Economics can be used to identify trade-offs in public policy by enumerating costs and benefits. President Donald Trump’s decision not to allow the Deferred Action for Childhood Arrivals (Daca) program to continue will create economic costs, if Congress does not act. The US stands to lose hundreds of thousands of productive workers, the value those workers generate, and the taxes those workers pay.
The economic benefits of deporting 690,000 people whose families brought them here illegally when they were children? There are none.
Attorney General Jeff Sessions argues otherwise. In his statement rescinding Daca, Sessions contended that it “denied jobs to hundreds of thousands of Americans by allowing those same jobs to go to illegal aliens.” This reasoning would earn a failing grade in an undergraduate economics course.
The US economy does not have a fixed number of jobs. Hundreds of thousands of Daca recipients - commonly called Dreamers - do hold jobs. They also buy food and clothing, pay for housing, and consume entertainment. Their spending is someone else’s income, supporting employment in their local communities - creating jobs. Their work makes the economic pie bigger. They don’t just take a slice.
Moreover, people covered under the program are not the lesser-skilled, low-wage immigrants that many are concerned drive down wages for native-born workers. Rather, according to Ike Brannon and Logan Albright in a study published in January by the libertarian Cato Institute, Dreamers closely resemble H-1B visa holders - foreign-born workers employed in specialty occupations requiring a high level of skill. The average Daca recipient earns US$17 per hour, more than double the federal minimum wage, according to the Cato report. And many of them are pursuing advanced degrees.
Brannon and Albright estimate that Dreamers not only add several hundred billion dollars to the economy over a decade, but also generate billions of dollars of additional tax revenue. How? They pay more in taxes than they consume from government programs, in part because they are not eligible for means-tested federal benefits.
All in all, Brannon and Albright estimate that over 10 years, “the United States economy would be poorer by more than a quarter of a trillion dollars” if the Daca program is repealed and its recipients deported.
Of course, this controversy is about more than economics. President Barack Obama implemented Daca not through the legislative process, but through constitutionally dubious executive action. But even if the legality of the program is unclear, the proper response to Trump’s decision to end it in six months isn’t. Congress must act.
Republican Senator Lindsey Graham of South Carolina and Democratic Senator Dick Durbin of Illinois introduced a bill this summer that is a good place to start, and should be getting more attention than it currently is. The plan would allow certain young immigrants brought here as children the opportunity to earn permanent residence and a pathway to citizenship. Graham thinks Trump “was right to terminate the program, but give us six months to fix the problem.”
The administration and immigration hawks in Congress will want something in return for passing the bill granting legal status to the Dreamers. The obvious deal is to give them legal status in return for enhanced border security.
But the president’s statement that he will “revisit” Daca if Congress can’t pass legislation in the next six months gives away quite a bit of leverage. Why would congressional Democrats give the GOP more aggressive border security if Trump might extend Daca in the absence of a legislative fix?
That is a political problem for Republicans. But the fate of the Dreamers is larger than politics.
The United States gave the Dreamers security, telling them that this country is their home. The government relieved the Dreamers of the fear of a knock on the door one day, a life shattered, a forceful return to a country they do not know. A great nation doesn’t take that assurance away, once it has given it. A morally serious nation doesn’t extend the hand of welcome to someone one day and then shove him out the door the next.
Congress has an opportunity not only to illustrate the character of the nation, but to add to it for the better. That opportunity must be taken.
Michael R. Strain is a Bloomberg View columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute. He is the editor of “The U.S. Labor Market: Questions and Challenges for Public Policy” and the co-editor of “Economic Freedom and Human Flourishing: Perspectives from Political Philosophy.”