Let’s deconstruct the issue of economic growth.
If there is one thing all politicians support, at every level of government, it is growing the economy. Unfortunately, few of those political figures recognize the economic effects of their other policy preoccupations. Here in Indiana, that disconnect was on vivid display during then-Governor Mike Pence’s effort to privilege religious discrimination against LGBTQ citizens; it was equally obvious in North Carolina in the wake of the so-called “bathroom bill.”
It’s somewhat less obvious–but no less consequential–in Trump’s efforts to slash the budget and to drastically reduce immigration. A recent report from the Brookings Institution considered what it would take to achieve 3% growth in GDP, if that level of expansion is even possible: “There are three I’s that can do this: immigration, infrastructure, and investment.”
Infrastructure is the most obvious: not only does America desperately need to improve our deteriorating roads and bridges, not only do we need massive improvements to rail and public transportation, but cities and states across the country need the jobs a comprehensive infrastructure program would generate. As the Brookings Report notes,
Infrastructure jobs are disproportionately middle-class (defined as wages between the 25% and 75% percentiles, so this is the real middle-class and not the upper-middle class; there is no Dream Hoarding going on here).
Investment is harder to discuss, because far too many lawmakers fail to distinguish between investment and routine expense. Conceptually, however, most of us understand that we must invest in order to grow–it’s the difference between payments on your home mortgage and the amount you spent at that fancy restaurant. Trump’s budget may not reflect that understanding, but many lawmakers do recognize the difference. Unfortunately, many self-identified “fiscal hawks” do not.
We need to increase our nation’s investment in research, development, and people. The federal government’s investment as a share of total research and development has fallen to multi-generational lows. Increasing the federal government’s investment will not bust the budget. Currently, the federal government’s entire investment in R&D (as measured by the OECD) is equal to only about one-tenth of our nation’s defense budget. Investments like these have proven track records of increasing economic growth.
When it comes to the importance of immigration to economic growth, however, American xenophobia is far more influential than economic reality.
Comprehensive immigration reform, such as the bipartisan legislation which passed the Senate in 2013 (Schumer-Rubio), would increase our nation’s work force, bring economic activity out of the shadows and into the mainstream, increase our nation’s economic and physical security, and boost our GDP. One estimate sees an increase in $1.5 trillion in GDP cumulatively over the next decade, as compared to the status quo. That same study contrasts with the deportation-only policy that appears to be favored by some in the Trump Administration, which would reduce economic output by over $2 trillion. Even scholars from the CATO Institute argue that immigration reform could be used to boost GDP, with an earlier estimate of an increase of over 1.25% of GDP.
President Trump claims that legal immigration levels should be cut in half and that greater priority should be placed on those with high skills. Both of these claims fly in the face of census statistics that show that current immigration levels are increasingly vital to the growth of much of America, and that recent arrivals are more highly skilled than ever before. Current immigration is especially important for areas that are losing domestic migrants to other parts of the country including nearly half of the nation’s 100 largest metropolitan areas.
Well, that’s what happens when you elect a man who has no idea how the economy works, and for whom facts are meaningless…