07/29/15 – Alex Nowrasteh – The Scott Horton Show

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All right, you guys, welcome back to the show.
I'm Scott Horton.
It's my show, The Scott Horton Show.
Next up is Alex Narasta from the Cato Institute, author of this working paper from a year ago, The Fiscal Impact of Immigration.
Welcome to the show.
Alex, how are you?
Great, thank you.
How are you doing?
I'm doing real good.
Appreciate you joining us on the show today.
My pleasure.
So I actually know a couple of red Indians, but pretty much everybody else here is the son or daughter, grandson, granddaughter, great-great-great, of immigrants who came from the old world and came and colonized this place.
North America, all of it, and in our case, we're discussing the middle part here.
But now it seems like everybody who gets here, and it's always been this way, I guess, everybody who gets here wants to slam the door shut behind them and not let any new immigrants in.
And a lot of times they come armed to the teeth with numbers and proof that these immigrants, especially the Hispanics, because they're all so poor and uneducated and third world and teeming huddled masses, that they're just bringing us down.
They're taking our jobs and they're wasting all our tax money.
And when I've got to go to the emergency room, I have to wait for them to go first, and it just ain't fair, Alex.
So what have you got to say about all that?
Well, the first thing I've got to say is all those complaints are the exact same complaints that have been leveled against every single group of immigrants in American history.
You even see complaints about English immigrants in the early 1800s, about those groups using about the same types of reasoning, saying they're all poor, lazy, stupid, use charity and welfare, which by the way there was small welfare benefits back then as well.
And the numbers just don't hold up.
Now, this working paper you talked about is coming out of the book chapter in an academic press in Texas in a few months.
And what we find is taking a look at the dozens, almost a hundred different research papers out there that take a look at the impact of immigrants on the U.S. government budget deficit, what we find is that it's a really boring result, but we find that they basically pay for their own way.
They basically do not increase deficits by coming here to the United States.
They don't increase the taxes that we as Americans have to pay.
And so just from that narrow perspective of how it affects government budgets and taxes, immigrants pretty much pay for themselves.
Yeah, but anecdotes, man.
Don't you know about the school district where all the Mexicans came and then their budget got tight?
Yeah, well, the plural of anecdote is not data.
And I wish that a lot of those people who pass around those emails would take a notice of this.
Listen, a lot of my conservative friends at places like Heritage, which I have a Heritage Foundation in D.C., which I have a lot of respect for, they're really good at pointing out that we need to do dynamic economic analyses when we judge the impact of a tax cut, for instance, or a tax increase.
Liberals will say we need to double tax revenue.
Well, we can do that by doubling taxes.
Conservatives and folks at Heritage say, no, that's not true.
If we double tax rates and people are not going to work as much, not going to invest as wisely, and they're right.
So the tax revenue is not going to be doubled.
Well, when we add immigrants to the economy, it actually grows the size of the U.S. economy.
It makes us all richer.
It makes the immigrants richer.
So we need to take a look at that dynamic effect and see how that affects government budgets going forward.
And there's three major impacts.
Immigrants increase the size of the economy.
They increase the amount of taxes going to the government.
But there's also some more government expenditures.
And when you take a look at all these three factors and you combine them all, over time and in a segment of time and period of years, immigrants pay it their own way.
All right.
Now, so the overall size of the economy, I saw where you wrote in here, just to take the macro and make it micro.
If you have an illiterate Mexican immigrant who comes in just to pick heads lettuce or whatever it is, he's not going to pay income tax.
He doesn't make enough to pay income tax.
But he's helping his employer make that much more money, and that's definitely going to pay into the income tax, whatever.
So even from the very poorest workers, there's a very serious trickle-up effect to the state's coffers.
And it's not just income tax.
Remember that a fellow also has to rent property in order to live, which increases the value of property, which increases the value of property taxes.
He also pays sales tax.
You can't really avoid that.
He pays all manner of excise taxes and tariffs and everything else.
He has to go get a driver's license fee if he drives.
All these types of fees and stuff, he just cannot avoid those types of taxes.
And the good thing is, because of welfare restrictions in the United States, he doesn't have access to means-tested welfare benefits.
So it's a pretty good situation.
And let's say, for instance, and this is the biggest benefit that everybody misses.
Let's say you have a 20-year-old Mexican immigrant who comes here who has a 10th grade education, pretty poorly educated by American standards.
Well, that means that those 11 years that he spent in public school were not paid for by the American taxpayers.
And public school costs $10,000 to $20,000 per year per American.
So we're already ahead by a minimum of $110,000 for that person.
I see what you mean, because most of the immigrants come after their childhood from wherever they're from.
Absolutely.
And if they have a high school education or a college education, even better.
You and I, I assume you went to public school, too?
Sure.
Yeah, so did I. I went to school in Camarillo, California.
And I cost the taxpayers about $10,000 per year for my 19 years of education at California taxpayer expense.
You and I are far bigger fiscal drains on the U.S. government by the time we are in our 20s and 30s than immigrants are.
Yeah, that's exactly what Doug Stanhope says.
He's crying about immigrants, outlaw babies.
They're the biggest tax parasites out of everybody.
Give me a break.
Yeah, I mean, if you really want to balance the government budget deficit now, shoot everybody under the age of 18 and everybody over the age of 65.
And outlaw any new babies.
Now, don't tempt them, because they'll say, see, there's demand for our new program.
Well, yeah, I mean, if you listen to anti-immigrant groups, a lot of them, like the California Population Stabilization, might agree with that statement.
But every reasonable person, I think, would realize that we might balance the budget in the short term, but we'd also go extinct.
All right.
Now, so you make sense to me when you say overall size of the economy, obviously, benefit.
They're working hard and they're paying taxes.
So obvious benefit there.
And then on the expenditures, I guess what you mean by that is like your example with the schools, that actually immigrants use government programs and welfare less than regular American citizens do.
Yeah.
So there's two types of government programs we need to think about.
The first kind is, you know, when there's more people, there need to be more government expenditures.
So there's more people that are going to build more roads.
You know, if they have kids, more schools are going to be built.
If the immigrants have kids here, you know, a little bit of an uptick in terms of total welfare benefits.
Now, immigrants are less likely to use them.
But just the fact that there's any kind at all means there's going to be more expenditures, you know, in the aggregate to begin with.
But then you also take a look at the other side of government expenditures, where the government doesn't spend any more because there are more people like the military.
Like we don't need more nuclear bombs just because there's more immigrants here.
You know, we're fine defending us with the defense that we have just because there are immigrants here.
So in fact, you spread around the cost of national defense even more when you have more people here, not to mention the burden of national debt.
So the interest on paying the national debt is actually a little bit lower for everybody if there's more people here.
Yeah.
Well, that makes a lot of sense, too.
Well, you know, none of this is, you know, voodoo.
This is all based on, you know, economic reasoning, based on work, not by any kind of ideologues or anything like that.
It's by people who are just looking at the facts.
Sure.
Okay.
But now those anecdotes, I mean, we don't really have the anecdote about the nation state in general from San Diego up to Bangor, Maine.
But the anecdotes are all local ones.
And they still seem relevant and important that, hey, a bunch of immigrants came to town and completely overwhelmed our local school district's budget.
And the state is in a pinch and they don't have the money to help and these kinds of things.
We do hear things like that.
So maybe you're only right when you generalize to a country with a population of 300 million, but that if you were to narrow your view to this county in East Texas somewhere, then you'd have to admit about all these negative consequences.
But now I'm not even going to let you answer that challenge until we get back from this break.
It's Alex Nerasta.
He's from the Cato Institute.
He wrote this working paper a year ago, The Fiscal Impact of Immigration.
You can find it at Cato.org.
We'll be right back after this.
All right, you guys, welcome back to the show.
I'm Scott Horton.
It's my show, The Scott Horton Show.
I'm talking with Alex Nerasta from the Cato Institute about immigration and the costs to the state, which ultimately means the costs to all of us, and the right wing myth that immigrants come here just to get on welfare and suck us all dry, when, in fact, our guest says they at least pay their own way and, in fact, help grow the economy overall, et cetera, like that.
But now, so at the break, I was saying, yeah, but maybe anecdotes are important, even if they don't prove overall things or something like this or that.
We do hear about hospital systems in certain parts of certain states, school districts being completely overwhelmed and unable to cope with the amount of people coming in and demanding their services for and not paying their way, in essence.
Yeah, there's always exceptions, I think, to every rule like this.
And I want to point out that those same problems are also experienced by communities that have a large increase in native-born Americans really rapidly.
So you saw like Williston, North Dakota, which boomed because of the fracking boom that was going on there.
And it was native-born Americans who moved there in droves and put huge strain on the local tax base and local services and things like that.
So I think it's not so much a problem with immigrants per se, but a problem with the government's ability to respond in a dynamic way to changing conditions.
And if we're concerned about things like immigrants or anybody using welfare or hospital rooms or things like that, that calls for reform or elimination of a lot of these government benefits that are handed out to people.
Prior to 1986, there was no problem with emergency rooms and issues like this.
But it was in 1986 when the government passed a law called the Intala Act, which made it so that hospitals had to treat and stabilize people before releasing them by law, which gave a great vehicle for Americans, as well as some unauthorized immigrants, to abuse that system.
So you hand out law, and the problem goes away.
And it's a lot easier to reform welfare states than it is to build a wall around the country.
Yeah, but the answer to that from them certainly would be, yeah, but then you have a pile of dead bodies out in front of the hospital.
And that's bad PR.
That's not what we had before.
I mean, one of the things that this law, the Intala Act, did badly is it prevented hospitals from transferring patients to charity hospitals that were specially designed to take care of poor people who didn't have the means to it.
Now, by raising the cost of transporting people that are basically making it impossible, except under extraordinary circumstances, you made it so that every hospital had to take care of these folks, and you placed a huge burden on them rather than the burden being placed on charity, which had been established to deal with this.
And the result of Intala was putting those charities out of business.
Well, and, you know, as Jacob Warnberger says, only government complains about having too many customers.
You don't ever hear anybody else complain.
Oh, man.
I mean, you might hear employees complain, but you don't ever hear the owner complain that it's the lunch rush at some sandwich shop.
You know what I mean?
That's what they're in business to do is to serve customers the more the better.
And I can see how, I mean, obviously we're talking about private hospitals, but they're really only sort of pseudo-private.
As you say, they're under these government mandates, but they're not getting paid.
It's not like they're saying, oh, great, a bunch of new immigrants.
The more immigrants we get coming in here to our emergency room, the closer we get to expanding our new wing.
Right?
Like, they're not looking at it that way at all because it's not that way.
Exactly.
I mean, these people, you know, immigrants are, and I know you know this, but immigrants are people.
They are customers as well as people who work and add to the supply side of the economy.
They're great opportunities for every business in the United States to serve them.
The only people who seem to be incapable of responding are government employees in these massive bureaucracies that don't have the incentive, information, or means of really addressing these concerns.
So I think the problem is the government, not the immigrants, and we should stop punishing immigrants and Americans who want to work with them just because the government is incompetent and inefficient.
I mean, if we need to wait for the government to become efficient to have more immigration, then I think we're going to be waiting forever.
Yeah.
Well, listen, you know, this is really important just because, hey, the truth is important overall and all that kind of thing, too.
But it's especially important because you have people saying that, well, listen, I'd be for open immigration.
Instead, we've got this giant socialist welfare state, and so we've got to close the borders at least until we get rid of all the socialism.
Otherwise, it's all just, you know, a guaranteed bankruptcy.
And then, but now you're providing the perfect rejoinder, which is that's just not true, really.
Socialism or not, we benefit from immigrants always have.
And now so I'm sorry, last couple minutes here.
Let me ask you to differentiate here between a bunch of bums, as Rich Lowry calls them, a bunch of criminals, as Donald Trump calls them, versus what I think we see.
Certainly here in Austin, for example, there are a lot of Pakistani and Indian immigrants, Korean immigrants, but they're all from the upper middle class.
They all have advanced degrees and they either, you know, own property like the Indians and the Pakistanis tend to own their own stores or they work in, you know, for Archer, not Archer.
But the other not ADM, AMD, the advanced micro devices here in town.
Right.
Making the computer chips, this kind of thing.
And so Lowry is saying, well, sure, of course, bring the upper caste from India on over.
That's great.
But it's the the very poor and, you know, having many children and no education, these people coming over.
They're the ones who are really dragging us down.
Does he have a point there?
What if they were what if we didn't have any of the upper class immigrants to balance out your stats and everybody was the poor underclass from Mexico?
Well, it still works.
It's still very close to being balanced.
Because one of the best things you can do to improve the fiscal condition of the US government is to increase the birth rate and to have more kids and poor immigrants tend to be more fertile.
Their kids are much more educated than their parents.
They approach the American average.
Even poor immigrants do.
And they have years of work ahead of them, generations, actually, because one of the biggest fiscal drains in the future and right now is going to be Social Security and Medicare.
And those programs are helped substantially by the addition of people, even on the poor end, who are going to be working for generations, paying taxes to support, unfortunately, a very large welfare state.
So even on that end, we see a pretty good and you see it especially for low skilled illegal immigrants, because illegal immigrants have no access to any of those programs at all.
So anything that they pay is really a big net addition to the system.
Right.
Yeah, it makes total sense.
I want to say, you know, for the small welfare programs out there, because there's always exceptions, there's always some welfare chief who's an immigrant or some bum who's an immigrant.
It's a lot easier to build a wall around the welfare state politically and bar non-citizens from accessing it than it is to build a wall around the country.
And I want to say Cato was the only organization in D.C. that wrote a detailed paper of exactly how to do that, what laws need to be changed, and how much money would be saved by doing that.
Meanwhile, all these other anti-immigration organizations or those worried about it have never done any similar work.
I think it indicates to me that their real goal is to be opposed to immigration rather than try to solve these problems.
Yeah.
And I guess, you know, in California, they hit the kids going to public school first.
And so that gave the whole movement a real bad look.
But there's a lot of welfare benefits that could be denied to illegal immigrants beyond just picking on their children.
Absolutely.
And, you know, the thing is, right now, almost all of them have zero access to begin with.
And there's this thing in the literature called the Hispanic paradox, which is even though Hispanics are poorer than most Americans, they tend to have other indicators that point to poor health.
But they're actually healthier than us.
They cost less.
It's a paradox.
All right.
Well, we're all out of time, but, jeez, I had more stuff to get to, so maybe we'll talk again.
Thanks very much, Alex.
Appreciate it.
I hope to be back on soon.
Thanks again for having me.
All right, y'all.
That's Alex Narasta at Cato.org.
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