Gordon Hanson Research on the Positive Contributions of Immigration Cited
November Fundamentals Research Affiliates
Chris Brightman, Advisor Perspectives
In 1981 David Stockman, the Director of the Office of Management and Budget for newly elected President Ronald Reagan, published a budget using such an optimistic set of assumptions that it was derisively nicknamed Rosy Scenario. In Stockman’s 1986 book, The Triumph of Politics, he explained in vivid detail his disillusionment with the politics that thwarted the spending reforms that were supposed to accompany Reagan’s tax cuts. He also expressed his fear for the county’s future, given the explosion in deficits and accumulation of debt. While dreading the consequences of the deficits and debt of the 1980s seems quaint from today’s perspective, and memories of the Reagan era are fading into history, Rosy Scenario lives on.
Too many of today’s fiscal projections extrapolate past growth trends without adjusting for the dramatic deterioration in our future growth outlook. The 2.5% long-term potential growth assumptions for the U.S. economy held out by the White House and Congressional Budget Office are wildly optimistic; indeed, the White House forecast centers on 4% real growth during the proposed recovery years of 2014–2017. While we wouldn’t challenge the idea that such growth is possible, even the White House concedes that these are aggressive assumptions. Rosy Scenario indeed.
Gordon Hanson is director of the Center on Emerging and Pacific Economies and professor of economics at UC San Diego. He specializes in the economics of international trade, international migration, and foreign direct investment. He has published extensively in the top academic journals of the economics discipline, is widely cited for his research by scholars across the social sciences, and is frequently quoted in major media outlets. His current research examines the international migration of skilled labor, border enforcement and illegal immigration, the impact of imports from China on the US labor market, and the determinants of comparative advantage.