Event

Niall Ferguson in the Huffington Post today: 

The harsh reality that is being repressed is this: the Western world is
suffering a crisis of excessive indebtedness. Many governments are too
highly leveraged, as are many corporations. More importantly,
households are groaning under unprecedented debt burdens. Average
household sector debt has reached 141 per cent of disposable income in
the United States and 177 per cent in the United Kingdom. Worst of all
are the banks. Some of the best-known names in American and European
finance have balance sheets forty, sixty or even a hundred times the
size of their capital. Average U.S. investment bank leverage was above
25 to 1 at the end of 2008. Eurozone bank leverage was more than 30 to
1. British bank balance sheets are equal to a staggering 440 per cent
of gross domestic product. 

I discussed whether families facing so much debt should spend or save in this post from last night.

For those hoping for economic recovery, one of the most important questions that has come up is the role everyday Americans will play in bringing about a global and domestic turnaround.  In hearing discussions of the stimulus today, particularly in defense of the tax cuts, you hear about the need to put money in people's pocket so they will go out and spend, accelerating economic activity, helping bring about an end to the recession.  

But is this really the best course for American families now? If the story of everyday people this decade has been flat wages, declining incomes, easy credit, debt financed spending, overleverage - shouldn't there be a conversation taking place about encouraging Americans to get their own family balance sheets in order before they go out and spend some more?  After 9/11, Bush argued that it was important for Americans to go out and shop.  But is that the case now?  In this new age of responsibility, should we be talking about getting everyone on stable 30-year mortgages, paying off high-interest credit card debt, tackling home equity loans whose equity has vanished, saving more for retirement to make up for the stock market decline of recent years?  I understand that talking about saving more, paying down debt, cutting back on spending after the recent binge leads to slower economic activity in the short run - and a longer and deeper global recession - but isn't this the best course for American families? 

In the Times today there is an interesting piece on all this which concludes: 

"Consumers are rational," said Joshua Shapiro, chief United States economist at MFR. "They respond to incentives and conditions, and right now the conditions and incentives are: spend as little as you can, and pay down as much as you can. You hunker down. That's what the consumer's doing." 

But what will it mean for the American and global economies if American consumers waking up to the recession, their loss of 30-50 percent of their assets, uncomfortable and expensive levels of debt, decide to let all their stuff age for 3-5 years - no new cars, additions on the house, washing machines, tvs, clothes?  Make do with what they have. Pull back, hunker down, get the family balance sheet back in order, save for an uncertain future, adopt a new culture of thrift. 

Not sure this very real possibility is being given adequate consideration right now in our planning.

10pm Update - The auto companies are reporting that their January sales dropped 50% percent from a year ago.  50 percent in just 12 months. I don't think we are seeing a normal downturn, a normal business cycle. 

Streak of Racialist Extremism Exposed - New York Times (NYT) editorial this weekend on how the "relentlessly harsh Republican campaign against immigrants has always hidden a streak of racialist extremism. Now after several high-water years, the Republican tide has gone out, leaving exposed the nativism of fringe right-wingers clinging to what they hope will be a wedge issue."  The editorial alludes to last week's visit by the American Cause to the National Press Club in Washington. The group, seeking to speak for the future of the Republican Party, declared that its November defeats in Congressional races stemmed not from having been too hard of foreigners, but too soft.  The NYT points out several key points that have been repeated in NDN analysis throughout the years:

This is nonsense, of course. For years Americans have
rejected the cruelty of enforcement-only regimes and Latino-bashing, in opinion surveys and at the polls. In House and Senate races in 2008 and 2006, "anti-amnesty" hard-liners consistently lost to candidates who proposed comprehensive reform solutions. The wedge did not work for single-issue xenophobes like Lou Barletta, the mayor of Hazleton, Pa., or the former Arizona Congressman J. D. Hayworth. Nor did it help any of the Republican presidential candidates....Americans want immigration solved, and they realize that mass deportations will not do that. When you add the unprecedented engagement of growing numbers of Latino voters in 2008, it becomes clear that the nativist path is the path to permanent political irrelevance. Unless you can find a way to get rid of all the Latinos.

The Editorial also alludes to two illustrative quotes by Bill O'Reilly, "for another YouTube taste of the Fox News host assailing the immigration views of "the far left" (including The Times) as racially traitorous."

On that note, you might want to review the NDN Backgrounder: State of the Modern GOP and the Conservative Movement

Amidst Having No Identity and No Agenda, the GOP Attacks Immigrants Again in Economic
Stimulus Debate

NDN BackgrounderImmigration Reform and the Growing Power of the Hispanic Vote

The Utter Bankruptcy of Today's Republican Party

Chip Saltsman's Other Song - The Star Spanglish Banner - After all the attention received by the Republican mailing of the parody song "Barack the Magic Negro" by Chip Saltsman, last week NDN highlighted "The Star Spanglish Banner," a "puerile bit of Latino-baiting" on the same notorious CD.  That same afternoon Mr. Saltsman withdrew his name from the race for RNC Chair.

The election for RNC Chair was finally won by Michael Steele.  Many see this as a "first step" by the
Republican party to change direction, but when we read Mr. Steele's position on immigration, it is clear that the GOP just doesn't understand how to fix the broken immigration system, and they have no plan.

According to this article, and to the New York Times,incoming Senator Gillibrand "Hints at a Change of Mind on Immigration."

University of Virginia law professor David Martin is joining the Department of
Homeland Security as a principal deputy general counsel.

Confidential taxpayer information might be at risk in Weld County, CO due to warrantless immigration searches being conducted by the Sheriff's office.

Postponing E-verify - The federal government has agreed to postpone implementing the E-Verify regulation for federal contractors until May 21, 2009 at the earliest, a business group said today.  Federal officials agreed to a request by the U.S. Chamber of Commerce to postpone enforcement of the regulation so that the rule can be reviewed by the Barack Obama administration, the organization said in a news release.  It is the second time the federal government has pushed back the deadline. Under the new agreement, federal contractors will
not need to comply with E-Verify until May 21.

Layoffs mean more than lost wages for H-1B visa holders

Obama Must Embrace Immigrants to Reform Economy 

This image was the headline on the Huffington Post website, until our post on "The Star Spanglish Banner" took its place for most of the day, and it goes very well with a piece in the Washington Post today by  Manuel Roig-Franzia.  As Republicans have a national meeting this week, they search for their misshapen identity.  In the meantime, since they have nothing else to propose and know nothing other than the exploitation of racial fear and hate, they decided to issue a statement claiming that the stimulus bill would help undocumented immigrants:

The $800 billion-plus economic stimulus measure making its way through Congress could steer government checks to illegal immigrants......The legislation, which would send tax credits of $500 per worker and $1,000 per couple, expressly disqualifies nonresident aliens, but it would allow people who do not have Social Security numbers to be eligible for the checks.

What this statement does not say, is that the stimulus steers checks to TAXPAYERS, it's not aimed at "illegal immigrants." In fact, the measure indicates that Social Security numbers are needed to claim tax credits of $500 per worker and $1,000 per couple. It also expressly disqualifies nonresident aliens.  Senate Majority Leader Harry Reid clarified, "This legislation is directed toward people who are legal in our country.  It is about time the Republicans got a different piece of reading material and get off this illegal immigrant stuff." said Sen. Reid, D-Nev. "This bill has nothing to do with anything illegal as far as immigration. It creates jobs for people who are lawfully in this country."  Not just U.S. citizens pay taxes - many legal immigrants under Temporary Protected Status or other programs file taxes, purchase homes, and get credit, so they would be eligible for a return.

Instead of trying to create a new "boogieman", the GOP should be thinking about how to be more inclusive - and inclusive does not mean having one member of one minority in a prominent position in your Party.  Some Members of Congress still - for reasons that I will probably never understand - think it is somehow out of line to repudiate racist/divisive attacks like Rush Limbaugh's.  At least Phil Gingrey took one step in the right direction by not shying away from repudiating some of the latest offensive attacks, namely by Limbaugh against our President:

"I think that our leadership, Mitch McConnell and John Boehner, are taking the right approach," Gingrey said. "I mean, it's easy if you're Sean Hannity or Rush Limbaugh or even sometimes Newt Gingrich to stand back and throw bricks. You don't have to try to do what's best for your people and your party. You know you're just on these talk shows and you're living well and plus you stir up a bit of controversy and gin the base and that sort of that thing. But when it comes to true leadership, not that these people couldn't be or wouldn't be good leaders, they're not in that position..."

Lastly, and more importantly, aside from whatever Republicans do or don't do, this statement tying the immigration debate into the stimulus debate exemplifies a greater trend that Simon and NDN have predicted will occur with the entire domestic agenda until immigration reform is passed:

"That the debate.....has immediately become a debate about immigration should be a clear warning to the Administration and Congress that progress on many important domestic priorities this year may get caught up in the debate on how to best fix our broken immigration system. It is our belief that rather than having a series of tough and contentious proxy fights [with Republicans and with Democrats] on immigration, our leaders should recognize that passing comprehensive immigration reform this year will not only help fix our badly broken immigration system - a priority of many Americans - but may also be the key to unlocking bipartisan progress on a whole range of other domestic and security related issues." 

Within one week of taking office, President Obama has dispelled any doubts on whether he’s serious about tackling climate change. His stimulus plan will direct greater tax and spending subsidies to climate-friendly technologies and fuels over the next 18 months than the Bush administration did over the last eight years, and the federal government will offer itself as a model by bringing federal facilities up to the “Gold Leeds” energy-efficiency standard. Moreover, his EPA will let states that as yet are politically more climate-sensitive than Washington, including California and a dozen others, set more stringent CO2 emissions standards than the federal versions. And other climate-friendly laws and regulations are on their way, including higher federal fuel-efficiency standards for automobiles and trucks.

Sound as these steps generally are, they leave undone the hard work that climate scientists agree must be done – namely, to put in place a policy to embed the cost of carbon in the price of everything our businesses and households use, especially that electrical power which mostly still depends on the most carbon-intensive fuel we have, coal. And there’s a good reason why President Obama isn’t starting with this step, even though it’s the most important one: Making people pay more for carbon-intensive energy and the products and services produced with it means that, well, people have to pay more – and people don’t like that, especially in very hard economic times. And the inconvenient truth is, those are only the beginning of the costs to contain climate change, since retrofitting our factories, offices, homes and our power systems for less carbon-intensive and energy-intensive technologies and materials will cost everyone, well, a lot more than the stimulus package. To his credit, President Obama corrected one of his rivals for the nomination who tried to claim that we could beat climate change at little cost. And there is some other good news here: The costs to redo our lives around more climate-friendly fuels and technologies can be spread over two generations – and paying those costs will save much of planet for our grandchildren.

The current hard economic times hopefully will focus more of the climate change debate on how to contain those costs, both the direct costs to people and businesses and the indirect ones through the larger effects of these policies on the economy. And if we don’t figure that out, any systemic reform that doesn’t contain those costs may not survive long enough to make a difference. Here is where a real divide opens between the two main options for embedding the price of carbon, a cap-and-trade system and carbon-based taxes. On the direct costs, a tax-based system has the advantage: You can tax energy based on its carbon content, and then turn around and return the revenues to everybody through payroll tax cuts or simple disbursement to every household. Cap and trade could do something of the same thing by auctioning off its permits to generate greenhouse gases and then using those proceeds for tax cuts. But so far, every cap-and-trade plan either gives away its permits (businesses wouldn’t have it any other way) or uses the auction revenues to pay for other climate-friendly initiatives. In either case, cap-and-trade leaves everyone’s incomes lower, a pretty nasty outcome for most of us.

Another inconvenient truth here is that carbon-based taxes also have the advantage on indirect costs. The great asset of cap and trade is that it applies an actual cap to CO2 emissions. But whenever demand for the energy that produces those emissions is greater than had been expected when the cap was set – for example, because the summer is hotter than expected, the winter is colder, or the economy grows faster than anticipated – demand will hit the cap, and prices will spike for both the permits and the energy that underlies them. Adding a new layer of national price volatility in energy prices, on top of what we already have to bear from international forces, would be another nasty outcome.

Carbon-based taxes have their own problems. They don’t involve a set, annual cap on greenhouse gases, so keeping us on a safe emissions path would probably entail adjusting the level of the tax on a pretty regular basis. And the prospect of enacting a large, new tax and then choosing what offsetting taxes to cut could itself easily turn into a nasty piece of political business. It’s no wonder that President Obama isn’t eager to referee this fight. Of course, the public’s faith that of all of our national leaders, he alone is best equipped to drive and guide our responses to daunting challenges is also the main reason he’s the president today.

With debate over the recent vote in Congress on the State Children's Health Insurance Program (SCHIP) largely turning into a debate on immigration, we present much of NDN's key work on comprehensive immigration reform, the changing demographic realities of 21st century America and Hispanic electoral trends.

• The Star Spanglish Banner, Melissa Merz, January 29, 2009
• Weekly Immigration Update, and Outlook for 2009, Zuraya Tapia, January 2009
• Immigration Remains Top Priority for Hispanics, Evidence of Bipartisan Support, Zuraya Tapia, January 26, 2009
• What Race Means in America Is Changing, Simon Rosenberg, January 19, 2009
• Congress, SCHIP, and Immigration Reform, Simon Rosenberg, January 13, 2009
• The GOP and Magic Negros, Simon Rosenberg, December 30, 2008
• A New Coalition and a New Map, NDN Event, December 12, 2008
• The Economy and Immigration, DHS Targets "Engine of Our Economy", The Economy and Immigration Reform, 2008-2009
• What World Does the Republican Party Live In?,  Zuraya Tapia, December 12, 2008
• An Updated Analysis of the Hispanic Vote, 2008, Andres Ramirez, November 15, 2008
• New NDN Polls Find Overwhelming Public Support for Comprehensive Immigration Reform in Key Battleground States, September 10, 2008
• Words Have Consequences, Zuraya Tapia, August 7, 2008 and November 20, 2008
• Hispanics Rising II, May 30, 2008
• The 50-Year Strategy, Simon Rosenberg and Peter Leyden, Mother Jones, Winter 2007
• 1%, 62% and the Failure of Tancredoism,Simon Rosenberg, December 20, 2007
• Can Democrats Seize the Opportunity The Immigration Debate Offers Them, Simon Rosenberg, December 11, 2007
• Immigration, Once Again, Despite Huge GOP Investments, Does Not Perform for the GOP, Simon Rosenberg, November 7, 2007

Steve Lohr has a very worthwhile story in the NYTimes today taking a hard look at the true economic legacy of FDR.  Titled "F.D.R's Example Offers Obama Cautionary Lessons, " it begins:

In 1933, as today, a new president stepped into the White House,
vowing change and decisive action at a time when a banking crisis posed
a grave threat to the nation’s economy.

The economic morass that confronted Franklin D. Roosevelt 76 years ago was undeniably deeper and more ominous than the trouble President Obama
is facing. Yet, according to economists and historians, there are also
some telling similarities and cautionary lessons to be drawn from the
experience of the Roosevelt years in the 1930s.

Roosevelt had his triumphs. He stemmed panic and stabilized the
banking system with a combination of deposit insurance, government
investment in banks, restrictions on banking practices and his
“fireside chat” radio addresses, which repeatedly steadied the national
mood and bought Roosevelt time to make changes.

Still, even after the government assistance, the surviving banks
were shaken and lending remained anemic — much as the nation’s banks
today are reluctant to make loans again, despite receiving more than
$300 billion of taxpayers’ money in Round 1 of the federal banking
bailout.

So, throughout the 1930s, economic recovery remained frustratingly
elusive and arrived only with the buildup for World War II in the 1940s.

The shorthand verdict on Roosevelt, economists and historians say,
is that he was an eloquent and skillful politician, and an innovator in
jobs programs like the Civilian Conservation Corps and in regulatory
steps like the creation of the Securities and Exchange Commission to
police Wall Street. But Roosevelt, they say, while brilliant in many
ways, did not have a sure grasp of how to guide the economy as a whole.

“Roosevelt had some successes, but we hope that Obama is going to do
better,” said Kenneth S. Rogoff, a professor of economics at Harvard. “Otherwise, we’re in trouble.” 

I've been a little suprised that so much of the discussion in recent months on FDR's legacy has focused on his first 100 days, or some of the jobs programs which had marginal impact on the economy at the time.  A truer read of his legacy would show that America remained in an economic slow down until we went to war; that perhaps his most lasting legacy was not domestic but international, in defeating fascism and in fashioning a new liberal international order that has kept the world peaceful and prosperous for 60 years; and that of all of this was done over time, a long time - the FDR-Truman Administrations were in power for 20 years. 

As I wrote in a recent essay, Progress Not Motion, those in power now have to start coming to terms with the most challenging part of the FDR legacy - the unpleasant reality that solving the great challenges in front of us will certainly take more than the 2 years before the next election and the 4 years before the President's reelection.   There is a very real chance that the economy will still be in recession in 2010, and even 2012.  To me what this means is that our leaders need to stop raising expectations that things will get better quickly; to stop suggesting that there is no time to waste; to resist short term fixes that will not hasten the transition of America into the new economy of the 21st century.   As our new President said in his Inaugural speech last week this is a time for us to act responsibly, which means many things but certainly it means that we cannot confuse motion and progress in these vital days ahead.  It is more important at this critical time for our leaders to be right than fast - and to make it clear to the American people that the messes left behind by our recent era of terrible leadership will take many years, a lot of money, a great deal of effort and a lot of patience to fix. 

Below you'll find a summary of our articles related to immigration this week.   

Immigration Remains Top Priority For Hispanics, Evidence of Bipartisan Support for Reform on Al Punto yesterday.

Why DHS Fees are So Unjust - GAO Study Finds DHS Did Not Adhere to Federal Accounting Standards and Principles.

Simon Discusses How the Meaning of Race in America is Changing

NDN and Twelve-hundred other groups delivered a letter to the Obama Administration outlining priorities in order to fix the broken immigration system - The letter stresses the urgency with which the new Administration should approach immigration reform legislatively and administratively, noting that efforts to address the many ills facing our immigration system have become the victim of gridlock in Washington for too long.

Hispanics and Immigration Reform Must be a Part of the Economic Agenda - A recent study on minorities and the economic crisis shows: 1) Hispanics are currently suffering a percent of unemployment much higher than that of their white counterparts, 9.2% in January, up from 8.9% unemployment in December 2008.  2) Even during a period of employment gains enjoyed by Hispanics from 2001-2007, poverty increased among Hispanics over the same period, which only highlights the low wages at which Hispanics tend to work. 3) Personal and family income has steadily declined for Hispanics.  4) Large disparities in health insurance coverage also persist.  In 2007, 32.1% of Hispanics lacked health insurance coverage, compared to 10.4% of whites.  5) Additionally, Hispanic home ownership rate was only 49.7% for Hispanics in 2007, compared to 75.2% for whites. 

NDN Participates in Pre-inaugural Day Events - Simon and Andres addressed approximately 100 Latino organizers, community leaders, and individuals interested in increasing the civic participation of Latinos from approximately 20 different states.  Subsequently, Simon spoke at the "Latino State of the Union" conference, where he highlighted the importance of immigration reform as an essential part of any plan for economic recovery, "As long as the trap door of undocumented immigration remains, with 5% of the American workforce outside of the protection of U.S. law and U.S. minimum wage, we will not be able to achieve economic recovery." 

NDN Praises U.S. Sen. Jay Rockefeller for offering amendment to help legal immigrant children. 

A Race to the Bottom, A Broken Immigration System Has a Social and Economic Cost, too - According to a report just released by the Migration Policy institute, although the U.S. economy's nosedive has probably contributed to a drop in the number of undocumented immigrants coming into the United States, those already here will be less inclined to return home due to the manifestation of the economic crisis in the U.S. and abroad.

Victory for Nashville - It's always good to hear good news on the immigration front - Props to all those Nashville, TN voters and organizers who voted down an "English-only" amendment. 

Yesterday, Al Punto, the Sunday morning political show on Univision - the network with the largest Hispanic viewership in the U.S. - featured the issue of immigration once again, as it does each week in one way or another.  Immigration features prominently on the Spanish-language newscast each evening, and during Al Punto's interviews every Sunday because it is an issue that remains a top concern for Latinos, and to Americans in general.  

Yesterday's show highlighted the bipartisan support that can be drawn on the issue of immigration.  The first segment consisted of an interview with U.S. Rep. Loretta Sanchez and U.S. Rep. Ileana Ros-Lehtinen to discuss their opinion of President Barack Obama's agenda coming into office.  Rep. Sanchez quickly named immigration reform as one of the top three issues she believes President Obama should move on first (along with the economy and the war in Iraq).  She mentioned that she has already spoken with White House staff to discuss how to move on immigration this year, and reiterated her belief that immigration reform is imperative in order to help the economy and secure our borders.  For her part, Rep. Ros-Lehtinen was more skeptical about reform passing this year, although she recognized that President Obama is in a great position to launch reform because "the American people are on his side" - polling data has consistently shown that the American people want a solution to the broken immigration system - and that the popularity enjoyed by President Obama would certainly help efforts to pass comprehensive immigration reform.  It's noteworthy that Rep. Ros-Lehtinen stated that while she might not agree on many issues with President Obama, she is on his side when it comes to immigration reform and would work with Rep. Sanchez and others in order to pass comprehensive immigration reform. 

The show's third segment consisted of an interview with U.S. Senate Majority Leader, Sen. Harry Reid.  Jorge Ramos began the interview by asking, "Barack Obama promised the Latino community that he would move comprehensive immigration reform within his first year, is there the political will to do this in the first year?"  The questions denote the sense of urgency for reform felt among Latinos.  Reid pointed out that in addition to addressing interior and exterior enforcement, future flow, path to citizenship, etc., any bill for comprehensive (CIR) would also include the Dream Act.  This is great news, but Jorge Ramos pressed on, "As you know, this is very important for the Hispanic community; when will CIR pass?"  Sen. Reid answered, "I hope that we can get it done in September, and I feel confident that we can get this done.  I've spoken with John McCain," and "Sen. McCain has reiterated his commitment to providing Republican support," for the legislation.  It's interesting that Sen. Reid noted, "Now we're 59 Democrats, and we need 60 votes," alluding to the new political landscape in the Senate, a landscape that requires less Republican votes for the bill than was required when legislation for immigration reform was presented in 2007.  Now if we can only make sure all Democrats share the President's view and the Democratic platform for immigration reform.....Ramos ended the interview by thanking Sen. Reid and reiterating, "And we'll be checking in with you on the progress of immigration reform." 

We knew there was something very wrong with the new fee schedule released in Summer of 2007, now GAO explains why these fees, in fact, have no basis.   

In February 2007, the Department of Homeland Security's (DHS) U.S. Citizenship and Immigration Services (USCIS) completed a study to determine the full costs of its operations and the level at which application fees should be set to recover those costs.  Based on its analysis, in June 2007 USCIS's new fee schedule increased the cost of some applications by over 300%!  For e.g., the cost of applying for Legal Permanent Resident status went from around $300 to $675 ($595 plus an $80 biometric fee) - and that does not include the cost of hiring a lawyer to assist throughout the application process, which most immigrants can't afford (and people wonder why immigrants fall out of status).  The cost of applying for citizenship went from around $192 plus a few additional fees, to $460, plus additional exams and fees.

This GAO report, released today, to investigate USCIS fee review found that the costing methodology USCIS used to develop the fees for each application type did not consistently adhere to federal accounting standards and principles and other guidance (surprise surprise).  The GAO reports:

While federal accounting standards allow flexibility for agencies to develop managerial cost accounting practices that are suited to their needs, they also provide certain specific guidance based on sound accounting concepts. USCIS's methodology was not consistent with federal accounting standards and principles and other guidance in the following aspects: (1) costs paid by other federal entities on behalf of USCIS were not included in its estimates of costs, (2) key assumptions and methods used for allocation of costs to activities and types of applications were not sufficiently justified, (3) assumptions about staff time spent on various activities were not supported by documented rationale or analysis, (4) the cost of premium processing services was not determined, and (5) documentation of the processes and procedures was not sufficient to ensure consistent and accurate implementation of the methodology.