Ten Reasons Why Immigration Reform Is Important To Our Fiscal Health
All eyes in Washington these days are on the new congressional super committee. The 12 members from both parties in both chambers of Congress have been assigned the task of developing a plan to reduce the federal deficit by $1.5 trillion over the next decade or risk setting off deficit-cutting triggers that will force sharp cuts to both defense and domestic spending.
There are many ways the members of this committee can reach the $1.5 trillion target between now and their Thanksgiving week deadline. We at the Center for American Progress understand that comprehensive immigration reform is not among the deficit reduction options on the table but want to urge the super committee to consider it. Comprehensive immigration reform is one key to boosting economic growth and thus helping to solve our nation’s fiscal problems.
Here are the top 10 reasons why immigration reform, or the lack thereof, affects our economy.
Additions to the U.S. economy
1. $1.5 trillion—The amount of money that would be added to America’s cumulative gross domestic product—the largest measure of economic growth—over 10 years with a comprehensive immigration reform plan that includes legalization for all undocumented immigrants currently living in the United States.
2. 3.4 percent—The potential GDP growth rate over the past two years if comprehensive immigration reform had gone into effect two years ago, in mid-2009. (see Figure 1)
3. 309,000—The number of jobs that would have been gained if comprehensive immigration reform had gone into effect two years ago, in mid-2009. A GDP growth rate of 0.2 percent above the actual growth rate translates into, based on the relationship between economic growth and unemployment, a decrease in unemployment by 0.1 percent, or 154,400 jobs, per year.
4. $4.5 billion to $5.4 billion—The amount of additional net tax revenue that would accrue to the federal government over three years if all undocumented immigrants currently living in the United States were legalized.
Revenue generated by immigrants
5. $4.2 trillion—The amount of revenue generated by Fortune 500 companies founded by immigrants and their children, representing 40 percent of all Fortune 500 companies.
6. $67 billion—The amount of money that immigrant business owners generated in the 2000 census, 12 percent of all business income. In addition, engineering and technology companies with at least one key immigrant founder generated $52 billion between 1995 and 2005 and created roughly 450,000 jobs.
Taxes generated by immigrants
7. $11.2 billion—The amount of tax revenue that states alone collected from undocumented immigrants in 2010.
Negative consequences of mass deportation
8. $2.6 trillion—The amount of money that would evaporate from cumulative U.S. GDP over 10 years if all undocumented immigrants in the country were deported.
9. 618,000—The number of jobs that would have been lost had a program of mass deportation gone into effect two years ago, in mid-2009. A mass deportation program would have caused GDP to decrease by 0.5 percent per year, which, based on the relationship between economic growth and unemployment, translates to an increase in unemployment by 0.2 percent, or 309,000 jobs, per year.
10. $285 billion—The amount of money it would cost to deport all undocumented immigrants in the United States over five years.
The upshot
Most Americans and their elected representatives in Congress would be pleasantly surprised to learn about the substantial benefits of comprehensive immigration reform to our nation’s broad-based economic growth and prosperity, and thus our ability to reduce our federal budget deficit over the next 10 years. Given how difficult a challenge the super committee faces, we cannot afford to ignore any viable options for strengthening our economy. We hope the super committee takes these top 10 economic reasons into account as they move forward with their deliberations.
By: Angela M. Kelley and Philip E. Wolgin, Center For American Progress, September 29, 2011
Populist Sen Mitch McConnell: “I Think Everyone Should Pay Their Fair Share, Including The Rich”
Today, Senate Minority Leader Mitch McConnell (R-KY) named three Republicans to the fiscal super committee that was created by the debt ceiling deal. All three have taken the Americans for Tax Reform anti-tax pledge and support a cockamamie constitutional balanced budget amendment. “What I can pretty certainly sayto the American people, the chances of any kind of tax increase passing with this, with the appointees that John Boehner and I are going to put on there, are pretty low,” McConnell has said.
But McConnell has not always been so virulently anti-tax. In fact, in a 1990 campaign ad, McConnell said that “everyone should pay their fair share, including the rich,” prompting the Associated Press to say that he sounded like a “populist Democrat”:
“Many Republican candidates are, in fact, holding fast to the no-new-taxes position that Bush embraced and then abandoned, even as they try to portray themselves as friends of senior citizens and the disadvantaged. Others are sounding more and more like populist Democrats. ‘Unlike some folks around here, I think everyone should pay their fair share, including the rich,’ Sen. Mitch McConnell, R-Ky., says in a campaign ad.” [Associated Press, 10/28/90]
“A twist of untraditional Republicanism is added to McConnell’s message when he says, ‘Unlike some folks around here, I think everyone should pay their fair share, including the rich. We need to protect seniors from Medicare cuts too,’” wrote Roll Call reporter Steve Lilienthal. “After proclaiming his independence from the President and Congressional leaders, McConnell reassures voters that he will back a ‘fair deal for the working families of Kentucky.’” [“Democrats Flood Airwaves Charging GOP Party of Rich,” Roll Call, 11/5/1990]
If McConnell truly believes this, he should be appalled by current conditions. Tax rates on the richest Americans have plunged in recent years, and millionaires today pay tax rates that are 25 percent lower than they were in 1995. Meanwhile, income inequality is the worst its been since the 1920s, with the top 1 percent of Americans taking home 25 percent of the country’s total income. Just the richest 400 Americans hold more wealth than the bottom 50 percent of Americans combined, and the richest 10 percent of Americans control two-thirds of the country’s net worth.
From the sounds of it, once upon a time McConnell would have found this troublesome. It’s a shame that he doesn’t any longer.
By: Pat Garafalo, Contribution by: Sarah Bufkin; Think Progress, August 10, 2011
How The Budget Deal Affects The Affordable Care Act
So how does this mammoth budget-cutting deal, with its congressional “supercommittee” affect health reform?
Good question, because lots of people in Washington are asking it too.
More specific answers will become clearer in the next few weeks, but here’s a first version of the road map to both the policy and the politics.
First, understand there are two different processes – and each, separately, aims at cutting more than $1 trillion over the next decade.
The one that you’ve probably heard most about is the “supercommittee” of 12 members of Congress. They are supposed to identify savings by Thanksgiving. Entitlements – Medicare, Medicaid, Social Security and aspects of the Affordable Care Act – are part of their turf. So are taxes and revenue – at least in theory. It’s not so clear that the Republicans see it that way given the public statements of Congressional leaders.
If they agree on some kind of grand deal by Thanksgiving, Congress has to take it or leave it by the end of December, eliminating the usual congressional dilly-dallying. (It looks like dilly-dallying to the casual observer or much of the public, but remember that all that arcane, tedious process IS policy in Congress. If you slow something down, make it go through hoops, amend it, hold it up, etc., it doesn’t become law. That may be good or, depending on your point of view, bad politics.)
If Congress takes any recommendations that the supercommittee agrees on, that’s the law. If the committee fails, or Congress rejects it, then the “trigger” gets pulled. The official name is “sequestration.” That’s a fancy name for automatic cuts – 2 percent across-the-board cuts in Medicare, for instance, affecting all health care providers, doctors, hospitals, etc. It won’t affect beneficiaries – at least not directly.
Medicaid is not subject to the trigger. Neither, according to the preliminary interpretations I’ve received from analysts and congressional staff, are the big, key subsidies in the health care reform law – the Medicaid expansion and the subsidies that will help low-income and middle-income people afford health care in the new state exchanges.
Other parts of the health reform law are, however, subject to automatic cuts. Among them: Cost-sharing subsidies for low-income people. This isn’t the help paying the premium; this is the help with the co-pays when people do get care. But the payments are made to health plans, not directly to beneficiaries so it won’t have the direct impact of discouraging care. It may affect how health plans make decisions about what markets to participate in. Gary Claxton and Larry Levitt at Kaiser Family Foundation explain here.
Also, the supercommittee could have a partial deal – meaning there’s still a trigger, but a smaller one. Maybe they won’t reach agreement on $1.2 trillion to $1.5 trillion in savings, which would avoid the trigger. But maybe they could agree on, say, $500 billion. That means a trigger wouldn’t have to go as deep because some of the savings would already be identified.
To recap – before we go on to the second stage of this process: The “super-committee” can do whatever it wants to health care, Medicare, Medicaid, Social Security, etc. – if it can agree, if it can get the rest of Congress to agree and if the president doesn’t veto it.
Will the Democratic Senate and the Obama White House agree to cuts that eviscerate health reform? Not likely. In fact, the Democrats “won” on very few aspects of the budget/debt deal. Walling off Medicaid and key parts of the health coverage expansion were two of the “wins.” That’s a bright line worth paying attention to as this moves forward.
Does that mean other health-reform related spending will be untouched? Given how many moving parts there are to any spending deal, and the fact that defense and tax policy are also part of the mix, chances are it will be affected. But expect to see that bright line remain visible – maybe not quite as bright, but visible. (The CLASS Act, the voluntary long-term care program created under health reform, is a different story; it’s quite vulnerable.)
The second part is the annual appropriations process. The budget deal provides for cuts – real cuts in spending, not just slowing the rate of growth. Health programs (aspects of the health reform legislation touching on exchange creation, prevention, community clinics, etc., and just about everything else at the Department of Health and Human Services – the FDA, NIH, CDC, etc. – will be subject to these cuts. But this isn’t an across the board process, it’s a line-by-line, or at least category/agency-by-category/agency, process. And there is some horse trading.
It’s safe to say that the Republicans will try to cut discretionary portions of the new health law. That’s not a new political dynamic, it doesn’t arise out of the debt ceiling or the Wall Street woes. It’s what we’ve seen since last fall’s elections and the repeal/defund fights of the past few months. And House Budget Chairman Paul Ryan has publicly tried to insert health care into any potential deal. So expect to see more Republican push to cut, and continued Democratic push back. Will health spending emerge unscathed? It’s too soon to know but, given the amount of savings Congress needs to find –both in this budget deal and in the perennial quest to fund the “doc fix” payments – some cuts are clearly possible. Some of it may affect aspects of exchange establishment, regulation, prevention, public health, etc. But it’s hard to see the Democrats allowing cuts so deep that they basically constitute a side door to repeal.
One further twist – some Republicans are calling for a delay in health reform implementation to save money.”Delay” may sound better to an ambivalent public worried about spending than “repeal.” What’s delayed (if anything), how it’s delayed, how long it’s delayed, and what stopgaps are created in the meantime could have an impact on how many people get covered in 2014.
Assorted committees and government agencies are still examining the new budget law and how it will affect … everything. So the perspective I’ve outlined here – and I’m writing amid all the market turbulence – may change as the economic and political climates change. But the lines in the sand around the trigger – health reform, Medicaid and Social Security – tell us something about where the White House will come down.
By: Joanne Kenen, Association of Health Care Journalists, August 10, 2011
The Fight Will Continue: Democrats Will Lose Now But They Can Win Later
Democrats are going to lose this one. The first stage of the emerging deal doesn’t include revenue, doesn’t include stimulus, and lets Republicans pocket a trillion dollars or more in cuts without offering anything to Democrats in return.
The second stage convenes a congressional “Supercommittee” to recommend up to $2 trillion in further cuts, and if their plan doesn’t pass Congress, there’s an enforcement mechanism that begins making automatic, across-the-board cuts to almost all categories of spending. So heads Democrats lose, tails Republicans win.
It’s difficult to see how it could have ended otherwise. Virtually no Democrats are willing to go past Aug. 2 without raising the debt ceiling. Plenty of Republicans are prepared to blow through the deadline. That’s not a dynamic that lends itself to a deal. That’s a dynamic that lends itself to a ransom.
But Democrats will have their turn. On Dec. 31, 2012, three weeks before the end of President Barack Obama’s current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is…nothing.
This scenario is the inverse of the current debt-ceiling debate, in which inaction will lead to an outcome — a government default — that Democrats can’t stomach and Republicans think they can. There is only one thing that could stand in the way of Democrats passing significant new revenues on the last day of 2012: the Obama administration.
Republicans — and even some Democrats — think that the Obama administration lives to collect revenue. The truth is closer to the opposite. Senior administration aides view the expiration of the Bush tax cuts as less of an opportunity than a chore. About four-fifths of the cuts go to households making less than $250,000 a year, and they don’t want to raise taxes on those folks. They don’t like the politics of the issue, either. It’s an article of faith among Democratic strategists that debates on taxes inevitably favor Republicans, allowing Democrats to be hammered from the right and undermined from the left. White House aides would rather focus on “win the future” issues like infrastructure, education and energy.
The White House’s strategy in the debt-ceiling negotiations has reflected its ambivalence, with Obama trying to extract either as much revenue as Republicans would allow or as little as Democrats would accept. Obama even offered Boehner a deal in which the Bush tax cuts would be extended right now, so Republicans wouldn’t have to fear a subsequent negotiation in which they lacked leverage. Boehner rejected that deal and, in doing, might have saved the safety net.
But the Obama administration doesn’t want to take its second chance. They argue that the economy will still be recovering in 2013, and so it’s not an ideal time for a large tax increase. True. But what happens in 2012 is not simply setting tax policy for 2013. It’s setting tax policy for decades to come.
Health costs are rising and the Baby Boomers are retiring. If taxes don’t rise, none of these commitments are sustainable. And Republicans, in normal times, are perfectly capable of blocking any and all attempts to raise taxes. For Democrats, the expiration of the Bush tax cuts presents a unique opportunity in which GOP intransigence will mean more new revenues rather than no new revenues.
The alternative has been on clear display in recent months. Republicans can’t necessarily sell the country on big cuts in federal programs, but they can make them necessary. All they need to do is hold the line aganst taxes, allow deficits will continue to mount, and then use forcing events like the debt ceiling or the budget to demand huge spending cuts. A world in which the two parties can’t agree on tax increases but can agree on spending cuts is one in which the government eventually shrinks dramatically. Republicans understand this. Do Democrats?
A year ago, I was less concerned about the Bush tax cuts. I assumed, as did many in Washington, that the Republicans’ antipathy to taxes was a negotiating stance. Eventually, we would strike a “grand bargain” that would reduce spending and raise revenue substantially. The past few months have proved me wrong.
Republicans have shown, that they will block any and all tax increases, no matter what incentives they are offered in return and no matter how dire the consequences of their refusal. Next year’s deadline offers Democrats their only chance to negotiate from a superior strategic position. Republicans will still be able to refuse to raise taxes. But if they do, it won’t matter. The only way they can succeed in keeping taxes from rising is if the Obama administration and the Democrats stand shoulder-to-shoulder with them to extend the Bush tax cuts.
By: Ezra Klein, The Washington Post, July 31, 2011
With Deal Announced, The White House Makes It’s Case
So the final deal has been announced, pending approval by the House, and one of the key new pieces of the compromise is that the Congressional committee tasked with coming up with a second round of spending cuts in exchange for the later debt ceiling hike would be forced to act by the new “trigger.” In the event that the committee deadlocks, that trigger would force an even division of non-defense and defense cuts, and since the latter is anathema to Republicans, they would not have any incentive to deliberately sabotage the committee in order to force the deep entitlements cuts they want.
The White House’s argument is that even if the deal is far short of what liberals hoped for, Republicans have effectively surrendered the amount of leverage they were expected to have over entitlements cuts. Now that the committee — which is half Republicans and Democrats — will all but certainly advance a package of cuts in exchange for the later debt ceiling hike, the argument is that Democrats can live to fight it out another day on entitlements.
The White House is also arguing that the deal sets the stage for a re-litigation of the tax cut fight, and it’s now distributing talking points to outside allies that are heavily devoted to making that case on entitlement and taxes, an argument that seems designed to quiet angst and criticism among liberals:
* Expedited Process for Balanced Deficit Reduction: Puts in place a longer term process for additional $1.5 trillion in deficit reduction through a committee structure that will put everything on the table, including tax and entitlement reform. To prevent either side from using procedural tricks to prevent Congress from acting, the committee’s recommendations will receive fast track authority, which means they can’t be amended or filibustered.
* Sets the Stage for a Balanced Package Including Revenues: The American people and a growing number of Republicans agree that any deficit reduction package must be balanced and included revenue.
* Even Speaker Boehner was open to a deal with $800 billion in revenues, and nearly 20 GOP senators were supportive of the Gang of 6 framework, which had more than $2 trillion in revenue.
* If the Committee does not succeed in meaningful balanced deficit reduction with revenue-raising tax reform on the most well-off by the end of 2012, the President can use his veto pen to raise nearly $1 trillion from the most well-off by vetoing any extension of the Bush high income tax cuts.
By;: Greg Sargent, Washington Post-The Plum Line, July 31, 2011
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