Whenever people here in Colorado get together and discuss our national problems someone always mentions that we have an immigration problem. At this point the conversation heats up as both sides get excited about our illegal alien issue, or our “Mexican problem” as some will call it. Interestingly, everyone agrees on that point. When discussing illegal aliens we are never talking about Cubans, Chechens, Brazilians, Western Europeans or South Africans who enter the country illegally and try to establish lives here. We are not even talking about Terrorists from the Middle East. Nope, it’s the Mexicans. To say that immigration is not a simple issue doesn’t even begin to describe how complicated this political hotbed of a discussion topic is.
Those who would rather have all illegal aliens deported back to Mexico think this solution will also rid us of many of our other problems associated with undocumented people from Mexico. To those who favor this argument we are spending money on undocumented Mexicans in the welfare system, at our hospital emergency rooms, in our schools and on our unemployment rolls that we shouldn’t be burdened with. They believe that all of the related problems from our over populated prisons to the annoying fact that an average citizen must now press 1 for English when calling their local bank or utility service help line will simply disappear if we just get up the gumption to deport the lot of them back to Mexico and let Mexico deal with it. After all, it is really their problem isn’t it?
To understand the reasons why our immigration problems come from Mexico we have to take a look at our immigration rules, our less than secure southern border and the inefficiently run, largely corrupt Mexican government. Imagine your name is Juan Jose and you cannot make a decent living in Mexico. Although Mexico has laws governing many aspects of life, most of these laws are either ignored or are only enforced to the point that it prompts a healthy bribe from any citizen or businessperson who wants to accomplish something or get away with something. Imagine a little further and visualize a system where the only way life can go smoothly for anyone is if the law is completely ignored until it is necessary to remember it in order to keep out of trouble with the largely corrupt, bribe seeking officials—whoever they may be.
After growing up in a system like that and constantly seeing life from this perspective and in the interest of having a better quality life than this, you will come to the quite natural conclusion that life in the U.S. would be better. After all, they accept the world’s tired, poor and hungry…right? So you find out from a friend or relative who is already in the U.S. that you can start working at the Holiday Inn in El Paso or San Diego on Monday if you can find a way to get there.
You go to the American consulate and apply for a visa to come into the U.S. to work. Fine, we say. We can get you a visa or a green card in approximately…18 weeks, give or take a month or two. This is what you will be told. After a life time of having to work around the system in your own country you will naturally come to the instant conclusion that you need to find a way to get to the El Paso Holiday Inn by Monday so you can start working and get the good life. But once you arrive and begin working (yes, they will let you start working just like your cousin said they would) the U.S. government tells you that you cannot get a green card or a visa because you entered the country illegally. So you stay anyway, which you can find a way to do. It isn’t difficult. Just stay. After a while you have a driver’s license and a social security card (somehow). There is an entire underground network of industries to help you get the proper identification. In fact, there is also an underground network of businesses on the Mexico side of the border that will help you get into the country to begin with if you can afford it.
However, Juan Jose is a productive individual and he works hard. He learns English during his first year here and he even pays taxes on his earnings at the Holiday Inn. Maybe he even gets married and has a family here. Some day he may retire here.
So, let’s get back to the reality of our immigration problem. Wouldn’t it be simpler if we just streamlined the official process so that they could come into the country legally? If Juan could have gotten a green card or a work visa in, say, one or two weeks—do you think he would come in here legally? As expensive as it is to hire a coyote to ferry him into the country just so he can work in the hotel business or pick vegetables (to begin with). My guess is he would.
To go a bit further with this let’s look at the high number of people who have been living productively in the U.S. for 20 years and cannot get official papers because they entered the country illegally. Why not let them become citizens a little easier? Will it damage our national security? I doubt it, but go ahead and let Homeland security verify that they are not some transplanted terrorist sleeper before allowing them to become a citizen. If they haven’t been in trouble with the law, and if they don’t have any citizenship preventing facts in their documentable life, why not streamline their pathway to citizenship? Isn’t that what America is all about?
On the other hand, if they have been in and out of jail for several years and they have an undesirable track record—deport them.
Saturday, March 7, 2009
Thursday, February 26, 2009
It's Time For The Bitter Truth
If you want to find an economist who advises that the country should spend more money on education as the best way to solve our economic problems—they are out there. Ross Perot made that argument in the March US News & World Report and many economists agree with him that this would be a sound step to take to prevent slumps as bad as the one we are currently experiencing.
Anyone who looks deeper into our economic sphere of movers and shakers can also find experts who advocate raising taxes as the best solution to our current downturn. Oh, they have their different takes on which taxes to raise and what methods to use to get the money. They say everything from let the Bush tax cuts expire to increasing taxes on social security to taxing special segments of society based upon income level.
There are also experts who recommend focusing on changing our national energy policy in such a way to spur development of new green industries which they say would simultaneously create an entire industry of new jobs and move America away from the energy guzzling, glutinous consumer society that we have been for the last few decades.
But in his speech to congress and the nation last night, Obama stated he wants to address them all. Ah…let us focus on the big picture, please! He made several valid points during his 58 minute speech, not the least of which was the fact that he and his staff are going through the entire budget, line item by line item, looking for frivolous expenditures to slice away from the books in order to get the money to pay for the spending that he believes must occur for the country to get moving on its own again. Surprisingly, they found $2 trillion so far, and they expect to find much more as they plod through the ridiculously long budget list.
Although Obama will undoubtedly meet with resistance from farm belt legislators when he cuts money from certain farm subsidies, he did say in his speech that all members of congress will have to take cuts in things they may consider to be important. And let’s be realistic, please. You can believe there are plenty of non sensible if not outright stupid line items on the current budget list that amount to gaping holes in the economic integrity dike which desperately need to be plugged.
When the system is leaking money and the powers that be don’t even consider fixing the leaks, the system will hobble along like a wounded economy no matter what else is done to make things run smoothly again. Truthfully, it is about time we had a president who tells us the bitter truth about the books. His new budget will have the war costs on the declaration sheet, which until now has been treated as a multi-billion dollar afterthought.
When we have troubles making ends meet at home the first thing we do to get a handle on things is take a good hard look at our own books to see what we can actually afford and what we cannot. Those things we can’t afford we don’t buy. If we have needs that must be met, our only choice is to cut other things to make sure we have the money for those needs—and that is exactly what Obama is telling us our government needs to do. The major difference between what he has to deal with and what we would deal with at home is that the nature of government is to compromise to achieve those goals—we at home don’t have to deal with that so much. We can simply make the cuts. At home there aren’t a dozen people with an opposing philosophy and their own personal agendas arguing against making certain cuts. If we can’t afford it, we can’t afford it.
So whether you agree with his stimulus package or not, his message about how bleak the situation is hits the mark. And his ideas about how to come up with the money to pay for it make sense. He does, however give himself stretch goals. On top of all of this, he wants to cut the deficit in half by the end of his first term. It is an amiable goal and it would surely be good for the country—now let’s hope he pulls it off.
Anyone who looks deeper into our economic sphere of movers and shakers can also find experts who advocate raising taxes as the best solution to our current downturn. Oh, they have their different takes on which taxes to raise and what methods to use to get the money. They say everything from let the Bush tax cuts expire to increasing taxes on social security to taxing special segments of society based upon income level.
There are also experts who recommend focusing on changing our national energy policy in such a way to spur development of new green industries which they say would simultaneously create an entire industry of new jobs and move America away from the energy guzzling, glutinous consumer society that we have been for the last few decades.
But in his speech to congress and the nation last night, Obama stated he wants to address them all. Ah…let us focus on the big picture, please! He made several valid points during his 58 minute speech, not the least of which was the fact that he and his staff are going through the entire budget, line item by line item, looking for frivolous expenditures to slice away from the books in order to get the money to pay for the spending that he believes must occur for the country to get moving on its own again. Surprisingly, they found $2 trillion so far, and they expect to find much more as they plod through the ridiculously long budget list.
Although Obama will undoubtedly meet with resistance from farm belt legislators when he cuts money from certain farm subsidies, he did say in his speech that all members of congress will have to take cuts in things they may consider to be important. And let’s be realistic, please. You can believe there are plenty of non sensible if not outright stupid line items on the current budget list that amount to gaping holes in the economic integrity dike which desperately need to be plugged.
When the system is leaking money and the powers that be don’t even consider fixing the leaks, the system will hobble along like a wounded economy no matter what else is done to make things run smoothly again. Truthfully, it is about time we had a president who tells us the bitter truth about the books. His new budget will have the war costs on the declaration sheet, which until now has been treated as a multi-billion dollar afterthought.
When we have troubles making ends meet at home the first thing we do to get a handle on things is take a good hard look at our own books to see what we can actually afford and what we cannot. Those things we can’t afford we don’t buy. If we have needs that must be met, our only choice is to cut other things to make sure we have the money for those needs—and that is exactly what Obama is telling us our government needs to do. The major difference between what he has to deal with and what we would deal with at home is that the nature of government is to compromise to achieve those goals—we at home don’t have to deal with that so much. We can simply make the cuts. At home there aren’t a dozen people with an opposing philosophy and their own personal agendas arguing against making certain cuts. If we can’t afford it, we can’t afford it.
So whether you agree with his stimulus package or not, his message about how bleak the situation is hits the mark. And his ideas about how to come up with the money to pay for it make sense. He does, however give himself stretch goals. On top of all of this, he wants to cut the deficit in half by the end of his first term. It is an amiable goal and it would surely be good for the country—now let’s hope he pulls it off.
Saturday, February 14, 2009
With Stimulus Here, Let’s Hope The Fix Is In
Many of us here in the blogosphere know that the banking meltdown was caused by the loosening of lending regulations and the promise of a government guarantee on what has become known as B paper loans. These loans were basically unsound business decisions that never would have been made under the normal lending practices of the time had not the government jumped in and guaranteed the loans. In laymen’s terms, B paper loans were given to people who could not have qualified for the money until the government guarantee changed the formula.
Within a few years interest rates had gone up significantly, the fixed period of the teaser rates on many of the adjustable rate B loans expired and the interest rates on those loans began to escalate. Many of the borrowers on those loans were unable to handle the new adjusted payments and found themselves in default. Suddenly the banks have large portfolios of foreclosed properties and a new position on staff that didn’t exist during better times. Now they have a Vice President in charge of REOs. REOs are “Real Estate Owned” or repossessed properties. These are properties that are just sitting there with no active loan attached to them producing income for the bank, hence they are non-performing assets.
At this point we have our credit crisis, which hit us at roughly the same time that we as a nation were footing the bill for the extended wars in Iraq and Afghanistan. Talk about bad timing. So then the plane that is our economy had its proverbial wing shot off by the two bullets of our credit crisis and high war costs and then started hemorrhaging money—big time. This sent the plane on a downward spiral toward crash city, and the dominos began to fall. The next thing we know we are losing jobs right and left and families are going from deciding what to do for fun this weekend to what regularly scheduled costs can they shave off their budget so they can keep the house without drastically cramping their lifestyle.
The entire country began restricting the way they spend money. Small businesses began losing revenue and began to close. Restaurants, contractors, specialty stores and service providers began having troubles staying open. More jobs lost. Car dealers, theatres and mini malls saw dwindling revenue. Again, more jobs down the drain. Families are left with next to nothing after just paying their bills and buying food. Large mainstay companies like Caterpillar, Home Depot, Sprint and the airlines have massive layoffs. National companies like Circuit City begin shutting down. Where, we wonder will it end? The government decides to do something about it and comes up with the stimulus package.
At first Obama proposes a package that will create millions of jobs in the next few years by building bridges, upgrading our highways, fixing our broken healthcare system, injecting money into ailing state government coiffures, retrofitting our government facilities to be green operations and providing incentive for environmentally friendly energy projects aimed at changing our dependence upon foreign oil for our energy needs. At $300 billion, it seemed to Republicans that the package was too ambitious and represented way too much spending on things that ultimately would not create that many jobs.
At one time the package grew to $900 billion but by the time it was on the way to the president’s desk it had been pared down to $789 billion. Democrats are saying the package is too small and Republicans are still saying this will be too much blind spending to do the economy any real good. (It is interesting to note that the Republicans, who only favored tax cuts as a means to turn the economy around ultimately got over $276 billion of this package dedicated to tax cuts which represents over 92% of the size of the original proposed package.) So now Obama has a bill on his desk awaiting his signature, which he will certainly sign. Shortly thereafter, $789 billion will be on its way into the mainstream of American money thought to solve our problems.
In order for things to turn around as intended it will have to spur more activity than just the projects itemized by Obama in his speeches. Yes, activating all of the previously mentioned projects will certainly get many people working who are currently idle. But for the stimulus to have its intended affect the entire economy will have to be jumpstarted into motion again. That means that when the projects financed by the stimulus package are completed the economy will have to be running on its own well enough for the people who are working on those projects to easily be absorbed back into the economy without the nation suffering a huge jump in the unemployment rate. Let’s hope that this huge spending effort will not only be a temporary fix for those out of work today, but will result in growth industries that will foster a vibrant and growing economy again.
Within a few years interest rates had gone up significantly, the fixed period of the teaser rates on many of the adjustable rate B loans expired and the interest rates on those loans began to escalate. Many of the borrowers on those loans were unable to handle the new adjusted payments and found themselves in default. Suddenly the banks have large portfolios of foreclosed properties and a new position on staff that didn’t exist during better times. Now they have a Vice President in charge of REOs. REOs are “Real Estate Owned” or repossessed properties. These are properties that are just sitting there with no active loan attached to them producing income for the bank, hence they are non-performing assets.
At this point we have our credit crisis, which hit us at roughly the same time that we as a nation were footing the bill for the extended wars in Iraq and Afghanistan. Talk about bad timing. So then the plane that is our economy had its proverbial wing shot off by the two bullets of our credit crisis and high war costs and then started hemorrhaging money—big time. This sent the plane on a downward spiral toward crash city, and the dominos began to fall. The next thing we know we are losing jobs right and left and families are going from deciding what to do for fun this weekend to what regularly scheduled costs can they shave off their budget so they can keep the house without drastically cramping their lifestyle.
The entire country began restricting the way they spend money. Small businesses began losing revenue and began to close. Restaurants, contractors, specialty stores and service providers began having troubles staying open. More jobs lost. Car dealers, theatres and mini malls saw dwindling revenue. Again, more jobs down the drain. Families are left with next to nothing after just paying their bills and buying food. Large mainstay companies like Caterpillar, Home Depot, Sprint and the airlines have massive layoffs. National companies like Circuit City begin shutting down. Where, we wonder will it end? The government decides to do something about it and comes up with the stimulus package.
At first Obama proposes a package that will create millions of jobs in the next few years by building bridges, upgrading our highways, fixing our broken healthcare system, injecting money into ailing state government coiffures, retrofitting our government facilities to be green operations and providing incentive for environmentally friendly energy projects aimed at changing our dependence upon foreign oil for our energy needs. At $300 billion, it seemed to Republicans that the package was too ambitious and represented way too much spending on things that ultimately would not create that many jobs.
At one time the package grew to $900 billion but by the time it was on the way to the president’s desk it had been pared down to $789 billion. Democrats are saying the package is too small and Republicans are still saying this will be too much blind spending to do the economy any real good. (It is interesting to note that the Republicans, who only favored tax cuts as a means to turn the economy around ultimately got over $276 billion of this package dedicated to tax cuts which represents over 92% of the size of the original proposed package.) So now Obama has a bill on his desk awaiting his signature, which he will certainly sign. Shortly thereafter, $789 billion will be on its way into the mainstream of American money thought to solve our problems.
In order for things to turn around as intended it will have to spur more activity than just the projects itemized by Obama in his speeches. Yes, activating all of the previously mentioned projects will certainly get many people working who are currently idle. But for the stimulus to have its intended affect the entire economy will have to be jumpstarted into motion again. That means that when the projects financed by the stimulus package are completed the economy will have to be running on its own well enough for the people who are working on those projects to easily be absorbed back into the economy without the nation suffering a huge jump in the unemployment rate. Let’s hope that this huge spending effort will not only be a temporary fix for those out of work today, but will result in growth industries that will foster a vibrant and growing economy again.
Wednesday, February 11, 2009
Nothing More Necessary Than This Compromise
So the economic stimulus package keeps getting pared down by the necessary negotiation that has to occur between the Democrats and Republicans in order for things to move forward and for our economy to get its much needed injection of money. The Republicans hold fast to their belief that the entire package is merely an effort to spend more money on useless things that won’t create jobs—and because of that, will not stimulate the economy in the right way needed to cause real growth. Their position, of course, is that only tax cuts for those who really invest will encourage the type of spending that will actually create jobs.
The Democrats, however, are trying to spend money on projects that will result in contracts for small businesses which provide the services needed to upgrade our infrastructure. Both strategies are correct and both will create jobs. Many questions remain, not the least of which is: Where will these jobs be created? Without changes in our tax laws many large corporations with profits made in foreign markets have no incentive to spend those profits in the U.S. because of the tax penalties placed upon returning foreign earned dollars. Tax cuts to those corporations without an accompanying change to the tax code will only result in investment in cheaper foreign labor markets that are not burdened with American styled regulation.
On the other hand, to ignore our crumbling infrastructure and our ailing healthcare system would be folly. With our economy in such a weakened state, now is the perfect time for the government to spend money on those things. Never mind the objections the Republicans have concerning spending money on education and the healthcare system at a time when those sectors are not losing jobs. Our education system needs to be revamped so we can better prepare our next generation. And the healthcare system is broken, and fixing it now would go a long way toward relieving the burden felt by many families who have mounting healthcare costs while at the same time experiencing a shrinking family income.
Still it is wise to recognize that both parties had valid arguments during this recent fight. The Democrats are right to push for money for education and healthcare as part of the overall package. And the Republicans are right to try to rein in the spending somehow. It is after all the largest spending bill to ever grace the floor in either house of congress. Without the clash between parties over the details of this bill the entire project could have taken on such a scope that once initiated, everything in motion in our society would be a government project. In reality, that wouldn’t be a permanent fix. And it is a permanent solution that we really need.
The Democrats, however, are trying to spend money on projects that will result in contracts for small businesses which provide the services needed to upgrade our infrastructure. Both strategies are correct and both will create jobs. Many questions remain, not the least of which is: Where will these jobs be created? Without changes in our tax laws many large corporations with profits made in foreign markets have no incentive to spend those profits in the U.S. because of the tax penalties placed upon returning foreign earned dollars. Tax cuts to those corporations without an accompanying change to the tax code will only result in investment in cheaper foreign labor markets that are not burdened with American styled regulation.
On the other hand, to ignore our crumbling infrastructure and our ailing healthcare system would be folly. With our economy in such a weakened state, now is the perfect time for the government to spend money on those things. Never mind the objections the Republicans have concerning spending money on education and the healthcare system at a time when those sectors are not losing jobs. Our education system needs to be revamped so we can better prepare our next generation. And the healthcare system is broken, and fixing it now would go a long way toward relieving the burden felt by many families who have mounting healthcare costs while at the same time experiencing a shrinking family income.
Still it is wise to recognize that both parties had valid arguments during this recent fight. The Democrats are right to push for money for education and healthcare as part of the overall package. And the Republicans are right to try to rein in the spending somehow. It is after all the largest spending bill to ever grace the floor in either house of congress. Without the clash between parties over the details of this bill the entire project could have taken on such a scope that once initiated, everything in motion in our society would be a government project. In reality, that wouldn’t be a permanent fix. And it is a permanent solution that we really need.
Wednesday, January 28, 2009
Tax Law Should Not Inhibit Growth
What a state we have placed ourselves in, when U.S. companies with assets abroad must pay a 35% tax on all foreign-earned profits that are brought back into the country. Further complicating the situation, if profits from U.S. owned foreign subsidiaries are allowed to stay out of the country then that money is taxed at a lower rate.
In today’s Wall Street Journal Allen Sinai, chief global economist and President of Decision Economics wrote that under those conditions our government would do well to take action to reverse this trend by changing the tax penalty for American companies with foreign subsidiaries to provide incentive for those companies to bring foreign earned dollars back into the U.S. Sinai estimates that if that situation were to come about the U.S. would bring $545 billion into our economy without increasing our deficit. This is a novel idea.
If the government were to turn the current state of tax laws around so that instead of penalizing companies for bringing money into the country it would provide incentive for them to do so it could have a reverse domino effect on the contracting economy. Imagine what would happen if that amount of free market money, not government spending stimulus funds, were to get injected into our economy. The companies who brought the money into the country would not need to rely so heavily upon credit for their business operations. With a decreasing credit demand, these companies could be more financially independent than they would be if they had to use credit to move forward and foster their own growth.
Sinai argues that this would make these companies much more able to grow since they would be detached from that aspect of the country’s economic woes. This would help foster real economic growth without the need to repay a giant debt to the government. With this growth would come jobs, with the jobs would come more tax revenue. So the government could gain from this type of stimulus instead of having to foot the bill.
Obama wants to find a way to jump start this economy with a giant stimulus plan that is rapidly approaching $900 billion. With so many losing their jobs the general fund in Washington is shrinking faster than congress can vote on bills. We as a nation have placed a lot of trust in Obama and I am sure he wants to get things back on track as permanently as possible. He has made it clear that he doesn’t just want a quick fix unless it will also be the right one. He doesn’t want this contracting economy to just be forestalled temporarily only to begin contracting again when an ineffectual, temporary fix wears off.
Obama has mentioned that he wants to provide incentives for companies to invest their profits at home instead of elsewhere where there are no penalties placed upon investment. With our cost of living as high as it is, American labor costs are too expensive to compete with the same costs in, say, Mexico, Taiwan, Hong Kong or Sri Lanka. Under the current global economic conditions it is a wonder that our companies still have these tax penalties in place any more.
Obama is right to want to send some form of relief directly to the people who are desperately slugging it out while watching their neighbors get hit by layoffs one by one, all the time hoping that they themselves won’t be hit next. It is also right to try to find a way to stimulate the economy from the other end and change the tax laws in order to provide incentive for companies to bring money back into the U.S. and create jobs here. It could even relieve the government of some of the burden having to pay for all this.
In today’s Wall Street Journal Allen Sinai, chief global economist and President of Decision Economics wrote that under those conditions our government would do well to take action to reverse this trend by changing the tax penalty for American companies with foreign subsidiaries to provide incentive for those companies to bring foreign earned dollars back into the U.S. Sinai estimates that if that situation were to come about the U.S. would bring $545 billion into our economy without increasing our deficit. This is a novel idea.
If the government were to turn the current state of tax laws around so that instead of penalizing companies for bringing money into the country it would provide incentive for them to do so it could have a reverse domino effect on the contracting economy. Imagine what would happen if that amount of free market money, not government spending stimulus funds, were to get injected into our economy. The companies who brought the money into the country would not need to rely so heavily upon credit for their business operations. With a decreasing credit demand, these companies could be more financially independent than they would be if they had to use credit to move forward and foster their own growth.
Sinai argues that this would make these companies much more able to grow since they would be detached from that aspect of the country’s economic woes. This would help foster real economic growth without the need to repay a giant debt to the government. With this growth would come jobs, with the jobs would come more tax revenue. So the government could gain from this type of stimulus instead of having to foot the bill.
Obama wants to find a way to jump start this economy with a giant stimulus plan that is rapidly approaching $900 billion. With so many losing their jobs the general fund in Washington is shrinking faster than congress can vote on bills. We as a nation have placed a lot of trust in Obama and I am sure he wants to get things back on track as permanently as possible. He has made it clear that he doesn’t just want a quick fix unless it will also be the right one. He doesn’t want this contracting economy to just be forestalled temporarily only to begin contracting again when an ineffectual, temporary fix wears off.
Obama has mentioned that he wants to provide incentives for companies to invest their profits at home instead of elsewhere where there are no penalties placed upon investment. With our cost of living as high as it is, American labor costs are too expensive to compete with the same costs in, say, Mexico, Taiwan, Hong Kong or Sri Lanka. Under the current global economic conditions it is a wonder that our companies still have these tax penalties in place any more.
Obama is right to want to send some form of relief directly to the people who are desperately slugging it out while watching their neighbors get hit by layoffs one by one, all the time hoping that they themselves won’t be hit next. It is also right to try to find a way to stimulate the economy from the other end and change the tax laws in order to provide incentive for companies to bring money back into the U.S. and create jobs here. It could even relieve the government of some of the burden having to pay for all this.
Subscribe to:
Posts (Atom)