Wednesday, May 8, 2013

The Heritage Foundation's $6.3 Trillion Deception

I was hoping to stop talking about immigration, but then the Heritage Foundation decided to crap on their own credibility by issuing a report that is so phony it would have made a Soviet propagandist’s head spin. So I figured I had to say something, especially as talk radio is running blindly with this report. What you’ve probably heard is that if Rubio’s bill passes, it will cost $6.3 trillion!! What you probably haven’t heard is that Heritage’s report is pure deception.

Distortion: You know how we always complain about the Democrats talking about their spending cuts over a 10 year period to make the cuts seem meaningful when they aren’t? For example, do you remember how Obama claimed he proposed $4 trillion in budget cuts over 10 years, and how everyone scoffed at this because it’s a dishonest way to inflate the numbers? Well, guess what...

To get their $6.3 trillion number, Heritage adds up the cost over 50 years. Yes, 50.

That’s a credibility killer right there.

If you break their number down by year, you’re talking about $126 billion per year on average. That number is actually back-ended and is much lower in the first 30 years (and even lower in the first ten), but let’s go with the worst-case $126 billion. That $126 billion works out to only 0.8% of our GDP right now. And by the time we reach Heritage’s 50 year mark our GDP will be around $70 trillion per year, which means these illegals will cost a whopping 0.18% of GDP. It’s interesting how that $6.3 trillion suddenly doesn’t seem so large when you put it into context. And that’s just the beginning...

Deception: The numbers Heritage uses include some nonsense assumptions that pretty much need to be considered deceptive. Here’s how Heritage determined the $6.3 trillion figure. First, they determined the total cost of government. Then they determined how much government spent on natives, on lawful immigrants and on illegal immigrants. They don’t actually explain how they determined this, but they did spend several pages pretending they did. Then they determined how much each group paid in taxes and they calculated the “net deficit” for each group by subtracting the amount of government spending they attribute to each group from the amount they paid in taxes. From this, they concluded that natives receive $310 more from the government than they paid to the government. Lawful immigrants received $4,344 more than they paid. And illegals received $14,387 more than they paid. Then they took this deficit for illegals and multiplied it by the number of illegals and the number of kids they would have, and they added it up. The end result was a $6.3 trillion deficit over 50 years.

Here’s why this is deceptive.

First, Heritage assumes that illegals will never earn more than they do now. Basically, Heritage assumes that nothing will change for these people after they are legalized and that they and their children will always work for their current wages for the rest of their lives. That’s nonsense, and Paul Ryan has already criticized this. Why would someone work for a couple dollars a day when they can now work at WalMart for above-minimum wage and benefits? Why would their kids do the same? Once illegals can work legally, there is no reason to believe they won’t do as well as legal immigrants. If we assume that illegals eventually match legal immigrants, then using Heritage’s own numbers, the Heritage deficit drops from $6.3 trillion to $1.9 trillion over 50 years or $38 billion a year.

Further, I have reason to doubt even that. At one point in their analysis, Heritage notes that legal immigrants actually out-earn natives by $59,071 per household compared to $53,937 for native households -- about $5,000. This calls into question Heritage’s claim that legal immigrants have a tax deficit that is $4,034 greater than natives. Why would legal immigrants, who earn more than natives use $9,000 more in services than natives? This doesn’t seem true. And if that isn’t true, then this deficit vanishes and immigrants become net contributors.

In any event, even the $1.9 trillion is overstated. To create these deficits, Heritage divides government spending into five types of benefits. The things natives like are dismissed as “for the public good” and aren’t counted. In other words, Heritage is making immigrants seem more expensive by downplaying the costs that benefit natives.

Continuing... of the remaining four benefit types, different values are assigned to natives, legals and illegals, again without adequate explanation. Heritage simply asserts that immigrants use more services (and illegals use even more) because immigrants live in higher density areas and therefore cost more. So, logically, if we move all the illegals to smaller towns, suddenly they become cheaper than natives. Does that seem credible to you?

Anyway, of the four categories of benefits, the two conservatives complain about are actually the smallest. This includes (1) direct benefits like social security and unemployment and (2) means-tested benefits like food stamps and welfare. But those alone don’t come anywhere near to creating a deficit, so Heritage adds two more benefits: (3) the cost of educating children in public schools and (4) the cost of “population-based services.” These population-based services are the cost of police, fire, highways, parks, public transportation etc. Those last two categories account for around $19,000 of the $24,000 Heritage assigns to illegals.

But ask yourself if this is truly valid.

For one thing, it seems dubious to claim that illegals cause highways, parks, police and fire. Those things will exist whether illegals are there or not. More interestingly though, consider public transportation. No doubt you’re thinking that must mean buses because illegals probably use buses, right? Except that’s not what it means. The real public transportation costs are airports and commuter trains... things illegals never use. Yet, Heritage not only attributes those costs to everyone, including illegals, it uses some hidden formula to charge illegals more for these things than natives even though illegals don’t use them. Ditto on highways. Illegals cluster in inner-cities, yet Heritage not only charges illegals with the cost of building and maintaining highways to the suburbs and through Montana, but it charges them more for those highways than it charges natives. It’s the same with schools. Do you think the children of illegals who go to aging inner-city or tiny rural schools actually absorb more costs than the suburban kids who go to the palaces they are building these days? Heritage wants you to believe they do.

False Premise: Finally, there is another hugely misleading aspect of this report: it wrongly implies that these costs can be avoided. Basically, the report tells you, “Think about what it will cost if we pass this thing!” without ever mentioning that these costs will be borne whether the Rubio bill passes or not. In other words, these people are here already and they are already using these benefits legally. Heritage even acknowledges this, but then ignores that point so they can imply that these costs will only be incurred “if” the Rubio bill passes. This is false. Since all these costs will be incurred whether Rubio’s bill passes or not, the honest cost/benefit analysis Heritage should be performing is whether passing this bill will cause these people to contribute more as legal citizens than they would being left in the shadows. But that wouldn’t support the conclusion Heritage wants, so they avoid talking about that.

I find this frustrating. I find it frustrating that supposedly reputable conservatives are lying and distorting and producing deceptive reports in the name of ideology. Conservatism is supposed to be better than this and if this is what passes for analysis from somewhere like the Heritage Foundation then we have real problems. In any event, the CBO will be looking at this bill soon and I suspect they won’t find anything like what Heritage found. All this report really tells us is that we need to take everything we hear from Heritage with a grain of salt from now on. Nice work folks, way to blow your credibility.


LL said...

Truth: The population in Mexico is actually declining while their economy is improving faster than ours is. The immigration problem is solving itself.

And I agree with you on the lies.

Tennessee Jed said...

this sure as hell doesn't help :(

AndrewPrice said...

LL, That is very true. Mexico is running out of people, so the chances of another wave are close to zero. In fact, they've been net zero from Mexico for several years.

AndrewPrice said...

Jed, No, it doesn't. And this is what is so amazingly frustrating to me. The one thing you could always count on with conservative in the past was that they were honest. They might not have been great tacticians, but they were honest. Suddenly, there is this.

This is how reputations are destroyed.

K said...

Heritage simply asserts that immigrants use more services (and illegals use even more) because immigrants live in higher density areas and therefore cost more. So, logically, if we move all the illegals to smaller towns, suddenly they become cheaper than natives. Does that seem credible to you?

So you're saying that Podunk Wisconsin has the same welfare, unemployment, infrastructure, public employee pensions that Los Angeles does? Correct me if I'm wrong, but if all the illegals in Los Angeles moved to Podunk, which doesn't have all those costs, they'd be cheaper than the average native. Maybe that's our solution, Andrew.

K said...

Heritage assumes that illegals will never earn more than they do now.

Since a large majority of the illegals have been in this country for more than a decade, I'd say that isn't as wild an assumption as you might think. But let's assume you are correct. Where are those "upgraded" jobs going to come from? Yeah, from jobs the natives would have otherwise occupied. What will those natives do instead - go on unemployment, welfare or disability? I think your assertion only flys if the economy recovers completely - and that's unlikely, particularly in California.

AndrewPrice said...

K, What I'm saying is that Heritage is trying to make immigrants sound more expensive by claiming that they ALL live in big cities and everything in big cities is more expensive. And when Heritage divides up the cost of government, they assign a much larger share to immigrants based on that assumption.

It is the equivalent of me saying, "Well, whites live in rich areas like Potomac, Maryland or Beverly Hills, California and those places cost a lot more, so all whites should be hit with a corresponding surcharge because all whites cost more."

It's nonsense reasoning by Heritage. Moreover, Heritage ignores the fact that any map will show you that most illegal immigrants are clustered along the border regions where there are no big cities, and that those in the big cities live in the inner city parts which are not nearly as expensive as big cities as a whole.

Thus, Heritage is used false assumptions and my point was to demonstrate the illogic of their assumptions by pointing out that under Heritage's assumptions, we can wipe out their supposed deficit by simply moving all the illegals to small cities... something which is clearly nonsense, but which logically flows from what Heritage is claiming.

AndrewPrice said...

K, Since a large majority of the illegals have been in this country for more than a decade, I'd say that isn't as wild an assumption as you might think.

Except you forget the key fact -- they aren't legally allowed to work here right now. Thus, they CAN'T currently work at WalMart or other big companies and they can't really climb on the income ladder. That's why they become day laborers. Making them legal eliminates this barrier and lets them start up the ladder by getting real jobs.

AndrewPrice said...

Also, as for the assertion only flying if there is a recovery, that's simply not true. These people are here whether we make them legal or not. These costs get incurred whether or not they are made legal. What Rubio's bill does is let them join the real workforce and pay taxes. Without that bill, they just keep going as they are and they pay no taxes... but the cost is the same either way.

K said...

I think you're mistaken. Just because it's "illegal" doesn't mean no illegal alien doesn't work here. It's illegal for them to drive in California as well, but somehow they all manage it. The California housing bubble was built on the backs of cheap illegal carpenters, installers and plumbers. And "cheap" here means mucho dinero next to Walmart stocker.

Since I live next to a big city where the bill boards were proclaiming "Los Angeles: Mexico" on Mexican language radio station ads a decade ago I'm probably biased that a hell of a lot live in big cities.

Something else to chew on in this thread: LINK

Note that according to Pew public opinion poll of Mexican citizens in Mexico, 1/3 said they would come to the US if they could.

To reiterate: I'm fine with green cards for all - but it has to be realized that out of control immigration is a body blow to the republic - particularly in a multi-culti context. Unless immigrant education to American cultural norms is mandated I'm against the bill.

tryanmax said...

Because Heritage is so revered, many on the right will use agreement with this report as a conservative litmus test. But because a number of prominent conservatives disagree with it with little fear of losing their support, the Heritage report may open a fissure in the GOP.

AndrewPrice said...

K, I didn't say they don't work here, I said it was impossible for them to get decent jobs and move up the income ladder. All they can basically get right now are labor jobs. And Heritage is pretended that's all they will ever get, even after the restrictions which keep them from getting better jobs are gone.

It's the same thing like saying, "Well, we made it illegal for them to drive, so most don't drive, so granting them licenses will be pointless since they clearly will never drive." It's false reasoning.

As the poll, so what? First, polls are meaningless. If you asked how many Americans would move to Canada if Obama got re-elected you would have gotten about 25%... and not one of them would have gone. Secondly, the bill doesn't allow that -- they would be sent home. Third, conditions have changed dramatically. Mexico is short on people, their narco war is dying down. Their economy is improving, ours isn't. For several years now, we've had net-zero immigration from there. That's not going to change.

Finally, if you're fine for green cards for all, then you should be for this bill, because that's what this bill does. It puts them on the green card track -- after a lengthy delay during which time they are cut off from benefits and during which time border security is supposed to take place.

AndrewPrice said...

tryanmax, I'm told they already are, but then, those same people have already identified opposing the Rubio bill as a litmus test. This just adds to the tantrum.

As for the fissure, it's already there. The right is split into those looking to become a viable political philosophy again and those don't want that.

On Heritage specifically, this is really damaging to them precisely because so many conservatives are seeing right through this. Heritage is one of those places that was supposed to be a genuine think tank -- somewhere you could trust for data and ideas, but this shows that they are no better than talk radio. And with the number of prominent conservatives lining up against this, it will damage them a lot of they don't find a way to back down from this.... which they won't -- they're doubling down actually.

tryanmax said...

As for the fissure, it's already there. ... they're doubling down actually.

That's what I mean. The fissure is there and the report is a wedge that Heritage has decided to drive into it.

AndrewPrice said...

Yeah, that's probably true.

This report is so obviously false that I can't imagine the people who put it together at Heritage didn't know what they were doing.... you can't make this many biased assumptions without knowing that you're lying. So it clear had a point other than enlightening the debate.

I would say it was written to give opponents the appearance of having a reason other than bias to oppose the bill.

NightcrawlerER said...

Nice analysis, Andrew, as always. It's really sad that conservatives are acting this way. I don't like the fact these people broke the law to get here, but they are here so we need to do something to fix the situation. Whining about it and making fake reports to keep people from trying to fix the problem doesn't speak well for conservatism.

AndrewPrice said...

Thanks Nightcrawler! Yeah, this is not our side's finest hour.

ellenB said...

Excellent takedown, Andrew. I am not very happy with "conservatives" at the moment and things like this are the reason. Thanks for setting the record straight.

ellenB said...

Also, did you see what Leahy did with the gay rights thing? I saw that and I thought of your comments that the Democrats don't want this thing passing. You might be very right about that.

AndrewPrice said...

Ellen, Thanks. I've said it before, there may be things that need to be fixed in the bill and there may be valid reasons to oppose the bill, though I haven't seen those yet, but making up garbage about it to stop it is not worthy of conservatives.

I saw that about Leahy. I'm not sure yet if that is a genuine attempt to sabotage the bill or if they're just trying to get conservative opponents to up their level of hate. If it ends up in the bill, then it's a sabotage attempt -- a "poison pill." I suspect however, he's just waving it get our fringe more agitated.

Koshcat said...

Thank you for the review. I think the Heritage Foundation missed an opportunity here. One concern about the illegal aliens is some of them have been having their wages taxed, not to mention they pay sales tax. On the former, many employers will collect their "social security numbers" and submit as required by law their state and federal taxes. These are on things that they will never receive such as social security. I don't have the source but I read somewhere that if all the illegal aliens were to be kicked out states such as California would go bankrupt do to this loss revenue.

An analysis of this as well as an analysis of how much it will cost to lose this free lunch as well as appropriately pay them their due would have been much more informative.

As a sovereign country, we have the right to determine immigration into our country. Currently the situation is not working very well. I see this bill as a way to improve it. I haven't see any of the other yahoos come up with a real plan. Of course it is much easier to play Obama-politics where you sit back and whine and criticize what others are trying to do but never come up with a real solution yourself.

AndrewPrice said...

Koshcat, You're welcome. I honestly wanted to move on from this issue, but then this report came out and it was shocking to me how obviously false it was. This is not conduct I expect from our side. This is the kind of garbage you expect from MSNBC and Paul Krugman.

I agree with you that Heritage could have contributed a lot to this debate, but I don't think they intended to examine this fairly -- I think they intended to create a report to support the position they wanted.

A more honest analysis would have looked at (1) what will these people really cost/contribute if we do nothing, (2) what will they cost/contribute if we pass this bill and (3) what would they cost/contribute if we adopted some other plan. It also would not have tried to distort the data as this report does. And it would have used "dynamic scoring" (i.e. accounting for changes in behavior -- something conservatives have been demanding for years from the CBO). Such a report could have been used as a way to either offer a better plan or tweak this one to improve it. But now, this report is meaningless except as a credibility destroyer for Heritage. In effect, Heritage just proved what the left has been saying about them for years.

Honestly, if I was on their board, I would want whoever did this fired.

As for the tax issue of which you speak, I haven't seen much on that, but I know that most of them do pay taxes in one form or another. California probably would be doomed without that income, but I can't say that for certain. Their farming industry would be destroyed, that's for sure.

On your Obama-politics point, don't get me started. I'm sick of that attitude of trying to attack everything... and I get the feeling a lot of other people are too. I think talk radio land will be in for a shock when some of the people they think they love support this bill.

AndrewPrice said...

Interestingly, here's a statement issued today by a group of soon-to-be-named RINOS:

"Simply opposing immigration reform should not be the conservative response to this problem. We believe conservatives should be leading the way on this issue by supporting legislation that upholds conservative principles."

This list of RINOs includes Ralph Reed, Paul Wolfowitz, Al Cardenas (who runs the American Conservative Union), Lawson Bader (who runs the Competitive Enterprise Institute), and about two dozen more. Add in Rubio, Ryan, and Grover Norquist.

That's a lot of secret RINOs.

AndrewPrice said...

FYI, there are some unsavory things turning up about the guy who co-authored the Heritage study: LINK.

He posted articles for a website run by a guy who describes himself as a "Nationalist" and who founded "a think tank for White Americans."

It also turns out that his thesis at Harvard claimed that immigrants have low IQs and apparently suggested banning immigrants with low IQs. Heritage has disavowed his dissertation after it was brought to their attention this week.

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