Trump's Immigration Plan Could Undermine Promise To Boost Economy
President-elect Donald Trump says he will double the nation's growth rate during his time in office. That promise will be difficult to keep.
Trump isn't talking about a temporary boost in growth. He says he can make the economy grow in the long term at a rate of about 4 percent a year.
Most economists think America's potential growth is only about 2 percent, and most agree the best way to make it higher is to get more people working and make those workers more productive. Stimulating the economy with government spending or tax cuts will only boost short-term growth and cause inflation.
But right now, getting more people into the labor force is a challenge. For one, it means fighting a demographic tide.
"We have a huge wave of baby-boom era people retiring," says Robert J. Gordon, an economist at Northwestern University and author of The Rise and Fall of American Growth. "Right now, we've got a shortage of construction workers. We've got a shortage of long-distance truck drivers. We've got a shortage of many kinds of skilled workers needed to work in manufacturing."
Gordon says bringing immigrants into the workforce is the best way to deal with this mass retirement of baby boomers.
In the past couple of decades, half the growth in the labor force has come from immigration. But, Gordon points out, Trump has said he will deport millions of immigrants.
"They're called illegal immigrants, and they're here illegally," Trump said in an interview with CNN. "They're going to have to go, and they're going to have to come back in legally, and otherwise, we don't have a country."
Those were chilling words for Jose Aguiluz, a 27-year-old operating room nurse at Adventist Hospital in suburban Washington, D.C.
"His rhetoric was very negative during the election, but now he has to contemplate and analyze reality," Aguiluz says.
Aguiluz came to the U.S. at age 15 for a lifesaving surgery after a car accident in his native Honduras. After the surgery, he and most of his family stayed illegally. Then, in 2014, President Obama issued an executive order that provided two-year deportation deferments for young immigrants like Aguiluz. Trump says he will rescind that order.
If he could talk to Trump, Aguiluz says, here's what he would say.
"I am a very contributing individual in the American society," he says. "I save American lives in the OR. They don't care about my immigration status. They don't care if I'm a Latino. What they care is that I'm a very capable nurse that will carry them through the surgery."
In fact, about one-quarter of all the doctors and nurses in the U.S. are immigrants.
Stephen Moore, who has advised Trump on his economic growth policy, says Trump isn't against immigration, just illegal immigration. Personally, Moore says he believes even some of those workers who are in the country illegally shouldn't be deported.
"People who are in this country, are working, and productive Americans who are contributing, I personally would not like to see those people deported," says Moore, who is also an economic consultant with FreedomWorks, the grass-roots organization that helped launch the Tea Party.
He also argues that a faster growing economy will not only provide jobs for the unemployed but will attract others back into the labor force, including some retirees. Most economists are skeptical that could provide enough workers to get to a 4 percent growth rate.
In terms of making workers more productive, Moore says big tax cuts for businesses will boost investment in new equipment and technologies, such as autonomous vehicles and artificial intelligence.
"We could see very rapid rises in the productivity that ... is a key part to making growth possible," Moore says.
But Gordon, who has studied innovation, believes it will be several decades before those two technologies have much impact on U.S. productivity. And he notes that neither the big Reagan tax cuts nor the big Bush tax cuts boosted U.S. productivity.
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