21st Century Agenda for America

For months, NDN has written a great deal about what we believe should be in an economic recovery plan. We’ve argued for investment in provisions that will both spur the economy now and create the basis for future prosperity.  We’ve argued for investments in clean and traditional infrastructure, broadband access, electronic health records, and computers in schools. While we have some concerns about what will end up in the final bill, all in all we think the recovery plan that is emerging is a good one and should be passed as soon as possible. We applaud the work of this young Administration and Congress for moving so swiftly and so assuredly to take the kind of action required at this challenging time for the nation.  

However, there are two provisions being discussed that we believe should not be in the final bill: mandatory E-verify usage by employers receiving stimulus funds and "Buy American" requirements for materials involved in stimulus funded projects. We believe that, in coming days, these provisions should be removed from the economic recovery legislation. While they are well intentioned provisions, we, like many others, do not believe that they will function as a stimulus for the economy and will do more harm than good.

As President Obama pointed out yesterday in Elkhart, Indiana, there are many effective ways to make America more competitive in the global economy, but we believe that "Buy American" provisions, which, depending on the version of the bill, would force steel, iron, and other materials used in stimulus projects to be American-made, are not among them. We have serious concerns that Buy American provisions, while well-intentioned, place us right on the edge of our international legal commitments and open the door to dangerous retribution from other nations also in the midst of grave economic challenges at home. America not only imports from abroad, but our workers and our companies sell a great deal abroad.   Enacting provisions that would slow American exports and potentially diminish the overall volume of trade at a time of an accelerating global slowdown could tip the world into a global depression. As many have pointed out, America tried this strategy in the early 20th century, and it was instrumental in bringing about the Great Depression.  

Similarly, however laudable the goal of using the nascent E-verify system by all companies receiving stimulus funds to ensure that these funds go to legal workers, the reality is that the system is not yet ready for broad, mandatory deployment. Indeed, mandating its use could have adverse consequences for the economic recovery, as it would almost certainly slow the use of funds, be incredibly costly to employers, and, because of the consequences of false "no matches" (which are easily triggered and all too common), would delay the recovery plan’s goal of putting Americans back to work.  For those policymakers interested in the United States having national, effective electronic immigration verification system, they should work with the President to include it in a broader effort to fix our broken immigration system later this year.  

As members of Congress debate the economic recovery plan in conference committee over the next few days, we trust that they will keep an eye out for provisions that are clearly not in the economic interests of the United States. The inclusion of Buy American and E-verify provisions fall well short of this measure and should be removed from the legislation.

I.  We begin with the good news from this week - The President signs a children's health bill into law that provides for legal immigrant children.  Even though the recent debate over funding health insurance for children was contaminated by fears that "illegal immigrants" would sign up for the program, the bill still passed Congress and was signed into law this week.  It is a very encouraging sign that Members of Congress could see past the politics and recognize that this bill - and the provision that was for granting legal immigrant children care - was the best policy.  Congress and the American people showed how they are now ready to rise above the insults and demagoguery to enact smart policy.  The accusations rang hollow - that the bill would encourage more people to come to the United States to "get on the government dole," or that there was "no verification system to speak of ... in the bill," as stated by Lisa Sylvester on CNN's "Lou Dobbs Tonight," while the phrase "illegal alien bailout" flashed on the screen - all this was kicked to the curb because policy makers knew better.  They knew the truth, and demonstrated a desire to focus on solving problems as opposed to hating immigrants.  Donna Cohen Ross, director of outreach at the Washington-based Center on Budget and Policy Priorities, said she was not surprised by the Lou Dobbs rhetoric.  Still, after studying the House bill's language, she concluded that there was "nothing about the rules that would allow illegal immigrants to use the program."

But the fight is not over, as Simon has stated, "The immigration system is broken and there are a lot of people who live in this country who are not legal citizens,....So the issue of whether benefits are conferred upon them will come up again and again."  Hence the urgency to pass comprehensive immigration reform as a way to stop having domestic policy held up by immigration proxy fights. 

II. Mixed Messages - The debate in D.C. is focused around the economic stimulus package this week.  And while everyone says they care about helping businesses and helping "everyday working Americans," the "economic recovery" plans laid out by Congress are full of mixed messages - I won't delve into NDN's perspective on these issues individually at this time, I'm only pointing out key items that - to me - seem a bit contradictory: 

1.  On the one hand, the Senate kind of backed off the original "Buy America" provisions, diluting them after public outcry.  And yet, after diluting buy America, Senators turned around and came out against increasing H1-B - foreign - workers. 

2.  "He giveth and he taketh away" - A week after the Federal government decided to delay mandatory implementation of the E-Verify system for government contractors, the economic stimulus package could mandate that all recipients use this ineffective system.  Let me get this straight - you have companies that are struggling to the point they need government aid, and somewhere, someone believes it's a good idea to then turn around and impose an additional requirement on them that will potentially dilute any benefit conferred by the stimulus.  Mandating e-verify could require businesses to hire additional Human Resources personnel to become trained in and handle the e-verify checks.  Additionally, it will cause a delay for businesses in receiving the stimulus because most do not currently use e-verify, which means they can't get stimulus until they are trained and registered on the system.  Businesses will have to deal with DHS and SSA on a regular basis, and many workers will potentially lose their jobs as their data is run through e-verify, many unjustifiably.  At this time, all energy and money should be going to helping business get on its feet, and that should be the ONLY goal at this time, not to impose a bureaucratic process that does not even fulfill its intended role.  By all means, we support a functional system that could provide certainty to employers making hiring decisions, but that is not the current e-verify.  Let's worry only about stimulus at this point, then revisit E-verify as one part of a bill to enact comprehensive reforms to the entire broken immigration system.  

And lest we forget - the E-verify database does not contain immigration information, it was created by SSA to verify benefits with W-2s, it was never intended to serve as a system to check legal status.  As reported by the House Committee on Small Business, implementing this now will only hurt businesses - small businesses above all, who already suffer inflation, poor sales, and job loss.  

Finally, I have a test case that demonstrates what happens to business when you mandate the current - flawed - e-verify system: the State of Arizona.  IPC has data about this case, and NILC and CATO have written about it as well.  As Rep. Gabrielle Giffords testified during a committee hearing:

I believe that the Arizona experience should inform the ongoing debate about employment verification and whether the current E-Verify program administered through DHS should be extended and/or mandated Nationwide. 
Some of the businesses that have signed up have reported a variety of challenges and problems using E-Verify. They are finding it complicated, unreliable, and burdensome. They are having great difficulty getting answers from DHS to their problems about the system.  I have heard from employers, employees, and privacy rights advocates who are very vocal that nationally mandating E-Verify as it is would be potentially disastrous for our Nation. They are all experiencing the downfalls of using an inaccurate database with inadequate privacy protections.  Between October of 2006 and March 2007, roughly 3,000 foreign-born U.S. citizens were initially flagged as not work-authorized.  These errors have specifically impacted Arizona workers who have their ability to work wrongfully impacted. The experience of Arizona employers and employees makes it clear that we can do better and that action is needed.

III. Money = Policy.  A great piece by Nina Bernstein of the New York Times this week continued exposing details of how Immigration and Customs Enforcement (ICE) actually strayed away from its mission to protect us for the sake of meeting ridiculous "quotas" of arrests, originally reported in California last week.  Under President Bush, Immigration raids garnered bigger increases in money and staff from Congress than any other program run by ICE even as complaints grew that teams of armed agents were entering homes indiscriminately.  Raids on private homes around the country were billed as carefully planned hunts for dangerous immigrant fugitives, and given "catchy" names like Operation Return to Sender.  Federal immigration officials had repeatedly told Congress that among more than half a million immigrants with outstanding deportation orders, they would concentrate on rounding up the most threatening - criminals and terrorism suspects.

Instead, newly available documents show, the agency changed the rules, and the program increasingly went after easier targets. A vast majority of those arrested had no criminal record, and many had no deportation orders against them, either. Internal directives by immigration officials in 2006 raised arrest quotas for each team in the National Fugitive Operations Program, eliminated a requirement that 75 percent of those arrested be criminals, and then allowed the teams to include nonfugitives in their count.  In the next year, fugitives with criminal records dropped to 9 percent of those arrested, and nonfugitives picked up by chance - without a deportation order - rose to 40 percent. Many were sent to detention centers far from their homes, and deported.

What exactly was Congress expecting when it funded this particular program the most, and then did not partner that funding with oversight?  Money is policy, and if you put your dollars into making arrests, it's not exactly a shock when the recipient of the money focuses on making arrests - without regard for the type of arrest.  This is an example of why it's so important for advocates and for members of our community to look at where the dollars are going, and to shape where funding goes because that will necessarily dictate policy priorities. 

Now, as the Obama administration vows to re-engineer immigration policy to target criminals, we certainly hope they reverse these "internal directives," participate in oversight, and work with Congress so that relevant committees also understand their role in funding certain programs, and then continuing oversight after they decide to appropriate funds.  It will be interesting to see the role Janet Napolitano decides to play in all this - now that she has left Arizona politics behind, Ms. Napolitano is free to prove this is not Arpaio's America, where the mob rules and immigrants are subject to ritual attack and humiliation.

IV. Where is the Outrage? Speaking of ritual humiliation, even though 21st Century America is nothing like Sheriff Arpaio's America, this man refuses to let down.  This "Sheriff" from Maricopa County, AZ paraded more than 200 men and women in shackles and prison stripes, marched under armed guard past a gantlet of TV cameras to a tent prison encircled by an electric fence. They were inmates being sent to await deportation in a new immigrant detention camp minutes from the center of America's fifth-largest city.  Two things are troubling:  1) this has not been recognized as a NATIONAL civil rights issue by the media, most activists, and elected officials.  How can a man - particularly in the position of Sheriff - allowed to parade people like cattle, dehumanizing and humiliating them while they are in a legal proceeding.  We forget - MOST awaiting deportation are not criminals.  Where is our community's outrage at this man, and the outrage of the entire country, that people are paraded in such fashion in the United States of America?
And 2) Arpaio's tactics are even more infuriating given that his office's budget has nearly doubled since 2001. In the meantime, criminals have the run of Maricopa County. As reported by the Goldwater Institute and the East Valley Tribune, the sheriff has 40,000 outstanding felony warrants in his jurisdiction and 2,700 lawsuits filed against him.  So the money is going to pulling stunts as opposed to doing his job.  If he wants celebrity, let him step down. The duty of Sheriff is to keep people safe.  With crime rising, and being in a state that is largely involved in the drug trafficking fight, he should be more concerned with organized crime and fighting real criminals, as opposed to humiliating members of the community.  I share NCLR's call to action against him: 

Arpaio's newest scandal will by no means improve the safety of his community but no doubt get him more publicity. The images that this march will provoke are shocking: horrific shots of people chained, marching through public streets at lunchtime. Perhaps it's a ploy to increase the ratings of Sheriff Joe's new reality show, which is in its seventh week. Are you tired of his antics yet?  Here's what you can do:

1. Request that the Department of Justice investigate Arpaio's abuses.
2. Forward this email to all of your family and friends, post it on Facebook, and circulate it as far and wide as you can. Send a clear message to Arpaio and his thugs that we will not stand for these kinds of abuses in our nation.

Arizona Republic: Arpaio to Move Illegal-immigrant Inmates
Hundreds to be relocated to segregated area of Tent City; sheriff says plan will cut costs
February 4, 2009
By JJ Hensley and Yvonne Wingett

http://www.azcentral.com/news/articles/2009/02/04/20090204arpaiojail0204.html

Sheriff Arpaio Chains Together Immigrants and Forces
March
February 4, 2009
By Dan Weiss
http://imagine2050.newcomm.org/2009/02/04/sheriff-arpaio-chains-together-immigrants-and-forces-march

Stop Arizona. Stop Arpaio. Stop the Circus.
February 4, 2009
By Rev. David L.
Ostendorf
http://imagine2050.newcomm.org/2009/02/04/stop-arizona-stop-arpaio-stop-the-circus/

"Chain gang?" He should be worried about real gangs. So that you can see the "chain gang" for yourself:

In his newest weekly address this morning, President Obama congratulates the Senate for reaching a compromise on the stimulus bill, and stresses the urgency of passing a stimulus package. Clocking in at over 4 minutes, it's one of the longer addresses the President has released. Check it out below:

The U.S. Senate’s “Dr. No,” Republican Judd Gregg of New Hampshire, best captured the need for political leadership in this time of crisis in accepting his nomination by President Barack Obama to be U.S. Secretary of Commerce: "Now is not the time for partisanship. Now is not the time to stand in our ideological corners and shout at each other. Now is the time to govern and govern well."

Unfortunately, many in Congress, including much of the leadership of both parties, still don't understand that the United States has entered a new civic political era, demanding new rules of behavior in response to our dire economic circumstances. Even as President Obama expresses the "fierce urgency of now," pointing out that if government does not act soon and vigorously it "will turn a crisis into a catastrophe," Congress still seems unable to put aside the ideological arguments and constant efforts to win partisan advantage that characterized American politics in the era the country has just left.

Congressional Republicans seem to believe that the economy can only be revitalized by tax cuts while Democrats say that only vast federal spending, some of it on the pet projects of Members, will produce economic recovery. As demonstrated by the recent House vote on final passage of the economic recovery bill, in which virtually all Democrats voted against all Republicans, working across party lines remains an elusive dream. Republican Members of Congress seem intent on following the strategy from their ideological battles with President Bill Clinton a decade ago in which the goal was to enforce party discipline in the hope that the President and his party would fail and Republicans could blame the Democrats in the next election. But with the stakes as high as they are now, the GOP should instead be listening to the author of that earlier strategy, Newt Gingrich, who has publicly made it clear that the country cannot afford for Obama’s economic recovery plan to fail.

Meanwhile, Democrats need to learn some new rules of behavior as well. While NDN's Globalization Initiative Chair Dr. Rob Shapiro has correctly noted that the recovery package now before the Senate contains only the "normal quotient of special interest subsidies on both the spending and tax sides -- think of it as a 'congressional tax,'" -- these clearly aren’t normal times. It may be true that, as Rob says, "they really can’t help themselves." But like others recovering from an addiction, Democrats will have to at least try to change their approach to building legislative consensus in this new era, one step at a time. 

The American public clearly sees the distinction between Congress' approach and that of President Obama. A Pollster.com compendium of national surveys indicates that 70 percent of Americans have a favorable opinion of President Obama and 63 percent approve of his performance. By contrast, only 17 percent approve of the job Congress is doing, while 78 percent disapprove. More to the point, in a recent Rasmussen Reports survey, a plurality (42 percent) perceives Obama to be governing in a bipartisan manner. By contrast, only half that number believes the same of both congressional Democrats and Republicans (22 percent each).

Of course, there is a way out. Unlike the social issues that dominated American politics during much of the last four decades, the economic and fiscal issues that are the current focus can be bridged with a non-ideological, post-partisan, and pragmatic approach recognizing that each side may have something to offer. If properly targeted, the tax cuts advocated by Republicans should be useful. If aimed at the right mix of projects, the Democratic spending proposals should help the economy in the short run and provide the conditions for growth in the long run. Keeping people in their homes, as both parties seem to advocate, will help families, neighborhoods, and society.

In short, as Rob Shapiro points out the recovery package can be "a useful first step, and one for which NDN has long argued."

Unlike their legislative representatives, the public has moved on from the cultural wars of the last decade. In a late January Pew survey, more than eight in 10 named the economy (85 percent and jobs (82 percent) as top policy priorities for the federal government, significantly above the numbers saying this about any other issue. In a January Wall Street Journal/NBC News poll, only seven percent cited “social issues” as an area on which government should focus compared to 21 percent who cited such cultural issues a decade ago. Paul Helmke, The Republican former mayor of Fort Wayne, Indiana, summed up the historical nature of the shift, telling Naftali Bendavid of the Wall Street Journal, that in a time of war and financial crisis, "people tend to focus on pragmatic issues rather than what the framers meant in 1789."

Throughout our history, major transformations or civic realignments have occurred at a time of intense national crisis that threatens the viability or even existence of the Republic. One such crisis occurred in the mid-19th century when the nation, led by Abraham Lincoln, overcame secession and a civil war to preserve the Union and end the moral blight of slavery. Another took place in the 1930s as America, spurred by Franklin D. Roosevelt, created the governmental institutions that allowed it to overcome the greatest economic downturn in its history and later to overcome the threats of fascism and communism.

The makeovers stemming from these crises change almost everything about U.S. government and politics -- voting alignments, public policy, and the rules by which politicians are expected to act and are judged by the American people (as we recently wrote in our essay, New Rules for a New Era). In the idealist periods before these civic realignments political figures more often than not act as moralists bent on the uncompromising advancement of ideological positions across virtually every policy concern--economic, international, and cultural -- and, more often than not, the public applauds and rewards this behavior. But, after civic realignments, faced with overwhelming and severely threatening crisis, the behavioral expectations and evaluative standards of politicians are altered. The public wants politicians to work across party and institutional lines on a non-ideological basis to produce pragmatic policies that deal with the crisis facing the nation. It's time for the House and Senate to follow the lead of President Obama and the American people and adopt new rules for a new era.

As the U.S. Senate continues its consideration of the American Recovery and Reinvestment Act, NDN is pleased to offer much of our recent, narrative shaping work on the economy, recovery, and keeping the focus on everyday people. For last week's economic backgrounder, click here. 

• Obama's Post-Partisan Plan Almost Where it Should Be by Dr. Robert Shapiro, 2/4/2009 - Shapiro points out that, despite the predictable partisanship surrounding the economic recovery package, the plan will do roughly what it should. 

• Spend? Save? What is the Right Course Now for Everyday Americans? by Simon Rosenberg, 2/3/2009 - Rosenberg asks if, even at a time of slowed demand in the economy, American families should be focusing on saving.

• The Utter Bankruptcy of Today's Republican Party by Simon Rosenberg, 1/28/09 - Rosenberg argues that Republican opposition to the economic recovery package represents the ideological bankruptcy of the party.

• Clearing the Decks for the Next Expansion by Michael Moynihan, 1/26/2009 - Moynihan envisions the economic situation he would like to see in 2012 and lays out the policy steps necessary to get there.

• NDN: Economic Recovery Package Signals New Priorities, Development of a 21st Century Economy, 1/15/2009 - NDN applauded the new direction signaled in the draft release of President Obama's economic recovery plan that will invest in technology, clean infrastruture, and a low-carbon, 21st century economy.

• Politics and the Economic Crisis by Dr. Robert Shapiro, 1/9/2009 - Shapiro argues that, for an economic recovery plan to be effective, we must also address the underlying causes of the "Great Recession," including the housing crisis.

• Getting the Stimulus Right by Michael Moynihan, 1/6/2009 - Moynihan makes a number of suggestions for ensuring that the upcoming, record-size stimulus package is a success, including a board to oversee the vast expenditures.

• A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.

• Accelerating the Development of a 21st Century Economy: Investing in Clean Infrastructure by Michael Moynihan, 10/18/2008 – NDN Green Project Director Michael Moynihan outlines a strategy for investing in clean infrastructure that will help create long-term prosperity.

• Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.

• Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay and campaign on the economic need to stabilize the housing market.

• Making the Struggle of Every Day People the Central Focus of the National Debate by Simon Rosenberg, 8/17/2008 - As the 2008 presidential campaign entered a crucial phase, Rosenberg argued that political leaders must focus on raising the wages and incomes of Americans.

• Video: At the 2008 Democratic National Convention in Denver, Newark Mayor Cory Booker discusses his work reinventing a vision for government and innovation. This message of change is timely as America works through these tough economic times and begins to shape a 21st century economy and 21st century government.

Over the past two days, NDN has offered important, leading commentary on economic recovery and the need to keep people in their homes. Dr. Robert Shapiro, Chair of NDN's Globalization Initiative, wrote "Obama's Post-Partisan Plan Almost Where It Should Be."

While the chorus of complaints about President Barack Obama’s spending and tax package was dispiritingly predictable, the post-partisan surprise is that its basic structure is evolving to just about where it should be. The legislative process is adding its normal quotient of special interest subsidies on both the spending and tax sides -- think of it as a "congressional tax," because they really can’t help themselves. And compared to the last decade of limitless tolerance for the unregulated escapades of Wall Street financiers that’s now pushing many of the world’s economies over a cliff, the partisan outrage at this conventional if distasteful part of the legislative process seems pretty hollow.

The important matter here is that at its core, the package should do roughly what we want it to, given the gravity of current conditions and our equally serious, longer-term problems with wages and jobs. (There is one gaping exception: nothing serious yet to address the foreclosure and housing crisis). In effect, the Administration has cleverly packaged some broadly useful, longer-term economic and social initiatives with some traditional “stimulus,” and it’s selling it as the answer to the crisis. It provides some of that answer -- unfortunately, not all of it by a long shot -- but it also offers the Administration’s first responses to other legitimate matters on which President Obama happened to win his election.

Read the full piece here. 

On the need to keep people in their homes, an issue NDN has led on since the financial meltdown, NDN Fellow Michael Moynihan argued that "What America Needs is a Fixed 4% Mortgage."

In short, America needs three things to stimulate the economy: the recovery package that is now approaching passage; a plan to revitalize the banking sector, which the Treasury Department should release soon; and finally, a 4% fixed-rate mortgage to address the housing crisis. Fixing the housing problem was mysteriously absent from the Bush efforts to address the crisis. Now that Obama economic team is in place, the Administration and Congress should work rapidly to develop this critical third piece of the economic recovery.

Read the full piece here.

For more of NDN's leading work on keeping people in their homes, please see the following pieces and click here for the Keep People in Their Homes page:

• The Utter Bankruptcy of Today's Republican Party by Simon Rosenberg, 1/28/09 - Rosenberg argues that Republican opposition to the economic recovery package represents the ideological bankruptcy of the party.

• Notes on the Financial Crisis by Michael Moynihan, 9/26/2008 - Moynihan examines the panic fueled by the Bush Administration's inadequate response to the financial meltdown.

• Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective. 

• Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay and campaign on the economic need to stabilize the housing market.

• NDN to Congress: "Keep People in Their Homes" by Simon Rosenberg and Dr. Robert Shapiro, 9/17/2008 - NDN made this leading statement on the need for the federal government to keep people in their homes.

New York City - Debt crises, as I have written before, are as old as civilization. And history has shown that when debt exceeds the ability to repay, there is only one solution: debt reduction. This can take the form of a general release as in the Biblical jubilee or laws of Solon in ancient Athens, a moratorium on repayment and reduction of interest as in the decrees of the Roman emperor Tiberius, forgiveness of principle as in Bono's initiative for the developing world, bankruptcy at the level of the individual firm, or if all else fails, inflation as in Germany after World War I. However, there is no getting around the fact that when people can't pay, the only real answer is debt reduction. It is time for Congress and the Administration to face up to that fact in the arena of mortgages as we work through the current financial crisis.

Mortgages remain a key part of the current crisis, as evidenced by the vastly different fate of banks that currently hold mortgage-backed securities such as Citi (whose stock is trading at 3.7) and banks that avoided them such as JP Morgan Chase (whose stock is trading at 25).  The biggest casualties of the crisis so far -- such as Bear Stearns, Lehman and AIG, not to mention Fannie and Freddie -- fell, in large part, due to their involvement with mortgage- backed securities. Mortgage-backed securities and the mortgages that underlie them remain at the eye of the financial hurricane.

However, at the level of the individual household, the mortgages that underlie them are also hampering recovery. Forced to choose between keeping their homes and spending, people will try to keep their homes as long as possible. Unsustainable mortgage payments, thus, are a direct challenge to any effort to jump start the economy. Absent real action by the government, these mortgage payments will continue to drive foreclosures, lower home prices and eviscerate household budgets for the foreseeable future. Fortunately, there is something government can do.

While principle amounts as well as interest rates are a problem, the latter can be altered simply by allowing Americans to refinance into affordable fixed rate mortgages. Of course, banks themselves are not about to lend money to mortgage buyers at 4% in the current environment. That is why the federal government needs to step in with an ambitious new federally guaranteed mortgage to solve the mortgage crisis once and for all. 

A new low-interest mortgage is the key ingredient needed to get American households spending again. In other words, it is no exaggeration to say that economic recovery is hostage to mortgage reform.

Someone who has been writing about the need for debt reduction for some time is British historian Niall Ferguson who returns to the subject today in the Financial Times.  He notes that in the 19th century, it was common for governments to replace 5% notes with 3% notes through a process called conversion. When markets are working properly, it is often possible for borrowers themselves to practice conversion by refinancing at a lower rate. However, in today's environment in which underwater mortgages continue to cripple household budgets but replacement mortgages are hard to come by, Ferguson makes the point that conversion of the whole class of adjustable rate mortgages with a new low-interest mortgage is needed to work through the current crisis.

Not everyone would take advantage of the U.S. mortgage, as I would call it, nor should they.  If someone's house has depreciated well below the level of the mortgage, that mortgage is no longer worth par. Provision might be made to permit banks to sell underwater mortgages at a hefty discount. However, a large share of high-interest mortgages that are currently problematic for lenders and crippling for borrowers could be converted into stable-performing mortgages through an orderly refinancing into a 4% fixed-rate mortgage. A universal waiving of pre-payment penalties would be a small price to pay to fix a gigantic problem with one stroke. The program is doable today at rates south of 5% because of historically low costs to the government of borrowing. 

The benefits going forward would be immense. Ferguson argues that "permanently lower monthly payments for a majority of US households would almost certainly do more to stimulate consumer confidence than all the provisions of the stimulus package, including the tax cuts."  In my view, they would complement other efforts. And think of the long-term benefits after the current crisis subsides! A stable, low-cost mortgage for American families would improve family budgets, living standards and the U.S. economy for many years.

In short, America needs three things to stimulate the economy: the recovery package that is now approaching passage; a plan to revitalize the banking sector, which the Treasury Department should release soon; and finally, a 4% fixed-rate mortgage to address the housing crisis. Fixing the housing problem was mysteriously absent from the Bush efforts to address the crisis. Now that Obama economic team is in place, the Administration and Congress should work rapidly to develop this critical third piece of the economic recovery.

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."