The Politics of Immigration

Immigration has been a source of political discord since the beginning of our republic – despite the fact that we are a nation of immigrants. As early as the late 1700s, immigration was the subject of legislative action. The very first Congress passed The Naturalization Act of 1790 which read: “That any alien, being a free white person, who shall have resided within the limits and under the jurisdiction of the United States for the term of two years, may be admitted to become a citizen …” Congress subsequently extended the waiting period from two to five years in 1795, and to fourteen years in 1798.

The History and Technology Museum in Washington, DC displays a chart that outlines the long legislative history of limits placed on the immigration of various groups: convicts and prostitutes (1875); idiots, lunatics, and persons requiring public care (1882); Chinese (1882-1943); gangs of cheap contract laborers (1885); immigrants with dangerous contagious diseases, paupers, and polygamists (1891); epileptics, insane persons, beggars, and anarchists (1903); the feeble-minded, children under 16 unaccompanied by parents, and immigrants unable to support themselves because of physical or mental defects (1907); immigrants from most of Asia, and adults unable to read and write in English (1917). Legislation since that time set quotas for immigrants by nationality, required registration, and established preferences for certain groups of immigrants, such as those with relatives already here, and workers with skills needed in the US.

Flash forward to the discussion today and we see the results of more than two centuries of progress. Citizenship is no longer limited by race, sex, or creed. Today, naturalization and enforcement of our immigration laws are the responsibility of the Department of Homeland Security. However, we again see states and localities attempting to assert jurisdiction over immigration. Although Federal government responsibility for immigration was established by the Supreme Court in 1875, the recent law enacted in Arizona would empower state and local law enforcement officials in Arizona to check the immigration documents of any person they suspect is in the country illegally.

One has to ask how this law could possibly be carried out without some sort of racial profiling. Opponents of the law will undoubtedly argue in federal court that the state law should be overturned consistent with the 1875 Supreme Court ruling. Law enforcement officials across the US seem split – some arguing that this new authority will make it easier to take criminals who are non-citizens into custody, even when they can’t prove that any other crime has been committed. Others seem to be focusing on the concern that investigative leads will dry up if members of immigrant communities are afraid to report crimes or provide information about the identities of suspects.

And we are not even hearing in recent days about the impacts of illegal immigration on our national and local economies. Are illegals a drain on federal, state, and local budgets? Do illegals take jobs from Americans, depress American wages, or are they an important supply of labor for local industries such as construction and farming? President Obama clearly had it right when he pointed out that state action like that which has taken place in Arizona is a natural consequence of the lack of federal leadership on this important national issue. National immigration reform needs to be mindful of state and local impacts. Real solutions are needed and the time for action is now.

Observations From Mexico

My family just returned from a relaxing week in Riviera Maya on the Yucatan Peninsula in Mexico just south of Cancun. Like many Mexican resorts, the one we stayed at was spectacular, the weather was beautiful, and the only problem with the experience was that it had to end. While there, I found myself taking some mental notes that I’d like to share. First of all, safety at Mexico’s east and west coast resorts is just not a problem. Cancun, Cozumel, Cabos San Lucas, Puerto Vallarta, Mazatlan – in these places one feels quite safe, and much safer than in most large American cities. Even when venturing out into the countryside for shopping or sightseeing, the environment is typically warm and welcoming and the Mexicans you meet along the way are consistently friendly. They don’t demand that you speak Spanish – and among the most successful Mexicans in the tourist trade appear to be those that speak good English.

One thing I noticed during this trip was the complete absence of anything to buy that was labeled “Made in China”. In fact, the only imported item I found during the entire week was the butter served at restaurants. The butter came from New Zealand and France. I found myself making a point to look at labels during this trip, and almost everything I looked at was labeled “Hecho in Mexico”.

Another thing I noticed was the considerable amount of construction recently completed and ongoing in the places I visited. While construction has slowed in the US, it has very clearly been on the increase in Mexico, and there appear to be more and more citizens of Mexico finding employment in the tourist industry.

Perhaps there are some things we here in the US can learn from the Mexicans.

Obama Governing From the Center

The surest sign that a Democrat serving as President of the United States is heading for the center of the American political spectrum is when he plays the foreign policy card. And President Obama has clearly signaled his intention to govern from the foreign policy center since taking office. The troop surge in Afghanistan, and the renewed relationships with India and Pakistan that enable much more aggressive anti-terrorist activity in that part of the world, both signal that this Commander-in-Chief is very much taking the fight to those who would do harm to our homeland. Even the recent nuclear arms agreement with the Russians signals that this President intends to exploit the Presidential advantage in foreign policy.

On the domestic front, President Obama has nowhere more clearly headed for the political center than he has in his recent action to allow off-shore drilling along our coastlines. The fact that he has displeased some on both ends of the political spectrum in taking this action — environmentalists think he went too far and the “drill, baby, drill” crowd thinks he didn’t go far enough — is a recent example of his “getting it right,” non-ideological approach to governance.

But this is not a recent phenomenon. The Recovery Act included tax cuts for individuals and small business. Health reform featured subsidies for individuals and small businesses, as well as a role for the States in implementing the new health care laws. Recent “jobs bills” also featured incentives targeted to small business, including tax cuts for hiring the unemployed.

Last year, the President called for a spending freeze on discretionary federal spending, and the Congress approved the pay-go rules that were key to bringing the budget into balance during the Clinton administration. With pay-go rules in place, spending increases passed by the Congress need to be offset by spending reductions or tax increases. Once the economy picks up, watch for the President to flex his fiscal responsibility muscles and begin to enforce pay-go rules aggressively.

Feds Take Over Federal Student Loans

As part of health care reconciliation, major changes were enacted into law relating to federal student loan programs. Included in this legislation is what appears to be no less than a federal takeover of federal student loans, along with big increases in Pell Grants.

The new law eliminates the Federal Family Education Loan Program and cuts out private lenders. Beginning on July 1, all federal loans will originate through the federal Direct Loan Program. According to the non-partisan Congressional Budget Office, cutting out banks and private lenders from the student loan business will save taxpayers $61 billion over the next 10 years, at least $10 billion of which will reduce the federal deficit and help underwrite the cost of health reform.

The new law also includes $36 billion for Pell Grants, which provide subsidies to low-income and some middle-income students. The maximum amount of Pell Grants this year will grow to $5,300 and to almost $6,000 in 2017. Without the new law, Pell Grants would have been limited to $2,150 next year. Students receiving larger Pell Grants will need to borrow less to pay for college.

Beginning in 2014, borrowers will also get better debt repayment terms. Current borrowers can limit monthly federal student loan payments to 15 percent of their discretionary income. In 2014, this cap will be reduced to 10 percent of discretionary income.

The only role left for the private sector will be loan servicing, and the legislative intent appears to be to ensure that these contracts will be performance-based and awarded to the loan servicing companies providing the best customer service.

It seems ironic that this last minute addition to the health care reform legislation indeed amounts to a federal takeover. While it’s hard to take seriously the argument that the new health care law amounts to a takeover of health care, the new law absolutely seems to put the federal government directly in charge of lending to our nation’s students.

Helping Americans With Credit Card Debt

Let’s concede up front that the Congress often doesn’t get it right. All the political back and forth, and the back room deals, too often result in sub-optimal policy solutions, and imperfect lawmaking. Today, though, I’d like to highlight the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 — legislation that went into effect on February 22, 2010. Although it was very much a product of compromise and could have contained even stronger consumer protections, it will nonetheless help a lot of people with credit card debt.

The CARD Act provides that consumers receive some basic protections such as 45 days notice of interest rate hikes, monthly statements that allow for 21 days each month before payments are due, and protection against interest rate increases (including increases that apply to existing balances). Credit card companies will also have to set up payment plans for consumers who opt to close their accounts, and when consumers fall behind and late payments do result in higher rates, the original, lower rates will have to be reinstated after six months of on-time payments.

There’s also an important change in the information that credit card companies are required to provide you that may not at first seem like a big deal, but this small change speaks volumes about the potential for good government to really help people to help themselves.

Here’s an example of the standard information that is now required on all credit card statements that highlights the fact that if you make only the minimum payment each month, you will pay a lot more in interest and it will take you longer — in many cases decades longer — to pay off your balance.

Let’s say you have a credit card charging 19.8% and have run up a balance of $4,800, and your credit card company is requiring a minimum payment of $124. Have you ever wondered how long it will take to pay off the balance? The federal law now requires that your credit card statement must include information about how long it will take to fully pay off your balance making minimum payments, along with the amount you would have to pay to eliminate your debt in 3 years. Both amounts assume no additional charges are made to your account.

Using the example above, making a typical minimum payment each month it would take 21 years to pay off the balance. However, and this is striking, by paying only an additional $54 each month, the payoff period shrinks to only 3 years.

You heard it right. And extra $54 a month and you can shave 18 years off the payoff period, and in doing so, save $4,456 in interest charges. And while this may not seem like a big deal to some, for the individual who is looking at this debt as a big deal, it represents light at the end of the tunnel, and is the kind of information that can be empowering and hopeful for someone who really wants to take back control of their finances.