Making it worse: President Bush has tackled the immigration problem--wrongly.

THE Bush administration has revealed the broad outline of its immigration-reform plan. It has three key components. First, it legalizes the approximately 10 million illegal aliens now present in the U.S. by creating a new type of temporary-worker visa. This visa would have a term of three years and would be renewable an unspecified number of times. Second, these visas would be available to persons now living abroad who have been offered employment by an American employer. As the White House puts it, the plan would "match willing foreign workers with willing U.S. employers when no Americans can be found to fill the jobs." The implication is clear: Many American workers in many different industries will face direct competition from foreign workers. And third, the program would give temporary workers a path to permanent immigration by allowing them to apply for a green card. To take care of the backlog that will inevitably arise as millions of applications pour in, the president proposes an unspecified increase in the number of employment-based green cards that are granted each year.

Although the plan's details remain sketchy, it is not too early to make a summary judgment about its conceptual underpinnings. In its ambition, in its misguided approach to social policy, and in the huge consequences it forebodes, the package bears more than a passing resemblance to Hillary Clinton's ill-fated health-care proposal. The new bureaucrats in town must have worked equally long hours trying to fuse a lot of bad ideas into an incoherent policy.

The proposal begins on a realistic note: Something must be done about the millions of illegal aliens already here. But problems crop up as soon as the president begins to fill in the details. The Bush plan makes the fatal mistake of providing a form of amnesty to the existing illegal-alien population without addressing the problem of how to curtail future illegal immigration. It makes no sense to consider what should be done about the existing 10 million illegal aliens until we can reasonably ensure that we will not have to revisit the issue in a few years, when another 10 million have come in.

We've been here before: The 1986 immigration bill gave amnesty to what was then considered to be a very large number of illegal aliens (around 3 million!) in exchange for the establishment of an employer-sanction program that would cut off the demand for illegal workers by American firms. The employer-sanction program had many loopholes and was not enforced seriously, leading to our current situation.

Bush's proposal will probably encourage much more illegal immigration. There is a huge demand for entry into the U.S. Millions apply for the 50,000 visas that we raffle out annually in the "diversity lottery" program. How many of these millions will now view the guest-worker program as their ticket into the country? How many of these "temporary" visitors, once their visas expire, will ever leave?

It has been said that the Bush proposal rewards illegal behavior, but this is not the whole truth. The Bush proposal does not reward persons who commit only the crime of entering the country illegally; it rewards persons who compound that crime by committing others. The illegal alien must be working to qualify for a temporary-worker visa, implying that he must have purchased fake documents. He must have given the employer a false Social Security number. The employer, who probably knows precisely what is going on, breaks the law by knowingly hiring the illegal alien. And what is the end result of all this illicit activity? A fast-track opportunity for a green card. Compare this path to the one that many law-abiding immigrants have taken: The State Department is only now processing the visa applications of Filipinos who were sponsored by their siblings 23 years ago!

Let me give one specific example of how half-baked the proposal seems to be. We now grant 140,000 employment-based green cards annually (almost all of the other green cards are given to family members of U.S. residents or citizens). Suppose that the administration eventually proposes to expand the quota by more than tripling the number of employment-based green cards, to 450,000 per year. It would still take 32 years (!) for the extra visas to handle the 10 million illegals now here, even if nobody else comes in under the new program.

But doesn't the U.S. need illegal aliens to keep many of its industries running? And don't illegal aliens do jobs that natives do not want to do? These questions perpetuate some of the most persistent myths of immigration. Supporters of a guest-worker program claim that entire industries would vanish if American employers did not have access to cheap foreign labor. The vast majority (82 percent) of cab drivers in New York City are foreign-born: Would all those yellow cars be piled up in some junkyard if those immigrants had not been admitted? Of course not. In Cincinnati and Detroit, fewer than 10 percent of the cab drivers are foreign-born, and the taxi industry survives in those cities. It may cost a little more to ride in those cabs, but the job gets done. Similarly, most gardeners in southern California are Mexican immigrants, and many of them are illegal aliens. Yet one can travel to many parts of the country where illegal Mexican immigration is rare and, not surprisingly, see green and neatly mowed lawns.

Moreover, people adapt to changing circumstances. The huge supply of low-wage illegal aliens encourages American farmers to lag technologically behind farmers in other countries. Raisin production in California still requires that grapes be cut off by hand and manually turned on the drying tray. In other countries, farmers use a labor-saving technique called "drying on the vine." A cutoff of the illegal-alien flow would encourage American farmers to adopt many of these technological innovations, and come up with new ones.

What illegal immigration has done--and what the new program would do--is depress wages and increase the profits of the firms that employ the immigrants. According to the latest research, a 10 percent increase in the number of workers reduces a worker's wage by 3 or 4 percent. Over the past 20 years, immigration (much of it illegal) increased the number of workers without a high-school diploma by 16 percent, implying a 6 percent decline in the wage of low-skilled workers. The typical high-school dropout earns $21,000 annually. Immigration lowers this worker's salary by around $1,300. The large-scale temporary-worker program proposed by the Bush administration would expose millions more Americans to this competition, leading to even larger earnings losses and an even greater redistribution of wealth from workers to those who buy and use immigrant services.

The Bush proposal also ignores the fiscal consequences of letting an influx of temporary workers make use of the social-welfare system. In California, for example, an important part of the huge budget deficit is traceable to a problem that few politicians dare mention: the cost of supporting the state's large illegal-immigrant population. The last detailed calculations of this cost were conducted in the mid 1990s. The conclusion of studies conducted by Gov. Pete Wilson's Office of Planning and Research and the (pro-immigration) Urban Institute was that illegal immigrants created a net burden for California's taxpayers of around $2 to $3 billion annually. Supporters of the Bush proposal will claim that illegal aliens and guest workers do not qualify for welfare. But the illegal aliens and guest workers are not just workers, they are people too: They will get sick, have children (who, incidentally, are American citizens), and experience financial difficulties. And who exactly will pay for these health and schooling expenses?

The Bush administration keeps repeating the mantra that a) this is not an amnesty and b) it is only a temporary-worker program--implying, I suppose, that it will not increase permanent immigration all that much. At best, this is wishful thinking. A key objective of the Bush proposal is to legalize the 10 million illegals currently here. One can call the program whatever one wants, but the end result is a green card in the mail. Moreover, as the experience of guest-worker programs in other countries suggests, there is nothing more permanent than a guest worker. Many of the guest workers will surely figure out a way--even if it is by becoming an illegal alien--of staying in the United States once their visas expire. The Bush proposal will also increase legal family-based immigration, perhaps by a substantial amount. Once the newly legalized illegal aliens and guest workers get their green cards and become citizens, new entitlements kick in: They can sponsor the entry of their close and not-so-close relatives. They will sponsor the entry of their brothers and sisters, who, in turn, can sponsor the entry of their spouses, who can sponsor the entry of their siblings, and so on.

The Bush proposal takes immigration policy in precisely the wrong direction. When you're in a hole, stop digging: Only when we have dramatically reduced the number of incoming illegal immigrants should we consider proposals--like the administration's--to change the status of the illegals already here.

Mr. Borjas is a professor of economics and social policy at Harvard University's Kennedy School of Government. His latest book on immigration issues is Heaven's Door: Immigration Policy and the American Economy (Princeton).