The GOP’s Failed Anti-immigration Strategy

The Wall Street Journal published a great lead editorial this morning (subscription required) on the GOP House leadership’s losing campaign strategy of using immigration as a “wedge issue.” The strategy obviously failed.

As the Journal’s editorial staff observed:

Republicans on Tuesday managed both to lose their majority in Congress and alienate a fast-growing bloc of Latino swing voters. Other than that, the House GOP strategy of trying to save itself by bucking President Bush and using immigration as a wedge issue worked pretty well.

Republicans can’t say they weren’t warned. Like trade protectionism, the immigration issue is the fool’s gold of American politics. Voters like to sound off to pollsters about immigrants, yet they pull the lever with other matters foremost in mind. Elections seldom if ever turn on immigration, and the GOP restrictionist message so adored by talk radio, cable news and the nativist blogosphere once again failed to deliver the goods.

Such GOP anti-immigration crusaders as J.D. Hayworth of Arizona and John Hostettler of Indiana were tossed out of office by wide margins. Exit polls suggest that Republicans suffered a sizeable drop in support from Hispanic voters turned off by the harsh Republican rhetoric aimed at Hispanic immigrants.  

Of course, I call it a great editorial because it and this week’s election returns confirm my own warnings to Republicans about the dangers of running as the anti-immigration party (here and here).

Although the election results were not good news on free trade and other issues, the new Congress will probably be more open to the kind of real immigration reform the Cato Institute has been advocating.

Jeff Flake, Take (Another) Bow!

Further to Tom’s post on Monday, our friend Jeff Flake (R–AZ) has written an excellent op-ed in today’s Wall Street Journal (subscription required) on the need for Republicans to apologize for betraying their small-government principles. Mr. Flake points to the farm bill, up for renewal next year, as the best opportunity to ” hew back to our [i.e., Republicans’] first principles.”

Yes, please. And may I propose the dairy policy, one of the most egregious examples of Soviet-style intervention, as one of the first to be reformed? Here’s a study I released yesterday on that very topic.

Bravo, Mr. Flake. I wish you the best of luck.

America’s Record Capital Surplus

The Commerce Department announced the latest U.S. trade deficit figures on Thursday. Although the monthly deficit for September was down from previous months, Americans are still on track to run a record merchandise trade deficit for all of 2006 that will reach nearly $900 billion by the end of the year.

The trade deficit numbers are sure to provide fodder for the incoming 110th Congress, which because of Tuesday’s election will probably take a more belligerent tone toward global trade than the previous, Republican-controlled Congress.

How worried should we be about the large and growing trade deficit? I’ve written extensively about what the trade deficit means, and what it doesn’t mean. (See here and here for details.) One unappreciated aspect of the trade deficit is the offsetting capital surplus that flows into the U.S. economy year after year.

Think about it for a moment: What on earth are the Chinese, Japanese, Canadians, and Mexicans doing with those hundreds of billions of dollars they earn each year exporting into the American market? They are not stuffing them in cookie jars and under mattresses. Almost all those dollars come back to the United States to buy U.S. assets — real estate, stocks, corporate and Treasury bonds, and bank deposits. In other words, they invest those dollars in America.

According to the basic rules of supply and demand, the surplus of global savings flowing into the United States each year to finance the trade deficit puts downward pressure on U.S. interest rates. A new study from the National Bureau of Economic Research, “International Capital Flows and U.S. Interest Rates,” by Francis Warnock and Veronica Warnock, confirms the positive effect of international capital flows on long-term U.S. interest rates. “Large foreign purchases of U.S. government bonds have contributed importantly to the low levels of U.S. interest rates observed over the past few years,” the authors concluded. Specifically, they found that current inflows of foreign capital reduce long-term U.S. interest rates by about 100 basis points, or one percentage point.

If you are among the tens of millions of American families that are paying off a home mortgage, you can thank the trade deficit and the offsetting foreign capital surplus for saving you thousands of dollars a year in interest payments.

Voters ♥ Gridlock

An interesting poll from Rasmussen Reports:  A majority of voters (52%) like divided government.  Only thirty percent think single-party control is preferable.

Apparently partisan affiliation had something to do with the result.  Perhaps not surprisingly, Democrats favored divided government by sixty percent.  However, it’s worth noting that not even half (47%) of Republican respondents favored one-party control.

Did Voters Throw the Bums Out?

As we all know by now, Democrats have taken control of the House and (almost certainly) the Senate.  So was this a watershed election? 

Sure, it’s extremely rare for both houses of Congress to change hands in a single election and there’s quite a bit of buzz about a few high-profile incumbents who lost their jobs.

But now that the dust is almost settled, it looks like we will welcome only about 60 new faces to Capitol Hill.  And while there are a few races still too close to call, incumbents have been extremely successful in winning reelection. 

Consider that there were 435 races in the House and Senate with an incumbent trying to retain his or her seat.  Only 26 – 6% – of challengers in these races have won.  That’s pretty low for a “throw the bums out” election.  Pending the outcome of three or four yet-to-be-determined races, this year’s 94% incumbent reelection rate appears to be slightly higher than the 90% rate of 1994.

I should note that this figure doesn’t include the three incumbents who were defeated earlier this year in a primary election.  But even one casualty of his primary switched his party registration and managed to hold onto his seat.

The moral of the story: if you’re an incumbent member of Congress and you want to stay in office, there’s a pretty good chance you will be successful.  Just don’t forget to send ‘thank you’ cards to Senators McCain, Feingold, and all the gerrymandering folks who helped make your reelection possible.

No, really. Why?

From the homeland security boodoggle department comes PIVMAN - a sort of personal-identity-verification super-hero.

Federal government employees are beginning to carry uniform ID cards under a program created for no apparent reason other than a vague knee-jerk appeal to “security.”  Now along comes PIVMAN, a mobile ID card reader touted by its manufacturer as the reason for all the cards.  The whole story is finally made sense of in SecureID news:

“[PIVMAN] is the first complete out of the box end user application that answers ‘why’ … we built these infrastructures, spending all this time and money,” said Mr. Libin [president of PIVMAN seller Corestreet]. Consider the Department of Defense’s Common Access Card: “We started working with them five years ago and they’ve already issued millions of cards, but no one was really using them. People at DoD had spent all this money for a new card, but there were very few applications for it… . PIVMAN is the first actual end user visible application.”

Get it?  The reason for the ID cards is so that they can be checked

At $24,950 for two handhelds, charging cradles, and the management software, this is all entirely worthwhile.  After all, without these super-expensive card readers, the millions spent on IDs would be wasted!

No, really, there must be some use for this junk.  Let’s try again.

If there’s a disaster, or attack, there are several waves of first responders, explains Mr. Libin. “These people are typically concerned with halting the damage, but pretty quickly after that it becomes a more organized process and you get other types of first responders, such as fire fighters or maintenance workers. You need to control who gets into the disaster scene. You have people with the PIVMAN controlling the perimeter. Anyone getting in presents his or her card, a person scans or swipes the card into the PIVMAN and he quickly knows if it’s a valid card. It also displays what privileges are associated with that card. If you’re allowed to deal with hazardous material, you can be directed to the appropriate place for HAZMAT cleanup and the PIVMAN logs in that activity.”

There you have it.  This stuff makes disaster scenes orderly.  ‘Yes, I understand that the hazardous materials are over there, but the designated area for HAZMAT cleanup is actually behind you.  Thank you for submitting your ID to PIVMAN.  Now go wait where you’re told.’

Let’s try one more time.

“Securing access to our nation’s ports and maritime facilities is a key use-case for the PIVMAN System,” said Mr. Libin following the demonstration. “The mobility of the PIVMAN System speaks to the nature of the maritime industry. Now you will be able to check any individual’s FIPS 201 ID, including TWIC … whether that person is driving a truck or on a ship, the information will always be available, even when networks are not.”

This is close, but still not a sufficient for a digital ID reader.  If it’s about access control, all you need is an analog card and someone with eyeballs.

Matching means to ends is difficult in security.  Selling means to the government in hopes of finding some end for it to serve - not so difficult.