[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 113-0047
 
       IMMIGRATION AND ITS CONTRIBUTION TO OUR ECONOMIC STRENGTH
                                 PART I

=======================================================================


                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE

                     CONGRESS OF THE UNITED STATES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 7, 2013

                               __________

          Printed for the use of the Joint Economic Committee




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                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

HOUSE OF REPRESENTATIVES             SENATE
Kevin Brady, Texas, Chairman         Amy Klobuchar, Minnesota, Vice 
John Campbell, California                Chair
Sean P. Duffy, Wisconsin             Robert P. Casey, Jr., Pennsylvania
Justin Amash, Michigan               Mark R. Warner, Virginia
Erik Paulsen, Minnesota              Bernard Sanders, Vermont
Richard L. Hanna, New York           Christopher Murphy, Connecticut
Carolyn B. Maloney, New York         Martin Heinrich, New Mexico
Loretta Sanchez, California          Dan Coats, Indiana
Elijah E. Cummings, Maryland         Mike Lee, Utah
John Delaney, Maryland               Roger F. Wicker, Mississippi
                                     Pat Toomey, Pennsylvania

                 Robert P. O'Quinn, Executive Director
                 Niles Godes, Democratic Staff Director



                            C O N T E N T S

                              ----------                              

                     Opening Statements of Members

Hon. Amy Klobuchar, Vice Chair, a U.S. Senator from Minnesota....     1
Hon. Kevin Brady, Chairman, a U.S. Representative from Texas.....     4

                               Witnesses

Dr. Adriana Kugler, Professor, Georgetown Public Policy 
  Institute, Washington, DC......................................     5
Mr. Grover Norquist, President, Americans for Tax Reform, 
  Washington, DC.................................................     7

                       Submissions for the Record

Prepared statement of Vice Chair Klobuchar.......................    36
Prepared statement of Chairman Brady.............................    37
Prepared statement of Dr. Adriana Kugler.........................    39
Prepared statement of Mr. Grover Norquist........................    49


       IMMIGRATION AND ITS CONTRIBUTION TO OUR ECONOMIC STRENGTH


                                 PART I

                              ----------                              


                          TUESDAY, MAY 7, 2013

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:30 a.m. in Room 
562 of the Dirksen Senate Office Building, the Honorable Amy 
Klobuchar, Vice Chair, presiding.
    Representatives present: Brady, Duffy, Paulsen, Hanna, 
Sanchez, Cummings, and Delaney.
    Senators present: Klobuchar, Casey, Warner, Murphy, 
Heinrich, Coats, Lee, and Wicker.
    Staff present: Corey Astill, Ted Boll, Gail Cohen, Connie 
Foster, Niles Godes, Paige Hallen, Colleen Healy, J. D. Mateus, 
Patrick Miller, Robert O'Quinn, and Brian Phillips.

  OPENING STATEMENT OF HON. AMY KLOBUCHAR, VICE CHAIR, A U.S. 
                     SENATOR FROM MINNESOTA

    Vice Chair Klobuchar. Good morning, everyone. I would like 
to thank you for being here today for this incredibly important 
hearing and conversation about immigration reform.
    I would especially like to thank our distinguished panel of 
witnesses. With the House and Senate schedules, Representative 
Brady and I have worked out a plan for this hearing that we 
think will work. We are actually bifurcating it, having this 
morning's hearing and then having our two remaining witnesses 
tomorrow afternoon. And so I thank him for accommodating this 
hearing with his busy schedule. He is going to be chairing a 
subcommittee and will have to leave a little early, but we have 
a number of Members here and I want to thank you for working 
your schedules around it.
    Today's hearing comes at a critical moment. Our economy is 
improving, but still fragile. The private sector is adding jobs 
but not quite at the pace we would like, and the housing market 
is getting stronger. But more needs to be done, and 
comprehensive immigration reform is one of the pillars which 
will help us to build this strong economy.
    That is why we have scheduled this hearing. We are going to 
focus today on immigration's contribution to our economic 
strength and how we can make it work better.
    We all know that our current immigration system is broken 
and that we need to work together in a bipartisan way to get 
comprehensive reform done.
    As a member of the Senate Judiciary Committee, I look 
forward to marking up in the coming weeks the proposal that is 
before us in the Senate. There is a large and diverse coalition 
supporting immigration reform in this country: business 
leaders, law enforcement, religious leaders, farmers, labor 
unions, people from all across the political spectrum, as you 
can see at our table today, as we stretch from the left to the 
right, in terms of the witnesses that we have with us today.
    Dr. Adriana Kugler is a Professor at Georgetown Public 
Policy Institute and is Co-Director of the International Summer 
Institute on Policy Evaluation. She served as Chief Economist 
of the U.S. Department of Labor in 2011 and 2012. She is a 
Research Associate at the National Bureau of Economic Research.
    Mr. Grover Norquist is the President of Americans For Tax 
Reform, an organization which he founded in 1985 that works to 
limit the size and cost of government. Previously, Mr. Norquist 
served as economist and chief speech writer at the U.S. Chamber 
of Commerce, and as Executive Director at the National 
Taxpayers Union.
    I don't know how many times a Democratic Senator has asked 
you to testify, Mr. Norquist, but I did. And I think it is a 
tribute to the broad support that we see for immigration 
reform.
    This is not going to be easy or simple, but this reform is 
vital to our country. We need to establish a reasonable pathway 
to citizenship, continue the progress that we are making on the 
border, and make sure our companies are getting the workers 
that they need to compete in the world market.
    Immigrants are truly an entrepreneurial force in America. 
Just look at the Fortune 500 companies: 90 of them--90 of 
them--were founded by immigrants; 200 of them were founded by 
either immigrants or children of immigrants. And that, by the 
way, includes in Minnesota major Fortune 500 companies like 3M 
and Hormel.
    Thirty percent of U.S. Nobel Prize winners have been 
immigrants. This is a country that makes stuff, invents things, 
exports to the world, and immigrants have been a major force 
behind that entrepreneurial spirit and this idea that we can 
always do better and bring in new ideas and new people to help 
us get those ideas.
    I also want to focus this morning on some of the nuts and 
bolts of comprehensive immigration reform that will be very 
important to moving our economy forward, such as important 
provisions for ag workers--which we all know is in the bill, 
and also pathway to citizenship, but some specific provisions I 
think that people should take note of, which will be important 
to our economy.
    Earlier this year Senator Hatch and I introduced the I-
squared bill, which is about encouraging engineers and 
inventors and entrepreneurs to work here in this country. I-
squared is about innovation immigration. It reforms the H1B 
Visa system, as well as the Green Card system to meet the needs 
of a growing science, engineering, and medical community.
    I-squared would also reform the Student Green Card System 
to encourage students who get degrees here to stay here. Rather 
than going overseas to start the next Google in India, we would 
like them to start it here. And that is what those provisions 
are about in the Green Cards.
    The bill would also change the visa funding structure, and 
that is something Senator Hatch and I are working on in the 
Judiciary Committee to make sure that some of the funds from 
the increased fees for the visas that many in the business 
community believe are possible and have in fact agreed to pay 
would go toward educating our own students with science, 
engineering, technology, and math.
    I am pleased that the legislation before the Senate, 
actually in the Senate Judiciary Committee, contains the bulk 
of the provisions that are in our I-squared bill.
    Second, I was just in Rochester, Minnesota, in the snow a 
few days ago and there we were talking about the need for more 
doctors in our country. We actually have some clinics in 
Minnesota--for example, Grand Meadow in rural Minnesota, who 
actually lost its health clinic because they could not find a 
doctor to staff it.
    Senator Conrad, years ago, introduced the Conrad-30 bill, 
which I have expanded on in this legislation, which has also 
been included in the comprehensive immigration reform to allow 
for expanded use of the concept of the J-1 Visa. What this does 
is, instead of sending doctors back after they do their 
residency, to the country that they came from, this actually 
allows them to do their additional residencies in under-served 
areas, including rural and innercity areas. And that would 
fulfill their requirements under the visa so they could then 
stay here and continue to work in this country. If they serve 
in those areas for five years, it actually allows them to serve 
even more.
    Again, there is a shortage of physicians in certain parts 
of the country that can be filled with doctors educated in our 
country and would like to stay.
    Another example of something you might not always think 
about that is in the comprehensive immigration reform bill that 
would greatly help our economy is tourism. Last year I was part 
of a group of Senators that introduced the JOLT Act. Senator 
Blunt and I have worked extensively on these issues on the 
Commerce Committee.
    What the JOLT Act does is to modernize and expand the Visa 
Waiver Program. That bill is also in this comprehensive reform.
    Just to give you a sense of the money we are talking about 
and the jobs we are talking about, since 9/11 we have lost 16 
percent of the international tourism market. Every point that 
we lost was 76,000 jobs. Can you imagine that? So every point 
that we are starting to gain back--and we have gained nearly 60 
percent of the jobs lost during the downturn--every point that 
we gain back, 76,000 jobs for this country.
    And so that is why we have worked hard on this JOLT Act, 
and I am glad that that is part of it, as well. Every foreign 
tourist that comes, even for a few weeks, spends an average of 
$5,000.
    One last point, we know that immigration reform not only 
benefits our economy in the short term but strengthens our 
economic foundation for the long term. Former CBO Director 
Douglas Holtz-Eakin estimates that immigration reform will save 
$2.7 trillion over 10 years by adding to our labor force, 
boosting productivity, and accelerating economic growth, 
something that we are going to hear about from our witness 
Grover Norquist today who knows just a little bit about the 
debt and cares about it, as well.
    So those are the points that I think are important to take 
away from the focus on the economy: What we can add 
specifically in certain sectors, but also what we can add 
overall, as well as what this can mean for reducing our debt.
    Our country, as I said, must be a country that makes stuff, 
invents things, exports to the world; that is what this bill is 
all about that we are going to be considering in Judiciary over 
the next few weeks. And it has been really heartening to see 
the bipartisan support for the bill across the country, and we 
want to continue in that vein as we discuss this today.
    So thank you very much, and I will turn it over to Chairman 
Brady.
    [The prepared statement of Vice Chair Klobuchar appears in 
the Submissions for the Record on page 36.]

    OPENING STATEMENT OF HON. KEVIN BRADY, CHAIRMAN, A U.S. 
                   REPRESENTATIVE FROM TEXAS

    Chairman Brady. I want to thank Vice Chairman Klobuchar for 
choosing this important hearing topic that will be explored in 
a Joint Economic Committee hearing both today and tomorrow.
    Given the growth gap that America is experiencing, in which 
the current historically weak economic recovery translates into 
100,000 fewer new jobs per month, and workers realizing only a 
mere fraction of the increase in real disposable income during 
an average recovery, it is important that the Joint Economic 
Committee carefully and objectively examine the economic and 
fiscal effects of our current immigration system and proposed 
reforms.
    If we wish to remain the world's largest economy through 
the 21st Century, the economic objective of any immigration 
reform must be to maximize potential economic benefits for the 
Nation, while minimizing costs to hardworking American 
taxpayers.
    My belief is that we must close the back door of illegal 
immigration so that we can keep open the front door of legal 
immigration.
    My frustration through the years of this politically 
charged debate is that Congress and the White House have failed 
to agree on a most basic question:
    What kind of workforce does America need to remain the 
strongest economy in the world? And what steps do we need to 
take to ensure we have that 21st Century workforce?
    There is little doubt that the front door of legal 
immigration is--by all measurable standards--broken. Talented 
individuals with advanced education, unique skills, and wealth 
that could be invested here to create new high-paying jobs for 
American workers have been excluded, or have waited years, even 
decades, to immigrate legally. And the current visa program for 
low-skilled workers is essentially unworkable.
    Recognizing that other committees have jurisdiction over 
immigration reform issues such as border security, employer 
verification, and paths to legal status, the Joint Economic 
Committee will concentrate on its principal function, which is 
to provide Congress with analysis and advice on economic 
issues.
    To that end, from our witnesses I am seeking answers to 
these questions:
    What kind of workforce does America need to remain the 
strongest economy in the world? And what steps do we need to 
take to make sure we have them?
    In addition to developing more trained American workers, 
who should we encourage to immigrate to the United States? And 
what should be our priorities? What criteria should we use to 
evaluate potential immigrants?
    Are immigrants entering the United States under our current 
immigration system a net economic benefit, or a net cost to the 
U.S. economy in the long term?
    What changes would you make to our current immigration 
system to maximize that net economic benefit to the United 
States' economy, to the federal treasury, and to the treasuries 
of our state and local governments?
    How does the bill currently before the Senate Judiciary 
Committee affect economic growth in the short and long term, 
including its effects on wages, on real GDP per capita, on job 
prospects for Americans, and for our long-term global 
competitiveness?
    As America continues to struggle with historically high 
budget deficits, are the immigrants entering the United States 
under our current immigration system a net fiscal benefit, or a 
net fiscal cost to the federal taxpayers, as well as to the 
state and local taxpayers?
    How do the taxes that immigrants pay compare with the 
taxpayer-funded benefits they receive? And what is the impact 
of the immigration reform proposal currently before the Senate?
    Finally, what can we learn from the immigration systems of 
our global competitors such as Australia, Canada, and New 
Zealand that admit large numbers of immigrants relative to the 
size of their native-born population?
    So just as we need pro-growth tax reform, a rebalancing of 
burdensome regulations, a sound dollar, and a Federal 
Government credibly addressing its long-term entitlement 
challenges, America needs a trained, mobile, and flexible 
workforce that meets the needs of a 21st Century economy.
    I welcome our witnesses. I look forward to their insight as 
we explore the economic effects of immigration reform.
    [The prepared statement of Chairman Brady appears in the 
Submissions for the Record on page 37.]
    Vice Chair Klobuchar. Thank you very much, Chairman Brady.
    Dr. Kugler, do you want to begin? We have a number of 
Senators and Representatives here, so we are here to hear your 
testimony.

   STATEMENT OF DR. ADRIANA D. KUGLER, PROFESSOR, GEORGETOWN 
                   UNIVERSITY, WASHINGTON, DC

    Dr. Kugler. Thank you very much for this invitation, and 
thank you, Co-Chair Klobuchar, Chair Brady, Members of the 
Committee, for organizing these important and timely hearings.
    As we know, over generations the strength and the dynamism 
of the U.S. economy has relied on many new incoming generators 
of immigrants, and today is no different.
    Immigrants continue to contribute to the U.S. economy as 
entrepreneurs, as job creators, as workers, as innovators, as 
consumers, and as taxpayers.
    So, for example, we know that immigrants tend to be highly 
entrepreneurial even compared to their co-nationals and 
compatriots. We know that immigrants are over-represented among 
new business owners. They make up only 13 percent of the 
population, but 17 percent of new business owners. They are 
twice as likely to generate new businesses. They are more 
likely to be self-employed than the native-born.
    And they are 60% more likely to also generate exports. They 
are more likely to contribute and have higher levels of start-
up capitals. And they are more likely to create jobs also for 
U.S. workers.
    In fact, we know, for example, immigrant and small business 
owners generate 5 million jobs in total in the U.S. So this is 
very important.
    Immigrants, however, are not only job creators and business 
owners, but they are providers of labor, important providers of 
labor. For example, we know that 1 in 7 U.S. workers are 
immigrants today. And U.S. workers--and this goes back to what 
Chairman Brady pointed out--they fill important skill gaps. 
They fill important skill gaps both at the high end of the 
skill distribution but also at the low end of the skill 
distribution.
    In fact, the skills that immigrants have are very different 
from those that natives have. Immigrants are over-represented 
at the very, very high end of the skill distribution. We know 
that, although immigrants are 13 percent of the population and 
16 percent of the labor force, 24 percent of U.S. scientists, 
and 47 percent of engineers, are immigrants. So this is very 
important.
    These immigrants are twice as likely to patent. These 
immigrants are much more likely to engage in mathematical and 
computer occupations. And at the very low end, immigrants are 
also filling an important gap. We know that the foreign-born 
are much more likely to have less than a high school degree--
25.5 percent of them, compared to 5.3 percent of the native-
born. And this means that they also fill important gaps. They 
do very different jobs from the jobs that are done by the 
native-born.
    In fact, they are much more likely to occupy jobs in 
production, in transportation, in construction, in maintenance 
occupations, and in service occupations. Moreover, for example, 
in agriculture alone most of the laborers are immigrants: 72 
percent of agricultural workers are foreign-born, which makes 
you wonder how the agricultural sector would even function if 
these immigrants were not here to provide labor in those sort 
of jobs.
    Now some people worry that immigrants take jobs away from 
the U.S.-born, from native-born Americans, and they worry that 
they are going to be displacing these workers. They are going 
to have negative, adverse effects on their wages.
    In fact, we find generally in the literature that the 
impacts, any negative impacts that immigrants tend to have on 
the native-born are not there. The estimates tend to hover 
around zero. And in fact, the very recent studies that have 
been done on this topic, which are very thorough studies and 
which take account of these complementarities I just talked 
about, tend to find that if anything immigrants tend to have 
positive impacts on the native-born, and in particular on high-
skilled native-born Americans.
    So in fact a study by Ottaviano and Peri finds that the 
increase in immigration between 1990 and 2006 increased the 
earnings of the native-born by about 1 percent. In my own work, 
I find something very similar. I find that even among 
immigrants and the native-born who are likely to do the same 
jobs, a 10 percent increase in Latino immigration tends to 
increase the earnings of the native-born, high school native-
born Hispanics by about 1 percent.
    All of this means that when there is immigrtion there are 
more job creators. They are people who are becoming employed. 
They are also more consumers in our economy, and immigrants in 
fact have a very high purchasing power. Among Hispanics, and 
Asians, especially the purchasing power reached $1 trillion and 
$500 billion, respectively, in 2010. This is money that ripples 
through the economy and it is money that benefits all of us.
    So any danger that we may actually be taking jobs away from 
U.S. workers seems to be unfounded in many instances.
    [The prepared statement of Dr. Adriana D. Kugler appears in 
the Submissions for the Record on page 39.]
    Vice Chair Klobuchar. Thank you very much for your 
testimony.
    Mr. Norquist.

  STATEMENT OF GROVER NORQUIST, PRESIDENT, AMERICANS FOR TAX 
                     REFORM, WASHINGTON, DC

    Mr. Norquist. Thank you very much, Chairman, Vice Chairman, 
Members of the Committee:
    We do not have to sort of go to equations or predictions. 
We can look at our own history to see that as the United States 
has been the most immigrant-friendly, welcoming nation in the 
world, we have also become the richest, most powerful, most 
stable nation in the world.
    And we can look around at other countries and see how we 
compare with those. The countries that do better have higher 
percentages of their workforce and their population as 
immigrants. Being open to immigration has been part of the 
United States' success, and some other countries have done well 
also.
    We can look at Japan, which is a country that, for one, is 
forgetting to have children, but in addition to that is not 
culturally capable evidently of immigration. And as a result, 
what was supposed--I mean, I went to business school in the 
1980s and all I heard from everybody was that Japan is number 
one. They are going to leave us in the dust. And then all of a 
sudden, they left the playing field because, one, they forgot 
to have kids, and two, they are not capable of doing 
immigration.
    China is in a similar position. We are hearing all the same 
things about China as an economic challenge to the United 
States. They actually have immigration from the interior into 
the cities. But once you finish that, they do not do 
immigration outside of--from outside of China, and they are 
going to get old before they get rich. They are going to be old 
and not have enough--the number of people in China is 
eventually going to decline because they are not doing 
immigration, but the number of the workforce declines faster in 
China.
    We can look at Europe with similar challenges there. They 
sometimes do immigration, just not very well compared to the 
United States.
    So it is one of our competitive edges in the world that we 
do immigration better than other people. Now we have been 
whining about it for 300 years, since the Germans started 
sneaking into Pennsylvania awhile ago. We have always felt that 
the new guys were a problem. The guys who were here in previous 
generations we are married to, and they are our neighbors, but 
the new guys are probably not up to snuff.
    We have just been through this again and again and again. 
We do not even have to go to international comparisons. We can 
take a look at what Arizona did recently when they decided to 
shoot themselves in the ankle with legislation which 
discouraged people who were in Arizona from staying; 200,000 
people left. We had certain economic problems.
    They were worse in Arizona than in California, than in New 
Mexico. For other reasons, you would think Arizona would do 
better, but after they passed the law discouraging, people left 
and those jobs were not picked up by other people. Unemployment 
in construction. Unemployment in agriculture was not picked up 
by other people jumping in in some vast pool of people who were 
kept out of jobs by immigrants. And again, in both construction 
and agriculture and food products, you saw declines in 
employment that flowed from that.
    So comparing the United States to other countries, 
comparing the United States history, looking at state 
comparisons where Arizona has decided to be a bad example so we 
can all study it. And then you go to the questions where Doug 
Holtz-Eakin, the Vice Chair referenced his study recently which 
pointed to a bill similar to what the Senate has been looking 
at, how that would dramatically increase not just GDP but the 
government's balance sheet with more revenue coming in, 
dwarfing external costs.
    One reason why bringing to legal status those people who 
came here without papers is that, imagine just in your own 
life, a sibling or a child of yours, you said go out and 
accomplish everything you can in life, but do so--but you can't 
get a driver's license. You are not going to be able to fly on 
a plane. And every time you switch jobs, you have to worry 
somebody will arrest you. That kind of depresses the kind of 
job and the productivity that you could have as a worker.
    When in 1986 those restrictions were removed from about 3 
million people around the country through the amnesty program 
then, the wages of those people jumped 15 percent. They didn't 
get smarter or harder working, they did not have these shackles 
put on them by the fear of living in the shadows.
    So each of these suggests tremendous steps forward if we do 
more immigration, total numbers, but also as discussed earlier 
we need more high-skilled workers. We need guest-worker 
programs, because there's a lot of need for low-skilled 
workers. And when we think about dynamic economics, low-skilled 
workers have children and grandchildren that may not continue 
to be sugar-cane cutters. They may be senators. And so--or they 
might become successful.
    [Laughter.]
    Vice Chair Klobuchar. I got it. That is so noted.
    Mr. Norquist. I should have stayed with lawyers.
    Chairman Brady. Note he did not say ``Congressmen,'' which 
I appreciate.
    [Laughter.]
    Mr. Norquist. The challenge is that you have to look at 
this not just tomorrow where all the workers given legal status 
would do better, but over time the idea that the low-skilled 
worker, the Chinese who came over to build the railroads, did 
not stay in the railroad-building business. And the Japanese 
who came over to be sugar-cane cutters in Hawaii did not stay 
as sugar-cane cutters as they moved forward and future 
generations did better.
    So I think looking at this from a dynamic standpoint is 
very important, and also taking out those costs that are 
associated with education, welfare, and entitlement programs 
that exist independent of immigration, and not try and stick 
those onto the immigration debate gives us a good sense that 
the Senate's legislation--which can be improved; there need to 
be more high-tech positions; there needs to be a more robust 
guest-worker program--these are steps in the right direction 
and it would be very helpful for the United States economy. And 
we can leave the rest of the world in the dust.
    [The prepared statement of Grover Norquist appears in the 
Submissions for the Record on page 49.]
    Vice Chair Klobuchar. Very good. Thank you, very much, to 
both of you. I am going to start with Dr. Kugler.
    You mentioned the ag worker issue, which Mr. Norquist also 
mentioned. One of the most moving parts about the testimony in 
front of the Senate Judiciary Committee where we have now heard 
from something like 25 witnesses was when the head of the 
Migrant Workers was sitting next to one of the heads of the 
farm groups. And as you know, the Farm Bureau, and Farmers 
Union, have endorsed this bill.
    Could you talk briefly about how this can be so helpful for 
agriculture in the economy?
    Dr. Kugler. Thank you very much, Vice Chair Klobuchar.
    So as I mentioned, 72 percent of laborers in agriculture 
are foreign-born. So only 28 percent of those working in 
agriculture are native-born. And they tend to do managerial 
occupations. So the basic labor work in the pre-harvest, 
harvest, and post-harvest stages tends to be done by 
immigrants.
    And as I said, this makes you wonder how the agricultural 
sector would even work if you did not have these foreign-born 
individuals working there. There are about 50 percent who are 
actually currently undocumented, and they are very much in 
limbo. They can be kicked out any time. Which means that at 
some point the $200 billion in value-added that gets produced 
by the agricultural sector could even be halved.
    So it is very important to provide some stability to this 
labor force. It is very important to give some sense of 
certainty to the agricultural employers to know that these 
workers are going to be there in years ahead. And I think the 
idea of providing agricultural visas, of allowing people to 
change from one employer to another, and to allow them to stay 
here makes a whole lot of sense.
    Vice Chair Klobuchar. Thank you, very much.
    Mr. Norquist, the Heritage Foundation put out a report 
yesterday that says immigration reform could cost as much as 
$6.3 trillion over 50 years. I am going to put in the record an 
editorial from The Washington Post today which debunked a lot 
of those numbers. And, as you know, Cato and a number of other 
groups and economists--I've mentioned some of the facts in my 
opening statement--have also debunked those numbers and have 
criticized those numbers.
    Could you talk about that study? And do you think that it 
accounts for the economic benefits that immigrants could bring 
to this economy, and why you think that this study is 
incorrect?
    Mr. Norquist. Okay. To be fair to Heritage, for 30 years 
the Heritage Foundation was a Ronald Reagan-Jack Kemp 
institution that recognized the value of immigration to the 
country, and did very professionally done studies to that 
effect.
    Julian Simon, the great economist and thinker was a senior 
fellow at Heritage, and in 1984 put together a paper on The 
Nine Myths of Immigration, which covered most of the mistakes 
people make when they suggest that immigration hurts rather 
than helps the economy. Those nine are still true today--or 
still false today. The criticism of the nine is still true.
    And then that year they did a debate between Julian Simon, 
which they published, and some character from FAIR who made an 
argument against immigrants. And then in 2006, there was an 
excellent study Tim Kane put together, who is now at Hudson as 
an economist making the case that immigrants were a net benefit 
to the economy.
    It is only since 2007 that one guy over at Heritage has had 
a different opinion. The 2007 study at the time was basically 
used by a radio talk show host who took the number and not the 
analysis and had a conversation.
    Since then, other groups--Cato and others--have gone back 
and gone through that study and suggested it is not actually 
very accurate. And there was a hope that if Heritage did a re-
do on that study that they would improve those. They didn't.
    And much of the costs that they attribute are there anyway. 
They are people who are citizens today. Something like 40 
percent of the cost is education, and 80 percent of those 
people are citizens now. So they stick that on as if it was a 
cost of the legislation.
    One thing to keep in mind when people throw out some 
numbers here is that somebody who is going to retire at 2030 is 
going to collect $650,000 on average on Social Security and 
Medicare, but only pay $494,000. So a little more than $150,000 
for everybody that is going to get more in than they pay out. 
That is true for everyone in the country. That is true for 
people who are born here. That is true for people whose 
relatives came over on the MAYFLOWER. It has nothing to do with 
our immigration policy.
    And if you think that more people, because the entitlement 
system needs to be reformed--and I know you folks are working 
on that--but at present, if you don't reform them the whole 
country goes bankrupt, it's not an argument to structure how 
many children you have, or how many immigrants you have, based 
on a flawed entitlement program that needs to be reformed.
    So if you take those challenges in, you take those numbers 
that Heritage puts out on entitlement, it is an argument 
against having children. I mean, children tend to be much 
younger than immigrants. Their English is much more limited. 
They do not work very often. And they are going to get a lot 
more out of the entitlement program than they put in. But that 
is a bad argument against children----
    Vice Chair Klobuchar. I figured that out, yes.
    Mr. Norquist [continuing]. It's a good argument for 
reforming entitlements.
    Vice Chair Klobuchar. Very good. And from what I 
understand, when you look at the Holtz-Eakin numbers and other 
things, there is a strong argument--well, we will get the CBO 
score here--but that it actually brings it down in the long 
term to bring these people out of the shadows and have them 
work and pay taxes and everything else.
    Do you want to comment on that?
    Mr. Norquist. Yes. And this is I think where we should 
credit Heritage. They for a long time have said that we ought 
to be using dynamic scoring. When you increase the labor force, 
you ought to recognize that when you study the future labor 
force.
    When you know historically that people that come in and get 
legal status are able to work more productively, you can figure 
that in. These are not made-up numbers. These are historic 
numbers that you can look at.
    And so I understand CBO has announced they will be doing 
dynamic scoring on those issues where you can look historically 
and know something. You're not guessing about what the impact 
would be. And I was disappointed that Heritage in this study 
decided that they would ignore dynamic analysis.
    Vice Chair Klobuchar. Okay.
    Mr. Norquist. I am not sure it makes sense.
    Vice Chair Klobuchar. All right. Thank you. My last one, 
quickly, one of the most moving parts about your testimony with 
the Judiciary Committee is you quoted Ronald Reagan's farewell 
address to the Nation about the shining city with walls that 
had doors that were open to anyone with the will and heart to 
get here.
    Do you think that this immigration reform moves us closer 
to being that shining city on the hill?
    Mr. Norquist. Absolutely. And, look, I want to commend the 
Senators and the folks on the House side in the approach you 
are taking on this, the Group of Eight that put together this 
step one on immigration reform.
    They didn't show up at seven o'clock in the morning and say 
let's have a vote at ten o'clock. They are not asking, like the 
Market Fairness people, they are not asking to skip the actual 
regular order of going through committee; it is online. 
Everybody who wants to whine about it or make a suggestion, or 
amend it, can read that. It will be before the committee. It 
will be before the whole Senate. The House is going to come up 
with their own analysis in this general direction.
    So anyone who has a real concern can bring it up as an 
amendment. The people who just do not like immigrants can say, 
oh, it's not perfect; no. I think that is silly. But I do think 
that the Senate and the House are taking exactly the right 
approach to this because it needs to be thought about and it 
needs to be done publicly, not in the middle of the night, not 
quickly. And we are months away from Senate action, and we are 
going to have lots of time to talk about this in the House. 
There is no reason for anybody to be nervous about how we go 
through. I think it is a tremendous opportunity for bipartisan 
cooperation in creating more economic growth. And as the Holtz-
Eakin numbers say, this would do more to reduce the deficit 
than some of the other things people talk about.
    Vice Chair Klobuchar. Thank you very much. I appreciate 
that.
    Mr. Hanna.
    Representative Hanna. Thank you.
    Mr. Norquist, in your testimony you state that immigrants 
exhibit different skill sets than native-born Americans, and 
therefore generally do not compete against each other in the 
labor market.
    Could you please elaborate on that point? Much immigration 
labor is highly skilled and thus presumably not 
differentiated--is not highly skilled and presumably not 
differentiated. Why would wage competition not occur in the 
labor market? And furthermore, knowing that Australia and New 
Zealand and other countries differentiate in the skill sets 
that they ask of people in terms of immigration, is that 
something you support generally, or not?
    Mr. Norquist. I am not sure that doing some Japanese MITI 
kind of economic planning thing--you know, you are a farm 
laborer today, therefore you will be a farm laborer forever; 
you are a chemical engineer, so you will be a chemical engineer 
forever.
    When you talk to the guys in Silicon Valley, the people who 
came in on H1B visas and invented the kind of companies that 
create tremendous amounts of jobs, bounced around. This was not 
their first effort. It's not the first company they worked for. 
It is not the first zone that they worked in.
    So I can imagine some bureaucrat in Australia who thinks he 
is very clever going, oh, we need three plumbers; we will take 
three plumbers today. But in a free society, plumbers can 
decide to do something else in two years, two months, or two 
generations. And you get quality people--you know, guys who 
have not been to prison--and some of the engineering talent 
that--one of the reasons people talk about at the high end that 
certain engineers coming in do not compete with American 
engineers is we have shortages of particular kind of industries 
so that kind of by definition they do not compete. But they 
will compete by moving to Canada and compete from there.
    I mean, right? Microsoft has people they hire and they put 
them in Canada because they cannot get them across the border 
here. So they pay taxes in Canada and make the Canadian economy 
stronger, and they have to put up with all that snow.
    Or, they stay in India. Or they stay in Russia. Or they 
stay somewhere else and compete with us. In a worldwide, 
everybody competes with everybody and the idea that when they 
come over here somehow they compete more than where they were 
worked before planes and Internet and more mobility.
    Representative Hanna. You talked about Arizona. If the net 
cost of public service to unauthorized immigrants in the state 
had been substantial and the laws had the intended effect of 
inducing unauthorized residents and workers to leave, is it 
clear that the state is now worse off, or better off?
    Mr. Norquist. Well the numbers I was looking at talked 
about wealth and income generated, 200,000 people who were 
working have left; the value of the housing in Arizona has 
fallen more rapidly than neighboring states. So we are 
comparing apples and apples.
    The only state that has had a worse catastrophe was Nevada, 
in terms of dropping home values. And those jobs were not 
picked up by somebody else. Meaning, the unemployment in those 
sectors where people without papers congregated. So that 
suggests that they were not displacing some guy, and when they 
left the person they had been displacing showed up and said can 
I have my job back? That is not what happened.
    Representative Hanna. So knowing that commonly accepted 
wisdom is typically wrong, state and local governments bear 
much of the cost of certain public services especially related 
to education, health care, and law enforcement. For both of 
you, can you speak to that? Because I constantly hear about the 
cost of immigration in terms of social programs.
    Doctor, do you want to start?
    Dr. Kugler. Yes, Mr. Hanna. So there are two things, as Mr. 
Norquist pointed out, that are faulty in the Heritage study. 
One of them is that it overstates the costs. In one sense we 
know that it overstates the cost to law enforcement, to 
education--because, as was mentioned, these are costs that 
would be incurred no matter what.
    In fact, we know that immigrants have a lower rate of 
incarceration. They are less likely to commit violent and 
property crimes as well. So, if anything, they impose less on 
law enforcement from that perspective.
    We also know that naturalized citizens receive lower Social 
Security income, which is not taken into account in this study 
by the Heritage Foundation. And in fact we know that poor 
foreign-born are less likely to claim benefits than the native-
born. So there is evidence of that, once you control for 
everything else.
    Representative Hanna. Is there empirical evidence 
supporting that they basically pay more in than they receive?
    Dr. Kugler. Yes. So that is another very important point. 
One thing is that many of the undocumented have already been 
contributing, and they have been contributing over the past 10, 
20 years.
    We know that, for example, the Social Security has received 
over $1 trillion in their Earnings Suspense files. These are 
the unmatched Social Security contributions. So this is money 
that has already been contributed by undocumented workers.
    The IRS estimated that between 1996 and 2003 undocumented 
immigrants contributed about $50 billion in income taxes, and 
there are good estimates and conservative estimates actually 
that showed that state and local taxes are contributed by the 
undocumented at the rate of $11.2 billion per year.
    So this is money that has already been contributed. In 
addition, as Vice Chair Klobuchar pointed out, there are 
dynamic economic gains, and it is very important to point out 
that the Heritage study does not take account of that.
    For example, we know that as a result of legalization and 
eventual citizenship after 13 years, there would be a 25 
percent gain in earnings and in income that would increase of 
course the tax revenues that would be obtained from these 
populations. So legalization in itself is something that would 
contribute to solve some of our fiscal issues.
    Immigration, as we mentioned before, would increase 
earnings of domestic workers, as well, and would increase the 
earnings of the more-skilled domestic workers which precisely 
means that they are people also who are going to be paying 
higher revenues into the system.
    Representative Hanna. Mr. Norquist, quickly? My time is up.
    Mr. Norquist. Yes. Undocumented workers have been paying 
taxes for some time. They pay sales taxes. How do you get away 
from that? They pay property taxes. And they show up with a 
Social Security number. They are paying the Social Security, 
but they are not going to get it out. They pay into income 
taxes as well.
    So there is some weird sense that somehow these people are 
not paying taxes. They pay all the interesting taxes that we 
run into on any given day without the deductions. And so that 
is one factor.
    But the other is, look, we have a challenge. We have a 
public school system that is not educating people as well as 
you would like. Most of the people--at a higher cost than is 
necessary. Most of the people that affects were born here, 
okay? If they are not learning American history, the guys who 
were born here are not learning American history.
    If they are not learning English properly, the guys who 
were born here are not getting very good English classes. We 
know from looking at states that have experimented with school 
choice that you can dramatically drop the cost of education and 
increase quality by giving parents a choice.
    If you are worried about the cost of educating people, 
let's focus on that, not deciding that 3 percent of the 
population is the cause of some problem----
    Vice Chair Klobuchar. Okay----
    Mr. Norquist [continuing]. I'm not sure that that is why 
the public school system is having trouble in Detroit, all the 
immigrants showing up in Detroit. There are other challenges 
that governments have in putting these forward.
    Medicare, Social Security, are not structured to be 
sustainable. That needs to be fixed. It is not the problem of 
an immigrant. It is not the problem of a baby. But we ought to 
fix them for everybody. And let's do welfare reform, as Bill 
Clinton signed. There are 185 welfare programs like the Aid to 
Families with Dependent Children. Let's block grant them all. 
Do what Clinton did on welfare reform. Drop costs. Made people 
less dependent.
    But let's do that for everybody, not targeting some group.
    Vice Chair Klobuchar. Okay----
    Representative Hanna. Thanks, Mr. Norquist. My time has 
expired.
    Vice Chair Klobuchar. Yes. Thank you. And we are going to 
try now to stay within the five minutes after Mr. Hanna, 
Congressman Hanna and I abused it, because we have something 
like 10 Members here which shows a great interest in these 
witnesses.
    Congressman Delaney.
    Representative Delaney. Thank you both for your remarks, 
and I will address my question to both of you.
    And the question comes, Mr. Norquist, from some of the 
comments you made about how this is a competitiveness issue for 
our country. I am thinking about, or my question is a slightly 
different dimension to the competitiveness question.
    I have always been a big believer that the cost of doing 
nothing is not nothing. And we often times do not realize the 
cost of inaction until it is too late to fix the issue. And 
Senator Klobuchar I think spoke very eloquently about how 
important immigrants have been to our economy in creating the 
leading businesses. Half of the Fortune 400 have immigrant or 
children of immigrant founders. And the same is true today.
    I think in the last five years more than half of the 
companies that have gone public in the technology sector that 
received venture capital backing were founded by immigrants.
    And a lot of this is because our country has significant 
relative advantages. We have a rule of law. We have free 
markets. We have a large-scale and stable economy. We have some 
shortfalls, obviously, but we have significant relative 
advantages.
    One of our probably singular advantages is the fact that 
the majority of the world wants to come to our country. With 7 
billion people in the world, I am not sure how many, but 5, 6 
billion of them probably if they had their way would want to 
come to the United States and enjoy the benefits and the 
freedom that we all have a privilege of experiencing.
    And I worry in the context--and this does not get to the 
granular statistics that are at all accurate about the effect 
that immigrants have on our economy right now, but it gets to 
this notion that in a world that is changing because of 
globalization and technology, and as we see emerging economic 
centers around the world developing and competing with us, it 
feels to me like we enter this debate as if we have time to 
work through this.
    And I agree with the way you framed it, Mr. Norquist. We 
should spend time getting this right. But as if we will always 
have the ability to just flip a switch and fix the problem and 
everyone will want to come here.
    Is there a chance, in your judgment, that unless we fix 
this issue and really change how we think about this issue, 
that at some point in the future 5, 10, 15, 20 years, this 
singular advantage we have where so many people wake up and 
want to come to the United States may in fact not exist?
    And that while that is very difficult to measure, we can 
measure our debt-to-GDP very--we can measure it a hundred 
different ways. It is hard to measure this relative qualitative 
advantage that we have. And I worry that unless we get this 
right, that it will disappear. So we will start with Dr. Kugler 
and then Mr. Norquist.
    Dr. Kugler. That is a really great question.
    I think there are not only short-term gains but long-term 
gains that can be made as a result of immigration. Of course in 
the short term you have this increased consumption, ripple 
effects through the economy, increased taxes, and all of that 
is going to help us in the short term.
    But in the long term, there are some important 
contributions. There is the issue of innovation. There is the 
issue of continued job creation, and continued 
entrepreneurship.
    In fact, we have seen less and less people come to the 
U.S., and less creation of venture-based firms by immigrants in 
recent years. And so it is very important to take that into 
account, because we also know that these new businesses which 
are predominantly being formed by foreign-born individuals tend 
to be more productive. They tend to be more innovative. They 
contribute more greatly to job growth.
    And so if this does not happen, we are running the risk 
that in the future these jobs are not going to be there and 
they may even go to other countries. For example, the EB5 
program has been able to bring people to the U.S., and there is 
the Start-Up Visas that are being proposed which also take 
advantage of investors and venture-backed capital.
    But we also know that countries like Canada, like 
Australia, and other countries are already attracting many 
other people with those visas.
    Representative Delaney. Great. We'll give Mr. Norquist a 
little time.
    Mr. Norquist. The short answer is ``yes,'' the other team 
gets time at bat. In the 1980s we dropped our marginal tax 
rates and we were growing faster than everybody else. And then 
the Europeans said, hey, we could do that, too. And their 
corporate income tax is now an average of 25 percent. We are at 
35. And that is the European average. Stupider than France is 
not where we want to be. Other countries can move ahead of us 
both in how they deal with immigration--but good news. We have 
some time. But not an endless amount of time. And we could end 
up with the situation where people are perfectly happy to show 
up in Canada, and Australia, and Singapore.
    Representative Delaney. Great. Thank you.
    Vice Chair Klobuchar. Thank you, very much.
    Senator Coats.
    Senator Coats. Thank you, Madam Chairman. You did a great 
recruiting job for this session here. I know there were some 
issues with the other one. We all had conflicts. But obviously 
this issue is something----
    Vice Chair Klobuchar. I think we almost have everyone here. 
It's a very good showing for some very good witnesses.
    Senator Coats. It is a tribute to your advising us of what 
our priorities ought to be.
    Vice Chair Klobuchar. Thank you.
    Senator Coats. Both Dr. Kugler and Mr. Norquist made 
compelling arguments for immigration. We are all the product of 
that in time. I am the son of an immigrant. Unfortunately, Mr. 
Norquist, I turned out to be both a lawyer and a senator, and 
apparently that doesn't put me in very high status. But----
    Mr. Norquist. Your children might work out.
    [Laughter.]
    Senator Coats. They might. Thanks to their mother, they 
might do that. But I don't think there is any difference here, 
I would think, or even in the Congress, relative to the 
importance of immigration to this country, and the continued 
importance for ever more immigration to this country.
    The question is, though, how do we deal with illegal 
immigration to this country? And neither one of you 
distinguished between legal and illegal.
    Now maybe, Dr. Kugler, all the facts and statistics and 
numbers that you threw out relative to the Fortune 500 and the 
accomplishments of immigrants, but was there a distinction 
between legal and illegal immigrants in those numbers?
    Dr. Kugler. It is very hard to distinguish in those numbers 
between the two. But I can tell you that we know that some of 
these illegals are included in there. Some undocumented workers 
are included among the job creators, among the self-employed, 
certainly among the consumers----
    Senator Coats. I understand.
    Dr. Kugler [continuing]. And among the workers.
    Senator Coats. I understand that. But you would agree that 
you cannot just simply come up with a number of the Fortune 500 
without distinguishing----
    Dr. Kugler. No, I don't think they would be included in the 
Fortune 500, but they're included certainly among the workers--
--
    Senator Coats. No, I'm not disputing----
    Dr. Kugler [continuing]. They're included among the self-
employed.
    Senator Coats. Yes----
    Dr. Kugler. They're included among the consumers. I think 
what is important----
    Senator Coats. Excuse me, excuse me. Can I say something 
here? I guess I have very limited time. I am not disputing the 
fact that those who have come here illegally, some have made 
great contributions to this country.
    The question is: How do we go forward? I was here in 1986. 
I supported Ronald Reagan's immigration policy. At the time, we 
had 3 million illegals. We were promised at the time that this 
would put an end to illegal immigration. It would strengthen 
the legal. And now we have 13-plus million.
    It did not do the job. How do we know 10 years from now, 5 
years from now, that we won't be faced with say 23 million 
illegal immigrants----
    Dr. Kugler. Yes, sir, let me answer the question----
    Senator Coats. Let me finish the question. And shouldn't we 
have a policy in place that finally addresses this issue?
    Dr. Kugler. Certainly. So let me answer the question. First 
of all, let me say that if there are any costs to immigration, 
they probably come from the illegal status that some of these 
immigrants have.
    As far as I know, the numbers tell us that there are 11 
million. I have not seen the 13 million that you mentioned. I 
have seen 11 million, as far as the best estimates on this 
issue.
    There is certainly some cost. They may come on the fiscal 
side because we know that between 50 to 60 percent of these 
undocumented pay taxes. They actually do not benefit. They may 
have a harder time, for example, setting up new businesses. So 
you may not benefit as much on that end from this illegal 
immigration.
    But precisely we know that providing legal status is going 
to help us to further benefit from these 11 million people who 
are already here, and who would obtain legal status and would 
be able to gain this 25 percent gain that I mentioned before, 
which are numbers that come from studies that were done after 
the 1986 reform.
    Senator Coats. Thank you. Mr. Norquist, the question on the 
Heritage, my understanding is, and help me out here, before 
Heritage became what it is now, as you described what it was 
before, I think there was a study done indicating that the 
number was 2.6 trillion I believe instead of the latest number 
out, 6.7 or 3, or whatever it is.
    What should the number be from Heritage? Was that previous 
number a good number?
    Mr. Norquist. The previous number was flawed for all the 
same reasons the present number is flawed. It used households 
instead of individuals. There were a whole series. The 
statisticians looked at the first one and said I hope they'll 
fix this. They didn't fix it. They doubled down. And then they 
added costs of legal immigrants, of people who are here 
legally, and stick them in the six. Educating the 5-year-old 
who was born in this country, who is a citizen, is not a cost 
of passing the Senate bill. That is going to be there.
    Senator Coats. So the same assumptions used now----
    Mr. Norquist. And worse.
    Senator Coats [continuing]. To achieve this number were the 
same assumptions used----
    Mr. Norquist. It got worse, actually, the quality of the 
work.
    On your question of legal versus illegal, we in the 1970s 
had a 55-mile-an-hour speed limit. And there was all sorts of 
illegal driving going on. And we didn't say, you know what we 
need first to do is to arrest everybody who is illegally 
driving over 65. We said 55 is not reasonable. The highways are 
built for 65, and in Montana evidently 90.
    So let's get up to a reasonable speed limit, and then 
enforce the law. And the challenge we had in 1986 was, they did 
some border enforcement. They did some amnesty. But they did 
not do anything with future flows. We did not reform the 
immigration policy to give us the quantity of both low-skilled 
and tech high-skilled workers so that, as soon as we hit the 
new--the economy started to grow, there was no legal way to get 
in.
    It is not like there was some other way for people to get 
employed. You know, we didn't have numbers. So what this 
legislation that the Senate has put together begins to do is 
deal with that third part. What about the future?
    How do we not end up with a whole bunch of illegal 
immigration in the future? The same way we ended up not having 
a whole bunch of illegal driving because you moved the speed 
limit and the immigration numbers to a reasonable number of 
what the American economy needs both to grow and to help 
everybody who is here already.
    Vice Chair Klobuchar. Thank you, very much.
    Senator Coats. I'm way over my time. Thank you.
    Vice Chair Klobuchar. We could do it on the record later. I 
just want to point out, in response as well, to Senator Coats' 
question, that one of the things we will be focusing on in the 
Judiciary Committee with Senator Lee and others are these 
issues about what has happened over the last decade in terms of 
security, the fact that everyone agrees that the system is 
broken and it has been the reason that people like Speaker 
Boehner have said we need to speed up consideration of this 
legislation instead of delaying it.
    So I want to thank you for those question, and we are 
trying to focus very much on the economic piece right now, but 
the questions that you have raised about the past and how we 
fix this are very relevant to the outcome of the Judiciary 
hearings.
    Senator Heinrich.
    Senator Heinrich. Thank you, Madam Chair.
    Mr. Norquist, I appreciated your comments about a farm 
laborer doesn't necessarily remain one, and a chemical engineer 
doesn't necessarily remain one. I started out as a mechanical 
engineer and somehow ended up here. And you can make up your 
own mind as to whether or not that was progress. But as an 
engineer I do know that STEM education is incredibly important 
to our economy, and that the next generation of STEM leaders 
will play a critical role in driving us forward in an 
increasingly global and competitive economy.
    I wondered if you could say a few words about the impact of 
immigration policies today that really force many of these 
U.S.-educated STEM graduates to return to their countries of 
origin, rather than putting those skill sets to work here in 
the United States.
    Mr. Norquist. Absolutely. Look, a whole collection of 
people who used to be anti-immigrant are now pro-immigrant and 
pro-immigration reform, including Lou Dobbs, right, when he was 
on CNN. Monday, Tuesday, Wednesday, he complained about these 
immigrants coming into the country. And then on--so you should 
just keep them out. And then the rest of the week he complained 
about the out-sourcing to the people we kept out, which gave 
him Saturday off.
    But, you know, if you tell a highly talented person you 
cannot come and be highly productive here in the United States, 
you have to do it someplace else, they don't, you know, quit 
working.
    Senator Heinrich. That's right.
    Mr. Norquist. They not only do not add to our economy and 
to all the success of us, but they go out and compete with us. 
And then people have to out--we need an engineer to do this; 
well, there's one in India. Really? Yeah, the guy we wouldn't 
let in, right? He's doing it. So we out-source to them.
    Then people whine about out-sourcing. You can avoid out-
sourcing by having talented people come and stay here, and STEM 
education is one way to target that. I mean, why in the world 
would you take all that lovely talent in somebody who wants to 
become an American and tell them to go live in France or 
something off like that.
    Senator Heinrich. Especially when we contributed a great 
deal to the educational system that made that possible for 
them.
    Dr. Kugler, I was home last week in New Mexico and spent a 
great deal of time down on the southern border in Dona Ana 
County, and met with--got a chance to spend a lot of time with 
Border Patrol, a lot of time on the Port of Entry, which is 
very economically important, and a lot of time with a number of 
the immigration reform advocates in that part of the State. And 
many of the people I got a chance to meet with are Dream Act 
students.
    They are students who came to the country not really by any 
choice that they made, but by a choice that their parents made. 
Incredibly motivated, hardworking, not only want to make a 
better life for themselves but really want to contribute to 
this country, the only country they really know as their home. 
A lot of them want to start businesses, be engineers or doctors 
or scientists.
    And I wondered if you could talk a little bit about the 
particular aspects of how including an expedited path for these 
students as part of an overall accountable immigration reform 
effort will impact our economy, and not just the border region 
but the entire country.
    Dr. Kugler. Well, so these are the so-called Dreamers. I 
think the Fast Track, so-called Fast Track, instead of giving 
them a 13-year window, giving them the 5-year window makes a 
whole lot of sense.
    As you mentioned, these are people who are usually going to 
stay here no matter what. They are Americans for all practical 
purposes. And they will most likely become educated, continue 
to college, and contribute to the economy in all sorts of ways.
    There are some very good studies that have been done about 
the ripple effects, and the increased earnings that they would 
gain once, again, they gain legal status. And this is the big 
issue, right? Once you get legal status to people, they are 
much more willing to make investments not only into the 
education but also in terms of creating businesses, and to make 
long-term investments into their careers here in the U.S.
    So we know that there are actually big gains economically 
as taxpayers, as consumers, and this is money again that 
ripples through the economy. And there are some very good 
estimates on that end.
    Senator Heinrich. Well, Madam Chair, I am going to try and 
set a little bit of a--well, I am just going to yield back the 
rest of my time and not go over and see if it becomes a trend.
    Vice Chair Klobuchar. Well very good. And thank you for 
that focus, Senator, on the STEM and the need for more 
students. I always find it ironic that we have unlimited visas 
for sports players, which we love in Minnesota, as 
Representative Paulsen would tell you, from hockey players to 
basketball players, but in fact we have our limits on 
scientists and engineers coming into this country that are a 
third of what they were even just a decade ago.
    So, Representative Paulsen.
    Representative Paulsen. Thank you, Madam Chairman.
    Just to follow up on those two points of Senator Heinrich's 
as well, that I think it is really helpful to have this hearing 
that just looks at the issue of immigration through that 
economic lens. I think it adds just more credibility and 
thoughtfulness to the whole approach of this issue. And it is 
one of the reasons, obviously, that people are coming to the 
United States, for a better opportunity. And it is borne out in 
the statistics, obviously.
    I remember in Minnesota a couple of years ago I spoke to an 
individual who was involved in a software startup company. And 
he was seeking new software engineers that he needed to be 
successful and grow the operation. And he ran an ad in the 
Minneapolis Star Tribune and came back with two qualified 
applicants.
    He runs the same ad in the Delhi Newspaper in India and 
comes back with 800 qualified applicants. And clearly there was 
a disconnect there in terms of having the ability to fill where 
the work was needed to grow and prosper. And he was able to 
work something out eventually where he did operations not only 
overseas but also grew his operations in the United States in 
Minnesota.
    And I hear other stories from similar employers who go 
through those exact same situations that have a tough time 
filling open spots in terms of STEM, et cetera. And I have 
introduced legislation on the House side. It is not the 
comprehensive component, but it is one of the steps on the 
Staple Act that would exempt foreign-born individuals who have 
earned a Ph.D. in STEM from the limits on the number of 
employment-based green cards and H1B Visas annually.
    I know Senator Klobuchar has moved forward with similar 
initiatives, as well, and I think that is great because I think 
if we can get immigration reform right we can actually help our 
economy and close the growth gap, which I know has been a focus 
of a lot of our hearings in the JEC as well.
    I just want to follow up with one more specific question on 
STEM though if I could, Mr. Norquist first.
    It is pretty clear that we're saying if you get educated 
here, foreign-born folks are educated here, we are sending them 
back home. They are going back home and they are becoming our 
competitors; they are competing against us.
    In your viewpoint, is there a tipping point? I mean, is 
there a critical mass where other countries at some point 
generate either local education systems, or entrepreneurial 
sort of development where there's critical mass where we will 
no longer be the destination? Where we do have a tipping point 
and that critical mass is overseas if we don't act soon?
    Mr. Norquist. Well you certainly see it in certain 
industries, banking and others. There are a whole bunch of 
cities where somebody could cheerfully go to and it would be 
almost like living in the United States, but without really 
cool cable.
    So I think, yes, it is a danger. And I think that we are 
better off making available--if they want to come and be 
Americans--that opportunity. I was unaware of the legislation 
that said if you got your STEM Ph.D. somewhere else come on in. 
I think that is a great idea. It certainly ups the numbers of 
folks that could come in, not just the ones who were able to 
get into schools in the States. I think that is an extremely 
good idea.
    Representative Paulsen. And, Dr. Kugler, maybe you could 
expand, as well? Going forward, does the lack of STEM workers--
what does it mean for future innovation for the economy in 
general, you know, quantifiably. And I know the numbers clearly 
bore out where the immigrants have contributed greatly towards 
innovation, and the dynamic components of our economy. But what 
happens if we do not move forward?
    Dr. Kugler. So we know from data just from last month that 
about 17 percent of employers are unable to fill their 
vacancies; 36 percent are unable to find enough qualified 
applicants. And there are substantial skill gaps in high-tech 
manufacturing, information, and the health sectors.
    These are highly innovative sectors, which if they do not 
have the qualified labor would not be able to continue growing. 
Many of these people work in R&D and innovative activities, and 
without them we would hold back creativity certainly for the 
economy.
    It is very important that in the proposal they have 
included these exemptions to the H1B Visas from the caps for in 
particular doctorates in STEM, for those managerial 
occupations, and it is very important because the 65,000 cap is 
being reached continuously every year. It is being talked about 
in the proposal to increase STEM to 110,000. But these 
exemptions from these caps is very key because it allows people 
to come in no matter what, and not to have to rely on whether 
they will make it into that cap that year or not.
    Vice Chair Klobuchar. Thank you very much. Thank you, both 
of you.
    Senator Murphy, who knows a little bit about business. His 
State is first per capita for Fortune 500 companies. You may 
wonder why I know that, because Minnesota is a very close 
second.
    Senator Murphy. A very close second?
    Vice Chair Klobuchar. Yes, thank you.
    Senator Murphy. I appreciate the advertisements, Vice 
Chair. Thank you to both of you for being here today.
    Mr. Norquist, I wanted to get back to the portion of your 
testimony talking about the demographic reality of the globe 
18, 20, 25 years from now. If anybody wants to have a little 
bit of fun, you should look at the predictions of average age 
by country in 2030. It's actually not a ``prediction''; it is 
science because everybody is going to be alive in 2030 who is 
alive today.
    But China, which today is 4 years younger than us, will be 
5 years older. Japan will have an average age of 52. The 
average age in European countries will be 5 to 10 years older 
than the United States. And having just recently come back from 
an economic conference between U.S. leaders and European 
leaders, they look at us with envy. Because in addition to the 
energy revolution happening here and our relative state of 
economic growth to European nations, they just look at this 
demographic advantage that we have, dependent on immigration 
policy on continuing to head in the direction that allows us to 
remain relatively young as one of our chief strengths.
    And so I just wanted to allow you to expand a little bit on 
those comments. Because I think people fail to recognize the 
enormous advantage that we have that is dependent on us getting 
immigration right. We are going to move in a matter of 18 years 
from 37 to 39, and we are only going to become 2 years older on 
average as a nation despite all of the attention given to the 
enormous number of people graduating into the ranks of Medicare 
and Social Security roles. But immigration is a key part of 
this.
    Mr. Norquist. Sometimes people do say, you know, our 
national defense and our strength in the world is based on our 
economy, which is true, but that is also based an awful lot on 
the workforce--the size of the workforce, the quality of the 
workforce, and the age of the workforce.
    I mean, China's challenge is not just eventually the number 
of, if you only have one child per couple, eventually total 
number of Chinese people declines in the world, but the decline 
in people of working age occurs sooner and is much more 
dramatic.
    I mean, Europe is not going to disappear in terms of 
numbers of people; it is just going to be old. It is going to 
be a bunch of people who are generally older and out of the 
workforce hanging around visiting cathedrals that were built 
200 years ago, 500 years ago. And we can go visit and stuff, 
but it is going to be a little tedious.
    So this is a challenge, and it is an opportunity. It's a 
strength, a core--I mean, if we were a company, you would say: 
What's your competitive advantage versus other countries? Our 
ability to do immigration well, which is why getting an 
immigration reform bill that strengthens our immigration system 
so we can have more immigrants, better immigrants, and have a 
secure legal status for the people who come, and certainly in 
terms of border security for people you do not want to come.
    Getting this better is extremely helpful because it is one 
of the things we do. It is not like, oh, it is vaguely 
interesting and it is over here, and if we screw it up it 
doesn't matter. It is what we do better than the rest of the 
world, and we need to continue to do that. And there are some 
obvious failures over the last 20 years. We have had 
opportunities on STEM, on high-tech immigration, on H1B Visas, 
on Guest Worker, on coming up with how to deal with Dreamers 
and so on, but we need to move now.
    So I am all in favor of taking time over the next few 
weeks, the next few months, but we could have done this 10 
years ago.
    Senator Murphy. Right. Dr. Kugler, I wanted to talk about a 
criticism that is lodged all over the country, and certainly in 
Connecticut where people talk about immigrants, whether they 
are without documentation or with documentation, ``stealing our 
jobs.'' And the data that I have seen does not necessarily 
suggest that that is true. The data that I have seen suggests 
that the skills that normally come into this country complement 
rather than simply replicate the skills of American workers, 
and even those American workers are out of the workforce 
looking for jobs.
    Now it is not always the case, but I just wanted to give 
you a chance to respond to that common criticism. I think you 
referenced it a little bit in your testimony, but it is 
something--an important piece of pushback that a lot of us will 
need back home.
    Dr. Kugler. That is a very important issue. As I mentioned 
in my testimony, the most recent studies actually suggest that, 
if anything, there may be even gains in terms of earnings for 
the native-born as a result of immigration.
    In fact, the Ottaviano and Peri study finds that an 
increase in immigration that happened between 1990 and 2004 
increased earnings for highly skilled U.S. workers by about one 
percent.
    I also find very similar results. In fact, I looked at a 
group of people who may be more likely to be substitutable, who 
may be more likely to be taking the same jobs, and nonetheless 
I don't find any evidence of that.
    So I look at Latino immigration and the impact that they 
had on native-born Hispanics, and in fact I find that a 10 
percent increase in Latino immigration increases the earnings 
of Hispanics who are more highly educated by about one percent. 
And it has little displacement effects on even earlier 
immigrants who may be more likely to take the same jobs.
    So what happens is that they tend to specialize. They do 
different tasks. They take different jobs. And so we actually 
find very little evidence of displacement and, if anything, 
positive impacts on the earnings of the native-born. Not only 
in other sectors, but also because, as I said before, they are 
also consumers.
    So, for example, in retail there are huge increases in 
employment once immigrants come into local communities just 
because they demand those services, and so that increases 
employment in other sectors as well.
    Vice Chair Klobuchar. Very good. Senator Wicker, from 
Kansas.
    Senator Wicker. I'm actually from Mississippi, but I've 
visited Kansas once.
    Vice Chair Klobuchar. I'm just kidding, because everyone 
knows ``where's Kansas.'' Anyway, very good. Good seeing you 
here.
    Senator Wicker. Thank you so much.
    Mr. Norquist, very interesting prepared testimony. On page 
2 of your testimony, you make the flat statement that people 
are an asset, not a liability. And I think I can extrapolate 
from that what you mean is illegal status people and legal 
status people, regardless, are assets.
    On page 3 of your testimony, you talk about the Arizona 
experience and compare that to New Mexico and California. And 
basically do I understand your testimony to be that in 
persuading, one way or the other, illegal immigrants to leave 
Arizona that has harmed the Arizona economy as compared to 
California and New Mexico where more illegals were allowed to 
stay there? Is that your testimony?
    Mr. Norquist. On the first part, the people are an asset 
not a liability is that people produce more than they consume, 
and that there is the old Malthusian world view that if you 
have another baby born in the country we are all poorer because 
you have to divide everything that we have by one more person. 
The idea of the whole zero population growth campaign which 
also is associated with and manages the anti-immigrant 
organizations. Their view is that people are a liability. More 
people make us poorer. And that is a world view.
    I think they are wrong. I think historically with 300 
million people in the country we are slightly richer than we 
were when there were 3 million people in the country. And, that 
more people in a free society where people are allowed to 
innovate and operate in a free society, the country is richer 
with more people rather than less people.
    Senator Wicker. Okay, well apply that then to the Arizona 
versus New Mexico and California experience. You're saying 
they're an asset to California and New Mexico, regardless of 
their legal status?
    Mr. Norquist. Well the argument in Arizona at the time was, 
oh, if these people were not here unemployment numbers would 
get better, and the economy would get better because they are a 
drain.
    When they left, things got worse. Unemployment was 
problematic compared to other similarly situated states. We are 
not comparing them to----
    Senator Wicker. Things got worse as a direct result of 
their leaving? Is that your testimony?
    Mr. Norquist. Well, if you have another theory we can look 
at it, but clearly it did not get better.
    Senator Wicker. No, I am just trying to understand what you 
are saying.
    Mr. Norquist. The fellow who put that piece of legislation 
together got recalled. So somehow it was not viewed as a 
particularly good idea. And the two Senators from the State are 
two of the most outspoken advocates of comprehensive 
immigration, and both got re-elected with those positions. So 
the idea that Arizona, per se, is happy with that law--what 
they did is they made it a crime to stand on the side of the 
road and look for work.
    And I am not sure that that was a good idea. Other states 
have not followed it----
    Senator Wicker. I supposed the Governor that signed the law 
got re-elected, too, so there's always a difficulty 
extrapolating why people vote for whoever.
    Let me ask you this----
    Mr. Norquist. Watch the next Governor. We're going to be 
okay in Arizona.
    Senator Wicker. Let me ask you this, Mr. Norquist.
    If we did not have the 12 million illegals in the United 
States now, what would the economic effect of that be?
    Mr. Norquist. Well, you can look at where people came in. 
These are people who there was no legal opportunity to come in 
and be a farm worker or----
    Senator Wicker. Would it be positive, or negative, if we 
didn't have those 12 million illegal immigrants?
    Mr. Norquist. The GDP would be smaller.
    Senator Wicker. Okay. So from an economic perspective, 
should we--how should we be picking and choosing, Mr. Norquist? 
Who should we encourage to emigrate to the United States? 
Should we have a point system? And what can we learn from other 
countries who aggressively encourage immigration, such as 
Canada, and New Zealand, and Australia?
    Mr. Norquist. Well, you've got different examples through 
American history. I mean, one of the--the reason you have the 
illegal population is that we once had a guest worker program. 
We had lots of illegals, and we had a guest worker program. 
They were arresting 800,000 people a year on the border before 
Eisenhower put in a guest worker program.
    Then they were arresting 45,000 people at the border. Then, 
the labor unions did not like it, so they got rid of the guest 
worker program and they were arresting 1 million people at the 
border, and people came in illegally.
    If you don't have a guest worker program or a legal way to 
come in permanently or temporarily and work, people will come 
in around the system. And that was created by U.S. law, flawed 
U.S. immigration law, not having guest worker program, not 
having enough legal immigration to fit the needs. And a lot of 
high-tech people never came here, and they went and started 
companies in other countries.
    A lot of work just did not get done. So reforming that is 
very important. Look, there are all sorts of ways, the whole 
STEM idea of allowing people who have got certain skills and 
saying we need X number of guys from the high-tech industry, 
step one. But there is also a need for people who work in 
ranching, and dairy, and farming where there are not folks 
coming in from the domestic market.
    Whether you do that through permanent immigration, or 
through a guest worker program, those positions are needed for 
the economy. And if you did not have them, we would be worse 
off.
    Senator Wicker. Okay----
    Vice Chair Klobuchar. Okay----
    Senator Wicker [continuing]. I think I will ask the witness 
to take that last question about what we learned from other 
countries for the record and get us an answer on the record. 
Would you do that?
    Mr. Norquist. Sure. Well, the Canadian----
    Vice Chair Klobuchar. Very quickly, because Representative 
Sanchez is waiting.
    [The information referred to appears in the Submissions for 
the Record on page 26.]
    Vice Chair Klobuchar. Okay. Thank you very much, Senator 
Wicker.
    Representative Sanchez.
    Representative Sanchez. Thank you, Madam Chair. And thank 
you both, Doctor and Mr. Norquist, for being here with us 
today.
    I would like to say, before I ask this question because 
this is an incredibly important question to follow up to the 
Senator's question. I am one of the key sponsors in the House 
of Representatives for Startup 3.0. I have been a firm believer 
in STEM, in not only helping our young people born here in the 
United States to do STEM, but also to encourage those who come 
from abroad to stay here for awhile. And I feel conflicted 
about that because if they do return to their country, then 
they make economic pods there and then maybe we don't have as 
much immigration going on either.
    But I have been a firm believer in Science, Technology, 
Engineering and Mathematics, my own background, but I also 
think it is important that we let others in besides just STEM 
people when we look at our immigration.
    I look at my Mom and Dad, both immigrants from Mexico, with 
not a whole lot of education. My father started in a factory 
and ended up owning businesses in that industry.
    And my mother ended up, after sending seven kids to 
university, going back and getting her GED and her college and 
her masters and teaching for 17 years in the public schools 
young people and really making a name for herself in that 
industry.
    So my question to you is--oh, and by the way, they are the 
only two parents ever in the history of the United States to 
have two daughters in the United States Congress. So I think in 
one generation it is a tribute to hard work, innovation, desire 
to succeed, love of America, that I believe immigrants in 
particular bring to this country because they chose to be here.
    So my question to you is: Should we not also--because I 
know there's a lot of desire to limit only to STEM, or people 
with Ph.D.s, or people with money to be immigrants to this 
country. I think there is a lot to be said for someone like my 
father who came here, who learned English here, who worked 
hard, who got cheated in every single way along the way as 
immigrants do when they first come to this country, but managed 
somehow to overcome that and send two daughters to, as he calls 
it, ``the Board of Directors of America, Incorporated.''
    So you can tell where he's coming from when he says those 
words. Can you talk a little bit about why it might be 
important to not just select the cream of the crop from some 
other countries, but why it is important to let others have a 
chance at being Americans, if you will?
    We'll start with Doctor, and then go to Mr. Norquist.
    Dr. Kugler. Congresswoman Sanchez, what an inspiring story 
of your family. I want to say that, yes, there are important 
skilled jobs in high-tech manufacturing, but that includes also 
production workers, not only the innovators and the STEM 
workers. They are important skilled jobs being held. Some of 
those jobs being held, the ones growing the fastest and that 
are expected to grow the fastest in the next 10 years, do not 
necessarily even require a college education.
    There are some important skilled jobs in information, for 
computer science. Again, some of those jobs are not requiring 
necessarily very high levels of education. And of course we 
know that in agriculture there are very important needs.
    So I completely agree with you. It is not only skill as 
measured by level of education, but it is skill measured in 
terms of particular tasks that can be performed in the job. For 
example, I want to give the example of agriculture.
    In agriculture we know that about 65 percent of those 
working in agriculture do not have a high school degree. But 
nonetheless, more than 70 percent of them have been working in 
agriculture for more than 5 years. Presumably they have very 
specialized skills to work in the fields and to know what to do 
in terms of their harvest and post-harvest periods.
    So those are skills, even though they're not measured as 
years of education. Likewise, in production you can think of 
electricians, carpenters. In construction we hear this all the 
time. That's why those visas are also very important. It is 
very important to allow the non-skilled immigration as well to 
come in and satisfy those skill jobs.
    Of course it would be great to train people here in the 
U.S., and I think that is what Vice Chair Klobuchar said is 
very important, that we use some of that money also and we get 
even in high-tech some of those high-tech firms to train our 
own U.S. workers to do those jobs eventually. But in the short 
term, those skilled jobs will not be met if we do not let some 
of those people from abroad come in to meet those needs.
    Representative Sanchez. Mr. Norquist.
    Mr. Norquist. Yes, American history suggests that you are 
right. I mean, we did not ask people to have Ph.D.s when they 
came over the last 300 years. And a lot of people came with raw 
talent and moved up. So we do immigration and upward mobility 
both.
    Vice Chair Klobuchar. Very good. Thank you very much, for 
your personal story and what you are contributing today, 
Representative Sanchez.
    Senator Lee.
    Senator Lee. Thank you, Madam Chair, and thanks to both of 
you for being here.
    I too am pro-immigrant. I am pro-immigration reform. We are 
a Nation of immigrants. I hope we always will be. And I agree 
that we need to make it possible to come into this country 
through the front door.
    I want to start with you, Mr. Norquist, and follow up on a 
statement you made a few minutes ago dealing with the fact that 
one of the reasons why we have got 11 million or so immigrants 
in an illegal status today has to do with the fact that we have 
had a legal immigration system that does not function properly. 
It does not operate in such a way that allows our immigration 
system to keep pace with economic realities, with the demand of 
our economy.
    So one question I have for you is: In your opinion, does 
the Gang of Eight Proposal deal with this adequately? So 
separate and apart from the fact that it would take those 
currently here illegally and put them on a path to citizenship 
eventually, if it doesn't also deal with the inadequacy of the 
current visa system eventually that problem is going to creep 
up and we will have more illegal immigration. Would you agree 
with that?
    Mr. Norquist. Yes. You need to do something about future 
flows as well as past flows and status.
    Senator Lee. Does this deal with that adequately, in your 
opinion?
    Mr. Norquist. In my view, no. I think both the H1B numbers 
should be more robust. The total number of immigration should 
be more robust. The guest worker program should be more robust.
    Is this progress as opposed--Look, I am all in favor of 
compromising toward liberty and progress. This is a step in the 
right direction. Is it a step enough in the right direction? I 
think it could go further. But the world is a better place if 
that bill, unamended, passed than if it doesn't pass.
    Can it be a better bill with better results in the future? 
Sure. Absolutely. That is what the amendment process is for.
    Senator Lee. Okay. But eventually you think additional 
adjustments would be necessary in terms of opening up visas, 
more visas both in high skilled and in nonhigh skilled areas?
    Mr. Norquist. And it may be that that can only happen 
sufficiently after people have seen the success of 1.0 on 
immigration reform. But that is the direction that history 
suggests we need to go in.
    Senator Lee. Okay. Dr. Kugler, I would like to refer to a 
statement that was made in The New York Times on March 17th of 
this year. The Times reported, ``And as a side benefit, waiting 
a decade would mean that the costs of the overhaul would not 
kick in until the second decade because illegal immigrants do 
not qualify for government benefits until after they earn green 
cards. That means the 10-year cost estimates by the 
Congressional Budget Office would not include the expense of 
those benefits.''
    So the question I have for you is: How meaningful are the 
CBO cost estimates that we have? If they are based on 
projections that use a 10-year window, and the projected costs 
of the bill take those estimates outside the 10-year window 
because they hold off for more than 10 years the moment when 
there might be some direct entitlement and welfare implications 
of the bill?
    Do you understand the question?
    Dr. Kugler. Certainly. Yes. So I understand what you are 
saying. So we have the 10-year window, and in 13 years you have 
access to naturalization and citizenship. And you are right 
that then you won't be entitled to many of those transfer 
programs, many of those benefit programs. But by the same 
token, it is true that we know that there is about a 10 percent 
gain just moving from legal status to citizenship, and that is 
not taking account of that.
    So it works on both ends, actually. You're right that there 
is that issue about the cost side of things; but on the benefit 
side there are other things that immigrants will not be 
qualified for, including some of the access to more 
entrepreneurship, to loans, to other things that may also 
contribute in a dynamic sense.
    Senator Lee. And so do you think it is a wash, then, when 
you take those thing into account? Is that what you're saying?
    Dr. Kugler. Yes.
    Senator Lee. Okay. All right, that leads into my next 
question, which is for Mr. Norquist, related to the wash point. 
In his testimony before the Senate Judiciary Committee on April 
19th of this year, Douglas Holtz-Eakin noted that the 2007 
immigration bill had a cost of $18 billion over a decade, 
stating that such an amount would be ``swamped,'' quote/
unquote, by other changes. And he dismissed it more or less as 
a budgetary wash.
    Do you think Members of Congress, Members of the Senate, or 
of the House, whether they call themselves conservatives or 
not, do you think they should think of $18 billion as a 
budgetary wash?
    Mr. Norquist. Well, $18 billion is a significant number. So 
is $2.7 trillion, which is his estimate of increased revenue 
over the additional spending from a reform that looks like the 
one we're looking at now.
    So all costs are costs. In this situation, as Holtz-Eakin 
points out, the growth of the economy and the benefits you get 
from something like the Senate plan is much greater.
    Senator Lee. And could you support it if you became 
convinced that the net cost was greater--that there was a net 
cost, and that net cost wasn't offset somewhere else?
    Mr. Norquist. Well first of all, the bill has no tax--the 
Senate bill that one could look at and read, there may be other 
people's ideas--has no tax increases in it. There are fines for 
people who cross the border illegally.
    Senator Lee. No, I understand. I'm just talking about 
outlays, if it would result in more outlays.
    Mr. Norquist. I am focused on making sure taxes don't go 
up, and that total government spending as a percentage of GDP 
goes down. And spending as a percent of GDP would fall, by any 
way you analyze the kind of reform that the Senate is doing.
    I mean, spending goes up every year. Does it go up faster 
than the economy is the question of how damaging it is.
    Senator Lee. Okay. Our Chair has been very patient with me, 
and my time has expired. Thank you very much.
    Vice Chair Klobuchar. Okay, I just have a few questions 
following up on some of the other Members.
    I think it was Mr. Delaney that was talking some, and 
Senator Murphy, about the effect on the economy in terms of the 
debt. And one of the things is the Social Security and the fact 
that in 1950 there were 16 workers to every retiree. Today 
there are 3 workers to every retiree. And by 2030, there will 
be only 2 workers to every retiree.
    And I know we have talked about reform and other things 
that need to be done here, but how again does immigration stem 
that problem? When you look at the number of people, if we were 
to shut off our borders and not let any immigrants in, or to 
send back the 12 million that are already here now, or 11 
million, or whatever the correct number is, how does that 
affect Social Security for our existing retirees?
    Do you want to start, Dr. Kugler?
    Dr. Kugler. So we know that by 2030 about 33 million new 
jobs will be created just due to the retirement of the Baby 
Boomers. Maybe 17 million more jobs will be created just 
because of growth in the economy. We need people to satisfy 
that demand, and we need people to do those jobs.
    But that has important implications as well for the Social 
Security system. As I mentioned before, currently it is 
estimated that there's over $1 trillion in the earned suspense 
accounts. This means that many undocumented have already been 
putting money into the system. They don't get anything back.
    But we also know that after September 11th, from the Social 
Security Administration, only about 15 percent of the 
undocumented are paying taxes. It used to be 50 percent before 
September 11. It became harder, and that fell to 30 percent.
    That means that about 70 percent of the 11 million 
undocumented would now start paying taxes as a result of 
gaining legal status. And that is very important, especially 
with the upcoming Baby Boomers retiring, and with many of those 
people not contributing to the system but getting the benefits 
on the other hand.
    In addition, as I mentioned before, we know that 
naturalized citizens actually tend to claim less benefits and 
tend to claim less. So they tend to put more into the system 
than they actually take out of the system.
    Vice Chair Klobuchar. Okay. Mr. Norquist, do you want to 
add anything?
    Mr. Norquist. Well the present entitlement systems, 
Medicare and Social Security, promise to pay more than people 
pay in. So I guess every person you add marginally makes things 
better in the short run, and worse in the long run, assuming 
you are never going to reform the systems.
    But if you are going to reform those systems to become 
sustainable, which really needs to happen in the next 10 years 
if the country is going to continue forward economically, then 
more people into those systems helps.
    Vice Chair Klobuchar. Tourism. I raised that in my opening 
statement, but we have seen this decline in the numbers at the 
same time we are seeing a growing middle class in other 
countries that actually have money to come to visit us and 
spend money here, and buy stuff in America.
    What do you think of the provisions in the Senate proposal 
on tourism, Dr. Kugler?
    Dr. Kugler. So as we know, the recovery in the rest of the 
world, aside from Europe, has been a lot quicker, including in 
Latin America, Asia, and the rest of the world. So it makes 
sense for us to bring as much as possible those resources back 
into the U.S. Just like we export, it makes sense to bring 
money into the country as well in terms of tourism, and issuing 
tourist visas as long as people don't overstay on those visas 
makes quite a bit of sense.
    Vice Chair Klobuchar. Very good.
    Mr. Norquist. Those provisions are sheer genius.
    Vice Chair Klobuchar. Oh, thank you so much.
    [Laughter.]
    I am going to quote you on that, since I worked on some of 
them. Thank you.
    In the testimony before the Judiciary Committee last 
month--this will be our last thing on the debt issue with 
regard to the Heritage study--but you mentioned a number of 
studies showing the positive impact of immigration reform on 
increasing economic growth, reducing our debt, adding trillions 
on the high end in terms of bringing money into the economy. 
But I was struck by the point you made that replacing 
immigration reform with an enforcement-only policy would lead 
to a 2.6 trillion decrease in growth over the same period of 
time.
    Could you talk about that, and again use that to explain 
what is missing from the Heritage--the current Heritage 
Foundation Report?
    Mr. Norquist. Yes. The Heritage Report, the most recent 
one, not the earlier pro-immigration, pro-reform, pro-immigrant 
studies that Heritage did for 30 years before they changed 
their mind, the current reform doesn't--you know, how's your 
wife? Compared to what?
    How do you like immigration reform? Compared to what? The 
status quo? To deporting everybody who is here? One of the 
questions was: What if everybody left?
    Well, one of the studies I quoted in the Judiciary 
testimony was: What if you went and spent the money to grab 
everybody and put them across the border, the cost there? And 
that was a rather significant--it was not only a huge cost to 
finding people, grabbing them, and throwing them across the 
border in terms of dollar amounts, and it is hundreds of 
billions of dollars to do that if you wanted to; but then the 
lost productivity was estimated to reduce GDP significantly in 
the trillions of dollars.
    So if you are not going to reform immigration policy and 
allow earned legal status for people who are here undocumented, 
what are you going to do? Continue the status quo? In which 
case, any costs you see now continue into the future. Or, if 
you are actually going to grab people and throw them across the 
border and they are not here and they are not being--
theoretically not being replaced, there is a dramatic drop to 
GDP.
    Vice Chair Klobuchar. Very good. Do you have any questions 
in addition, Mr. Hanna?
    Representative Hanna. I do----
    Vice Chair Klobuchar. Okay.
    Mr. Hanna [continuing]. Madam Chair.
    Doctor, are you familiar with Harvard Professor George 
Borjas' work? He indicates that indeed immigrant workers do 
compete with and do have the net effect of lowering wages.
    Just a response? I think it is worth talking about.
    Dr. Kugler. I am certainly aware of Professor Borjas' work. 
We are both members of the National Bureau of Economic 
Research. I presented my work in front of him in fact, and we 
have interacted closely with each other.
    His work is very thorough, but one of the big issues with 
his work is that it does not take account of this potential 
complementarity. It basically assumes that for every one 
immigrant that is put in, one job among natives will be taken 
out. That they perfectly substitute each other.
    And so once you are making that assumption, you know, the 
results are going to give what they give. And what he finds is 
that there is, for every 10 percent increase in immigration 
there is a 3 percent decrease in native wages, and this is 
bigger for the less skilled because they are more likely to be 
substitutable at that end precisely.
    So we are aware of those. As I said, some of the recent 
studies that have come out precisely take account of the fact 
that immigrants and native-born Americans are not necessarily 
substitutable.
    Representative Hanna. So you do not agree with him?
    Dr. Kugler. I think there are some problems with his study, 
yes.
    Representative Hanna. Thank you. I have no further 
questions.
    Vice Chair Klobuchar. Okay. Very good. Well, thank you very 
much. And this has been a great hearing, one of our most well 
attended hearings. I don't know if you will beat out when 
Chairman Bernanke comes, but it was close in terms of the 
attendance here. And I think it is a testament to both of you, 
as well as to the importance of this subject, the cutting edge 
work that is going on right now in the Judiciary Committee, and 
work that is going on in the House to advance this.
    We are actually quite excited about what is happening with 
this. We are seeing movement for the first time. And as Mr. 
Norquist has pointed out, opponents from a few years ago when I 
was involved back in 2007 and saw how very hard work and a 
valiant effort on the part of President Bush did not quite make 
it because people are not ready with these kind of economic 
arguments that I think are going to be so important to this 
debate, as well as the security arguments and things that we 
have been talking about over the last few weeks.
    I truly believe that this economic opportunity is ours for 
the taking. When you look at how we built America, it has 
always been a country of immigrants, whether it is my Slovenian 
grandparents, great grandparents, coming over to work in the 
mines of Ely, Minnesota, or my Swiss grandparents coming over 
to start a cheese factory in Wisconsin--pretty cliche but 
true--we are a country of immigrants, and we have to remember 
that every single day.
    And we do not know who is going to invent the next 
Pacemaker, or Post-It Note, both of which came from my State, 
but when they do it, we want them to do it in the United States 
of America.
    So I want to thank Chairman Brady for working with me on 
this hearing, as well as all of the Members that have been 
here. We will continue this hearing at two o'clock tomorrow for 
our remaining two witnesses.
    Thank you very much, and the record will remain open.
    Thank you, everyone. The hearing is adjourned.
    Mr. Norquist. Thank you.
    Dr. Kugler. Thank you.
    (Whereupon, at 11:08 a.m., Tuesday, May 7, 2013, the 
hearing was recessed, to reconvene at 2:00 p.m., Wednesday, May 
8, 2013.)
                       SUBMISSIONS FOR THE RECORD

 Prepared Statement of Hon. Amy Klobuchar, Vice Chair, Joint Economic 
                               Committee
    Good morning. I'd like to thank everyone for being here today for 
this important and timely conversation about immigration. I'd 
especially like to thank our distinguished panel of witnesses, who I 
will introduce shortly.
    Today's hearing comes at a critical moment. Our economy is 
improving, the private sector is adding jobs, and the housing market is 
getting stronger. But more needs to be done, and comprehensive 
immigration reform is key to moving our economy forward. That is why I 
have scheduled this two-part hearing to discuss immigration's 
contribution to our economic strength.
    We all agree that our current immigration system is broken, and 
that we'll need to work together in a bipartisan manner to get 
comprehensive reform done. As a member of the Senate Judiciary 
Committee, I will be there later this week as we start marking up 
immigration reform legislation.
    There is a large and diverse coalition supporting immigration 
reform, including business leaders, law enforcement, religious leaders, 
farmers, labor unions, and people from across the political spectrum. 
We can in fact see the stretch of the ideological left to the right 
support for this bill right here at this table. I'd like to introduce 
our witnesses now.
    Dr. Adriana Kugler is a Professor at the Georgetown Public Policy 
Institute and is Co-Director of the International Summer Institute on 
Policy Evaluation. She served as Chief Economist of the U.S. Department 
of Labor in 2011 and 2012. She is a Research Associate at the National 
Bureau of Economic Research.
    Mr. Grover Norquist is the President of Americans for Tax Reform, 
an organization which he founded in 1985 that works to limit the size 
and cost of government. Previously, Mr. Norquist served as Economist 
and Chief Speechwriter at the U.S. Chamber of Commerce and as Executive 
Director of the National Taxpayers' Union.
    I don't know how many times a Democratic Senator has asked Grover 
Norquist to testify, but I did. We will chalk it up to the strong 
bipartisan support for this bill.
    It's not going to be easy or simple, but this reform is vital to 
our country. We need to establish a reasonable pathway to citizenship, 
continue the progress we've made on the border, and make sure our 
companies are getting the workers they need to compete in the world 
market.
    Immigrants are an entrepreneurial force in America. Look at the 
Fortune 500 companies. Ninety of those companies were founded by 
immigrants, and more than 200 were founded by immigrants or their 
children--including Hormel and 3M in my state. Thirty percent of all 
U.S. Nobel Prize winners have been immigrants.
    I also want to focus this morning on some aspects of comprehensive 
immigration reform that are very important to moving our economy 
forward, such as important provisions for ag workers and a pathway to 
citizenship.
                               i-squared
    Earlier this year I co-sponsored Senator Hatch's legislation, the 
I-Squared Bill, which is about encouraging engineers and inventors and 
entrepreneurs to work here in this country. I-Squared reforms the H-1B 
visa system to meet the needs of a growing science, engineering and 
medical community.
    I-Squared would also reform the student green card system to 
encourage students who get degrees here to stay here, rather than going 
overseas to compete against American businesses. The bill would also 
improve the green card system and change the visa funding structure to 
improve science, engineering, technology and math education.
    I am pleased that the legislation includes provisions very similar 
to I-Squared.
                               conrad 30
    Second, comprehensive immigration reform can contribute to economic 
strength by allowing doctors to stay in the U.S. to practice medicine, 
rather than returning to their home country for two years after their 
residency has ended. We have medically under-served areas of our 
country--from rural America to inner cities. As just one example, Grand 
Meadow, Minnesota, lost its local health clinic because they could not 
find a doctor to staff it.
    I sponsored legislation expanding on the former Conrad State 30 
Physician Access Act that would allow doctors to stay in the U.S. 
without having to return home if they practice in an underserved area 
for three years. Access to quality health care helps businesses attract 
the employees they need to grow and compete. The Gang of Eight 
legislation includes the Conrad State 30 provisions.
                                tourism
    Immigration reform is critical to another important part of our 
economy in Minnesota and across the country: tourism. Last year, a 
bipartisan group of Senators including myself introduced a bill, the 
JOLT Act, to modernize and expand the Visa Waiver Program and reduce 
visa wait times.
    Tourism suffered a 16 percent decline after 9/11. Every one percent 
increase in travel spending directly generates 76,700 American jobs. We 
have seen significant improvements in the tourism industry, which has 
recovered nearly 60 percent of the jobs lost since 9/11. The tourism 
industry now supports 7.7 million jobs in the United States.
    These are jobs that, like the jobs at our airports, depend on 
leisure and business travelers from around the world. The immigration 
reform bill in the Senate includes the JOLT Act, which is a positive 
step for tourism.
    One last point: We know that immigration reform not only benefits 
our economy in the short term, but it will strengthen our economic 
foundation for the long term by helping address our national debt.
    Former CBO Director Douglas Holtz-Eakin estimates that immigration 
reform will save $2.7 trillion over 10 years by adding to our labor 
force, boosting productivity and accelerating economic growth, 
something we will hear more about from our witness Grover Norquist 
today, who knows a little bit about the debt.
    America must be a country that makes stuff again, that invents 
things, that exports to the world, and to do that we need the world's 
talent.
    I look forward to our discussion as we dig into the economic impact 
of immigration. And again, I want to thank our witnesses for being here 
today.
                               __________
   Prepared Statement of Hon. Kevin Brady, Chairman, Joint Economic 
                               Committee
    I want to thank Vice Chair Klobuchar for choosing this important 
hearing topic that will be explored in a Joint Economic Committee 
hearing today and tomorrow.
    Given the growth gap which America is experiencing--in which the 
current historically weak economic recovery translates into 100,000 
fewer new jobs per month and workers realizing only a mere fraction of 
the increase in real disposable income during an average recovery--it 
is important that the Joint Economic Committee carefully and 
objectively examine the economic and fiscal effects of our current 
immigration system and proposed reforms.
    If we wish to remain the world's largest economy through the 21st 
century, the economic objective of any immigration reform must be to 
maximize potential economic benefits for the nation while minimizing 
costs to hardworking American taxpayers.
    My belief is that we must close the back door of illegal 
immigration so that we can keep open the front door of legal 
immigration. My frustration through the years of this politically 
charged debate is that Congress and the White House have failed to 
agree on a most basic question: What kind of workforce does America 
need to remain the strongest economy in the world, and what steps do we 
need to take to ensure we have that 21st century workforce?
    There's little doubt the front door of legal immigration is--by all 
measurable standards - broken. Talented individuals with advanced 
education, unique skills, and wealth that could be invested here to 
create new, high-paying jobs for American workers have been excluded or 
have waited years--even decades--to immigrate legally. And the current 
visa program for low-skilled workers is essentially unworkable.
    Recognizing that other committees have jurisdiction over 
immigration reform issues such as border security, employer 
verification, and paths to legal status, the Joint Economic Committee 
will concentrate on its principal function, which is to provide 
Congress with analysis and advice on economic issues.
    To that end, from our witnesses, I am seeking answers to these 
questions:

      What kind of workforce does America need to remain the 
strongest economy in the world, and what steps do we need to take to 
ensure we have a 21st century workforce?
      In addition to developing more trained American workers, 
who should we encourage to immigrate to the United States and what 
should be our priorities? What criteria should we use to evaluate 
potential immigrants?
      Are immigrants entering the United States under our 
current immigrant system a net economic benefit or a net cost to the 
U.S. economy in the long term? What are the benefits and the costs?
      What changes would you make to our current immigration 
system to maximize the net economic benefits to the U.S. economy, the 
federal treasury, and the treasuries of state and local governments? 
How does the bill currently before the Senate Judiciary Committee 
affect economic growth in the short and long term, including its 
effects on wages, real GDP per capita, job prospects for Americans, and 
our long-term global competitiveness?
      As America continues to struggle with historically high 
budget deficits, are the immigrants entering the United States under 
our current immigration system a net fiscal benefit or a net fiscal 
cost to the federal taxpayers and to state and local taxpayers in the 
long term? How do the taxes that immigrants pay compare with the 
taxpayer-funded benefits that they receive? And what is the impact of 
the immigration reform proposal currently before the Senate?
      Finally, what can we learn from the immigration systems 
in our global competitors such as Australia, Canada, and New Zealand 
that admit large numbers of immigrants relative to the size of their 
native-born population?

    Just as we need pro-growth tax reform, a rebalancing of burdensome 
regulations, a sound dollar and a federal government credibly 
addressing its long term entitlement challenges, America needs a 
trained, mobile and flexible workforce that meets the needs of a 21st 
century economy.
    I welcome our witnesses and look forward to their insight as we 
explore the economic effects of immigration reform.
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