A long-awaited overhaul of U.S. immigration law has a good chance of happening this year, bringing major changes to the millions of people living here illegally—and perhaps giving the economy a boost.
While details are sketchy right now, the Obama administration last week announced it is launching a major effort to push reforms through Congress soon.
A major goal is to expand the guest worker program to allow more foreign nationals to legally work in the U.S. But the biggest hurdle may be whether to grant amnesty to millions of illegal immigrants in the U.S.—or deport them.
Analysts say that unlike failed attempts in the past, they expect reform to get done this time—and it could end up being beneficial for the still sluggish economy. (Read more: Bleak Global Economy)
"If there's a way to bring millions of people legally into our system, they'd be paying more taxes and spending more money and creating more jobs," said Michael Wildes, managing partner of the immigration law firm Wildes & Weinberg. "It would be a big boost to the economy and any kind of amnesty provision that includes fees from illegal immigrants would help fill the treasury."
Others agree that this is the year something will get done.
"I think some type of reform will happen soon," said Jim Witte, director of the Institute for Immigration Research at George Mason University. "There are traditional allies among Democrats but there's also a growing conservative coalition of businesses and law enforcement who want immigration reform as well." (Read more: Disney To Layoff Workers?)
I'ts estimated that some 40 million people in the U.S. are immigrants, according to the Census Bureau, with anywhere from 7 million to 20 million of them in the country illegally.
Economic activity produced by illegal immigrant spending employs about 5 percent of the total U.S. workforce, according to a study by UCLA. The research indicates illegal immigrants produce a total of $150 billion of economic activity each year.
And billions of dollars from illegal worker paychecks flow into and support the Social Security system--some $7.2 billion in 2009 alone, that they will be unable to collect.
"The irony is that illegal immigrants are not entitled to many of the benefits they pay for," said Jamie Longazel, a professor of sociology at the University of Dayton. "The reality is that many people receive benefits on the backs of those who suffer."
How to integrate them—or not—into the country could be the a stumbling block to any reform. But the idea of deporting millions of people isn't realistic, said Christine Greer, an assistant professor of political science at Fordham University.
"We can't just pick up and move some 15 million people and their families out of the country," Greer said. "It's not feasible to do that. Besides, many kids came here with parents and had no choice. Some of the kids don't even speak the language of their native land."
But it's not just illegal immigration that's at stake. Some analysts have argued that since the late 1990s, the U.S. needs to find a way to allow more workers—most specifically skilled tech workers—to enter legally. There are nearly one million people working in the U.S. under the current guest worker programs that allow U.S. employers to sponsor non-U.S. citizens in the country with temporary visas.
That number is not big enough, said Scott Cooper, managing attorney at the immigration law firm of Fragomen, Del Rey, Benson & Lowey. (Read more: Why End of Stimulus May Not Be All Bad)
"The U.S. needs more skilled workers from abroad and be more receptive to the contributions they make economically," said Cooper. "We're limiting our economy by not letting more in."
"We need go beyond the current quota of 140,000 legal immigrants per year and allow more qualified people with math and science skills to enter the U.S.," said Ted Ruthizer, a lawyer who teaches immigration law and policy at Columbia University. said. "The Job market is screaming for them."
But not everyone sees an economic rainbow with immigrants, legal or not. (Read more: US May Get Messy Again: Roubini)
"Their contribution is large, but I think it's hard to accurately say what impact immigrants have on the economy, especially when it comes to the earnings and spending of illegal immigrants," said Jim Witte.
"You can say that some competition from illegal workers may depress the wages of legal workers. On the other hand you can also say that cheaper illegal labor frees up people at higher skill levels to put their talents to a higher value," Witte said.
Business groups, like the U.S. Chamber of Commerce have called for tighter border security but also say they advocate establishing provisional visas for lesser skilled workers, having sufficient numbers of visas for the highly skilled and for agriculture workers. "These changes would allow employers to hire immigrants in accordance with the demands of the economy, when U.S. workers are unavailable," according to the chamber's web site.
For the Federation for American Immigration Reform (FAIR), who contend that immigrants are a drain on the economy, any reforms must include not only stricter border controls but tougher laws limiting any kind of immigration -- with amnesty for no one.
"We blame the business community as well as others because we're bringing in people who have poor job skills, are poorly educated and relegated to the lower rung on the economic ladder," said Ira Mehlman, a spokesman for FAIR. "We end up paying for all their health care they take away jobs from Americans." (Read more: Heath Insurance Rates Rise)
The last attempt at reform came in 2007 from President George W. Bush who advocated an expanded guest worker program that would tighten security along the southern border while allowing about 11 million illegal immigrants to work legally in the country temporarily before forcing them to return home. But the measure failed to get any support in Congress.
That lack of action spurred some states, like Arizona and Alabama, to pass their own stringent and controversial immigration laws.
What's different now on the national level--and why reform is likely to become law in the months ahead -- is a shift in the political scene, said Scott Cooper.
"The recent presidential election changed things with the immigration vote going so strongly to Obama," Cooper said. "So that's why I think there will be reform because the Republicans need it to win elections and Obama has to give something to the immigration groups that voted for him."
Despite what many consider the best chances in decades for reform, getting it done won't be easy.
"I'n not optimistic about any reform package because of the extent to which current policy reflects corporate interests for cheap labor and the fact that most politicians lack the courage to stand up to those who spout ant-immigration sentiment," said Jamie Longazel.
Immigration reform is hard to do anytime because of the many misconceptions about it, said Evie P. Jeang, founder and managing partner of the Ideal Legal Group, an immigration and labor law firm.
"The myths are that immigrants steal jobs, commit more crimes, mooch off our health care and don't pay taxes," said Jeang. "The studies have shown that's not true. Even unlawful immigrants pay more in taxes that they use in welfare services."
But there are reasons for optimism. A so called bi-partisan 'Gang of Eight' of U.S. senators has been meeting since the first week of December to discuss reform. They include Democrats Chuck Schumer, Dick Durban and Bob Menendez as well as Republicans Lindsey Graham, Mike Lee and John McCain.
Schumer said he and Graham are reviving talks about an immigration reform proposal they started in 2010. (Read more: Most Stressful Jobs)
President Obama has moved in pieces on immigration, despite having deported record numbers of illegal immigrants in his first term--some 409,849 from October 2011 through September 2012, the fourth consecutive fiscal year that the number increased.
Obama issued an executive order on January 2, making it easier for illegal immigrants to obtain permanent residency if they have immediate relatives who are U.S. citizens.
And before the November election, Obama issued a directive that grants people who'd be eligible for the DREAM Act -- a law that would give certain illegal immigrants between 16 and 30 legal standing --a reprieve from deportation and work-authorization papers.
Whether a reform bill includes deportation mandates, amnesty provisions or a broader guest worker program, expect a hard fight in Washington, said Christine Greer.
However, Greer said, something will get done.
"Reform might be pushed to a back burner with gun control and other economic issues, and there are a lot of sides that have to get coordinated, but if nothing happens this year, it will happen before the end of Obama's second term," said Greer. "We're a nation of immigrants. We have to come up with some way to handle the issue."