Higher unemployment. Lower wages. Higher interest rates. Continued illegal immigration.
That's what the non-partisan Congressional Budget Office analysis concludes regarding the Gang of Eight's amnesty bill, S.744. In two separate analyses released on Tuesday, the CBO found that S.744 might have some long-term benefits to the U.S. economy, but in the interim, it will be a disaster for working Americans.
The Gang of Eight was hoping the CBO would come back with a positive report on how their bill impacts the national debt. They hoped the report would put to rest the Heritage Foundation's research showing that amnesty for 11 million illegal aliens would cost $6.3 trillion over the lifetimes of the illegal aliens. The CBO complied by finding that the entire bill would actually trim the national debt by nearly $200 billion over the next 10 years. But the score doesn't go beyond 10 years, which is exactly why the Gang carefully crafted their legislation to delay green cards for most illegal aliens by 10 years.
Robert Rector from the Heritage Foundation found that the bulk of the cost for granting amnesty to illegal aliens would come when they reach retirement age and become eligible for Social Security and Medicare benefits - all of this is excluded from the CBO report.
The CBO did find that the labor force would increase by an additional 18 million people over the first 10 years; this 18 million is in addition to the 10 million foreign citizens that would receive green cards over the next decade through existing law. The addition of 28 million new workers into the labor force over the next 10 years is pretty close to NumbersUSA's analysis that S.744 would grant 33 million green cards in the first decade.
The CBO's research predicts a devastating effect for American workers as a result of the massive increase in new workers.
First, the CBO, along with the Joint Committee on Taxation (JCT), projects that the unemployment rate will rise over the next 10 years as a result of S.744.
Relative to CBO's projections under current law, enacting the bill would increase the size of the labor force by about 6 million (about 3½ percent) in 2023 and by about 9 million (about 5 percent) in 2033, CBO and JCT estimate. Employment would increase as the labor force expanded, because the additional population would add to demand for goods and services and, in turn, to the demand for labor. However, temporary imbalances in the skills and occupations demanded and supplied in the labor market, as well as other factors, would cause the unemployment rate to be slightly higher for several years than projected under current law.
In a time where 20 million Americans who want a full-time job can't find one, should Congress really be considering legislation that would make it even more difficult for Americans to find work? The CBO and JCT also found that competition among low-skilled workers (workers with no more than a high school diploma) would increase the most. The Bureau of Labor Statistics reports that low-skilled workers are more likely to be unemployed than college educated Americans.
Second, the CBO projects that wages for low-skilled and high-skilled Americans will fall under S.744. Have no fear, the impact on wages for high-skilled Americans won't impact Big Business owners. They'll do just fine as the CBO projects increases in GDP and profits. It'll be the high-skilled tech workers across the country who will feel the most pain due to S.744's massive increases in H-1B guest-worker visas and automatic green cards for foreign citizens with advanced degrees in science, technology, engineering, and mathematics.
The legislation would particularly increase the number of workers with lower or higher skills but would have less effect on the number of workers with average skills. As a result, the wages of lower- and higher-skilled workers would tend to be pushed downward slightly (by less than ½ percent) relative to the wages of workers with average skills.
The impact on wages confirms the findings of Harvard Prof. George Borjas who concluded back in April that S.744 would reduce wages for low-skilled workers, while increasing profits for the upper class.
Third, the CBO projects that interest rates would increase because capital investment would rise leading to greater return on investment for investors.
Capital investment would rise primarily because the return that investors would earn on a given amount of investment would be higher under the legislation than under current law. ... With that greater rate of earnings on investment, the federal government would face higher interest rates than under current law because it would be competing with the private sector for investors' money.
That's great news for the investors and bankers who profit from higher interest rates, but what about every day Americans? Under S.744, middle-class Americans would see mortgage rates increase, car loan rates increase, credit card interest rates increase, and college loan rates increase.
Finally, the CBO predicts that S.744 will only reduce illegal immigration by 25%. This is a far cry from the Gang of Eight's claim that the bill will end ALL illegal immigration. In Sen. Marco Rubio's false ad, he says the bill "does not encourage people to come here illegally in the future." But critics of the bill have argued that the lack of interior enforcement provisions in the bill would lead to another amnesty down the road, and the CBO concurs.
CBO estimates that, under the bill, the net annual flow of unauthorized residents would decrease by about 25 percent relative to what would occur under current law.
Furthermore, the this conclusion contradicts a study from the Center for American Progress that projects that illegal immigration will be cut by 90% under S.744.
Minutes after the CBO report came out yesterday afternoon, Sen. Chuck Schumer (D-N.Y.) excitedly rushed to the Senate floor to tell his colleagues all about the CBO analysis. Unfortunately, he left out the impacts of S.744 that most Americans care about most.
CHRIS CHMIELENSKI is the Director of Content & Activism for NumbersUSA