Reform would do much to help business in general and entrepreneurs in particular. There's just one little obstacle.
The House Republicans’ two-hour meeting yesterday on immigration reform was supposed to be private, a chance for the party’s pro-reform establishment and its anti-reform hardliners to exchange views away from the prying eyes of voters and the press. But enough noise leaked out from behind the closed doors to make clear what was happening, and it was this: the “long, slow death” that hardline Republicans promised for immigration reform has begun. It’s hard to imagine a more disappointing outcome for business in general and entrepreneurs in particular.
To see what’s at stake, consider what the Senate’s comprehensive reform bill, passed late last month, proposed to do. Among other things, it would increase the number of visas for skilled immigrants, award green cards to foreign-born students who earn graduate degrees in STEM studies, create a new visa for immigrant entrepreneurs, and eliminate self-defeating restrictions on immigration from India and China, the nations that together supply the lion’s share of immigrant entrepreneurs, especially in Silicon Valley. According to Congressional Budget Office estimates, enacting the bill would shrink the federal budget deficit by $175 billion by 2020, lift GDP by 5.4% over the next 20 years, increase national productivity, balloon the workforce by about 5% by 2033, raise the return on capital, and (although the CBO didn’t put it this way) create a $46 billion windfall for entrepreneurs supplying security operations along the U.S. southern border.
There’s no mystery why CBO researchers believe the bill will have lasting, positive effects on the U.S. economy. Lifting undocumented residents out of the shadow economy and turning them into taxpayers reduces the deficit and extends the solvency of Social Security. Making it easier for entrepreneurial immigrants to set up shop here would create jobs and the kinds of technological advances that make an economy more productive. Reform's pro-business credentials have won it the support of conservatives ranging from Tea Party favorite Marco Rubio to President George W. Bush and former vice-Presidential candidate Paul Ryan to the editorial writers of the Wall Street Journal.
Like anything produced in the Washington sausage factory, of course, the Senate bill is imperfect. Some of the bill’s alleged benefits are no doubt exaggerated, there is plenty of special-inerest pork, and there will be the usual spate of unintended consequences. Research by the Economic Policy Institute suggests that there may be less of a shortage of STEM workers than assumed by the bill’s proponents, and loopholes in the bill will allow unscrupulous companies to use H-1B visas to fill jobs with cheaper foreign workers when U.S. workers would do. And fiscal conservatives have every reason to wince over the bill’s allotment of $46 billion to fortify the Mexican border, a late amendment thrown in to win Republican Senators’ support. (The original bill allotted only $8 billion.)
But the economic overclaiming and political pork aren’t what bother the House hardliners. For the anti-reformers, the problem with comprehensive reform is that it creates a path to citizenship for residents now in the U.S. illegally. One group, led by Iowa’s Steve King, are adamant that any bill offering a road to citizenship for people who have broken the law is a non-starter. Another group, represented by Arkansas congressman Tom Cotton, think the bill does too little to choke off future illegal immigration. His preferred version of reform is a series of focused House bills that would erect walls along the Mexican border and force employers to verify workers’ legal status. Democratic members of Congress, for their part, vowed in a press conference not to consider any House bill that refused to allow undocumented residents to come out of the shadows and become full-fledged citizens. So the all-too-familiar familiar pattern of stalemate and non-negotiation has begun.
In a remarkable expression of business interests’ frustration with the House anti-reform stalwarts, a Wall Street Journal editorial last week criticized their obsession with border security as “a case of the Republican Party letting its blood-and-soil wing trump its supposedly free-market principles.” The allusion to the old Nazi rallying cry isn’t the kind of rhetoric that Republicans typically level at other Republicans. But on the behalf of entrepreneurs, who have so much to gain from intelligent reform of America’s broken immigration system, you can understand how they feel.
ERIC SCHURENBERG is the editor-in-chief of Inc. Before joining Inc, Eric was the editor of CBS MoneyWatch.com and BNET.com and managing editor of Money Magazine. As a writer, he is a winner of a Loeb and a National Magazine Award. @EricSchurenberg