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Is the Dream Act Fiscally Responsible?

Debating with Conservatives

Hispanic students

Recently, I participated in an email discussion with several conservatives about the merits of the Dream Act. The conversation had a narrow focus involving the fiscal ramifications of passing the bill. When the discussion ended, I was left with the impression that the argument - based on fiscal responsibility - was more of a protective mechanism than a concern about our country's fiscal imbalance.

 

Fiscal Responsibility and the Economics of the Dream Act

A report by the Center of Immigration Studies stated that the Dream Act will cost taxpayers an estimated $6.1 billion per year in tuition subsidies. That's rather costly. Yet I also noticed a report from the Tax Foundation estimating that the Bush tax cuts would stop $2.1 trillion from going into the federal tax coffers over a ten year period. The cost, according to static scoring models, is approximately thirty-three times the size of the Dream Act.

Conservatives would vigorously argue, and rightfully so, that the Bush tax cuts would incentivize savings and encourage investments. Small businesses would have more available capital to expand and create more jobs. The Bush tax cuts, they would argue, is a financial investment that will reap benefits down the road.

But I would argue that the Dream Act, like most tax cuts, would pay dividends down the road as well. During the email exchange, some didn't appreciate when I compared the Dream Act to the Bush tax cuts. But economists are much more comfortable predicting strong returns on investments in education than they are on returns from supply-side economics. This is not a criticism of the Bush tax cuts, but an observation that while tax cuts admittedly spur economic growth by promoting free market activity, they don't offer the same level of return as investments in education. An example should suffice.

The U.S. Census Bureau showed that workers with a high-school diploma earn an average of $27,000 per year while those with a B.A. from college earn an average of $51,000 a year. By correlation, attaining a college degree nearly doubles your annual income. Correspondingly, bigger incomes translate into more tax revenue for state and federal governments. A study by the UCLA says that recipients of the Dream Act would generate $1.5 to $3.5 trillion in income over a 40 year period.

Walter McMahon, an expert on the economics of education, said that every dollar spent on education is re-spent by recipients in the free market. It increases local demand for goods like computers and cars while allowing small businesses to hire more workers. McMahon estimates that investments in education pay for itself 6.7 times over in just 45 years. Even the Bush tax cuts, by rosy supply-side estimations, don't generate that sort of return. If the GOP needs a reason to oppose the Dream Act, they should shy away from fiscal calculations.

Remembering to Keep the Most Important Thing the Most Important Thing

A friend we affectionately call "Old Nick" reminds us that the most important thing is to keep the most important thing the most important thing. It's an adage that effectively refocuses the mind when you're caught up in secondary issues. We can argue about fiscal responsibility; but by doing so, we trade the ancillary points for something more important.

The Dream Act is not just about economic investments, but about those in America stuck in limbo because their parents brought them here illegally as minors. It's counter-intuitive to punish people for a crime they didn't commit. They are no more guilty for breaking our immigration laws than the passenger in a speeding car is guilty for breaking traffic laws. Our legal system does not punish passengers with speeding tickets, so why does our legal system penalize passengers brought to our country as children?

Instead of making things more difficult for those who have defied the odds, graduated from high-school, and qualified for college, we should encourage their productivity with citizenship. Let them serve in our military to get a better understanding of what it's like to fight for freedom. Let them go to college to get a better understanding of the importance of competition and the vitality of the free market. Let them live the American dream. After all, we are a nation founded on immigrants, are we not?

Conclusion

Michael Gerson wrote an interesting article for the San Francisco Chronicle about how the Democrat response to the School Choice program more than a decade ago resembles the current situation the GOP is in with the Dream Act.

Gerson said that Democrats had a hard time supporting the School Choice program because they were beholden to the Teachers' Union that largely opposed it. So Republicans kept narrowing the eligibility standards for school vouchers until the only applicants left were poor children that attended failing school districts. It was a move that dared Democrats to vote against the constituency they claimed to represent the most. Gerson called the situation "clarifying" because it showed that Democrats chose ideology and the Teachers' Union over the neediest children.

Now, Republicans are in a similar situation with the Dream Act. Republicans viscerally oppose illegal immigration. Some of them wouldn't flinch over deporting 12 million undocumented immigrants over night. However, the Dream Act doesn't apply to all undocumented immigrants. The bill reaches out only those brought to the United States as children, those that didn't break any laws themselves.

According to Gerson, Republicans have an opportunity to "clarify" themselves to the country. On Wednesday, the Dream Act passed the U.S. House of Representatives by a small margin, so it will go to the U.S. Senate. Will the GOP set aside strict ideology and govern in a way that's best for everyone? Or will they, like Democrats did with the Teachers' Union, be controlled by the fringe of their party?

 

Comments (7)
  • Verlyn  - Racial Profiling

    Aaron the analogy between the Bush tax cuts and the costs of the Dream Act are ludicrus. The Bush tax cuts are for 2 years at best. The business people I've heard are not going to invest on such a short term. They are going to sit on their cash until such time they can project their costs more than 2 years. Costwise the Dream Act is all profit. The small investment up front will be made up quite quickly.

  • Dan

    Hispanic Conservative? Not on this issue.
    First, the kids are getting an easy pass.
    My ex-wife came from Singapore and we had to jump through a bunch of hoops to get her citizenship, starting with getting a greencard etc. We also had to send a few thousands of dollars to get her citizenships.
    These kids, nah, just get a H.S. diploma. They don't even have to graduate from college to become a citizen.
    Second, kid commits a crime. No problem, let them in.
    Third, I work in a school that has a high population of illegal students. Their loyalty is still with Mexico, not the U.S., for the most part.
    I'd be a little more sympathetic to people who joined the military and served at least 4 years and then apply for citizenship. likewise, I'd give some credence to a person who graduated from a 4 year university and possibly give them citizenship, if they enter the workforce for a certain period of time.
    But you just want to give them citizenship just for graduating high school. Sorry, but that is not good enough.

  • Aaron M. Rodriguez  - A reasoned response

    Dan,

    Thanks for your response. First, we agree that the Dream Act doesn't go far enough. In the email exchange I had with aforementioned conservatives, I asked if it would be enough for the GOP if Democrats were to write in 4 yr degrees and 4 years of military service as a requirement for conditional permanent residency. My instincts tell me it really doesn't matter what compromises Democrats were to make, the GOP would oppose it out of ideological partisanship.

    Concerning your statement that my position is not conservative, I would like to see your argument. I've taken a fiscally conservative approach laying out the facts that the Dream Act will pay for itself 6 times over in less than 50 years, which is a better return of investment than tax cuts - depending on which taxes are cut of course.

    What is the GOP approach? Some would rather deport undocumented immigrants. How fiscally conservative is that?

    Your statement that these kids are getting a free pass is suggestive of your bias. Remember, these kids broke no laws; they are innocent bystanders. And the Dream Act is not affording them special treatment or handouts. It merely allows them access to college like everyone else.

  • Verlyn Steinbach  - to understand

    ‘Hundreds of students here illegally are now terrified of being deported to Mexico. I can understand that, given the chaos in Mexico and their own long residency in the United States. But here is what still confuses me: If one were to consider the classes that deal with Mexico at the university, or the visible displays of national chauvinism, then one might conclude that Mexico is a far more attractive and moral place than the United States.


    So there is a surreal nature to these protests: something like, “Please do not send me back to the culture I nostalgically praise; please let me stay in the culture that I ignore or deprecate.” I think the DREAM Act protestors might have been far more successful in winning public opinion had they stopped blaming the U.S. for suggesting that they might have to leave at some point, and instead explained why, in fact, they want to stay. What it is about America that makes a youth of 21 go on a hunger strike or demonstrate to be allowed to remain in this country rather than return to the place of his birth?’

    Victor Davis Hanson is a senior fellow at the Hoover Institution, the editor of Makers of Ancient Strategy: From the Persian Wars to the Fall of Rome, and the author of The Father of Us All: War and History, Ancient and Modern


    Mr Davis gave me some idea of the Young Hispanics quandry. On the one hand he has grown up with the idea he is entitled to all the US has to offer. He has known nothing else as he grew up. If he grew up in CA he might have been taught that the US 'stole' CA from Mexico. He takes course like Hispanic Studies and learns what awful country the US is and how it exploits everyone it encounters. His parents are going to wax romantic about ther homeland and what a beautiful country they left behind. They will certainly tell him how Spanish is the language of Love.

    So I can understand why the young person marching for 'rights' from the US would carry the Mexican flag.

    I understand, but disapprove. If you want to be part of the US tell me why. Better yet show me why.

    The 'Dream Act' grants special status to young people. Lets assume we can verify the status w/o arresting his parents or guardians. We don't want to break up families. Due to the special status I would only agree with following provisos;
    1. All males incur a 6 year military obligation - that is what a native born American assumes
    2. All who take the military option will serve a minumum of 4 years active duty unless released Under Honorable Conditions based on the needs of the service.
    3. Those going on to higher education may attend a tecnical or 4 year college.
    a those going to a technical school are required to graduate within 3 yrs
    b those going to a 4 year school will have 5 yrs to complete their degree program
    4. Those who complete the requirements and continue to citizenship will not be allowed to sponsor their parents/quardians. They will be allowed to sponsor a spouse.

  • Aaron M. Rodriguez

    Verlyn,

    I thought your response was thoughtful and well reasoned. I seem to be getting a lot of input lately on increasing the minimum standards of college education and military service to 4 years rather than 2. I agree with this idea, I'm just wondering why Democrats were satisfied with what seems like a minimal requirement.

    By increasing their college requirements from 2 years of college to 4, it would increase college graduation rates, which in turn would be a high-return investment for our economy, since college graduates nearly double their annual incomes.

    Again, why didn't Democrats think of that? It's not like they don't have policy wonks or education economists on their team telling them what should already be clear to them. Perhaps their is another reason why Democrats are so eager to lower the requirements?

  • Zeus

    Crap.

  • Human  - Human Trafficking

    The African American Community went thru this. Now they "Blacks" support the Human trafficking of our "Latinos, Latinas" own group.

    Our own group supports Human trafficking of our own people.


    When will we EVER Learn?

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Hispanics for School Choice