Cato Policy Forum: President Bush's Immigration Proposal: Too Much, Too Little, Or About Right?

RAMESH PONNURU,
NATIONAL REVIEW

MR. PONNURU: Well, I would like to thank everyone for coming today to this forum on a very important topic of the administration's new proposals on immigration. As I'm sure everyone in the room knows, we have had a lot of arguments over the last week and a half, and they're likely to continue, about those proposals, with supporters and critics making arguments of almost every conceivable variety. We've had on both sides of the issue arguments from humanitarianism, national security, fiscal concerns, and political concerns.

I think we've assembled a very strong lineup to address these issues. We are going to be hearing first from Margaret Spelling, who is the Assistant to the President for Domestic Policy. She is responsible for the development and implementation of White House policy on education, health, labor, transportation, justice, housing, and other elements of President Bush's domestic agenda. A very modest portfolio, as you can see, and it gives her plenty of time to spend with us here at Cato. So I would like to thank her in particular for giving of her busy time to us today.

And I hope you will all join me in welcoming Margaret Spelling.

(Applause.)

MARGARET SPELLINGS,
ASSISTANT TO THE PRESIDENT FOR DOMESTIC POLICY

MS. SPELLINGS: Thank you very much. Friday at lunch, that's great billing.

Well, first, I want to thank the Cato Institute for hosting this important forum. And obviously, as you all are well aware, the President unveiled last week a very bold immigration proposal that I want to talk a little more about, and I really appreciate your interest. I want to commend Cato for not only hosting this forum but for their long time work on this issue and in this area, and in particular their resident expert Dan Griswold.

I had occasion to chat with a friend from another think tank, who will go unnamed, but I asked, who do you have that works on immigration policy? And they said, we don't really do that, we don't have anyone. So thanks to Cato for recognizing that this is a very important issue and for all you do in that regard.

First, I want to say, obviously, as I would, that I think the President is to be commended for recognizing the elephant in the dining room, so to speak, recognizing this very critical issue and putting a plan forward that confronts it and addresses it. And obviously you are going to hear from both sides of the spectrum, that there are things that make them unhappy, but I think there is much to like in the proposal. And I think he is to be commended for kicking off this very vigorous national debate on an emotional, controversial, but really, really important and fundamental issue to our country.

We are a nation of immigrants, as everyone knows, and so we welcome the discussion and the debate. We look forward to engaging very actively with Congress. This is not a political ploy. We are very serious about this proposal. And we are going to work with them to enact it. Obviously there are lots of details, a lot of moving parts, in this policy I'm sure you all know that and lots of room to maneuver. But we are very serious about the proposal and look forward to working with the Congress to enact it.

I want to recognize a couple of people from the White House, whom I don't see I was looking around. Diana Schact, who is on the Domestic Policy staff, who works for me. Don't call me; call Diana Schact, if you have questions or want more information or need to work on this. And Abel Guerra, who is from our Public Liaison Office, who interacts with groups like the Cato Institute, among others.

Before I start on the President's plan, I think it's important to lay the ground, or set the stage, on a few facts about what the state of the world is. First, we in the administration believe that there are about 8 million people who are here illegally. Millions of them are working; we don't know how many millions, but millions of them are working. And 70 percent, roughly, of them are Mexican. You will hear other numbers, but it's millions we think 8 million and it's a big problem, lots and lots of folks.

Second, and I think importantly to note, as you all can see in the President's policy proposal, is that there is currently no legal way for people to come to this country and work in many, many sectors, such as the service industry, the construction industry, and on and on. So we have a problem.

Third, and whether you think it's too much or too little, the capacity for legal entry into the United States is limited. We have two ways that you can do that. We have work visas, which there are seasonal workers, agricultural workers, high tech workers, and so forth. A fairly limited pool that can be offered through the visa program, which is something around 150,000 or so, exacting out the agricultural category since there is no limitation on those workers. But it's a relatively small number of people when you've got 8 million as the universe, a few hundred thousand on the work visa side.

And then, meanwhile, back at the green card, or legal permanent resident status, we have 480,000 green card opportunities for family sponsorship and 140,000 for employment based sponsorship. So obviously there are all kinds of various permutations about how you get there and how you get in line and country allocations. No country can have more than 7 percent of those totals, that 480 and 140, allocated. But suffice it to say we've got a big universe and a little bitty funnel, both on the visa side and on the green card side. So I just want to set that out.

Fourth, I think we know that U.S. employers want and need workers to grow their businesses, that this is fundamental to our economy. Fourteen percent of our work force is foreign born. I saw a quote from someone at the Chamber of Commerce that said, if we deported all these people, we would have to close the country. I don't know if that's true or not, but, anyway, that's what the Chamber of Commerce guy thinks.

Fifth, I think in our day of homeland security and the need to secure our borders, it's critically important that we know who is here, why they're here, how long they're going to be here, so we need to have some order here. We are a nation of laws, and we need to know who is here if we're going to be effective at securing our borders.

I know some of you know something about the President's plan already, but I want to talk about it a little bit, and then we'll interact. The President's plan is based on principles that will serve as a framework, we hope, for a rigorous congressional debate. There are lots of details to be worked out. Some of those he's been fairly specific on and some he has not, so we think the principles will guide us.

He has called for the enactment of what he's calling a temporary worker program that would be non sector specific. So it could be nurses, teachers, hotel workers, agriculture workers, students potentially, lots of things that could fit under this category of a temporary worker program, that would match a willing worker with a willing employer when no American is available to fill jobs. The program would be open to new foreign workers who currently reside abroad, who wish to come to the U.S., provided that an American cannot be found to fill those jobs, and to the millions of undocumented men and women who are here working today.

We believe this program will serve the economy by matching willing workers and willing employers. We believe that it will promote compassion by affording to these undocumented workers that would join the temporary worker program the same protections that American workers enjoy, such as minimum wage, work place safety and the like. We believe it will protect the right of legal entrants, those people who are currently in the green card queue, by not advantaging these temporary workers over them like previous amnesty programs have done.

The President has also called for enhanced capacity for green cards. He has not been specific about how much that capacity ought to be enhanced, but 8 million in the universe, a few hundred thousand in the legal opportunities, we do have a disconnect and we have long lines that we're working on working through. And the President pledged during his first campaign to reduce the backlog of immigration processing.

His plan calls for incentives for temporary workers to return home in actually three ways. One, by providing what is called circularity. That is, the opportunity for people to go back and forth regularly to keep their roots in their home country established. So that someone could live in Nuevo Laredo and work in Laredo and go back and forth on a regular basis to keep those ties. That's the first way.

And secondly, through a couple of opportunities to save cash. First, he has called for the creation of tax sheltered savings accounts for all Americans, including this would be available to temporary workers as well, tax sheltered savings accounts to save for your retirement or to invest in a business upon your return to your home country, or whatever, and for the provision of what we call totalization agreements.

These are agreements that we now have with 20 some odd countries, and that we would engage with Mexico, for example, to provide the opportunity for people and this works both ways for American workers working in Mexico and for Mexican workers working here to get credit for the contributions that they make in the Social Security system when they return home. And likewise, for American workers to get credit in our Social Security system for the time and money that they have paid into the Mexican Social Security system. So incentives to return home.

It calls for enhanced enforcement of work place immigration laws. There will be a lot of discussion about why should people join this program. Well, we mean to have, and must have we're a nation of laws enforcement of these laws, and either people will participate in the program or they will be here unlawfully and would have to be sent home. It calls on employers to first look to the U.S., to American workers, to fill jobs. And he has spoken to things like America's Job Bank. And more efficient ways for employers to find and get American workers to fill those available jobs.

He has called for the establishment of a fee for the participants in this program. Those millions of people who are here illegally would have to pay a fee to enter the program. Those who are currently abroad would not have to pay a fee.

He has called for the establishment of a three year term as the term of the temporary worker program. And he has called for renewability. He has been nonspecific about how many terms the temporary worker program could be renewed but has said it should be able to be renewed.

As I said earlier, there are many, many details to be worked out with the Congress, but the broad notion is a non sector specific temporary worker program that will provide the opportunity for millions to come out of the shadows to participate legally in our economy, to pay taxes, to participate, to continue have roots in their home country, to provide incentives for them to do that the temporary worker program and to realize and recognize that some portion of those individuals will seek legal permanent status and a green card, and to provide enhanced capacity for that through the normal route to citizenship and to legal status.

So that is my pitch. I know we will have an active discussion when the other gentlemen join me. So thanks again.

(Applause.)

MR. PONNURU: Thank you very much for setting the stage so well for our next speakers, who will now try to pick holes in the President's proposal.
I should mention also that our next speaker, and some of the other speakers, have papers out available in the front, which include more information and critiques, analyses, of the proposals.

We are next going to hear from Frank Sharry, who has been since 1990 the Executive Director of the National Immigration Forum. In 1994, Mr. Sharry took a leave of absence from the Forum in order to serve as Deputy Campaign Manager for the Taxpayers Against Proposition 187, the effort opposing the famous, or infamous, California ballot initiative.

Mr. Sharry.

FRANK SHARRY,
NATIONAL IMMIGRATION FORUM

MR. SHARRY: Thank you. It's good to be here. It's good to be talking about immigration reform.

We've been somewhat critical of the President's specific proposal in the last week, but let me start by stepping back from the immediate back and forth on what's right and what's wrong about his principles, and give the President credit that he deserves for the courage to bring this issue up.

I was one of those who, just a few weeks ago, was predicting that he would be unlikely to raise it in an election year. I know it has been covered as some sort of political ploy, but I think you could make a strong argument that the easier thing for him to do, given how divisive and controversial this issue is within the general public and particularly within the Republican Party, would be for him to say, let's not touch it; if it's going to be a base turnout election, why bother? And if we get reelected, we'll see if we can bring it up next term.

So I think the President deserves credit for his courage in raising this issue. And as he learned, no good deed goes unpunished in this debate.

(Laughter.)

MR. SHARRY: Now, his analysis of the problem and the challenge I think were incredibly strong. When I was listening to his speech, I thought the first half was brilliant. The second half I had a little bit of a problem with. But his analysis of what immigration means to America and how the current system needs to be fixed was, I thought, right on point. He gets the big idea, the big idea that he and President Fox helped popularize before 9/11 in their discussions in 2001. Which is the current unilateral approach to repressing immigration has failed.

It's not like we haven't tried immigration law enforcement. Anyone who follows this closely knows that the Border Patrol has gone from 2,000 to 12,000, that the budget has gone up by billions, that the United States has made the most concerted effort to crack down on illegal immigration in the last 15 years in its history, and it's coincided with the largest increase in illegal immigration.

Now, why is that? Is it because the Border Patrol isn't a professional law enforcement agency? Not at all.

It's because the laws they are enforcing don't match up with the realities. We have an integrated labor market, with particularly Mexico and Central America, and no regulatory regime that allows it to happen transparently and legally. That's the challenge it's how do you take an organic, ordinary and, by and large, positive process and bring it into the light of day, rather than incentivize the black marketeers, which is what we've done in recent years?

Smugglers have made a killing off of our approach the last 15 years, and a lot of people have died as a result of it. We need to have a policy that actually works. And that's why reality has got to be the guide in assessing how to actually enact legislation that's going to get the job done.

As I said, I think the diagnosis of the problem was better than his prescription. Let me point out a few of our differences. The President emphasized circularity, as the policy experts call it. The idea of people coming and then going back. And certainly for a number of immigrants, particularly migrants from Mexico and Central America, that is the desire. But as we have seen throughout our history, there is also a strong desire for some to settle here and become citizens and full Americans.

And if this is going to be a realistic approach that's going to draw people into the legal channels, you have to not only promote circularity, you have to promote citizenship. And not only is that good in terms of reflecting reality, it's consistent with the success of American immigration. We are not the kind of country that is going to replicate or get anywhere near the kind of situation where Germany is faced now with generations of Turkish guest workers, and only now are they beginning to confront the challenge of citizenship and integration. The American integration success story is built on the idea of people coming, and those who choose to exercise that option, settling, pledging allegiance, and becoming full Americans.

So the path to citizenship and permanence is something that the President certainly is open to, but the way in which it is done needs to be fleshed out, and there has to be a clear path. Just to give you an example, the President's plan for those undocumented workers here are likely to draw into the program those who have been here just a few years, who aren't particularly stable here and have their families back home.

The folks who have been here 10 years, whose kids are going to school, who are paying off credit card debt, are not going to sign up for a three year work permit with an uncertain prospect of renewal, most likely. So the idea of the path permanence, to make legality the prevailing norm in a regulated immigration system will fall short unless we address that.

With respect to the balance between employers' need for a stable work force and protections for both U.S. and immigrant workers, we think the principles are a little bit out of balance and that there needs to be a better approach to make sure that the labor market is tested, to make sure that U.S. workers are given first shot at jobs, as is the principle, but there are ways to do it and there are ways to pretend to do it. And we need to make sure that the immigrant workers can not only protect themselves by changing jobs and not being tied to a particular employer, but, again, have a path to permanent residence, so people stay within the program, and those who do settle have an opportunity to do so.

In particular, I think the idea when we talk about minimum wage protections, that that is not going to be sufficient. We are going to need to have at least prevailing wage protections. You cannot have a situation where a $10 an hour worker is suddenly replaced by a $6 an hour worker under a legal temporary worker program. It's not going to be politically sustainable and it is not economically smart.

And I don't think that is what the responsible employer community wants. They want to make sure, if there are demonstrable shortages, they can fill the jobs, so that they can stay competitive as our demographics create more and more opportunities and there are fewer and fewer Americans to fill them. That's the legitimate need that this program needs to respond to.

And the other aspect of this program needs to respond to, I think it needs to be a bit more narrowly tailored so that it deals with the objective of replacing the current illegal flow with a legal flow. If we swing it too far wide open, we might end up having an illegal flow plus a new legal flow. And that's not the objective. The objective is to bring this under the rule of law. And I think that a well designed, tailored program would do a better job than the kind of lack of definition in the principles. I know the idea is that this will be dealt with in Congress, as it should be, but we are laying down our markers of where we think it needs to be improved.

The program is strong on work visas, but weak on family reunification. And many times what we have seen is that dealing with workers as opposed to families creates perverse consequences sometimes incentives for illegal immigration and sometimes family separation. And a well designed program that deals with both worker and family visas as part of managing the future flow in a way that makes most of it legal we think is a much better way to go.

Finally, the President talked about the need for enforcement, and this is going to be critical. If we are going to legalize more of the flow and make legality the prevailing norm and we set limits that are more realistic and more market sensitive, as we should, then we are going to have to make sure that the public has confidence that those limits are being enforced.

Now, it will be a lot easier when more people are incented to come legally. But there is going to be a need not for the disappearance of the Border Patrol but for a Border Patrol that can really target the smuggling rings that have popped up in the last decade and become so lucrative. It is going to require that the United States demand more of the sending countries with respect to cooperation on enforcement.

And I think we are going to need to get away from this kind of broad based employer sanctions approach, which has been so riddled with fake documents and employer noncompliance, and get to a much more targeted set of enforcements based on labor law violations, so that decent employers don't get undercut by unscrupulous competitors.

Having said that, I understand the politics of this debate as well as some of the policy implications, and I would suggest that the President aim perhaps not for the best policy solution but maybe for the middle of the Republican Party, which is deeply divided on this issue. And I think he hit his target. I think that he started a long overdue debate.

And it is our hope that he will be willing to work with constituencies from across the spectrum, with Democrats who are thoughtful and are more interested in sound policy than in partisan politics, and actually take advantage of this historic opening to craft a migration system that works, one that reflects labor market realities, family dynamics, the need to protect workers here, the need to make sure that you reward decent employers and not unscrupulous employers, the need to reunite families, and the need to rebuild public confidence in a system that is mostly legal and somebody is in charge.

This is a great opportunity to take the big idea that was popularized by Bush and Fox in 2001 and turn it into an actual legislative achievement. That's not possible this year. It is going to take longer. There are two measures before Congress right now that would prove that we're serious about this effort.

The ag jobs effort, the farm worker deal, which would allow a couple of hundred thousand people to earn legal status over time, as well as to allow employers access to fill available jobs with workers in the future, is a good deal and should be enacted. The DREAM Act, which will help college bound undocumented students get into college and be able to eventually become permanent is another good stepping stone to more comprehensive reform.

In the coming weeks, I understand Chuck Hagel and Tom Daschle are working on a bipartisan bill that may be closer to what we would consider to be an appropriate architecture. We look forward to seeing that. And, quite frankly, I think probably when we step back from this, as much as we have been critical of the President's proposal, that in 10 years, when we look back on how immigration was reformed, we will look at January 7th as the day that really turned the corner. And we went from, should we reform our system to how. I congratulate the President for doing that, and I look forward to working with all serious minded people to get it done.

Thanks.

(Applause.)

MR. PONNURU: Thank you very much, Frank, for those remarks.

Our next speaker is going to be Steven Camarota, who is the Director of Research at the Center for Immigration Studies. Steven has written extensively on the problems caused by immigration and has testified before the House Subcommittee on Immigration, Border Security and Claims about threats to national security, the asylum system, the visa lottery, and 245(i). Would you please join me in welcoming Steven Camarota.

(Applause.)

STEVEN CAMAROTA,
CENTER FOR IMMIGRATION STUDIES

MR. CAMAROTA: Well, first off, I would very much like to thank Dan and the Cato Institute for inviting me. Obviously I have a different point of view than Dan, so it is to Dan's credit that he and the Institute would invite me to provide that perspective.

I, too, think the President deserves some praise here. Although I have been critical of him, it's an important issue and he's talking about it. And that is always better than having an important issue not talked about.

Let me tell you about some of the problems I have with this proposal and why I think it has these problems. The first issue for me is that it fundamentally mocks the law abiding. By giving legal status to illegal aliens, we say to those who have waited their turn and come here legally or are waiting to come here legally that they are in effect saps and dupes for taking our own laws seriously and playing by the rules. And I would argue passionately that that is a horrible message to send to people here or to those thinking about coming.

Another problem that I have a big concern, an essential concern, with is the administrative capacity question, which I don't believe the President's proposal addresses at all. A recent GAO report, just released last week, showed that the backlog of unresolved applications for citizenship and green cards and change of status has grown to 6.2 million, a 59 percent increase, from 3.9 million, two years ago. In other words, the immigration bureaucracy can't handle what we've asked them to do right now.

Now, there is no way for them to handle an additional millions of applications that would result from this proposal unless we are prepared to spend very big money and wait the several years it would take to train personnel and set up new computer system and ratchet up dramatically our administrative capacity so that each applicant can be carefully vetted. The only way to process, of course, millions of applicants under the current system would be to rubber stamp them as quick as possible. In that environment, we are guaranteed to give one of these guest worker amnesties to a terrorist. We've done it before.

In 1986, we gave out 2.7 million green cards to illegal aliens as part of the last big amnesty. One of the people who got amnesty was Mahmoud Abu Halima, a leader of the 1993 attack on the Trade Center. He was legalized as a seasonal agricultural worker, even though he drove a cab in New York City, because the system was so overwhelmed that no attempt was made to verify his story. As a result, once he got his legal status, he traveled abroad to Afghanistan, where he received the terrorist training that he then came back and used in the 1993 attack on the Trade Center.

But let me touch on another issue about administrative capacity that's essential. Consider the case of Mohammed Salameh, who rented the truck in the 1993 attack on the Trade Center. He applied for the same amnesty as his friend Mahmoud, but he didn't get it. Okay, well, that's good, right? Good news. But see, then, as now, there is no administrative system to force people who are denied temporary or permanent residence to leave the country. We see reports all the time about this issue that we have hundreds of thousands of people who have even had their day in court and been ordered to leave, but we don't know if they've gone.

To fix that problem would require a dramatic infusion of resources and then years to utilize those resources. So, in the case of Mohammed Salameh, he simply stayed in the United States, living and working illegally, until the day he helped blow up the Trade Center. Put simply, past amnesties have greatly facilitated terrorism and have not hindered them in any way.

And the bottom line is this having an illegal alien terrorist in your country is very bad. Having one with legal status is much worse. Because then he can work at any job he wants. He can leave the country. He can open a bank account and has valid documentation.

Now, moving on from national security, another concern I have deals with the fiscal costs. Large numbers of unskilled workers necessarily impose huge costs on taxpayers, because the modern American economy offers very limited opportunities to workers with little education. Estimates suggest that 70 or 80 percent of illegal aliens lack a high school education.

And in 2001, for example, about 29 percent of households headed by an illegal alien who lacked a high school education used one of the four major welfare programs. But for legal immigrants who have legal status in the United States and who lack a high school education, the figure is 42 percent. In other words, any amnesty is guaranteed to dramatically increase the fiscal costs.

Now, there is some debate about the overall impact of immigration on public coffers. But the cost of unskilled immigrants is not in dispute; there is an absolute consensus on this. The National Academy of Science estimated that immigrants without a high school education imposed a net fiscal drain of $89,000 during the course of their lifetime on taxpayers. For those with only a high school education, the net fiscal drain was $31,000.

Put simply, there is a very high cost to cheap labor. But, of course, employers don't see these costs. They have a job. They hire someone at a low wage, someone legally at a low wage, and the costs are diffused, they are borne by everyone.

Now, it may occur to him, if he goes to the hospital and finds he can't get in because the public hospital is overwhelmed with uninsured immigrants. It may occur to him when he gets a bill in the mail that school taxes are going up, because immigration is increasing the number of kids who have to be educated without a corresponding increase in the tax base. But, in general, he doesn't see those costs. So to him it all looks like a good deal.

Now, a fourth concern I have is that the proposal ignores the enormous wage impacts and benefit impacts that come from increasing the supply of labor. There are about 10 million native born Americans without a high school education, and these are already the poorest workers in the United States.

The only way a proposal like this makes sense, instead of enforcing the law and reducing the supply of unskilled labor, is if you honestly believe that the poorest 10 percent in the United States are overpaid. And I don't think that's the case. They have the highest rate of unemployment, the highest poverty rates. And the only way that you can justify increasing the supply of unskilled labor, rather than enforcing the law, is if you think that the poor make too much money.

Now, let me read you just a quick quote from someone, a commentator on this. He said, it's unfortunate the Bush plan was couched in terms of "a cliché that illegal aliens do jobs that no native born American would do." If the supply of unskilled workers, the author goes on to say, had not been augmented by illegal immigration, the worst jobs would either pay more or we would figure out ways to do it without them. Which is of course true.

Of course, that was said by Alan Reynolds, right from here at the Cato Institute. Although he's a supporter of the President's plan, even Mr. Reynolds realized that immigration reduces wages. It's basic economics. You're increasing the supply of something.

On the question of a guest worker program, I have another concern that is fundamentally creates a second class citizenry, this sort of serf class, that we have out there, who I guess wash our dishes and clean our pools and take care of our little kids, but they can't participate in the political process. They can't vote and shape public policy and our laws, but we expect them to be subject to our laws. And I would argue that that is fundamentally antithetical to what a liberal democratic regime is supposed to be all about.

And we're talking about something on a massive scale here, millions and millions of these people, this helot class, this serf class, that sort of floats around and cleans toilets, but isn't really one of us. And we're of course reminded of that because they're this guest worker.

And I guess my final objection, though I guess I have many more, but let me just sum it up by saying that it ignores the benefits of enforcing the law as an alternative. Enforcing the law, first and foremost, restores the rule of law. Second, by reducing the supply of labor, it means better wages and working conditions for people at the bottom. Third, enforcing the law avoids the fiscal cost that inevitably comes from having a large, unskilled work force.

Additionally, by enforcing the law, it enhances national security. Almost half of the 48 al Qaida terrorists who have operated in the United States in the 10 years prior to September 11th had violated U.S. immigration laws prior to taking part in terrorism. Thus, vigorous enforcement of the law would likely snag us some terrorists. That's another advantage.

Another advantage is that even if you want a guest worker program, you have to set up an enforcement regime, get it in place, make sure it works and that's going to take years before you can expect anyone to have an incentive to sign up for a guest worker program. Because these people are already here, they already have jobs what are you offering them? We are not holding out the bait of a green card, and we're not pushing them in through dramatic increases in enforcement, so why sign up?

Enforcement is a necessary prerequisite, even if you like the President's proposal. And I'm not talking about 100 more border patrolmen or just going after smuggling rings. You have to go after all the employers who hire illegal aliens. You have to actually police the border and make the Border Patrol not simply roughly a third the size of the New York City Transit Authority cops. So you would have to do a lot more there to even make this workable.

Now, how would we enforce the law? I think we could do it very easily. We police the border. We go after the employers. We deny the documents to the illegal aliens. We don't give them drivers licenses. We don't give them in state college tuition. And we make sure that everyone knows that the immigration law is back in business.

And we have actually seen some evidence of this. We think that the number of illegal aliens from Pakistan actually dropped by half, within a year maybe, because they simply got the message: the immigration law is back in business. So we don't have to deport everyone. Most people, when they realize they couldn't access public benefits and they realize they couldn't get jobs in the United States, and so forth, they simply would go home on their own.

At that point, once you get it in place, then we could come back and talk about an amnesty. But of course, this really does put the cart miles before the horse.

Thank you.

(Applause.)

MR. PONNURU: Thanks, Steve.

We'll now hear from our last speaker, our last speaker until you all get a chance to speak, who is Dan Griswold, the Associate Director of the Center for Trade Policy Studies here at the Cato Institute. Dan is the author of "Willing Workers: Fixing the Problem of Illegal Mexican Migration to the United States," a paper that one might say has been somewhat influential in this debate, and who testified last October before the House Subcommittee on Immigration, Border Security and Claims on the prospects for American workers, immigration's impact.

Let's all give a round of applause for Dan Griswold.

(Applause.)

DANIEL T. GRISWOLD,
ASSOCIATE DIRECTOR, CENTER FOR TRADE POLICY STUDIES,
CATO INSTITUTE

MR. GRISWOLD: Well, I guess, as the soul Cato representative up here, let me thank Ramesh Ponnuru, of National Review, for moderating, and Margaret Spellings and Frank Sharry and Steven Camarota, for speaking here today.

Of all the issues that I research, talk and write about at Cato, this one, far and away, generates the most passionate e mails. This is an issue that gets people right in the heart.

And let me make it unanimous. President Bush deserves credit for putting this issue on the table. When I was putting together this program, I for some reason thought of Goldilocks and the Three Bears. You have somebody saying it's too hot, somebody saying it's too cold, and I guess I'm going to say the President's proposal is about right, although it will have to undergo some modification of course. But I think the President's proposal is compassionate conservatism at its best.

It legalizes a human activity that's going on that is voluntary and is good for our economy. It would allow the government to devote more of its resources to its constitutional duty of defending the homeland. And it would help the least among us, by bringing millions of people out of the shadows and under the rule and the protection of the law.

Now, our dysfunctional immigration laws are colliding with the realities of American life and, once again, those realities are winning. What are those realities? Well, first, our economy continues to produce demand for low skilled workers, opportunities for low skilled workers. The U.S. Labor Department estimates, in this decade, our economy is going to create a net additional 7.7 million jobs that require a month or less of training.

Meanwhile, the pool of Americans who are happy and willing to take those jobs continues to inexorably shrink. We're getting older as a society. We're getting better educated. By 2010, the average age of Americans in the work force will be over 40 years, 40.6 years. And the share of adult males in the work force who do not have a high school degree if you can believe it it was above 50 percent in 1960, it's below 10 percent, and falling, today. The result is a growing gap between the demand for low skilled labor and the pool of native born Americans willing to match that demand.

Yet, our immigration law has virtually no legal channel for peaceful, hardworking, foreign born workers to come into the United States and fill those jobs even temporarily. The unintended consequence is widespread illegal immigration.

Now, we've tried enforcing the existing law, and it has failed. Since the 1986 Immigration Reform and Control Act, we have tripled, quadrupled, depending on whose figure you look at quintupled perhaps the resources and the personnel at the Mexican border, trying to intercept illegal immigration. We have built three tiered fences 60 miles into the desert. We have imposed sanctions on U.S. employers for the first time in U.S. history. We've raided chicken processing plants and discount stores in our hunt for illegal workers.

But the crackdown did nothing to address those underlying realities of the U.S. economy and labor market. In fact, the only tangible result has been to create a deadly diversion of illegal immigration flows out into the desert. This has been a headache for landowners, of course, in Arizona, but downright deadly for the migrants.

Since 1998, almost 2,000 people have died trying to get into the United States. Many of them died agonizing deaths out in the desert. Others in sealed boxcars and trucks. They're dying at the rate of about one per day. Surely this is too high a price to pay for seeking a better job.

Now, contrary to the critics, this is not about opening the door to a large number of new immigrants maybe no new net increase in migrants at all. It's about legalizing millions of people who are already here, and an ongoing flow of about net 300,000 illegal immigrants coming into the country each year. Legalization would very likely raise their wages and working conditions. Legalized workers would have more bargaining power in the marketplace.

They could more easily change jobs to improve their pay and working conditions. They would be more likely to qualify for health insurance. They would be more likely to invest in their language and job skills. And in fact, this is what we found in the 1980's. A large underground pool of labor is a drag on the lower rungs of the economic scale.

Legalization would lift the working conditions of millions of people, foreign born and native born alike. If people are concerned about a two tiered system, what do we have today with millions of people living in the legal shadows?

And immigrants do not hurt the vast majority of American workers. They don't drive down wages or cause unemployment. Just look at recent history. Look at the 1990's. As the critics of immigration point out, we had more immigrants coming into the United States, legal and illegal, in the 1990's than in any decade in a century. And yet, and I would say partly because of that, we created millions of additional jobs. The unemployment rate went down to below 4 percent. The poverty rate fell by 3 percentage points. And compensation rose up and down the income scale at a time of relatively high immigration.

Large and important sectors of the U.S. economy need foreign born workers to grow. The 5 to 6 million of them who are in the U.S. labor force, illegal workers in the U.S. labor force, harvest food, build homes, pack meat, clean our offices and stores, and serve in restaurants, hotels and retail stores.

It's simplistic to argue that, well, if we just raise wages, Americans would do those jobs. One, some of those jobs are so unpleasant, you could double the wage and native born Americans would not come forward in sufficient numbers to fill those jobs. But, secondly, there is a limit to how much businesses can raise their wages without passing costs on to consumers. And once they start passing those costs on, demand falls, businesses go out of business. Those sectors would shrink. That would eliminate jobs for Americans in middle class jobs like management and marketing.

And of course, immigration reform is not just about economics. Let's keep in mind who kicked off this conversation a few weeks ago. It was Homeland Security Secretary Ridge. He said it would make his job easier to protect the homeland security if we knew who these millions of people are who are living here illegally.

And some kind of legalization program would begin to drain the swamp of smuggling and document fraud that facilitates illegal immigration. For those who are already here, they would be more likely to come forward and cooperate with law enforcement. And we could shift more of our limited resources towards going after the bad guys, instead of people who are here to do work. I'm sure Secretary Ridge would rather have his personnel chasing down terrorists than busting janitors at a discount retailer.

And I don't think it's fair to characterize what the President has put forward as an amnesty. Legalized workers would not, and should not, get automatic citizenship or even permanent residency. They would receive only a temporary visa, renewable for a limited time. They would have to pay a fine or a fee, whatever you want to call it. We're talking $1,000 $1,500. That's not chump change to somebody on a low skilled wage. And I think this is right, too they would have to get in line with everybody else to apply for permanent legal status. And I think the President is also right let's open up those channels to allow more peaceful, hardworking people to become permanent.

I have a suspicion that, if the law required that these newly legalized workers give up their firstborn child to qualify, some of the critics would still call it an amnesty.

Now, we should also be careful, as Frank and other people have warned, to avoid the mistake of past guest worker programs. It's absolutely essential that the temporary visa be fully portable and mobile, to give the worker maximum mobility not just from employer to employer but sector to sector. The fatal flaw of the Bracero program and others is that they tied workers too closely to a particular employer. Now, this gives an employer too much leverage, I think, over the worker and, basically, to exploitation. The best worker protection is the ability to quit one job and take another for better pay and better conditions.

I would disagree with Frank that the law has to have a lot of "protections written into it." I think prevailing wage will be a poison pill. We're talking about, basically, pricing these workers out of the market, which would just create and perpetuate an underground economy.

The undocumented workers in our midst are not bad people. They are victims of a bad law. This is not the first time we've confronted the side effects of a law out of step with the realities of American life.

Not long ago, the Federal Government imposed a 55 mile per hour speed limit on the entire country. That bad law made lawbreakers out of millions of normally law abiding Americans and undermined respect for law enforcement. In the end, we changed the law.

In the 1920's and 1930's, the Federal Government prohibited the consumption of alcohol nationwide. That bad law made petty criminals out of millions of Americans, our parents and grandparents, who only wanted to enjoy a drink after dinner. It spawned an underworld of bootlegging, smuggling and fraud. In the end, we changed the law.

In the early 19th century, millions of ambitious, hardworking settlers staked out their claims on the American frontier. They built houses and began farming the land, even though the property laws at the time did not recognize their claim to the property. In the end, after years of futile efforts and sometimes violent efforts to evict them, we changed the law.

Today we face the same choice with our unenforceable immigration laws. We can continue to throw good money after bad in a vain and costly and, I would argue, inhumane attempt to enforce a law that is contrary to our national interests, or we can recognize reality by fixing America's flawed immigration system so that it meets the needs of an efficient economy and a free society.

Thank you.

(Applause.)

MR. PONNURU: Thanks very much, Dan.

(End of Remarks Session of the Cato Institute Policy Forum.)