Economy & Budget

How immigrant investors can help end the housing crisis

We all know the depressing statistics - housing prices have fallen 33 percent since the housing bubble burst in 2008. This is an even greater decline than the drop in market value during the height of the Great Depression. And while house prices continue their slide, four out of five new mortgages require a down payment of at least 20 percent, putting home ownership out of the reach of most Americans. Almost five million households are either in foreclosure proceedings or are perilously close.

To address this problem, United States Senators Chuck Schumer, Democrat of New York, and Mike Lee, Republican of Utah, recently proposed legislation (S.1746) that is a step in the right direction. But it doesn’t go far enough, and the benefits are much too limited to attract the volume of foreign investors needed to make a real dent in the crisis.

The problem is that the Schumer-Lee bill fails to award what foreign national investors want: permanent residence status. Instead, their proposal would bestow a special three-year, renewable, temporary visa permitting the investor and his immediate family to reside in the United States so long as he purchases a residential property for at least $500,000 in cash and agrees to live in it for at least 180 days each year.


Cutting FBI Agents' benefits won't solve the country's fiscal crisis

Among the federal employees closely watching the Joint Select Committee on Deficit Reduction (the "Super-Committee") negotiations are FBI Agents and other federal law enforcement officers. They are becoming increasingly alarmed by calls from some of our political leaders for drastic changes to the formula by which they contribute to their defined pension plans.
For some, attacking federal employees — “faceless bureaucrats” — in the debate over spending cuts offers an easy sound-bite and generates little opposition.  However, when they do so, they are also attacking FBI Agents and other law enforcement officers who put their lives on the line every day.


The ECB and the Eurozone: A comprehensive restructuring plan is needed

This summer, I wrote about the Eurozone’s fiscal crisis and identified four key components to achieve a comprehensive restructuring.    At that time, all eyes were on Greece.  Since then, the level of the crisis has intensified, placing Italy in the cross hairs.   Italy’s debt level is unsustainable and its bond yields are too expensive.  The fear is that when Italy needs to refinance significant portions of its debt, investors will either be unwilling to purchase its bonds or demand yields that will make a refinancing prohibitively expensive.
It is time for the ECB to act boldly.  Our fickle equity markets have reacted positively to recent changes in the political leadership of Greece and Italy.  The markets pin their hopes on new leadership and its ability to pull Europe back from the brink.  While strong political leadership is important, economic leadership by the ECB is critical.  The Eurozone is in the throes of a debt crisis, not a liquidity crisis, and it needs the ECB to act as the lender of last resort rather than a champion of forced austerity measures.


The time is now

This week, for the first time in 16 years, the U.S. House of Representatives will vote on a balanced budget amendment to the Constitution.  This represents a historic opportunity to put an end to Washington's out-of-control spending spree and helps ensure the long-term financial security of our children and grandchildren.
While it is unfortunate we have reached this point, the evidence is clear that the only way to stop Congress and the President from spending money we don’t have is through a constitutional mandate.
The federal government borrows $188 million every hour of every day of the year.  It is more obvious than ever that Washington has proven incapable of making the tough choices necessary to rein in spending and reduce the federal deficit.


Prevention is cheaper than cure

Next week, a general debate is likely to begin on the “minibus” package that includes the Senate’s State and Foreign Operations Appropriations Bill. In the midst of a fiscal atmosphere that presses for cuts wherever possible, the bill’s accounts are increasingly vulnerable to spending sacrifices that favor military over civilian approaches to foreign policy.

While slashing budgets remains tempting when it comes to decreasing our deficit, legislators would do well to consider investing in what will make our foreign policy most cost-effective (in fact, 60 times more cost-effective) in the long-term. 


The Greek bailout referendum: Will it lead to a comprehensive restructuring?

Greek Prime Minister George Papandreou’s decision to ask for a referendum on the "Greek bailout" increases the uncertainty surrounding the eurozone debt crisis.  As Greece burns, is Prime Minister Papandreou looking for political cover? Or, is he taking a calculated risk, attempting to do away with short term fixes and replace them with a comprehensive restructuring that will fix the crisis?
Greece is engaged in a restructuring process.  Restructuring negotiations are always complex and involve brinkmanship.  The parties involved attempt to assert the leverage they have to get what they want.  Debtors want to fix their capital structures and operations to put themselves in a situation to compete and grow over the long term.  Creditors want to maximize their recoveries.  And investors want to pay as little as possible for the biggest stake.  The restructuring negotiations with Greece are no different.  Greece wants to reduce its debt and grow its economy.  The banks want to take as small of a haircut as possible, and the Troika wants to “invest” the smallest amount of cash necessary to avoid a massive default and contagion.  The restructuring negotiations related to Greece are more complex than most because they involve the politics of 17 member states.  And politics may be the card Prime Minister Papandreou is playing, using Greek voters’ sentiments against a bailout and more austerity as bargaining leverage. His political cover, however, may look ingenious at the end of the day if it leads to a comprehensive restructuring plan.
What do I mean?


Sorry, Secretary Panetta: DOD must cut more than you’re offering

In a mid-October speech at the Woodrow Wilson Center in Washington, new Secretary of Defense Leon Panetta lamented that under his watch, the Pentagon would have to make “some very hard choices... to reduce its projected spending by more than $450 billion” over the next ten years.

Sorry Mr. Secretary, the country needs just a little more than you're offering. Then again, you're not off by much: The worst outcome is if the Congressional “supercommittee”, given a mandate to negotiate a grand bargain to get our national finances on track, fails. Without bipartisan compromise by the new year, Congress has pre-approved a “sequester” option that would be automatically triggered and slash $850 billion-$1 trillion from DOD's budget as part of across-the-board spending cuts.


Investing in America's families,communities, and economy

Growing up in the borough of Queens in New York City, our idea of a park was a concrete pad where we played stickball with our friends. My mother and father, however, understood the importance of connecting my brother and me to nature. So every year, even though they couldn’t afford it, they would send us to a summer camp in upstate New York or in Maine. That was where I developed my love for the great outdoors – a place to escape, to appreciate the environmental wonders that surround us, and to play in a natural way.
My experience is not unique. Through the work of our family foundation, I’ve witnessed the benefits of protecting community parks and ensuring children and families have safe, close-to-home places to play. At a time when so many of our youth are facing health risks and other challenges associated with a sedentary lifestyle, parks can contribute to a healthy future for our families. These places also offer protections for our drinking water, clean air and wildlife habitat, and enhance the economic viability of rural and urban communities.


Debunking three myths about the debt deal

Defenders of wasteful Department of Defense (DoD) spending launched an all-out assault on the truth this week. They claim the debt deal has already reduced DoD spending by $450 billion, and if spending is cut any further, a million jobs will be lost and the U.S. military will soon be no match for the unstoppable Chinese military.

Unfortunately for those spouting this “doomsday” rhetoric, the facts tell a very different story, and, as John Adams said, “Facts are stubborn things.”


Trickle down tax cuts: A broken record

I’m one of those “job creators” members of Congress profess to admire so much. Thirty-two years ago, my partner and I started a small business with $300 worth of old records and a booth at the local farmers market. We’re now the biggest independent music store in St. Louis and employ 22 people. Our annual revenue is around $2 million. We’re a classic American success story.
Our incomes are typical for small business owners, which means we’re not in the top tax brackets. We’ve always been at or below the 25 percent tax bracket. So we’re trying to figure out how the new tax proposal from Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, is supposed to help small businesses like ours create jobs.
Rep. Camp wants to cut top individual and corporate tax rates from 35 percent to 25 percent. He would reward U.S. multinational corporations that have gamed the system with a 5.25 percent tax rate on U.S. profits they have disguised as “foreign” earnings. All this will be great for gigantic multinational corporations, Wall Street and the fat cats who attend those $1,000-a-plate and up political fundraisers. It will be great for the corporate lobbyists gaming our political system every day.
It won’t help small business, and it won’t help America.