Two pro-growth policies for Harris: Immigration and trade

While illegal immigration absorbs most of the political discussion, legal immigration is a critical component of economic growth and solvency for our entitlement programs. (“In their 2023 report, the Social Security Trustees estimate a 75-year Social Security shortfall of 3.61% of taxable payroll under their midline immigration assumptions,” the Brookings Institution recently found. “But that number fluctuates from a 3.21% with a high immigration scenario to a 4.02% deficit in the low immigration scenario.”)

With an aging population, the necessity for legal immigration to prevent economic contraction has become more urgent. And there is little dispute that immigration is a boon to economic growth. Indeed, the faster-than-expected post-covid recovery is partly attributable to immigration. Wendy Edelberg and Tara Watson shared recent research data in Time magazine:

The economic activity directly generated by increased immigration boosted real GDP growth by 0.1 percentage point in 2022 and 2023, according to our calculations. This year, we expect that continued strong immigration will boost real consumer spending growth by 0.2 percentage points and real GDP growth by 0.1 percentage point.

It is possible that the increased consumer demand raised prices and wages in particular sectors. Overall, though, we see little additional pressure on aggregate inflation because the increased immigration also generated greater production. In other words, the increase in productive capacity helped to counteract inflationary pressures that would arise from more people living in the U.S. . . .

Immigration helps address our long-run fiscal challenge. A National Academies report looked at immigrants who arrived between 2006 and 2013 and projects that over 75 years, each will contribute an average of $330,000 more in taxes than they and their descendants will receive in benefits. Immigration brings other long-term economic benefits too, including innovation and a boost to the productivity of native-born workers.

There is no shortage of good ideas, ranging from dropping outdated country caps to granting foreign STEM graduates green cards to clearing the green-card backlog to increased visas for seasonal workers. (The issue is such a no-brainer that even felon and former president Donald Trump suggested giving green cards to foreign graduates.)

Moreover, there is a direct link between immigration policy and high food costs. “On average, labor makes up about 15% (and climbing) of a farmer’s costs. And agriculture, like most industries, is facing a severe workforce shortage,” writes former trade negotiator Stephen Craven. “Already, an estimated 10 million tons of food are not harvested each year due to labor shortages and other factors, according to the World Wildlife Fund. Such a loss is one of the downsides of historically low unemployment.”

Harris need not come up with a full-blown statute to address this highly technical and complex problem. She could, however, commit to bringing in members of labor, business, state and local government and advocacy groups to make a comprehensive proposal to straighten out our legal immigration jumble. (Last year, the Cato Institute devised a highly instructive online game to show just how obtuse and costly it is for qualified immigrants to navigate the system.) In keeping with her message, she certainly can affirm that immigrants who can contribute to the United States should find legal means to do so in an orderly fashion consistent with our economic needs.

On the trade front, Harris has already denounced Trump’s tariff proposals. (Apparently neither Trump nor his advisers recall that the Smoot-Hawley Tariff Act helped trigger a worldwide depression.) She should be clear: This is economic self-destruction — of ourselves and our trading partners — that only an ignoramus could favor. “As fiscal policy, the Trump agenda amounts to regressive tax cuts, only partially paid for by regressive tax increases,” the Peterson Institute of International Economics recently reported. The report continued, “In contrast to Trump’s frequent, and mistaken, claims that foreigners bear the impact of tariffs, economists have long understood that tariffs burden domestic purchasers of imported goods. … The costs from Trump’s proposed new tariffs will be nearly five times those caused by the Trump tariff shocks through late 2019, generating additional costs to consumers from this channel alone of about $500 billion per year.”

In fact, Harris should align herself with pro-growth policies that lower barriers for U.S. businesses and farms, which survive on exports. A major casualty in trade wars, in particular, is American agriculture. And here, both in her effort to make headway in rural areas and in her effort to reduce grocery costs, Harris would be wise to focus on opening markets for American farmers and reducing food costs for American consumers. As trade negotiator Craven pointed out, “Given that the United States imports 15% of its food supply — including nearly all of its coffee and cacao, 60% of fresh fruit and nearly 40% of fresh vegetables — a 10% tariff [which Trump proposed] would amount to a cost increase on some of America’s most important imports.” He added: “As domestic suppliers are unlikely to be able to undercut them on price any time soon (America’s limited coffee farms, for instance, produce nowhere near the amount of coffee Americans drink), consumers are likely to foot the bill.”

Pledging to address barriers with existing trading partners, increasing funds available to help grow export markets for American farm and food products, and articulating “trade policies that advance American economic interests as well as American geopolitical interests,” as the Carnegie Endowment for International Peace put it, should be part of her opportunity agenda. When opportunities to renew and expand free-trade agreements arise, Harris should commit to ensuring that the United States is not excluded from growing markets. (“One clear opportunity for such reforms would be in the renewal of the terms of the [African Growth and Opportunity Act], slated for 2025; meanwhile, the governments of Colombia and Chile have given signs they are open to renegotiating their FTAs with the United States, presenting another opportunity to advance a new model for market access,” the Center for American Progress reported.)

With just over two months until Election Day, few would suggest that the Harris administration churn out a slew of detailed white papers on two of the most technical and controversial issues: immigration and trade. But Harris can certainly link her approach — optimistic, confident, engaged in the world, looking to expand opportunity — to an immigration and trade philosophy that aims to grow the pie, lift incomes and lower food costs.