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Center for Immigration Studies Overstates Immigrant, Non-Citizen, and Native Welfare Use

The Center for Immigration Studies (CIS) just released a new report that purports to show that 63 percent of non-citizen households are on welfare compared to 35 percent of native-born households in 2014.  The purpose of this report was to justify the president’s new public charge rule.  For years, CIS and I have debated this topic and this blog is yet another installment.  Please follow these links to read the previous installments.

There are a few issues with the CIS report and an unsound methodological choice that they made that results in inflating the welfare use rates for immigrants and natives.  I’m just going to make two points below.

First, the welfare use rate reported by CIS is much higher than the welfare use rates estimated by the Department of Homeland Security (DHS) even though they both relied on the Survey of Income and Program Participation (SIPP).  DHS did look at 2013 and CIS looked at 2014, but one year shouldn’t make much of a difference as no new big welfare laws were passed then.  The biggest difference between the DHS and CIS analysis is that CIS used households as a unit of analysis and DHS used individuals (more on this below).  Table 1 shows the differences.  CIS reports much higher welfare use for natives, the foreign-born, and non-citizens for every program.  Table 2 shows just how much higher CIS’ estimates are for every welfare program relative to DHS’ estimates.  Relative to DHS’ estimates, CIS estimates that native-born welfare use rates are an average of 95 percent higher, foreign-born use rates are an average of 173 percent higher, and non-citizen use rates are an average of 208 percent higher. 

 

Table 1

Estimated Welfare Use Rates by the Organization that Conducted the Analysis

 

Department of Homeland Security (2013)

Center for Immigration Studies (2014)

Benefit Program

Natives

Foreign Born

Non-Citizens

Natives

Foreign Born

Non-Citizens

Cash or non-cash

20.9

20.9

22.6

30.4

49.5

57.7

Cash benefits

3.4

3.7

1.8

7.7

9.6

6.3

SSI

2.4

3.2

1.3

6.3

8.2

4.5

TANF

0.8

0.3

0.4

1.3

1.1

1.4

GA

0.3

0.2

0.2

NA

NA

NA

Non-cash benefits

20.4

20.4

22.3

NA

NA

NA

Medicaid

16.1

15.1

15.5

23.3

41.9

49.9

SNAP

11.6

8.7

9.1

15.2

18.4

23

Housing Vouchers

1.6

1.7

1.4

4.7

5.1

3.9

Rent subsidy

3.9

4.8

4.3

NA

NA

NA

Sources: Center for Immigration Studies, Table 1; Department of Homeland Security, Table 11.

 

Table 2

Percentage Difference Between CIS and DHS Welfare Use Rate Estimates

Benefit Program

Natives

Foreign Born

Non-Citizens

Cash or non-cash

45%

137%

155%

Cash benefits

126%

159%

250%

SSI

163%

156%

246%

TANF

63%

267%

250%

GA

NA

NA

NA

Non-cash benefits

NA

NA

NA

Medicaid

45%

177%

222%

SNAP

31%

111%

153%

Housing Vouchers

194%

200%

179%

Rent subsidy

NA

NA

NA

 Sources: Center for Immigration Studies, Table 1; Department of Homeland Security, Table 11; author’s calculations.

 

Second, CIS chose to use a head of household unit of analysis rather than an individual unit of analysis.  This means that they designated some households as headed by non-citizens and others as headed by natives based on SIPP responses.  Thus, CIS’ analysis counts many native-born American children, American citizen spouses in immigrant households, and doesn’t control for the size of the households.  CIS does show welfare household use rates without non-citizens in them, but the entire household unit of analysis is a flawed way to look at welfare use rates.  The DHS sided with Cato on this long-standing issue as it measured individual welfare use rates and didn’t bother with an antiquated head of household measure.  The only close approximations to a household or family-level analysis that DHS conducted were in Tables 16 and 17 of its report, but it only compared citizens to non-citizens.  Tables 16 and 17 unsurprisingly find that people with more children have higher welfare use rates.

DHS isn’t the only organization to agree that the individual is the proper unit of analysis.  According to the massive report on the economic and fiscal consequences of immigration published National Academy of Sciences (NAS), the individual is the proper unit of analysis for fiscal cost analysis.  Since welfare use rates are a subset of fiscal cost analyses, it makes sense to use the individual rather than the household.  The NAS authors wrote:

 

households are not stable over time and because the costs and benefits originating in mixed households often need to be divided between native-born and foreign-born members—as opposed to having to ascribe them exclusively to one group or the other—the individual unit of analysis is more flexible and empirically feasible for dynamic analyses (338).

 

Even in static analyses, the NAS argues that the problem of how “to define an immigrant household (339)” breaks in favor of an individual unit of analysis to at least maintain consistency between the dynamic and static methods.  This is a big change from the NAS’ previous study in 1997 that argued for households as the unit of analysis.

The DHS and NAS both agree with Cato scholars that the individual is the proper unit of analysis in a welfare cost analysis by nativity.  CIS is on the other side of that issue.  I am not making an appeal to authority, but CIS should have to make a better case for why it persists in using the household level of analysis.

CIS’ analysis is not compelling.  A competing analysis of the same data by DHS, using the individual unit of analysis that Cato scholars have recommended, found that all immigrants have a welfare use rate identical to natives and that non-citizens only have a slightly higher usage rate. 

Cato scholars are very concerned with immigrant welfare use, which is why we’ve authored a study on how to eliminate non-citizen welfare use that is now in the form of legislation introduced by Representative Grothman (R-WI).  His bill would do more to save taxpayer dollars and reduce welfare use among immigrants than any refined public charge rule.  Although CIS and I do not agree on many of the facts regarding immigrant welfare use, we should be able to agree that approaches like those of Representative Grothman are better than a revised public charge rule. 

 

Postdoctoral Fellowship in Foreign Policy

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The Defense and Foreign Policy department is seeking candidates for a visiting fellow post. This one-year paid fellowship allows candidates to expand upon the policy implications of their dissertation research, and contribute to the work of the Cato defense and foreign policy department.

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During their time at Cato, the visiting fellow is responsible for:

  • Producing one scholarly paper (8,000-10,000 words) in the Institute’s Policy Analysis series on a foreign policy issue (which may or may not be part of the fellow’s dissertation)
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If you are interested in applying, please submit a C.V. and a writing sample via Cato’s online application system no later than February 15, 2017. The application can be found here.

Iran: From Hyperinflation to Stability?

With the announcement on Saturday night that Iran and the P5+1 group reached a tentative deal over the Iranian nuclear program, the Iranian rial appreciated 3.45% against the dollar on the black market. The rial jumped from 30000 IRR/USD on Saturday November 23rd to 29000 IRR/USD on Sunday November 24th. A daily appreciation of this magnitude is rare. In fact, it has occurred fewer than ten times since the beginning of 2013. Indeed, this indicates that the diplomatic breakthrough is having a positive effect on Iranian expectations.

Over a year ago, I uncovered the fact that Iran experienced a period of hyperinflation (in early October 2012), when its monthly inflation rate peaked at 62%. Since then, I have been actively monitoring and reporting on the IRR/USD black market exchange rates and calculating implied inflation rates for the country.

Since Hassan Rouhani took office, on August 3rd, Iranian expectations about the economy have turned less negative. Thus far, it appears Rouhani has been successful in ending the long period of economic volatility that has plagued Iran, since the US imposed sanctions in 2010. This has been reflected in the black-market IRR/USD exchange rate, which

There are three main factors at work here. The first is a concerted effort by the Rouhani administration and the central bank to curb Iran’s inflation. This stands in stark contrast to the previous regime, whose strategy was to simply deny that inflation was a problem.

The second is that that Iran’s economy has proved remarkably “elastic” – meaning that the country has ultimately adapted to the sanctions regime and has found ways to keep its economy afloat in spite of them.

The third factor in the rial’s recent stability is an improvement in Iranian economic expectations. This is where the P5+1 talks come into play. Iranians recognized that easing of the sanctions regime would be a bargaining chip in any nuclear negotiations. In consequence, their economic expectations improved as the talks progressed. Indeed, Saturday’s announcement gave these expectations a shot in the arm.

In light of the rial’s recent stability, I have delisted the rial from my list of “Troubled Currencies,” as tracked by the Troubled Currencies Project. For starters, the rial no longer appears to be in trouble. And, on a technical note, implied inflation calculations are less reliable during sustained periods of exchange rate stability.

That said, we must continue to pay the most careful and anxious attention to the black-market IRR/USD exchange rate in the coming months. Like the P5+1 agreement, Rouhani’s economic progress in Iran is tentative and likely quite fragile. Since the black-market IRR/USD is one of the only objective prices in the Iranian economy – and perhaps the most important one of all – it will continue to serve as an important weather vane, as the diplomatic process continues, and as Iran’s economy gradually moves into a post-sanctions era. 

The NSA’s Rent Is Too Damn High

For months, the American public has received a steady stream of new information detailing the massive scale and scope of the United States’ spying activities. Of course, maintaining a surveillance state powerful enough to reach into the inboxes of world leaders, friend and foe, is not cheap. Indeed, as the Washington Post revealed when it released portions of the so-called Black Budget, this year’s price tag on America’s spook infrastructure comes out to a whopping $52.6 billion.

This is, of course, a tremendous sum – more than double the size of the Department of Agriculture, more than triple the size of NASA; the list goes on… But, what really puts this number into perspective is its average cost to each American taxpayer, or what I would call the NSA and associated agencies’ “rent.”

Yes, the NSA’s rent, charged to every taxpayer living under its web of surveillance, comes out to an exorbitant $574 per year. If this is the price the federal government is charging American taxpayers to have their own privacy invaded, then I say the NSA’s rent is too damn high.

Normally, at the end of one of these blogs, I would ask a rhetorical question like: “Washington, are you listening?” But, in this case, we know Washington is listening, and now we know how much we’re being charged for it.

Syrian Pound Soars, Iran’s Single Digit Inflation, and Other Troubled Currencies Project Updates

Syria: On September 27th, the United Nations Security Council unanimously adopted a resolution outlining the details of the turn over and dismantlement of Syria’s chemical weapons. Syria’s president, Bashar al-Assad, has stated that his government will abide by last week’s UN resolution calling for the country’s chemical weapons to be destroyed. 

It appears that this news was well received by the people of Syria. The black-market exchange rate for the Syrian pound (SYP) has dropped from 206 per U.S. dollar on September 25th to 168 on September 30th. That’s a whopping 22.6% appreciation in the pound against the dollar. Currently, the implied annual inflation rate in Syria sits at 133 percent, down from a rate of 185 percent on September 25th.

Iran: Since President Rouhani took office, Iranian expectations about the nation’s economy have turned positive. Over the past month we have seen a significant decrease in the volatility of the Iranian rial on the black market. This trend of stability has continued into this week, as President Rouhani’s trip to the UN has raised hopes of constructive cooperation with the West. In consequence, the rial has remained virtually unchanged on the black market, moving from 30,500 per U.S. dollar on September 25th to 30,200 on September 30th. The implied inflation rate in Iran as of September 30th stands at 8%, down from 23% on September 25th.

Venezuela: While the crises in the Middle East are easing, the troubles in Venezuela are far from over. The black market exchange rate for the Venezuelan bolivar has fallen from 44.03 per U.S. dollar on September 24th to 40.92 on September 30th. This represents an appreciation of 7.6% over the last week.  The implied annual inflation rate as of September 30th sits at 255%, down from a local high of 292% on September 17th. The ConocoPhillips dispute, a massive blackout, and worsening shortages caused by price controls have ravaged the Venezuelans’ confidence in the bolivar over the month of September.

Although the bolivar has rebounded modestly in recent weeks, this simply indicates that the economic outlook in Venezuela is only slightly less miserable than it was in mid-September. The economy is still on a slippery slope and economic expectations continue to be weighed down by the fragile political atmosphere, worsening shortages, and the ever-present specter of political violence. An inflation rate of 255% is nothing to celebrate.

Argentina: The black market exchange rate for the Argentine peso has held steady at around 9.5 per U.S. dollar since September 25th, with a 9.55 exchange rate on September 30th. That represents a 2.9% decrease in the value of the currency from the September 22nd rate of 9.27. The implied annual inflation rate as of September 30th sits at 54%, a decrease from the rate of 49% on September 22nd.

Egypt: The black market rate for the Egyptian pound has held steady at around 7.1 per U.S. dollar since September 25th, roughly the same level as the official exchange rate. This indicates that, for the time being, the military has brought some semblance of stability to the Egyptian economy. As of September 30th, the black market exchange rate was 7.12. The implied annual inflation rate as of September 30th sits at 19%.

For up-to-date information on these countries and their troubled currencies, see the Troubled Currencies Project.

Rouhani Delivers Lower Inflation, and other Troubled Currencies Project Updates

Iran: Prior to Hassan Rouhani’s election as Iran’s new president in June, the black-market Iranian rial to U.S dollar (IRR/USD) exchange rate stood at 36150, implying an annual inflation rate of 109 percent (June 15th 2013). Since Rouhani took office, Iranian expectations about the economy have turned positive, or at least less negative, and the black-market IRR/USD exchange rate has strengthened to 29200. In consequence, the implied annual inflation rate has fallen like a stone, and currently sits at 20 percent. That’s even lower than the most recent official annual inflation rate of 35.1 percent. (August 2013).

Rouhani has stated that one of his top priorities is to set the Iranian economy right. So far, it appears the new president has delivered the goods.

Venezuela: September got off to a rocky start in Venezuela. On September 4th, the World Bank’s International Center for the Settlement of Investments Disputes announced that Venezuela had illegally expropriated ConocoPhillips’s multi-billion dollar crude oil projects. This coincided with a massive blackout that left half the country without power. To top it off, price controls have led to worsening shortages, with the government announcing on September 13th that the shortage index had hit a whopping 20 percent for the month of August. All of this bad news is reflected in Venezuelan’s economic expectations, as measured by the black-market exchange rate for the Venezuelan bolivar (VEF).

From beginning of the month through September 17th the VEF/USD exchange rate depreciated by 16.3 percent, from 37.32 to 44.59. In consequence, the implied annual inflation rate rose from 230 percent to a high of 292 percent.

Things took a turn for the positive on September 18th, when Venezuela and China agreed to a $14 billion investment package, which includes joint venture to develop the Junin 10 bloc of the Orinoco Oil Belt, as well as investments in mining, transportation and agricultural projects in Venezuela. In consequence, the black-market VEF/USD exchange rate has fallen to 44.03, yielding an annual implied inflation rate of 261 percent.

Argentina: Despite some recent good economic news, Argentineans still appear to be skeptical about their economy’s future. On Friday, September 20, Argentina announced a strong 8.3 percent year-over-year growth rate for Q2. One would think this strong performance would have improved Argentinean’s expectations for the economy, as measured by changes in the peso’s black-market U.S. dollar exchange rate. But, the black-market exchange rate has held steady in the days since the announcement. The current black-market ARS/USD exchange rate sits 9.43, yielding an implied annual inflation rate of 50 percent. It appears that concerns of ongoing inflation troubles are still weighing heavy on the minds of Argentineans.

Egypt: Since the Egyptian military ousted Mohammed Morsi on July 3rd, the Egyptian pound’s (EGP) official and black-market U.S. dollar exchange rates have converged. Currently, the black-market rate sits at 7.10 EGP/USD – very close to the official exchange rate of 6.89 EGP/USD. These rates have been stable for the past month.

Prior to the military takeover, the black-market exchange rate sat at 7.6 EGP/USD. Since Morsi’s ouster, the pound has appreciated by 7 percent, to 7.10 EGP/USD. This yields a current implied annual inflation rate of 18 percent, down from 28 percent in the final days of the Morsi government.

Yes, it appears the Egyptian generals have delivered some semblance of stability on the economic front. Indeed, the black market for foreign exchange has all but disappeared.

Syria: As President Obama heads to the United Nations General Assembly to iron out the terms of a tentative Syrian chemical weapons deal, the black-market exchange rate for the Syrian pound (SYP) continues to hold steady at 206. Currently, the implied annual inflation rate in Syria sits at 189 percent. This is down from a high of 291 percent on the 28th of August, when Secretary of State John Kerry kicked off the United States’ abortive march to war.


For up-to-date information on these countries and their troubled currencies, see the Troubled Currencies Project.

 

As Congress Prepares for Vote, Syria’s Inflation Hits 257%

As prospects of a U.S.-led military intervention in Syria hang in limbo, the foreign exchange black market for the Syrian pound (SYP) has become increasingly volatile. In countries with troubled currencies, such as Syria, black-market exchange rates provide a reliable gauge of economic expectations. Judging by the erratic performance of the black-market Syrian pound/U.S. dollar (USD) exchange rate, the Syrian people’s expectations have been on quite the roller coaster ride, as the U.S. Congress prepares for what will likely be a very close vote on a Use of Force resolution.

  • Following Secretary of State John Kerry’s initial call for military intervention in Syria, on August 26th, the SYP experienced a one-day drop of 24%—reflecting Syrians’ heightened fears of U.S. military conflict.  
  • On August 29th, two events occurred that reversed this slide. In Damascus, the Syrian government renewed its attempts to crack down on black-market currency trading. And, over 4,000 miles away in London, the British Parliament voted down a motion authorizing military action in Syria. In consequence, the SYP rebounded by a whopping 26% over the course of two days.
  • The U.S. Senate Foreign Relations Committee’s consideration of a use of force resolution seems to have once again raised Syrians’ expectations of a U.S. military strike, as it set the SYP on another slide. Since September 3rd, the pound has lost 10% of its value.

For some perspective on how the West’s march to war has affected Syria’s currency, and ultimately inflation, let’s take a look at how things have changed over the course of the past month: On August 6th, the black-market SYP/USD exchange rate was 205, yielding an implied annual inflation rate of 191%. As of September 6th, the black-market SYP/USD exchange rate sits at 250, yielding an implied annual inflation rate for Syria of 257%.

For more on the Syrian pound, see the Troubled Currencies Project.

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