By Robert Kahn – Newsweek / Council on Foreign Relations.
As many as 132,000 jobs could be lost too.
All the human disruption and confusion associated with President Trump’s executive order on immigration released on Friday, it is also worth noting the potential for substantial negative macroeconomic dislocation from increased barriers to travel to the United States.
In October of last year, I along with my colleagues Ted Alden and Heidi Crebo-Rediker published a note looking at the economic effects of a Muslim travel ban.
While the title highlighted a prospect of full ban, the central historical experience we drew on for our analysis was the use of intensified security measures after the 9/11 attacks. These measures can tell us a lot about what to expect from the current extreme vetting measures, particularly if the president’s order is expanded to include more countries over time.
In sum, our report highlighted the following:
• The effects of extreme vetting on U.S. economic activity are immediate and far-reaching.
In addition to those directly affected, there is a chilling effect on travel to the United States more broadly. After the 9/11 attacks, the enhanced visa requirements instituted under the National Security Entry-Exit Screening System (NSEERS) had an immediate and substantial impact on international travel, including importantly travel from countries not affected by the new measures. In part this reflected a general chilling effect from the new procedures.
• This negative effect was persistent.
As we show in our note, the rebound in travel after 2001 was gradual and arrivals did not return to their pre-9/11 level until the end of the decade. Tourism remain depressed, supply chains were disrupted and U.S. firms that relied on foreign know-how were disadvantaged.
• We looked at a number of scenarios, estimated their immediate (impact) effects, and tried to quantify the broader spillover (multiplier) effects on the U.S. economy taking into account the knock-on spending that tourism and other foreign visits cause. What we found was startling.
If widespread, the direct loss of spending due to restrictions on travel from Muslim countries could range from $14 billion to $30 billion per annum. Adding in indirect (multiplier) effects that take into account the broader spillover effects on the economy increases this range to $31 billion to $66 billion.
• The loss of jobs could range from 50,600 to 132,000.
Economic Impact Scenarios and Multiplier
Scenario 1 Base Spending Direct ($billion) Multiplier – Indirect ($ billion)
$13.79 $17.24
Total Impact ($ billion) Related job losses (direct)
$31.03 50,600
Scenario 2 Base Spending Direct ($billion) Multiplier – Indirect ($ billion)
$29.50 $36.88
Total Impact ($ billion) Related job losses (direct)
$66.38 132,000
In addition, we estimate the loss to education spending to be about 15 percent of the total foreign student spending, or $4.6 billion. We also look at the potential economic impact on five U.S. states that would likely see the largest negative impact from a Muslim or broader travel disruption, which are the states most dependent on international visitors and are most tourism-dependent: Nevada, Florida, California, New York and Hawaii.
In general, there are important security benefits from an efficient vetting system for foreign travelers, but President Trump’s unprecedented executive order fails to meet the test.
If last week’s action–and the unusually heated rhetoric accompanying the move–is seen by the world as creating a hostile environment for foreign travelers or more fundamentally signaling a less open attitude towards the world, it will have broad based and far reaching economic consequences.
*Robert Kahn is the Steven A. Tananbaum Senior Fellow for International Economics at the Council on Foreign Relations.
Annex:
For those who wanted to “give Trump a chance” it seems he is out of chances already :
For those finding it difficult to keep up – here’s a run down of the week so far
To recap:
* On January 19th, 2017, DT said that he would cut funding for the DOJ’s Violence Against Women programs.
* On January 19th, 2017, DT said that he would cut funding for the National Endowment for the Arts.
* On January 19th, 2017, DT said that he would cut funding for the National Endowment for the Humanities.
* On January 19th, 2017, DT said that he would cut funding for the Corporation for Public Broadcasting.
* On January 19th, 2017, DT said that he would cut funding for the Minority Business Development Agency.
* On January 19th, 2017, DT said that he would cut funding for the Economic Development Administration.
* On January 19th, 2017, DT said that he would cut funding for the International Trade Administration.
* On January 19th, 2017, DT said that he would cut funding for the Manufacturing Extension Partnership.
* On January 19th, 2017, DT said that he would cut funding for the Office of Community Oriented Policing Services.
* On January 19th, 2017, DT said that he would cut funding for the Legal Services Corporation.
* On January 19th, 2017, DT said that he would cut funding for the Civil Rights Division of the DOJ.
* On January 19th, 2017, DT said that he would cut funding for the Environmental and Natural Resources Division of the DOJ.
* On January 19th, 2017, DT said that he would cut funding for the Overseas Private Investment Corporation.
* On January 19th, 2017, DT said that he would cut funding for the UN Intergovernmental Panel on Climate Change.
* On January 19th, 2017, DT said that he would cut funding for the Office of Electricity Deliverability and Energy Reliability.
* On January 19th, 2017, DT said that he would cut funding for the Office of Energy Efficiency and Renewable Energy.
* On January 19th, 2017, DT said that he would cut funding for the Office of Fossil Energy.
* On January 20th, 2017, DT ordered all regulatory powers of all federal agencies frozen.
* On January 20th, 2017, DT ordered the National Parks Service to stop using social media after RTing factual, side by side photos of the crowds for the 2009 and 2017 inaugurations.
* On January 20th, 2017, roughly 230 protestors were arrested in DC and face unprecedented felony riot charges. Among them were legal observers, journalists, and medics.
* On January 20th, 2017, a member of the International Workers of the World was shot in the stomach at an anti-fascist protest in Seattle. He remains in critical condition.
* On January 21st, 2017, DT brought a group of 40 cheerleaders to a meeting with the CIA to cheer for him during a speech that consisted almost entirely of framing himself as the victim of dishonest press.
* On January 21st, 2017, White House Press Secretary Sean Spicer held a press conference largely to attack the press for accurately reporting the size of attendance at the inaugural festivities, saying that the inauguration had the largest audience of any in history, “period.”
* On January 22nd, 2017, White House advisor Kellyann Conway defended Spicer’s lies as “alternative facts” on national television news.
* On January 22nd, 2017, DT appeared to blow a kiss to director James Comey during a meeting with the FBI, and then opened his arms in a gesture of strange, paternal affection, before hugging him with a pat on the back.
* On January 23rd, 2017, DT reinstated the global gag order, which defunds international organizations that even mention abortion as a medical option.
* On January 23rd, 2017, Spicer said that the US will not tolerate China’s expansion onto islands in the South China Sea, essentially threatening war with China.
* On January 23rd, 2017, DT repeated the lie that 3-5 million people voted “illegally” thus costing him the popular vote.
* On January 23rd, 2017, it was announced that the man who shot the anti-fascist protester in Seattle was released without charges, despite turning himself in.
* On January 24th, 2017, Spicer reiterated the lie that 3-5 million people voted “illegally” thus costing DT the popular vote.
* On January 24th, 2017, DT tweeted a picture from his personal Twitter account of a photo he says depicts the crowd at his inauguration and will hang in the White House press room. The photo is curiously dated January 21st, 2017, the day AFTER the inauguration and the day of the Women’s March, the largest inauguration related protest in history.
* On January 24th, 2017, the EPA was ordered to stop communicating with the public through social media or the press and to freeze all grants and contracts.
* On January 24th, 2017, the USDA was ordered to stop communicating with the public through social media or the press and to stop publishing any papers or research. All communication with the press would also have to be authorized and vetted by the White House.
* On January 24th, 2017, HR7, a bill that would prohibit federal funding not only to abortion service providers, but to any insurance coverage, including Medicaid, that provides abortion coverage, went to the floor of the House for a vote.
* On January 24th, 2017, Director of the Department of Health and Human Service nominee Tom Price characterized federal guidelines on transgender equality as “absurd.”
* On January 24th, 2017, DT ordered the resumption of construction on the Dakota Access Pipeline, while the North Dakota state congress considers a bill that would legalize hitting and killing protestors with cars if they are on roadways.
* On January 24th, 2017, it was discovered that police officers had used confiscated cell phones to search the emails and messages of the 230 demonstrators now facing felony riot charges for protesting on January 20th, including lawyers and journalists whose email accounts contain privileged information of clients and sources.
* January 28th, 2017: the wall and a ban on Muslims entering from a large number of countries and the end to accepting Syrian refugees
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