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Wharton: RAISE Act Would Shrink U.S. Economy (But Is Not Likely to Become Law)

August 15, 2017

The University of Pennsylvania’s Wharton School of Business has released a brief economic analysis of the RAISE Act, the immigration reform measure introduced in the Senate by Republicans Tom Cotton (R-AR) and David Perdue (R-GA). The takeaway is that the act – which would significantly reduce legal immigration, and would institute a (supposedly) merit-based point system for evaluating applicants – would reduce GDP by 0.7 percent and would reduce jobs by 1.3 million within 10 years.

The RAISE Act Will (Almost Certainly) Not Become Law

The Wharton analysis goes in to some detail about the bill’s proposals, some of which we will discuss below. However, before addressing the actual legislation, it is important to note that virtually all politics watchers agree that this bill is exceedingly unlikely to become law. That is because the bill would be subject to a Senate filibuster, which would require 60 votes to break. With the Republicans holding 52 senate seats, they would need at least 8 Democrats (or independents who caucus with the Democrats) to vote for the bill. Given that the bill was written without any input from Democrats or immigrant’s rights groups, the chances of that happening are close to zero.

The only other option would be for Senate Majority Leader McConnell to once-and-for-all do away with the filibuster. However, he has already been urged to do so by President Trump (repeatedly), and has so far been unwilling. It remains possible that he could change his mind, but no one seems to think he would do so for this doomed piece of legislation.

Above: a Tweet from President Trump urging Mitch McConnell to do away with the filibuster, which did not work.

What the RAISE Act Would Do (If It Were To Become Law, Which It Won’t)

Broadly, the bill would seek to accomplish two things: 1) significantly reduce the total amount of immigration to the United States; and, 2) completely change the eligibility criteria for immigrating to the United States, emphasizing high-skilled labor and “job creators,” curtailing family-based immigration and refugee admissions, and eliminating the diversity lottery program.

The RAISE Act would use the following mechanisms to achieve these ends:

  • Eliminate the Diversity Lottery, which grants 50,000 green cards annually from countries that have low immigration levels to the U.S.
  • Cap refugee admissions at 50,000 (down over 40% from current levels)
  • Eliminate family-based immigration sponsorship for all but spouses and minor children of U.S. citizens and Legal Permanent Residents
  • Lower the number of visas available for capped family-based categories to 88,000 per year (down from 226,000)
  • Replace the current employment-based immigration process with a points-based system that is meant to admit only “the best” immigrants.

The points system has received a lot of press, with many noting that almost all current U.S. citizens would fail to ‘earn’ the 30 points needed to qualify for an immigrant visa under the RAISE Act. You can see if you would qualify here.

Why the RAISE Act Would Harm the U.S. Economy (According to Wharton)

For anyone interested in learning more about the economic benefits of immigration, the Wharton analysis is relatively brief and is worth reading in full. To briefly summarize the analysis, Wharton finds that the RAISE Act would act as a drag on GDP growth and would eliminate jobs, despite theoretically admitting a wealthier and better-educated mix of immigrants. The primary reasons for these findings are:

  • People at all income levels contribute to overall economic activity (aka GDP). Fewer immigrants means fewer people purchasing goods and services.
  • American workers will not be able to instantaneously fill the positions that would have been taken by immigrants, meaning some jobs will simply disappear.

If This Bill Isn’t Going to Pass, Why Are We Discussing It?

While this particular version of immigration reform is highly unlikely to succeed in the current congress, it’s nevertheless an important indicator of the GOP’s priorities on immigration reform. In the past, Republican talking points on immigration have focused on ‘border security’ and the debate over undocumented immigrants. This is the first concrete statement we’ve received about how the Republican party might seek to remake the employment-based immigration process, and also serves as an opening position in the debate about overall immigration levels. Should the Republicans make significant gains in the Senate in 2018 – which is a distinct possibility, even with Trump’s currently-dismal approval ratings – something like the RAISE Act may well be brought forward again, with greater chances of success. In addition, it’s possible that some Democrats would approve of the idea of a points-based system for selecting immigrants, even if they would reject the exact metrics used in the RAISE Act. As such, it would not be surprising to see elements of the RAISE Act resurrected in future immigration reform plans.

Summary

Republicans in the Senate have proposed comprehensive immigration reform legislation which would slash overall immigration levels and institute a ‘merit-based’ points system. The legislation would reduce GDP and U.S. jobs, but is extremely unlikely to pass in the current congress.

 


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