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Trump-backed immigration plan would cause GDP and jobs to slide, Wharton analysis says

By dailymail / Published on Thursday, 10 Aug 2017 17:12 PM / No Comments


A plan to slash legal immigration backed by President Donald Trump would cause U.S. GDP and jobs to dip over time, according to an analysis by the University of Pennsylvania’s Wharton business school.

The RAISE Act would lead GDP to drop by 0.7 percent by 2027 relative to current law, with 1.3 million fewer jobs, the Penn Wharton Budget Model report said. By 2040, it would reduce GDP by about 2 percent, with 4.6 million fewer jobs.

The bill, crafted by Sens. Tom Cotton, R-Ark., and David Perdue, R-Ga., is expected to cut legal immigration in half. The plan aims to make job skills, rather than family connections, a priority for people to obtain legal permanent residency. It would also slash the number of refugees coming to the U.S.

Cotton’s office disputed the report and criticized its methodology. Cotton’s communications director Caroline Rabbitt said the analysis used data that “misses nearly half of all green cards.”

“This gross undercounting of green cards is an understandable mistake for people new to immigration, but it’s embarrassing for purported ‘experts’ and shows that their projections are unreliable,” she said.

The Penn analysis said that on a per capita basis, GDP would be about 0.02 percent higher in 2027 under the law. But it would end up about 0.3 percent lower in 2040.

It would initially rise “because the capital stock will be similar to before the reform while the pool of workers will be smaller,” according to the Wharton school analysis. It would eventually change because, “over the long run, immigrants work and contribute to savings,” the report says.

“The RAISE Act also reduces employment because the domestic worker participation rate won’t increase enough to fill the jobs that would have been held by immigrants who are no longer allowed in the country,” the report says.

Trump and the senators have defended the plan, arguing it will lead to a more “merit-based” immigration system. The president contends the bill would “increase wages and save taxpayers billions.”

It has little chance of becoming law, as various Republican lawmakers from states reliant on lower-skilled immigrant labor have spoken out against it.

Spokespeople for the White House and Perdue did not immediately respond to CNBC’s requests for comment.