Dec 20, 2022 - Politics & Policy

Scoop: Biden's inflation-immigration pitch

Photo illustration of President Biden with immigrants walking towards the Texas border in the background and stripes

Photo illustration: Sarah Grillo/Axios. Photos: Jeff Swensen, Brandon Bell via Getty Images

The Biden administration is plotting to make a fresh push on immigration reform in the new year, looking for ways to provide legal status for so-called "Dreamers" and increase the labor supply to help lower inflation, according to people familiar with the matter.

Why it matters: Biden’s political advisers know the situation at the border — with up to 14,000 migrants expected to be crossing every day if Title 42 ends — presents an urgent humanitarian emergency and a long-term political dilemma.

  • At the same time, top economic aides are concerned that the lack of immigrant workers is leading to labor shortages, which will continue to keep inflation high.
  • But finding a legislative compromise that’s acceptable to the GOP-controlled House, as well as the president’s progressive base, will be a massive challenge. Biden officials are willing to try.

What they're saying: Immigration reform is "harder in the divided Congress, but it's so clearly necessary in light of what we're seeing in the job market," Commerce Secretary Gina Raimondo told Axios.

  • “The thing that's underpinning inflation still — that’s driving inflation still — is this tight labor market,” she said.
  • "Immigration is a lever,” she stressed. "We're down a million immigrants a year. That's a workforce that we need."

What we're watching: The president, like the rest of Washington, doesn’t know who the next speaker of the House will be — and how much space he or she will have to maneuver on immigration or any other legislation.

  • Leading up to next year’s State of the Union, Biden officials will continue to mill and refine the president's 2023 agenda, considering what's legislatively possible and what they need to include to please their progressive base.

By the numbers: Inflation has cooled from its June high of 9.1%, with the Consumer Price Index reading 7.1% in November.

  • Job growth continues to be robust, with employers adding 263,000 jobs last month.
  • But wage growth has also accelerated: Average hourly earnings for private-sector workers were up 0.6% in November, translating to a 5.8% annual rate over the past three months. That will make the Fed's job of taming inflation more difficult.

The big picture: The contours of a grand immigration bargain have been in view for several years, but only if you squint.

  • Republicans would receive increased funding for border security; Democrats would win permanent protection for the roughly 2 million undocumented migrants who were brought here as minors, and the business and agricultural communities would get more visas for high- and low-skilled workers.
  • An actual political compromise has been maddeningly difficult.
  • The most recent bipartisan effort by Sens. Thom Tillis (R-N.C.) and Kyrsten Sinema (I-Ariz.) foundered late in the legislative cycle, after some hope that their framework could find 60 votes in the Senate and pass the House while Democrats still controlled it.

Go deeper: Biden outlined his plan to modernize the immigration system on the first day of his presidency and has continued to call it a priority.

  • Asked about the prospects for immigration reform in the new Congress, Jared Bernstein, a member of the Council of Economic Advisers, told CNBC that "the legislative agenda can always surprise you.”
  • “And President Joe Biden is pretty masterful at pulling legislative rabbits out of hats,” he added. "So I wouldn't count anything out."

Between the lines: The White House also wants to increase the labor supply by convincing Congress to provide billions in new programs for elder and child care, two planks of Biden's Build Back Better agenda that were knocked out by Sen. Joe Manchin (D-W.Va.).

  • In addition, the administration is seeking to expand the workforce by helping younger Americans learn skilled labor and enabling older workers to retrain in new fields.
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