11/25/2013 07:21 pm ET Updated Jan 25, 2014

Why Immigration Reform May Depend on Political Reform

The immigration debate is a like a tragic comedy. It's a shame that a topic as critical to the national economy and tens of millions of lives is utilized as an instrument for political gain (or loss). Arguments on either side shift based on competing priorities and the political winds of the day without getting to the core of the issue - the result, perennial stalemate. Perhaps most disappointing for those directly affected, is the lack of consistent presidential leadership on this issue. The "mandate" from 71 percent of the Latino electorate certainly included a strong message that immigration reform is both urgent and necessary for this constituency, yet the implicit excuse from the White House is that the Republicans do not cooperate.

From my perspective, the "core" and "outer rings" of the issue are labor force management first, national security second and whether or not someone entered the country "illegally" third. If Americans were simply more "selfish" we would welcome hard-working migrants to our nation - many of them with both intellectual and economic capital to invest in the United States. As America's Anglo population ages and tends toward retirement, Hispanics and Asians will increasingly replace the 20th century labor force.

The danger in the immigration debate is that we lose focus on the value of immigrant human resources while bickering about who should be "entitled" to stay. It seems the extremists on the Republican side continue to stubbornly protect an ever-shrinking base constituency who fear immigrants might take their jobs and exploit public services. There is much evidence that employers hire them willingly and that they are net payers into both the IRS and SSA. For example, former Chief Actuary of the U.S. Social Security Administration, Stephen Gross reported that contributions minus benefit payments to unauthorized migrants were estimated at $120-$240 billion as of the year 2007 - thereby keeping our Social Security system afloat several more years than it would be otherwise.

Until recently, businesses that depend on immigrant labor have been conspicuously silent on the subject. It is quite clear there are willing employers of low-wage, high-energy labor. However, this process simply works as a subsidy for the employers of low-wage migrants. Hiring them at a low rate without benefits means that somehow expenses like health care eventually accrue to the balance sheet of the tax payer. Under the "self-deportation" scheme proposed during Mitt Romney's campaign, America would need to rely on legal residents and citizens for hard labor, low wage jobs. This undertaking, no doubt, would result in wage inflation which would then lead to reduced competitiveness of our businesses and by implication diminished macroeconomic vitals. Although health care and reduced competitiveness are not immediately visible, they are real - as the saying goes "lo barato sale caro" --what seems cheap becomes expensive.

It makes sense to begin by addressing legal immigration - the number of permanent resident visas available has been stagnant and low for decades and disproportionate against Latinos. If one considers reciprocity a valuable concept, one would adjust the number of such visas available to migrants from Latin America as opposed to Asia. For example, in 2007 Mexico was granted approximately 165,000 permanent resident visas - India was granted approximately 57,000. At the same time exports from the U.S. to Mexico was $163 billion compared to exports to India of only $19 billion. When you do the math, this is almost three times disproportionate in favor of India.

I find it interesting that whereas the late Ronald Reagan has become a true American hero among right-leaning Americans, the immigration bill that he signed into law back in 1986 included "amnesty" for those in the nation illegally at the time. Today, amnesty has become a bad word as both Republicans and Democrats stay away from the concept as if it were radioactive. If you listen carefully to the opponents of reform, you frequently hear the phrases "they broke the law" and "get in the back of the line" and "secure the borders"...these sound-bites seem good politics, but avoid the core of the issue which is labor force imbalance.

The Senate bill passed earlier this year (SB 744) is titled the "Border Security, Economic Opportunity and Immigration Modernization Act." Although it's a valuable entry for consideration yet to be matched by a house bill, it gives first priority to the red herring issue (border security) which is in the outer rings of the issue but not the core. Characterized as "tough but fair." The "W" visas in the Senate bill would seem to alleviate the labor issue, but many anticipate that those here on the W visas might over-stay and then become illegal as well. SB 744 is certainly not perfect, but it is infinitely better than doing nothing at all and letting yet another political season pass before taking meaningful action towards reform. Nonetheless, Republican leadership refuses to recognize the Senate bill and instead has opted to develop "principals of immigration reform" prior to formally introducing a bill for consideration.

While this bill fizzles and other issues get in the way, political opponents become proponents of political stagnation in the name of partisan politics. In the meantime, Democrats enjoy the fact that 71 percent of Latinos voted for president Obama in the last election. But they should not become complacent, as most Latinos fully expected the issue to be settled by now. Republicans, on the other hand (especially those leaning further right) are missing an opportunity to erode that 71 percent in their favor, but instead drag their feet and create roadblocks to reform.

Interestingly, the estimated number of illegal residents has been steady for the last few years at 11 million and even has dropped from a prior 12 million. What does this tell us? Well, when the economies of Asia and Latin America thrive, fewer workers want to migrate to the U.S. and some already here return. The recent economic climate is making migration within Latin America an attractive option (Wall Street Journal, November 18, 2013; Miriam Jordan), as economies in countries such as Colombia and Brazil continue to thrive, they reduce the push northward. If one reads further into that picture, there could be a danger of scaring away the necessary human resources needed to keep America's businesses strong and competitive.

So back to the original question: is it immigration reform or political reform that is needed? Well, it may seem idealistic or nationalistic to say that the nation's economy and our future well-being should come before partisan politics. In this era, such simplicity and common sense seems increasingly elusive.