On Trade and Immigration, the GOP Has It Backward
There are two debates in Washington right now about movement across borders. The first regards trade deals, the second the issue of undocumented immigrants. Based purely on economic evidence, you'd expect trade to be the more difficult issue to agree on. Despite its overall benefit, trade creates domestic losers as well as winners. Immigration, on the other hand, is at worse a wash and at best a huge net positive for groups across the economic spectrum.
Yet the political winds blow in precisely the opposite direction. President Obama's efforts to secure new free-trade deals have bipartisan support, while his calls for immigration reform are bitterly opposed by Republicans. That raises the question: Why is moving stuff so much less contentious in Washington than moving people?
At recent Senate hearings, Republican Orrin Hatch of Utah called President Obama’s chief trade negotiator, Ambassador Michael Froman, one of the best trade representatives the country has ever had. Senator Charles Grassley of Iowa, also a Republican, suggested that most of the opposition to giving the administration powers to negotiate the upcoming Trans-Pacific Partnership trade deal came from Democrats. On immigration, by contrast, the Republicans have tied Department of Homeland Security funding to legislation overturning President Obama’s executive actions last year, which delayed deportation of undocumented immigrants. Senate Democrats have blocked that legislation, and the President would veto it regardless. If one side doesn’t back down, the DHS will run out of money on Feb. 27. This shouting match will likely go down to the wire, and hopes for more comprehensive immigration reform appear dead.
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From an economic perspective, supporting free trade but not immigration makes no sense. Even free trade advocates concede that past trade agreements have really hurt some at home—those with manufacturing jobs, for example—and that the current U.S. negotiating position is increasingly dominated by special interests rather than the common good. Studies of the impact of China’s World Trade Organization accession suggest it was a factor in the rapid drop in U.S. factory jobs in the past decade—a total decline of nearly a fifth from 2001 to 2007. The freer trade that resulted was an overall net benefit to the U.S.—lowering prices and creating jobs elsewhere—but a lot of people lost out and received little help to recover from that loss. Estimates by MIT’s David Autor suggest that the Federal Trade Adjustment Assistance Program provided just 23¢ to help retrain displaced workers for every $1,000 in additional Chinese imports.
The Trans-Pacific deal will have a comparatively minor impact on manufacturing jobs in the U.S., simply because most of the barriers to manufacturing imports are already gone. That’s also why the broader benefits of the deal are likely to be small. And when you add in the impact of giveaways to special interests, such as intellectual property provisions that lengthen and extend the reach of monopolies granted to pharmaceutical manufacturers, the overall economic effect of the treaty is likely to be somewhere between a small net positive and a small net negative.
With immigration, the potential economic benefits of reform are huge. Angel Aguiar and Terrie Walmsley of Perdue University modeled the difference in overall economic impact between a policy of deportation of all undocumented workers and a policy of full legalization. They suggested the gap was around 1.14 percent of GDP—or a benefit of around $250 billion to the U.S. economy if Congress chose the latter. The group most often assumed to suffer from immigration is low-skilled native workers, but tthere simply isn’t the evidence to back that assumption up. In the words of migration expert Michael Clemens: “Many of the world’s best labor economists have spent the last quarter century exhaustively looking all over the world for negative effects of immigration on low-skilled workers. They cannot find such effects.”
What makes the GOP's divergent positions on trade and immigration even more puzzling is that they're at odds with public opinion. According to Pew, 55 percent of Americans support the proposition that the Trans Pacific Partnership trade deal is "a good thing"—and only 49 percent of Republicans share that view. Compare the percentages backing the policy of “allowing illegal immigrants who are the parents of children with legal status to stay in the U.S. for three years without being subject to deportation, if they pass a background check and have lived in the country for at least five years.” This substance of Obama’s Executive Action is supported by 76 percent of Americans, including more than two-thirds of Republicans, according to PRRI polling. In addition, 60 percent of Republicans (and more than two-thirds of all Americans) support the provisions of the Dream Act: that illegal immigrants brought to the U.S. as children should gain legal resident status if they attend college or join the military.
Those numbers change when the question about Obama's Executive Action is labeled as “President Obama’s policy”—Republican support drops to 51 percent. Similarly, support for the Dream Act drops from 60 percent to 37 percent among Republicans if it is identified with Obama. The natural inclinations of most Republicans are in favor of immigration reform, until they find out that puts them on the same side as the President.
So why has immigration been made into a wedge issue, while Republicans are happy to work with the administration on trade? One explanation points to the process: President Obama is coming to Congress to ask for trade negotiation authority while he bypassed the House and Senate with executive orders on immigration. A more cynical interpretation is that partisan bickering over immigration gives meat to the Tea Party/Minutemen wing of the Republican Party, which opposes immigration for all sorts of reasons unconnected to its economic impact. And it does so in a manner that’s comparatively harmless to Congressional reelection prospects. While there's a large overall payoff to immigration reform, the benefits are pretty diffuse—and the biggest benefits undoubtedly flow to the undocumented workers themselves, who can’t vote.
Whatever it is that’s driving the debate in Washington at the moment over the global movement of goods, services, and people, one thing is clear: It isn’t the economy, stupid.