The certainty of extended political gridlock will offset the economic benefits of President Barack Obama's immigration reform. Coaxing millions of undocumented immigrants out of the shadows could provide a boost to growth, jobs and tax revenue for Uncle Sam. But the actions promised by the president virtually ensure Republicans now in control of both houses of Congress won't compromise on important economic priorities. It's a wash.
Obama will use his executive power to ease the fear of deportation for 4.7 million parents of US citizens and permanent residents in the country for at least five years - provided they pass a criminal background check and pay taxes. He'll also expand work authorisation for workers in line for a green card, something the tech industry in particular has long advocated.
The economic effects of amnesty tend to be mixed and controversial. Some research suggests that certain groups will see lower wages, like low-skilled American workers without high school diplomas. But other data suggest that amnesty increases American incomes overall slightly, between 0.1 and 0.6 per cent, according to a Brookings Institution summary. It could also boost American jobs a bit, a recent study by economist Giovanni Peri shows.
If these undocumented immigrants begin paying taxes, that marginally helps federal coffers. But their relatively low incomes won't add much, and any government benefits they receive could offset those gains. It also provides a small benefit to the tech community, cutting some red tape for visa holders. But it fails to reduce the backlog of H-1B workers awaiting green cards.
Perhaps the clearest outcome of the president's action was to infuriate Republicans. GOP leaders have already responded by suing him over his health care law tweaks.
Compromise never was going to be easy, but some big efforts have supporters on both sides of the aisle. The tax code remains flawed, as evidenced recently by corporate inversions, where American companies purchase foreign firms to cut their taxes. Many Republicans were open to granting the president authority to negotiate new export-boosting trade deals. An infrastructure programme also held potential for bipartisan, and business, support.
All of that is gone now. GOP fury with the president for imposing his own immigration reform, rather than waiting to work with the new Congress, probably precludes any trade, tax or infrastructure compromises until after the 2016 presidential race. That lost opportunity easily wipes out any potential economic gains derived from an immigration amnesty.
