Immigrants can come to economy's rescue again

January 21, 2009|By JAY HANCOCK | JAY HANCOCK,jay.hancock@baltsun.com

So President Barack Obama, presiding over what will surely be the biggest budget deficits in history, doesn't want the country to go bankrupt.

"If we do nothing, then we will continue to see red ink as far as the eye can see," he said at a news conference two weeks ago. He'll summon a "fiscal responsibility summit," he told The Washington Post last week. America, he said, must make "hard decisions" about Medicare, Social Security and other expensive programs.

Hard decisions, of course, will include cutting costs and benefits, which will anger Democrats. We'll also need to raise taxes, which will anger Republicans.

But the hardest decision of all may be about increasing immigration, which even Obama doesn't seem to want to talk about. The retreat from trillion-dollar deficits must include recruiting millions of new Americans to share in this country's bounty as well as the cost of running it.

Immigrants have freed the United States from tight spots before. Properly managed, a doubling or tripling of immigration in the coming decades can help get us out of this one.

We can't cut our way entirely to solvency. The senior lobby is too entrenched, the profligate Medicare program too cherished to shrink it to a size within the country's present means. (Social Security, on the other hand, is easy to fix if we slightly cut benefits and increase contributions now.) Extending national health care to everybody will raise spending even higher.

Nor can we tax our way completely out of the red. Raise taxes too high, and they hinder growth.

And growth, after all, is a critical piece of the solution. Because tax collections rise with the size of the economy, a percentage-point increase in annual gross domestic product, sustained over decades, can mean the difference between insolvency and surpluses.

One way to improve the economy is productivity - higher output per worker or per factory. But the technology boom that increased productivity since the mid-1990s may be stalling. Every worker is on the Web who needs to be. Everybody has a cell phone, and pretty soon everybody will have a BlackBerry.

The only other way to expand the economy is by adding to the work force. Americans alone aren't doing the job. At recent birth rates, the population would decline if it weren't for immigrants, leaving an inadequate pool of younger Americans struggling to pay debt incurred by their elders.

So immigration is another way out of the deficit debacle.

The national debt just surpassed $10 trillion and will surely head higher. We need new taxpayers to help pay it off.

There are nearly 20 million vacant homes and apartments across the United States. We need new renters and owners to live in them.

There are companies that can't find enough competent employees. We need new workers to help them grow. There are retailers going bankrupt. We need new consumers to buy their stuff.

About 1 million people a year have immigrated to the United States recently, or one third of 1 percent of the population. A century ago, immigrants boosted the population by much more - 1 percent a year.

Good thing, too. Millions of new Polish, Russian, Irish, Italian and Greek citizens gave the country the economic strength it needed to win two world wars.

Opponents focus on the short-term costs of immigration - increases in social services use, supposed competition with domestic workers or alleged higher crime.

But these costs can be smart, long-term investments. The United States is living proof. No country is better at merging many into one, at building strength through diversity. Those who "packed up their few worldly possessions and traveled across oceans in search of a new life," as Obama described immigrants in yesterday's inaugural speech, helped themselves but also bequeathed a rich future to their descendants.

The U.S. government is spending trillions to bail out banks, consumers and everybody else.

Immigrants can bail out the bailer.

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