grover Norquist criticized Heritage over the report and warned Republicans “to take a careful look at the research about the fiscal impact of immigration”:
Mr. [Josh] Culling [government affairs manager for Americans for Tax Reform] said there are two main issues with the Heritage paper: It assumes that anyone who gains legal status will be eligible for government benefits programs and it doesn't use dynamic scoring, which estimates the economic benefits or losses a policy change could have. The Congressional Budget Office often calculates that macroeconomic impact, but it doesn't include it in the legislation's official price tag.
“Our ask to the Republicans on the Hill is just hold on a second,” Mr. Culling said. “Take a look at the merits of the research.”
In a memo to GOP staffers, as Roll Call reported, Culling wrote that “Rector's study was severely flawed in its methodology, and thus in its findings.” Culling added that Rector “appears poised to make the same errors [in] the paper's latest iteration.” Culling went on to state: “ATR agrees that Heritage should avoid the same errors present in the 2007 study, most notably the use of static, rather than dynamic scoring, and ignoring the escalating costs associated with immigration enforcement.”
American Action Forum president and economist Douglas Holtz-Eakin, former director of the Congressional Budget Office, similarly expressed “reservations” about the study during congressional testimony on immigration reform. He stated that “it leaves out the things that I think are most important -- the dynamic effects that are in my testimony and in the study I did.” Holtz-Eakin continued:
HOLTZ-EAKIN: Second thing that I've worried about in that study is the basic design doesn't shed any light on immigration reform. There's nothing about that study that says what happens as a result of passing legislation, so it doesn't inform the decision that any Congress might face, and I'd like to see studies designed about looking before and after reform.
The economist also criticized the study for its apples-and-oranges comparison “between very low-skill immigrants with sub-high school educations and all of Americans,” which he noted could include “by implication Bill Gates, myself, you,” -- referring to the group of senators and staff on the Judiciary Committee. Holtz-Eakin added: “I think that's not a particularly meaningful comparison. And I -- you can anticipate the outcome of that kind of a comparison without doing any detailed analysis. You know the answer by the way the study's constructed.”
The American Enterprise Institute also undermined the Heritage report. In a blog post on the group's website noting that the analysis by Cato's Nowrasteh made “good points” about Rector's flawed static scoring, James Pethokoukis wrote:
Indeed, most fiscal calculations are snapshots that don't account for immigrants' taxes and transfers over their entire lifetimes. As Madeline Zavodny argues, “The direct fiscal impact of the foreign born in a single year is only a small piece of understanding their economic costs and benefits.” You also need to take into account immigration's effect on economic growth, which could result in more tax revenue. And even using a static approach, immigration overall is a big fiscal winner.
In a letter to Heritage, Republican Sen. Marco Rubio (FL) also made his feelings clear, writing that as “a pro-growth, fiscal conservative, I have long believed that any legislation impacting our economy can only be fully evaluated by a consideration of both its baseline costs and its impact on growth.”
As the Wall Street Journal reported, Republicans prefer " 'dynamic' scoring - which takes into account how legislation changes behavior and could impact the economy - to 'static' scoring," one of the flaws experts pointed out in Rector's report.
Rubio further wrote in his letter to Heritage:
Conservatives have considered static scoring to be an erroneous and incomplete evaluation tool for decades. The late Jack Kemp spent his career advocating for dynamic scoring to account for the real-world impact of policy changes on incentives and economic growth. Congressman Kemp also believed in the positive contributions immigrants make to society and our economy, and was a strong proponent of comprehensive immigration reform.
4) Rector's 2007 Heritage Report Contradicted By Earlier Heritage Report
In a 2006 backgrounder on comprehensive immigration reform, Heritage noted that an “honest assessment acknowledges that illegal immigrants bring real benefits to the supply side of the American economy” and stated: “The argument that immigrants harm the American economy should be dismissed out of hand.”
In the report, Ph.D. fellows Tim Kane and Kirk Johnson wrote:
The population today includes a far higher percentage (12 percent) of foreign-born Americans than in recent decades, yet the economy is strong, with higher total gross domestic product (GDP), higher GDP per person, higher productivity per worker, and more Americans working than ever before. immigration may not have caused this economic boom, but it is folly to blame immigrants for hurting the economy at a time when the economy is simply not hurting.
Whether low-skilled or high-skilled, immigrants boost national output, enhance specialization, and provide a net economic benefit.
5) Rector Has Previously Been Criticized For Shoddy Analysis
Heritage's Rector has a history of pushing flawed analysis on immigration policy and on issues relating to poverty and economics. In a 2006 report, he alleged that a then-Senate immigration proposal would allow more than 100 million immigrants to enter the United States over the next 20 years -- he later reduced the number to 66 million after amendments to the bill.
The study was roundly panned by experts as “preposterous,” “widely unrealistic,” and “wrong on its face.” As the San Francisco Chronicle reported at the time: “That would imply 3.3 million new immigrants a year, more than three times the 1 million now admitted annually, and far above historic norms.”
In a May 2006 Philadelphia Inquirer article [via Nexis], Brookings Institution senior fellow William Frey denounced Rector's report because it “assumes the maximums, pulls out all the stops for every loophole, possibility, and makes some assumptions -- some unrealistic -- about how many family members will be brought in.” Frey added: “You cannot assume the maximum numbers for some of the provisions. He (Rector) is pushing it to the extremes.”
Demographers at the Pew Hispanic Center and the Population Reference Bureau also criticized the report, noting that calculations such as Rector's “rarely take into account that people leave as well ... Immigration is a net event. People come, and then they go.”
At the time, the American Immigration Council blasted Rector's report for projections it said “clearly are intended to frighten rather than to inform,” adding: “It is fanciful to think that immigration to the United States over the next two decades will be twice the total population of Mexico, which is the country from which most immigrants to the United States come.”
Rector was also behind the fabricated claim during the 2012 presidential election that President Obama "gutted" welfare work requirements. The lie was widely debunked by fact-checkers with PolitiFact calling it “a drastic distortion” of the program's planned changes.