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.
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.
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.
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?”
Federal Reserve Chair Jerome Powell testifies before the Senate Banking, Housing, and Urban Affairs committee on July 9. (CHRIS KLEPONIS/AFP via Getty Images) ·CHRIS KLEPONIS via Getty Images
An argument rooted in the UK
This latest campaign talking point appears to have at least some roots in the United Kingdom, specifically in some comments from Huw Pill, the Bank of England's chief economist.
He reportedly said this spring that "quite large increases in immigration" in his country have put pressure on the nation's housing stock, more so than other issues like higher interest rates.
Analyses of the subject in the US have likewise found that immigration can increase home values, but that could also be because of the positive effect on the economy overall.
One study from Partnership for a New American Economy, which examined data from 2000-2010, found an "effect on median home value" due to immigration but concluded that the change was primarily due to increased economic activity.
In any case, the Republican plan for immigration if Trump returns to office is doubling down on the strict anti-immigration policies that marked his first term. Those promises include a pledge, as this week's GOP platform put it, to enact "the largest deportation operation in American history."
Sen. J.D. Vance, R-Ohio, and Donald Trump appear at a campaign rally in March in Vandalia, Ohio. (AP Photo/Jeff Dean, File) ·ASSOCIATED PRESS
Allaying business-world worries
The inclusion of the inflation argument this week in the GOP platform was part of a larger effort by Republicans to smooth some of the rough edges off some of their campaign trail promises that have worried economists and business leaders.
The GOP release of their party platform was notable for how the brief document sought, after much intra-party tumult, to offer a more voter-friendly face on social issues like abortion and same-sex marriage.
On the subject of trade and tariffs, the document declined to repeat some of Trump's most audacious plans. On the campaign trail, Trump has promised a 60% tariff on goods from China and a 10% "ring around the country" for other trading partners.
Tariffs are unpopular among many business owners and executives who actually pay these duties. The GOP platform addressed this issue briefly, noting "Republicans will support baseline tariffs on foreign made goods."
The platform is also notable for not repeating the party's longstanding effort to repeal Obamacare and continues Trump's aggressive outreach to the fossil fuel industry, with promises to "drill, baby, drill" on nearly every page.
It's all part of a message expected to be repeated ad nauseam next week on the convention stage as the party looks to press its advantage following Biden's disastrous recent debate performance.
Antoni predicts voters will be more and more focused on the immigration and inflation topic, and that Republicans will "really hone in on this issue and to make sure Americans are aware of it."
Ben Werschkul is Washington correspondent for Yahoo Finance.
