Scoring Immigration Reform Correctly

Alex Nowrasteh Word is our pro-free-market brethren at the Heritage Foundation will release a new study on the fiscal impact of immigration reform in time for the congressional debate. It will be an update to a 2007 study that played a key role in derailing immigration reform then. While the 2007 study was influential, it was fatally flawed, as I detail here.  Hopefully Heritage’s updated version will correct for those criticisms and others, or else its analysis must be judged as lacking.  The key flaw in Heritage’s 2007 study is its use of static fiscal scoring, rather than dynamic fiscal scoring, to evaluate that year’s immigration reform bill. “Scoring” a bill means predicting its impact on the U.S. budget in the future by estimating how it will affect future spending and tax revenue. A statically scored prediction assumes the bill will not affect the rest of the economy – which is highly unrealistic.  A dynamically scored prediction, on the other hand, assumes that the bill will affect the rest of the economy, also changing tax revenue and government spending. Since increased immigration will increase the size of the economy, it will also increase tax revenue and some government spending. It’s important to factor those increases into any scoring model. Heritage’s 2007 study did not.  The Congressional Budget Office (CBO) has adopted dynamic scoring for the coming immigration bill for reasons they explain here.  The best justificat...
Source: Cato-at-liberty - Category: Health Medicine and Bioethics Commentators Authors: Source Type: blogs