Republicans test run a new argument: Immigration can cause inflation

Republicans are trying out a new argument this week that spans three top issues of the 2024 campaign: immigration, inflation, and the high cost of housing. The emerging case is that a Donald Trump-led crackdown on immigration in 2025 may help with the fight against high prices, at least when it comes to finding an affordable home. It's a case that will likely be received skeptically by many economists, but it's a line of reasoning that was memorialized in the newly unveiled GOP platform ahead of next week's convention in Milwaukee. As that document puts it, the next president should seal the southern border and deport millions already in the country in part because illegal immigration has "driven up the cost of housing, education, and healthcare for American families." It's a message at odds with a chorus of economists, as well as Democrats, who have released studies that say Trump's proposals — from tariffs to tax cuts to that immigration crackdown — could cause inflation to spike anew. Read more: Inflation fever breaking? Price hikes on everyday expenses finally ease up. FILE - Republican presidential candidate former President Donald Trump speaks at a campaign rally, June 22, 2024, in Philadelphia. Trump is seeking to distance himself from a plan for a massive overhaul of the federal government drafted by some of his administration officials. Some of these men are expected to take high-level roles if the Republican presumptive nominee is elected back into the White House. Trump is saying on Truth Social that he Former President Donald Trump speaks at a campaign rally in Philadelphia in June. (AP Photo/Chris Szagola) (ASSOCIATED PRESS) But it's an argument gaining steam in GOP circles. EJ Antoni of the conservative Heritage Foundation has been fielding questions from congressional aides on the topic in recent weeks. His group's case is that there is a 2-to-1 ratio at play: an influx that increases an area's population by 5% translates, he said, into rents going up by 10%. "It clearly has an impact now," he noted in an interview, citing communities along the southern border as well as major cities where new migrants are traveling as the most impacted. Jerome Powell's take on the issue The new message was tested on Capitol Hill this week during a Senate hearing featuring testimony from Federal Reserve Chair Jerome Powell. Sen. J.D. Vance, a Republican from Ohio and one of the leading contenders to be Donald Trump's vice president, brought up the topic when he had an opportunity to question the Fed chair on Tuesday, saying it was a subject "I imagine most of my colleagues are not asking [about]." Powell sounded skeptical. "There's no clear answer, but my sense is that in the long run, immigration is kind of neutral on inflation; in the short run [it] may actually have helped because the labor market got looser," Powell responded. Read more: How does the labor market affect inflation? But he did acknowledge that there could be regional effects, with some communities potentially seeing higher housing costs if faced with a wave of new residents. Others have echoed Powell's point and focused on the benefits to the labor market. Barbara Doran of BD8 Capital Partners noted on Yahoo Finance this week of Trump that "if he really gets elected and deports millions of immigrants, those are the ones who have been taking the jobs that help keep wage pressures down." Vance pushed back on that notion during his time with Powell on Tuesday, noting that it's another way of saying lower wages for Americans. "Why do we see it as a good thing?" he asked. "Why not try to boost wages in a way that brings some of those workers off the sidelines?” For more information, visit us at https://www.beverlyhillsimmigrationlaw.com/.