Wonkbook: The real damage the CBO did to the case against immigration reform

June 19, 2013

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Congressional BudgetOffice Director Douglas Elmendorf is reflected on a table in this Feb. 5 file photo.

According to the Congressional Budget Office, the Senate immigration bill grows the economy, cuts deficits, raises wages, legalizes eight million undocumented workers, makes the American workforce more productive, and adds more than 10 million workers to an aging economy.

That's a pretty unambiguously good score from Congress's budget keepers. It's a better score, frankly, than many pro-reform offices on the Hill were expecting. On Tuesday morning they were fretting about the CBO score and prepping responses to possible bad news. By Tuesday evening they were breaking out the champagne and clicking send on celebratory press releases.

Does it assure the bill's smooth passage? Of course not. But it helps the bill on the margin. And it avoids the possible catastrophe of a bad score. "This gives Republicans who wanted to support it anyway one more reason to support it," says an aide to the Republican Senate leadership. "It could've been a big setback, now it's a mild positive."

The score is good enough that opponents of the bill are simply warning their colleagues against believing it. "The bill’s drafters relied on the same scoring gimmicks used by the Obamacare drafters to conceal its true cost from taxpayers and to manipulate the CBO score," wrote Sen. Jeff Sessions in a statement.

Ultimately, the CBO report rips a layer of artifice from the immigration debate. Few critics of immigration reform really base their opposition on concerns about the deficit or the economy. Their real concern with immigration is cultural and sociological. But that's dangerous political ground. It's easier to frame opposition using the bloodless language of the budget than the combustible language of national character and composition.

That's the real damage the CBO did to the anti-immigration caucus. It took the bloodless language of the budget away from them. It left them only with their real concerns -- the ones they'd prefer not to emphasize. That will perhaps lead to a slightly more truthful debate about immigration reform, but one that is much more dangerous for the anti-reform side, and for the Republican Party.

Wonkbook's Number of the Day: 6.8 percent. That's the rise in housing starts since last month. The Commerce Department said that the U.S. produced 914,000 units at a seasonally adjusted annual rate.

Wonkbook's Graph of the Day: Multifamily housing starts have fully recovered to pre-recession levels.

Wonkbook's Top 5 Stories: 1) CBO on immigration; 2) a rundown ahead of the FOMC meeting; 3) the merit of NSA programs; 4) House votes on abortion ban; and 5) government and green energy.

1) Top story: What the CBO has to say about immigration reform

CBO: Senate immigration bill would cut deficits by $200 billion over decade. "The immigration bill under consideration in the Senate would reduce federal deficits by nearly $200 billion over the next decade, and continue generating savings in the years beyond, even after millions of new citizens became eligible for health-care and welfare benefits, congressional budget analysts said Tuesday. The long-awaited report by the nonpartisan Congressional Budget Office marked a major victory for the bipartisan “Gang of Eight” senators who have spent months negotiating the details of the measure." Lori Montgomery in The Washington Post.

Read: The CBO report.

...Here are the key numbers. "While the bill increases spending by $262 billion over 10 years, it increases revenue by $459 billion, for a deficit reduction of $197 billion in total. Additionally, it projects $690 billion in deficit reduction in the second decade of implementation, from 2024 to 2033. The reports predicts that the bill will add 10.4 million permanent U.S. residents and 1.6 million new temporary visa-holders, and reduce the undocumented immigrant population by 1.6 million." Dylan Matthews in The Washington Post.

@petersuderman: CBO estimates that the immigration bill will cut deficits by $197b over 10 years. Basically: More legal labor=more revenue=lower deficits.

...It's a free lunch, the CBO is saying. "This isn’t just a good CBO report. It’s a wildly good CBO report. They’re basically saying immigration reform is a free lunch: It cuts the deficit by growing the economy. It makes Americans better off and it makes immigrants better off. At a time when the U.S. economy desperately needs a bit of help, this bill, according to the CBO, helps. And politically, it forces opponents of the bill onto the ground they’re least comfortable occupying: They have to argue that immigration reform is bad for cultural or ethical reasons rather than economic ones." Ezra Klein in The Washington Post.

@reihan: CBO analysis accounts for population increase, but not potential productivity gains. It also doesn't account for technological risk.

2 amendments to immigration bill passed, 2 defeated. "Sen. Mary Landrieu (D-La.): The senator has several proposals regarding non-native children adopted by American parents, a longtime interest of hers. Under a 2000 law, children lawfully adopted by American parents are automatically granted citizenship. Landrieu’s amendment would extend those rights to children who turned 18 before the law was passed." Ed O'Keefe in The Washington Post.

House panel approves enforcement-based immigration bill. "The House Judiciary Committee late Tuesday approved its first immigration bill, advancing on a party-line vote a proposal to boost interior enforcement and border security. After a day-long mark-up, the Republican-led panel cleared the SAFE Act on a 20-15 vote shortly before 11 p.m. It is one of several bills that Chairman Bob Goodlatte (R-Va.) says the committee plans to send to the House floor in the coming weeks." Russell Berman in The Hill.

@dylanmatt: The CBO report is a good reminder that the case against expanded immigration isn't economic, it's sociological.

Reid: Bill could pass Senate right now. "Senate Majority Leader Harry Reid said the Gang of Eight’s immigration bill can pass the Senate in its current form, although he’s open to border security changes that don’t destroy the bill’s pathway to citizenship for undocumented immigrants...As Reid spoke to reporters on Tuesday afternoon, Republican senators like John Hoeven (N.D.) and Bob Corker (Tenn.) were working with some members of the Gang of Eight to craft a way to strengthen the bill’s border security measures while also not turning off Democrats." Burgess Everett in Politico.

...And Reid is threatening to file cloture on immigration reform. "The Senate must speed ahead on its attempt to remake U.S. immigration policy, Majority Leader Harry Reid said Tuesday morning, threatening to file to cut off debate by Monday. Reid said the workload for the Senate will be heavier than usual and that if the Senate doesn’t get to work on agreement on tranches of amendment votes, it will find itself working on the weekend — a familiar threat from the Nevada Democrat. Reid hopes to finish the legislation before the July 4 recess." Burgess Everett in Politico.

Boehner assures colleagues: No immigration bill without majority GOP support. "The fate of the sprawling immigration reform proposal winding its way through Congress may now be in the hands of some of the most conservative members of the Republican Party. House Speaker John A. Boehner (R-Ohio) said Tuesday that he will not advance any bill that did not have the support of a majority of the House GOP, which will mean engaging some of the proposal’s biggest detractors and harshest critics." Ed O'Keefe in The Washington Post.

...And he says he's not in favor of a comprehensive approach to immigration reform. "Speaker John Boehner (R-Ohio) said Tuesday that he will adhere to the “Hastert Rule” on immigration reform and denied claims that he is for a “comprehensive” solution. Boehner’s remarks seek to appease conservatives who have grown increasingly restless about where House Republicans are headed on the thorny matter." Molly K. Hooper in The Hill.

...Is Boehner bluffing? Even Boehner doesn't know. "The Hastert rule — which states that the Speaker of the House won’t bring legislation to the floor unless it’s supported by a majority of his own party — isn’t actually a rule. It’s more of an aspiration. Speakers follow it, except when they don’t. It’s a bit like my rule to jog every morning: I always follow it, except on the mornings when I don’t." Ezra Klein in The Washington Post.

Keeping undocumented immigrants off the dole is easier said than done. "[T]he conflicts over eligibility for Obamacare subsidies and Social Security/Medicare could be more intractable. The question of whether unauthorized immigrants should be able to get public money for health care, or get retirement money based on work they did while in the country illegally, isn’t a technical one. It’s a moral and ethical one on which those concerned primarily with the welfare of poor immigrants and those concerned primarily with ensuring that legal processes are fair and don’t reward certain behavior, are bound to disagree." Dylan Matthews in The Washington Post.

Music recommendations interlude: Carter Tanton, "Murderous Joy."

Top op-eds

PORTER: Making the case for a rise in inflation. "The experience of the Great Recession over the last five years has persuaded many economists, among them Olivier Blanchard, the chief economist at the International Monetary Fund, that a higher inflation target in good times would allow central banks to do more to fix things when the economy went bad. With inflation anchored at 2 percent, real interest rates could fall no further than a negative 2 percent, hitting a floor when the nominal interest rate reached zero. If it had been anchored at 4 percent, real rates would have had further to go, providing a more robust boost to investment and spending." Eduardo Porter in The New York Times.

KLEIN: Bobby Jindal is the GOP's problem. "Jindal has gone from diagnosing what’s wrong with the Republican Party to personifying it. The GOP’s problem isn’t that it insults the intelligence of the voters. It’s that it insults its own intelligence. It’s come up with a theory of liberal governance that has obviated the need for a theory of conservative governance." Ezra Klein in The Washington Post.

ORSZAG: Cities shouldn't sell traffic data. "Cities should go ahead and install as many cameras as they like; I hope they cut speeding and raise revenue from fines. Like it or not, those cameras will mean that cities have an increasing amount of data on how and where we drive, which will lead to a growing temptation to make money from it. It’s important that cities fight that temptation: The data from those cameras should be strictly protected, as California law provides, even in the face of significant funding needs. Just because government can make money selling something doesn’t mean it should." Peter Orszag in Bloomberg.

MILBANK: Congress has become a rubber stamp for the NSA. "The Founders created a system of checks and balances. Those overseeing the nation’s spying have switched to a system of cheers and bouquets...The congressional overseers of the intelligence agencies quite clearly are captivated by — if not captives of — the people they are supposed to be supervising." Dana Milbank in The Washington Post.

YGLESIAS: Don't taper. "All the talk is of tapering because that’s what’s been in the press, with well-sourced journalists reporting vaguely but authoritatively that tapering is on the agenda. That’s too bad, because absolutely nothing in the data or the objective state of the economy gives even the slightest hint of support for even a tiny reduction in bond purchases. If anything, the balance of the evidence suggests that the Fed ought to deliver a smashing uppercut to economic pessimists by announcing an increase in the pace of bond purchases and a determination to keep accelerating asset buying, unless or until inflation materializes." Matthew Yglesias in Slate.

WADHWA: Why Silicon Valley likes the war on patent trolls. "It’s little wonder a cheer is going up from the Valley for Obama’s proposals. So, let’s hope that Congress does as the President asked. If he won’t get rid of patents entirely in this fast-paced world of innovation, the least he can do is put the patent trolls out of business." Vivek Wadhwa in The Washington Post. 

Q&A interlude: Ask the wonks!

2) Your pre-FOMC rundown

Obama may be willing to let Bernanke go. "President Barack Obama has subtly suggested he's ready to let Federal Reserve Chairman Ben Bernanke step down from the central bank when Mr. Bernanke's term ends in January. In an interview with television host Charlie Rose conducted Sunday and aired Monday, Mr. Obama said that Mr. Bernanke "has already stayed a lot longer than he wanted or he was supposed to."" Jon Hilsenrath in The Wall Street Journal.

...What do we know about Bernanke's own exit? "This is not the first clue that Bernanke may be ready to step down. He is skipping the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyo., in August, the first time a sitting chairman has not attended the gathering of economic bigwigs in 25 years...Isaac Boltansky, a policy analyst at Compass Point Research & Trading, said Bernanke will keep his cards close until after his biannual testimony before the Senate next month." Ylan Q. Mui in The Washington Post.

...It's a moment for uncertainty for the Fed. "The Federal Reserve chairman, Ben S. Bernanke, faces the increasingly difficult challenge of shaping investor expectations about the future course of Fed policy amid growing signs that the Bernanke era at the central bank is drawing to a close...The Fed is not expected to announce any immediate changes on Wednesday, at the close of the meeting, but investors are watching for signs that the Fed is considering scaling back later this year." Binyamin Appelbaum in The New York Times.

How to interpret Bernanke. "If markets are responding to signs that the economy is improving and less in need of so much Fed adrenaline, that's OK. It is not OK if markets are interpreting his comments as predicting either that (a) the Fed is going to stop buying bonds soon no matter what happens to the economy or (b) a Fed move to scale back bond buying means the Fed will lift short-term rates sooner than had been anticipated." David Wessel in The Wall Street Journal.

...And here's some more advice. "When you are reading the Fed decision, don’t focus on whether they decide to taper asset purchases or not. It’s much more important to understand why, and what this says about future policy. The best outcome would be if Fed officials took a truly revolutionary step: Tell us what they are going to do, then follow through by doing it." Justin Wolfers in Bloomberg.

Bond investors head for the hills. "Signs of a stronger U.S. economy are rippling through the bond markets, sending investors and corporate leaders racing to prepare for higher interest rates. Investors have pulled money out of assets ranging from lower-rated corporate bonds to ultrasafe U.S. Treasurys in sums unseen since the financial crisis. Investors yanked $17.672 billion from funds that invest in bonds in the two weeks ended June 12, according to data company Lipper, a unit of Thomson Reuters. Trading has been volatile, and some investors have lost money after a long rally in many debt markets." Mike Cherney, Katy Burne, and Matt Wirz in The Wall Street Journal.

Rising mortgage rates elicit fears they could hurt housing recovery. "Mortgage rates have spiked over the past few weeks, rising at the fastest pace since 2010, sparking fears that the housing market could weaken and undermine the country’s economic recovery. In the short term, the jump in interest rates is spurring home buyers...But a sustained rise would hurt a fragile housing recovery, which has climbed out of the depths of its crash with the help of record-low rates, economists said." Amrita Jayakumar in The Washington Post.

...But mortgages are still a bargain. "Mortgage rates have jumped above 4% for the first time in about a year, hitting 4.15% in the first week of June, up from 3.59% five weeks earlier, according to the Mortgage Bankers Association. The rise represents a 15% increase in the cost of borrowing, or around $50 in the average monthly payment on a $192,800 home, the median price of a previously owned home in April." Nick Timiraos and Conor Dougherty in The Wall Street Journal.

Inflation is under control. "U.S. consumer prices ticked up in May as weak growth abroad and slow wage gains at home kept inflation pressures contained. The consumer-price index rose a seasonally adjusted 0.1% last month, the Labor Department said Tuesday, driven by higher rents, airfares and energy costs. While the data suggest prices are stabilizing after two months of declines, even with May's small gain, consumer prices are up only 1.4% from a year earlier. The latest report showed that four years into the economic recovery, demand still remains too weak for firms to push prices higher and unemployment too high for workers to secure significantly higher wages." Jeffrey Sparshott and Eric Morath in The Wall Street Journal.

Housing starts are up 6.8 percent. "Home builders stepped up construction of apartment buildings in May and prepared to boost construction of single-family homes, the latest signs that an improving housing market will support the shaky U.S. recovery. Overall housing starts rose 6.8% in May from a month earlier to a seasonally adjusted annual rate of 914,000 units, the Commerce Department said Tuesday. That level was nearly 29% higher from a year ago. The increase was driven almost entirely by a 24.9% surge in construction of multifamily units." Josh Mitchell and Jonathan House in The Wall Street Journal.

Banks pose hurdle in free-trade talks. "Financial-services regulation has become a trans-Atlantic hot potato because the global financial system has become increasingly fragmented under the strain of the crisis. Regulators on both sides of the Atlantic are protecting their financial systems from contagion by making it increasingly difficult for institutions to shift capital and liquidity across borders." Simon Nixon in The Wall Street Journal.

G8 to fight tax evasion. "The Group of Eight leading industrialized nations agreed to proposals to tackle tax avoidance and evasion that call for new laws to stop businesses from shifting profits across borders and urge greater transparency about company ownership. Tuesday's action reflected growing momentum among the largest economies for joint action to shore up their sometimes-leaky tax systems and shine more light in an often-murky area." John D. McKinnon and Ainsley Thomson in The Wall Street Journal.

Money money money interlude: Jack Lew's new signature.

3) NSA program merits under debate

Officials: Surveillance programs foiled more than 50 terrorist plots. "The U.S. government’s sweeping surveillance programs have disrupted more than 50 terrorist plots in the United States and abroad, including a plan to bomb the New York Stock Exchange, senior government officials testified Tuesday. The officials, appearing before a largely friendly House committee, defended the collection of telephone and Internet data by the National Security Agency as central to protecting the United States and its allies against terrorist attacks. And they said that recent disclosures about the surveillance operations have caused serious damage." Ellen Nakashima in The Washington Post.

House lawmakers offer bill to curb NSA's phone data collection. "The bipartisan House group has proposed legislation that would put limits on the federal government's ability to collect mass telephone records. Members of the group include conservative Rep. Justin Amash (R-Mich.) and Rep. John Conyers (Mich.), the ranking Democrat on the House Judiciary Committee." Pete Kasperowicz in The Hill.

Can state laws protect you from being watched by drones? "Congress ordered the Federal Aviation Administration to open the skies to private drones by 2015. But while the FAA will develop safety regulations for this fledgling industry, neither the FAA nor any other federal agency was given jurisdiction over privacy issues. And so instead of national privacy rules, we’re getting a patchwork of state regulations." Timothy B. Lee in The Washington Post.

Dumb ways to die interlude: So you think you're ready to walk on red-hot lava?

4) House votes on abortion ban

House votes to ban abortion after 20 weeks. "The House approved legislation Tuesday that would ban abortions starting at 20 weeks of pregnancy, the most sweeping abortion restriction to pass any chamber of Congress in a decade. The vote was 228 to 196. While the measure is unlikely to become law — it faces opposition in the Senate and a White House veto threat — it could reverberate politically over the next year and a half, as both Republicans and Democrats appeal to voters in this year’s special elections and the 2014 midterms." Juliet Eilperin in The Washington Post. 

...It won't become law, but it still matters. "For roughly a decade, congressional Republicans have emphasized their fiscal agenda rather than social issues, given the fact that voters are far more fixated on the economy than the conservative push to restrict gay marriage and abortion rights. But on Tuesday abortion will occupy a significant place in the public arena, even as the Senate aims to work toward a bipartisan agreement on immigration." Juliet Eilperin in The Washington Post.

Wonktalk: Can Avik Roy and Ezra Klein find common ground on Obamacare? The Washington Post.

Health-insurance exchanges are falling behind schedule. "Government officials have missed several deadlines in setting up new health-insurance exchanges for small businesses and consumers—a key part of the federal health overhaul—and there is a risk they won't be ready to open on time in October, Congress's watchdog arm said. The Government Accountability Office said federal and state health officials still have major work to complete, offering its most cautious comments to date about the Obama administration's ability to bring the centerpiece of its signature law to fruition." Louise Radnofsky and Sarah E. Needleman in The Wall Street Journal.

Groups launch multimillion-dollar push to promote health-care law, sign up the uninsured. "The race is on to sign up uninsured Americans for health-care coverage this fall, with a number of large national advocacy groups launching aggressive, multimillion-dollar campaigns this summer aimed at promoting President Obama’s health-care law. The groups are buying television ads, tapping social networks, training hundreds of new workers and volunteers and developing online and on-the-ground efforts akin to an enormous, months-long get-out-the-vote campaign. They aim to raise awareness in preparation for a big push leading up to open enrollment Oct. 1." Sandhya Somashekhar in The Washington Post.

Are slower-growing health care costs temporary or permanent? "The latest salvos in the battle come from the Federation of American Hospitals, which represents for-profit hospitals, and PwC’s Health Research Institute. Both argue in new studies out today that a big chunk of the slowdown is structural — and won’t disappear as the economy improves. Dobson DaVanzo & Associates, in a report for the hospital group, concludes that if present trends continue Medicare savings will be $1 trillion more in the next 10 years than the savings projected by the Congressional Budget Office in May." Laurie McGinley in The Washington Post.

In memoriam interlude: Michael Hastings, a great journalist.

5) How government can help us go green

New effort to quantify 'social cost' of greenhouse-gas pollution. "The Obama administration is making a second attempt to systematically account for the dollar damage from greenhouse gas pollution, even with no consensus on how to forestall global warming or whether to do so. Supporters of the idea acknowledge the tremendous difficulties of trying to translate slippery estimates into a single mathematical factor, difficulties that perhaps help explain why there is little hope of consensus now on climate policy." Matthew L. Wald in The New York Times.

Saving energy is great. But how much is actually possible? "The fact that we still don’t have great answers to those questions is what inspired a group of economists at MIT and the University of California, Berkeley to launch a big new project, called E2e, that will try to apply more scientific rigor to the whole topic of energy efficiency. “Almost all of the previous work on energy efficiency comes from engineering studies, which look at what’s possible under ideal conditions,” says Michael Greenstone, an economist at MIT and co-director of the E2e project. “We wanted to ask a slightly different question — what are the actual returns you could expect in the real world?”" Brad Plumer in The Washington Post.

Utilities switch off investment in fossil fuel plants. "With so much energy coming from renewables, many fossil fuel plants can no longer compete on price. Despite the upfront costs associated with green energy projects, they are inexpensive to run. In contrast, Europe’s gas and coal plants, which also provide backup power when renewables cannot operate, need constant spending on fossil fuels." Mark Scott in The New York Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Welfare reform took people off the rolls. It might have also shortened their lives. Dylan Matthews.

CBO: Immigration reform is a free lunchEzra Klein.

Read: The CBO finds that immigration reform will save $197 billion over 10 years. Dylan Matthews.

Is Boehner bluffing on the Hastert rule? Even he doesn’t knowEzra Klein.

Can state laws protect you from being watched by dronesTimothy B. Lee.

Keeping undocumented immigrants off the dole is easier said than doneDylan Matthews.

Bobby Jindal is the Republican Party's problemEzra Klein.

Saving energy is great, but how much is actually possibleBrad Plumer.

Are slower-growing health care costs temporary or permanentLaurie McGinley.

Wonktalk: Can Avik Roy and Ezra Klein find common ground on ObamacareEzra Klein.

How the IRS keeps the $4.3T nonprofit world secretLydia DePillis.

Jack Lew’s new signature unveiledZachary A. Goldfarb.

Bernanke’s done, Obama kinda sorta saysYlan Q. Mui.

Et Cetera

Biden touts White House progress on gunsPeter Baker in The New York Times.

Schools get reprieve on teacher mandateStephanie Banchero in The Wall Street Journal.

Rep. Elijah Cummings releases a full IRS interview transcript. Josh Hicks in The Washington Post.

How the IRS keeps the $4.3 trillion nonprofit world secretLydia DePillis in The Washington Post.

Got tips, additions, or comments? E-mail me.

Wonkbook is produced with help from Michelle Williams.

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Dylan Matthews · June 18, 2013