I must have hit a nerve, judging from the tone of Romesh Ponnuru’s response to my critique of his recent Bloomberg column, where he argued that the Supreme Court’s role in protecting freedom has been vastly exaggerated. He calls “bizarre” my charge that in arguing his point he was “selective” in his review of Supreme Court history – “as though it were possible for it to be anything else.” Please, I was hardly asking him to recite the whole of Supreme Court history, but merely to honestly exercise his critical faculties. In politics as in science, a thesis is tested not simply by selecting corroborating evidence, as Ponnuru did, but evidence that calls the thesis into question, precious little of which he adduced. Had he done so, his thesis would have come up short.

And it’s not simply the libertarian rulings of the modern Court that call Ponnuru’s thesis into question. Thus, he misreads the history of our first seven decades because he misreads the Court’s seminal 1803 decision in Marbury v. Madison as standing for “a kind of judicial self-restraint” (admitting to being in the minority in that view). In truth, the decision was a bold assertion by the Court, grounded in the text of the Constitution, of having the power to declare its own power limited by the Constitution, thereby implying that the political branches were similarly limited. And that is the principle that explains why we enjoyed such freedom as we did during our first seven decades. It was not from “judicial restraint” – from judicial deference to the political branches, as Ponnuru would have it – but from respect for constitutional limits on the power of each of the branches, as secured by the Court.

Turning to the modern era, however, it’s difficult to tell what Ponnuru’s point is when he writes that he used Brown v. Board of Education “as a stand-in” for the several libertarian decisions I cited – many more of which I could have cited, covering everything from religious liberty to school choice, property rights, criminal procedure, and far more. But truth to tell, the reason Ponnuru cited Brown originally was not as a stand-in for those many decisions, as he now says. It was because Brown “is central to that [judicial] story, the shining example of how the court has broadened our constitutional guarantees.” And that’s just the “story” he wants to scuttle.

Why, especially since the evidence of the Court’s having so often stood against political tyranny is so overwhelming? Not that it has always done so, mind you: As I wrote originally, “both the political and the nonpolitical branches have played their parts in protecting freedom” – and scuttling it, I might add. But on balance we’ve been far better served by having than by not having an independent judiciary, as a look around the world will attest.

So we come, again, to the main reason Ponnuru is advancing his less than credible thesis that, as his original title said, the Court is “no friend of freedom.” He believes “that our history does not give us reason to refrain from considering proposals to reduce judicial power.” What exactly does he have in mind there? He chides me for citing Madison in defense of the courts. Perhaps his insights on these matters are keener than Madison’s. We’d like to know what he’s proposing, not least because it undermines the Madisonian structure that has served us so well – not perfectly, but tolerably well.

There are indications that The Heritage Foundation may soon release an updated version of its 2007 report, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” by Robert Rector. That 2007 report’s flawed methodology produced a grossly exaggerated cost to federal taxpayers of legalizing unauthorized immigrants while undercounting or discounting their positive tax and economic contributions – greatly affecting the 2007 immigration reform debate.

Before releasing its updated report, I urge the Heritage Foundation to avoid the same serious errors that so undermined Mr. Rector’s 2007 study. Here is a list of some of its major errors:

1. Count individuals, not households.[1] Heritage counts household use of government benefits, not individual immigrant use. Many unauthorized immigrants are married to U.S. citizens and have U.S. citizen children who live in the same households. Counting the fiscal costs of those native-born U.S. citizens massively overstates the fiscal costs of immigration. 
2. Employ dynamic scoring rather than static scoring. [2] Heritage’s report relies on static scoring rather than dynamic scoring, making the same mistake in evaluating the impact of increased immigration on welfare costs that the Joint Committee on Taxation makes when scoring the impact of tax cuts. Instead, Heritage should use dynamic scoring techniques to evaluate the fiscal effects of immigration reform. For example, Heritage should assume that wages and gross domestic product are altered considerably because of immigration policy reforms. In contrast to that economic reality, immigrant wages, gross domestic product, and government welfare programs are unrealistically static in Mr. Rector’s study. His study largely ignores the wage increases experienced by immigrants and their descendants over the course of their working lives, how those wages would alter after legalization, and the huge gains in education amongst the second and third generation of Hispanics.[3] Heritage is devoted to dynamic scoring in other policy areas – it should be so devoted to it here too.[4]
3. Factor in known indirect fiscal effects.[5] The consensus among economists is that the economic gains from immigration vastly outweigh the costs.[6] In 2007, Mr. Rector incorrectly noted that, “there is little evidence to suggest that low-skill immigrants increase the incomes of non-immigrants.” Immigrants boost the supply and demand sides of the American economy, increasing productivity through labor and capital market complementarities with a net positive impact on American wages.[7] Heritage should adjust its estimates to take account of the positive spill-overs of low-skilled immigration.
4. Assume that wages for legalized immigrants would increase – dramatically.[8] Heritage did not assume large wage gains for unauthorized immigrants after legalization. In the wake of the 1986 Reagan amnesty, wages for legalized immigrants increased – sometimes by as much as 15 percent – because legal workers are more productive and can command higher wages than illegal workers. Heritage should adopt similar wage increases to estimate the economic effects of immigration reform if it were to happen today.[9] 
5. Assume realistic levels of welfare use.[10] Vast numbers of immigrants will return to their home countries before collecting entitlements,[11] the “chilling effect” whereby immigrants are afraid of using welfare reduces their usage of it, and immigrants use less welfare across the board.[12] 100 native-born adults eligible for Medicaid will cost the taxpayers about $98,000 a year. A comparable number of poor non-citizen immigrants cost approximately $57,000 a year – a 42 percent lower bill than for natives. For children, citizens cost $67,000 and non-citizens cost $22,700 a year – a whopping 66 percent lower cost. Heritage should adjust its estimates of future immigrant welfare use downward. [13] 
6. Use latest legislation as benchmark.[14] The current immigration plan, if rumors are to be believed, would stretch a path to citizenship out for 13 years.[15] Most welfare benefits will be inaccessible until then, so Heritage’s report must take that timeline into account.
7. Remittances do not decrease long term consumption.[16] Remittances sent home by immigrants will eventually return to the U.S. economy in the form of increased exports or capital account surpluses. Heritage should recognize this aspect of economic reality rather than assuming remittances are merely a short-term economic cost. 
8. Factor in immigration enforcement costs.[17] Heritage did not compare costs of legalization and guest workers to the costs of the policy status quo or increases in enforcement. The government spends nearly $18,000 per illegal immigrant apprehension while the economic distortions caused by forcing millions of consumers, renters, and workers out of the U.S. would adversely affect income and profitability.[18]
9. Use transparent methodology.[19]  Heritage’s methodology should replicate that of the National Research Council’s authoritative and highly praised – even by immigration restrictionists – study entitled The New Americans.[20] That study is the benchmark against which all efforts at generational fiscal accounting – including Heritage’s 2007 report – are measured. If Heritage deviates from their methods, it should explain its methodology in a clear and accessible way that states why they altered practice.[21]
10. Don’t count citizen spouses.[22] Heritage counted U.S.-born spouses of unauthorized immigrants as fiscal costs. Counting the net immigrant fiscal impact means counting immigrants and perhaps their children at most,[23] not native-born spouses who would be on the entitlement roles regardless of whether they married an immigrant or a native-born American.
11. Suggest changes to the welfare state. Heritage has elsewhere called low-skill migrant workers “a net positive and a leading cause of economic growth”[24] and accurately reported that “[t]he consensus of the vast majority of economists is that the broad economic gains from openness to trade and immigration far outweigh the isolated cases of economic loss.”[25] Instead of arguing against low-skill immigration, Mr. Rector should instead suggest reforms that would, in the words of Cato’s late Chairman Bill Niskanen, “build a wall around the welfare state, not around the country.”[26]

It is imperative that the economic costs and benefits of increased immigration be studied using proper methods and the most recent data. A previous report by the Heritage Foundation in 2006 entitled, “The Real Problem with Immigration … and the Real Solution,” by Tim Kane and Kirk Johnson roundly rejected the negative economic assessments of Mr. Rector’s 2007 study.[27] Not only does Mr. Rector not speak for the broad conservative movement; it appears that economists who have worked for the Heritage Foundation also disagree with Mr. Rector’s conclusions. 

For decades, the Heritage Foundation has been an influential intellectual force in conservative circles. Its economic analyses have been predicated on consideration of the dynamic effects of policy changes as opposed to static effects. Unfortunately, Mr. Rector’s past work has not been consistent in this regard, employing the same static scoring conservatives have traditionally distrusted in other policy areas. 

Many conservatives rely on the Heritage Foundation for accurate research about immigration’s impact on the economy. Before releasing another study assessing the net fiscal impacts of immigration reform, Heritage should correct the errors outlined above to guarantee the most accurate information on this important topic is available.

---

[1] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, p. 1.

[2] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, p. 14.

[3] Fry and Lopez, “Hispanic Student Enrollment Reach New Highs in 2011,” Pew Hispanic research Center, August 20, 2012.

[4] Beach, “It is Time to Include Dynamic Economic Analysis in the Process of Changing Tax Policy,” Heritage Testimony on the Economy, October 6, 2011. 

[5] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, pp.19–20.

[6] Kane and Johnson, “The Real Problem with Immigration … and the Real Solution,” Heritage Institute Backgrounder, No. 1913, March 1, 2006, pp. 2–3.

[7] Borjas and Katz, “The Evolution of the Mexican-Born Workforce in the United States,” in Mexican Immigration to the United States¸NBER Book, May 2007, Lewis, “Immigrants-Native Substitutability: The Role of Language Ability,” NBER Working Paper 17609, forthcoming in David Card and Stephen Raphael, eds., Ottaviano and Peri, “Rethinking the Effects of Immigration on Wages,” Journal of the European Economic Association, 2012. Peri and Sparber, “Task Specialization, Immigration, and Wages,” American Economic Journal: Applied Economic, 2009, Peri and Sparber, “Highly-Educated Immigrants and Native Occupational Choice,” Centre for Research and Analysis of Migration Discussion Paper Series No. 13/08, November, 2008.

[8] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, pp. 19–20.

[9] Amuedo-Dorantes, Bansak, and Raphael, “Gender Differences in the Labor Market: Impact of IRCA,” American Economic Review, 2007, Rivera-Batiz, “Undocumented Workers in the Labor Market: An Analysis of Earnings of Legal and Illegal Mexican Immigrants in the United States,” Journal of Population Economics, 1999, Kossoudji and Cobb-Clark, “IRCA’s Impact on the Occupational Concentration and Mobility of Newly-Legalized Mexican Men,” Journal of Population Economics, 2000, Kossoudji and Cobb-Clark, “Coming Out of the Shadows: Learning about Legal Status and Wages from the Legalized Population,” Journal of Labor Economics, 2002, Baker, “Effects of the 1986 Immigration Reform and Control Act on Crime,” SSRN Working Paper, 2011.

[10] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, p. 8.

[11] Alden, The Closing of the American Border: Terrorism, Immigration, and Security Since 9/11, New York, NY: HarperCollins Publishers, 2008, p. 74.

[12] Ku and Bruen, “Poor Immigrants Use Public Benefits at a Lower Rate than Poor Native-Born Citizens,” Economic Development Bulletin, Cato Institute, No. 17, March 4, 2013.

[13] See Ku and Bruen, “Poor Immigrants Use Public Benefits at a Lower Rate than Poor Native-Born Citizens,” Economic Development Bulletin, Cato Institute, No. 17, March 4, 2013.

[14] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, p. 21.

[15] Bennett, “Senators Agree on Path to Legal Status for Illegal Immigrants,” Los Angeles Times, March 11, 2013.

[16] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, p. 30.

[17] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, p. 20.

[18] Nowrasteh, “The Economic Case against Arizona’s Immigration Laws,” Cato Institute Policy Analysis, No. 709, September 25, 2012.

[19] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, pp. 8–9, 23.

[20] This advice is based on praise of those methods by the Center for Immigration Studies, a restrictionist think-tank in Washington, D.C.: Camarota, “The High Cost of Cheap Labor: Illegal Immigration and the Federal Budget,” Center for Immigration Studies, August 2004.

[21] See Smith and Edomnston, eds., The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, Washington, D.C.: National Research Council, 1997.

[22] Rector and Kim, “The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer,” Heritage Special Report, SR-14, May 21, 2007, p. 9.

[23] Kandel, “Fiscal Impacts of the Foreign-Born Population,” CRS, October, 2011, R42053, p. 8.

[24] Kane and Johnson, “The Real Problem with Immigration … and the Real Solution,” Heritage Institute Backgrounder, No. 1913, March 1, 2006, p. 3.

[25] Kane and Johnson, “The Real Problem with Immigration … and the Real Solution,” Heritage Institute Backgrounder, No. 1913, March 1, 2006, p. 3.

[26] Niskanen, “Build a Wall Around the Welfare State, Not Around the Country,” Cato Institute Blog, June 15, 2006.

[27] Kane and Johnson, “The Real Problem with Immigration … and the Real Solution,” Heritage Institute Backgrounder, No. 1913, March 1, 2006.

The Mehr News Agency is now reporting that Iran’s annual inflation rate has reached 31.5%. According to the Central Bank’s official line, Iran’s annual inflation rate has bumped up only 1.3 percentage points from February to March.

Never mind that this official inflation statistic is well below all serious estimates of Iran’s inflation. And yes, Iran’s official inflation statistics are also contradicted by the overwhelming body of anecdotal reports in the financial press.

Since September 2012, I have been estimating Iran’s inflation rate – which briefly reached hyperinflation levels in October 2012 – using a standard, widely-accepted methodology. By measuring changes in the rial’s black-market (read: free-market) U.S. dollar exchange rate, it is possible to calculate an implied inflation rate for Iran.

When we do so, a much different picture of Iran’s inflation emerges. Indeed, Iran’s annual inflation rate is actually 82.5% – a rate more than double the official rate of 31.5% (see the accompanying chart).

As I have documented, regimes in countries undergoing severe inflation have a long history of hiding the true extent of their inflationary woes. In many cases, the regimes resort to underreporting or simply fabricating statistics to hide their economic problems. And, in some cases, such as Zimbabwe and North Korea, the government simply stops reporting economic data altogether.

Iran has followed a familiar path, failing to report inflation data in a timely and replicable manner. Those data that are reported by Iran’s Central Bank tend to possess what I’ve described as an “Alice in Wonderland” quality and should be taken with a grain of salt.

Unions and other opponents tried almost everything in their efforts to derail Act 10, Gov. Scott Walker’s package of public-sector labor-law reforms in Wisconsin. They fought vainly in the Wisconsin legislature, in the courts, and in public discussion. They staged tumultuous, disruptive Occupy-style demonstrations and sit-ins in Madison. Most formidable of all, they even changed their Facebook and Twitter avatars to little clenched fists in the shape of the state of Wisconsin. 

All to no avail. On Tuesday they lost what will probably turn out to be their last chance, in the form of a race for a seat on the Wisconsin Supreme Court. That court is deeply split 4–3 along ideological lines, with a liberal minority led by Chief Justice Shirley Abrahamson considered eager to overturn the Walker reforms, and a majority of 4 led by Justice David Prosser seen as disinclined to do so. With Act 10 due to come before the court soon, one of the four-justice majority, Justice Patience Roggensack, was up for re-election and her rival on the ballot, Democratic-backed Marquette law professor Ed Fallone, was widely seen as more likely to search for some way to strike down the law, on which he might be the deciding vote.

Wisconsin voters weren’t having that: by a very comfortable margin (at last count) of 57–43 they re-elected Justice Roggensack. Incumbent judges do tend to win re-election at the polls, of course, and many voters may simply be tired of all the partisan bickering and politicization of the courts. Either way, it looks as if they are willing to give Act 10 a fair chance to work as intended. Public-sector labor law reformers in other states, take note. 

In what is either a case of blinders-wearing or just poor timing, today the Fordham Institute’s Kathleen Porter-Magee has an article on NRO, co-written with the Manhattan Institute’s Sol Stern, in which she and Stern take to task national curriculum standards critics who assert, among other things, that the Common Core is being pushed by President Obama. Yes, that’s the same Kathleen Porter-Magee whom it was announced a couple of days ago would be on a federal “technical review” panel to evaluate federally funded tests that go with the Common Core.

The ironic timing of the article alone is probably sufficient to rebut arguments suggesting that the Common Core isn’t very much a federal child. Still, let’s take apart a few of the specifics Porter-Magee and Stern offer on the federal aspect. (Other Core critics, I believe, will be addressing contentions about Common Core content).

Some argue that states were coerced into adopting Common Core by the Obama administration as a requirement for applying for its Race to the Top grant competition (and No Child Left Behind waiver program). But the administration has stated that adoption of “college and career readiness standards” doesn’t necessarily mean adoption of Common Core. At least a handful of states had K–12 content standards that were equally good, and the administration would have been hard-pressed to argue otherwise.

Ah, the power of parsing. While it is technically correct that in the Race to the Top regulations the administration did not write that states must specifically adopt the Common Core, it required that states adopt a “common set of K‑12 standards,” and defined that as “a set of content standards that define what students must know and be able to do and that are substantially identical across all States in a consortium.” How many consortia met that definition at the time of RTTT? Aside, perhaps, from the New England Common Assessment Program, only one: the Common Core.

NCLB waivers, for their part, gave states an additional option — having their state college systems confirm state standards as “college and career ready” — but that came after RTTT had already pushed states to adopt Common Core, and offered only a single alternative. That’s probably why, to use Stern and Porter-Magee’s own words, “President Obama often tries to claim credit” for widespread adoption of the Core. He actually had a lot to do with it!

As for states having “equally good” standards somehow being able to get past RTTT commonality demands, well, that’s just not how it works. The rules were the rules, and states didn’t just get out of them by saying “I dare you to act like our standards aren’t super.”

Education policymaking — and 90 percent of funding — is still handled at the state and local levels. And tying strings to federal education dollars is nothing new. No Child Left Behind — George W. Bush’s signature education law — linked federal Title I dollars directly to state education policy, and states not complying risked losing millions in compensatory-education funding (that is, funding for programs for children at risk of dropping out of school).

This is a very curious, self-defeating argument. Basically, Porter-Magee and Stern are asserting that the Feds only supply a small fraction of education money, and yet all states got sucked into No Child Left Behind. Applied to Common Core, federal money needn’t be very large in percentage terms to be irresistible, illustrating the very point about compulsion that Stern and Porter-Magee hope to refute. And it’s not hard to see why relatively small bombs of federal money pack a big punch: Taxpayers — who live in states – had no choice about paying their federal taxes, and no matter how they look in relative terms, millions or billions of federal dollars seem like mammoth sums in most news stories.

Perhaps the clearest evidence that states can still set their own standards is the fact that five states have not adopted Common Core. Some that have adopted it might opt out, and they shouldn’t lose a dime if they do.

It’s true that five states have not fully signed on to Common Core (Minnesota has adopted the language arts, but not math, portions), but that’s likely in large part because Race to the Top did not put annual funding on the line, and waivers had a non-Core option. But forty-five state did sign on, suggesting that the push was still very forceful. And it is irrelevant whether Porter-Magee and Stern think that states that opt out shouldn’t lose a dime of federal money. The reality is that those that have opted out did lose a full chance to win Race to the Top money, and if Common Core and accompanying tests are made central to a reauthorized NCLB — and why wouldn’t they be, since almost every state has adopted them — then annual funding would be put at risk. Which is what Common Core supporters have probably wanted since before the Obama administration existed, writing in 2008 that the job of the federal government is to furnish “incentives” for state adoption of “common core” standards.

So please, do look at NCLB when thinking about possible federal control of the Common Core. It’s a clarion alarm about what’s likely coming.

The U.S. Department of Labor claimed the authority to issue rules governing the H‑2B guest worker program on the grounds that the underlying statute provides for it to be consulted as part of the program’s administration. On Monday, the Eleventh Circuit U.S. Court of Appeals curtly rebuffed this “absurd” claim. From its opinion:

In its proposed and final rules, DOL cited two statutory provisions as the source of its rulemaking authority. First, DOL cited 8 U.S.C. § 1184(c)(1), which instructs the Secretary of DHS to consult with the “appropriate agencies of the Government” in resolving whether to grant a foreign worker a visa upon the “petition of the importing employer.” Although there is no grant of rulemaking authority to DOL in this statutory section, DOL asserts that as the result of the permission it grants to DHS to consult with it, DOL “has authority to issue legislative rules to structure its consultation with DHS.” The end result, in DOL’s view, is that it is empowered to engage in rulemaking, even without the DHS.

We reject this interpretation of “consultation.” Under this theory of consultation, any federal employee with whom the Secretary of DHS deigns to consult would then have the “authority to issue legislative rules to structure [his] consultation with DHS.” This is an absurd reading of the statute and we decline to adopt it.

Meanwhile, today’s Washington Post reports that the Obama Administration is anxious to get more of its appointees confirmed to the D.C. Circuit, which hears more regulatory appeals than any other, on the grounds that the current roster of judges on the circuit too frequently strikes down the administration’s regulations as exceeding the federal government’s authority. Perhaps the administration would not have to worry about seeing so many of its regulations struck down if it took care not to ground them on claims of authority that are “absurd.”

Yesterday, I wrote about a new “technical review process” the Feds have created to scrutinize “item design and validation” for national tests that go with new national curriculum standards. In that post, while noting that “in-depth” information on the review process was as-yet unavailable, I wrote that creation of the process “most likely” means federal reviewers will be “reviewing the specific questions that will go on the tests” [emphasis in the original]. I have since been cautioned by Ted Rebarber, CEO of Accountability Works and an expert on standards and testing, against making too firm a statement on this. While it is possible the review will consider test questions, it’s also quite possible the process will only examine the methodologies the consortia have employed to create and validate their measures.

Rebarber is no doubt correct about the potentially limited scope of the review, and right to caution against overstating what it might involve. That said, with very limited information available, it is hard to know what the review will ultimately encompass. But assume it doesn’t examine actual questions at all. Still, it will have the money-supplying federal government judging the technical merits of something that we are incessantly told only nutty people would think could become federally controlled. In other words, my main point — and root concern — remains: The technical review is yet more evidence substantiating the incredibly sane concern that “national standards” will ultimately mean “federal control.” It’s a very real possibility that, it seems, many Common Core fans just don’t want you thinking about.