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Bush's Immigration Strategy


An amnesty by any other name would smell as sweet. That's the lesson of President George W. Bush's Nov. 28-29 visit to the border hot spots of Tucson and El Paso. There, the White House downplayed its two-year-old proposal for guest worker status for some of the 11 million illegal immigrants in the U.S. Because GOP House hard-liners hate the guest worker plan -- backed by industries such as agriculture, hotels, and construction -- it has gone nowhere in Congress. So the President stressed get-tough measures such as the planned addition of 1,500 border agents.

The White House intends to stand aside as the House passes a strict enforcement measure with no guest worker provision. But take heart, business: The idea is that the Senate would follow early next year with a bill allowing undocumented workers to stay in the U.S. and work toward citizenship. The two approaches would then be combined. It wouldn't be amnesty, proponents say, because the illegals would have to pay a nominal fine in order to stay.

Hollywood has nothing on Carl Icahn when it comes to noisy action. Escalating his fight to force Time Warner (TWX) to boost its somnolent stock by restructuring, the onetime greenmailer says he enlisted investment bank Lazard (LAZ) and its sovereign, Bruce Wasserstein, to unhorse a majority of the board -- and perhaps toss CEO Richard Parsons. So far, Icahn's crusade hasn't caught Wall Street's attention or goosed the stock since he said in mid-August he had the company in his sights. Icahn's group controls nearly 3% of the stock and has pressed Parsons to buy back $20 billion and unload its cable unit. Icahn promises "an all-out proxy battle" before the next annual meeting in mid-2006.

See "Fighting Words for Time Warner" (BW-Nov. 28, 2005)

The U.S. economy seems stubbornly stuck in high gear, with new reports on GDP growth, durable-goods orders, new-home sales, capital investment, and consumer confidence bringing joy to dismal scientists. So what's with the simultaneous, scarifying news of monster job cuts at such giants as General Motors (GM) (30,000), Ford (F) (7,000), and Merck (MRK) (7,000)? They're concentrated in troubled industries. In fact, mass layoffs, defined as hitting more than 50 workers at one employer, in October hit their lowest level in five years.

See "Merck's Cure: No Tonic on the Street"

A nice round billion bucks: That's how much analysts figure Research in Motion, maker of the much-loved BlackBerry wireless device, may now have to pay NTP to end a bitter patent case. On Nov. 30 a district court judge in Virginia ruled that a $450 million settlement that fell apart in June isn't enforceable. He also declined to delay the case. Next up: proceedings on whether to squash BlackBerry's service in the U.S. RIM says it has a software workaround that would keep BlackBerry running, though it just finished testing. But its ill fortunes in court could soon lead RIM to fork over.

The 50-mile slick of benzene and nitrobenzene fouling the Songhua River finally cleared the city of Harbin on Nov. 27, but there's lots more poison where that came from. After 25 years of frenetic growth, 70% of the nation's waterways are polluted, and smog kills tens of thousands a year. Even Beijing recognizes the crisis -- one reason it has allowed environmental groups to proliferate. Still, it fears a strong movement. After initially letting the Chinese press report openly and angrily on the Harbin mess, Beijing has clamped down on coverage. Expect more disasters to float to the surface.

See "China: Choking on Pollution's Effects"

Hardly anyone thrills to the labor anthem Which Side Are You On? these days, but they may be singing it soon in Houston -- translated into Spanish. On Nov. 28 The New York Times reported that 5,000 mostly immigrant building cleaners are poised to join the Service Employees International Union in a city where unions are as scarce as caribou. The country's largest labor group employed a series of pressure tactics to persuade Houston's four largest janitorial companies to forgo the typical scorched-earth resistance to unionization of the workers, who often make the federal minimum wage of $5.25 an hour. Similar tactics helped the SEIU double the pay of janitors in New Jersey and other states in recent years, but the Texas win marks an unusual advance in the South.

State and local governments have long been slaves to the boom-and-bust cycle, and right now they're riding the upswing. With investors reaping capital gains and companies churning out profits, tax revenues are up more than 7% in the first nine months of this year, a far cry from the sad collections of 2000-03. Look for euphoric legislatures to trim taxes when they get back to work in January. But as spending, especially for Medicaid, continues to strain budgets, tax relief will be modest and temporary. States that really want to break the cycle would probably have to make income taxes more progressive and mend the loophole-ridden corporate-tax structure. So far no state has serious plans to tackle broad-based reform in 2006.

Gaga for gold even at around $500 an ounce, its highest price in 18 years? You could buy a gewgaw -- or you could make a real statement and buy a mining company. That's what Barrick Gold (ABX) is trying to do with a hostile $9.2 billion offer for its fellow Canadian miner, Placer Dome (PDG). On Nov. 30 the Toronto Globe & Mail reported that Denver-based Newmont Mining, the world's biggest gold producer, is also mulling a bid for Placer Dome. (Newmont declines to comment.) Gold prices are shining because of lust for jewelry -- especially in India -- and fears that strong economic growth could kindle higher inflation. The lustrous metal is still far from its 1980 peak of more than $800.

See "As Precious Metals Go, So Goes Jewelry?"

Fallout from New York State Attorney General Eliot Spitzer's plentiful probes came thick and fast this week. On Nov. 22, Warner Music (WMG) agreed to pay $5 million to settle charges that it paid radio programmers to spin its tunes. Sony BMG settled in July. On Nov. 25, Spitzer said he won't bring criminal charges against ex-AIG (AIG) chief Maurice "Hank" Greenberg, instead concentrating on the already filed civil case. And on Nov. 29, Federated Investors (FII)paid $100 million to settle allegations of improper mutual fund trading, the 14th company to come to terms in that inquiry. Spitzer, who's running for governor, may have lost his aura of invincibility lately, but he's still carving notches on his gun.

Cable companies are a-tremble after FCC Chairman Kevin Martin fired a broadside on Nov. 29. Reversing his predecessor's stand, Martin said his agency would issue a report concluding that selling cable channels individually, instead of in packages, can lower rates for consumers and allow them to reject risqué networks they find objectionable. While it's unlikely that à la carte cable will arrive soon, Martin's bombshell fuels the firestorm in Washington over indecent programming and fans consumer pressure for more family-friendly options.

See "The FCC's Cable Crusade Continues"

When your biggest customers go global, you'd better follow. That's what Europe's steelmakers are doing in pursuit of fast-globalizing carmakers -- and that'll soon mean the end of Canada's No. 1 steelmaker, Dofasco, as an independent. Whose furnace will swallow up Dofasco isn't clear. Germany's Thyssen-KrThyssenKrupp agreed on Nov. 28 to pay $4.1 billion for the Hamilton (Ont.) company, topping a hostile bid by Arcelor of Luxembourg. Arcelor may counter. The surprise tussle has triggered heavy trading in U.S. Steel (X) shares as speculators bet it could fall next. If it were to be sold, it'd join Bethlehem, LTV, and Inland Steel, which today belong to Mittal Steel (MT) of the Netherlands.

Companies will line up on opposite sides of a potent patent case headed for the U.S. Supreme Court. In 2003 a jury found eBay (EBAY) liable for infringing a patent held by MercExchange. The justices on Nov. 28 agreed to ponder whether courts in such situations should issue injunctions halting use of the infringing technology, or whether they can consider other remedies such as monetary damages. For eBay, the case is important but doesn't threaten its basic operations. But many tech enterprises say the prospect of a court-ordered kibosh on all or part of their business forces them into outlandish settlements. Big drugmakers, on the other hand, tend to favor injunctions. Look for a ruling by June.

Give thanks and go shopping. That great American ritual got even nutsier this Black Friday, so-called because it's the day retailers traditionally went into the black for the year. Many big-box chains, including Wal-Mart, threw open their doors at 5 a.m. Target (TGT) sent out "tuck-in" phone calls on Thursday to be sure the most eager got rested, then rang back in the wee hours to wake them in time for the 6 o'clock stampede. Target's targets could choose to hear the voice of a sexy swimsuit model, a Mariachi band, or Kermit the Frog, among others. Such gonzo marketing -- and deep price cuts -- paid off for discounters, which rang up bang-up numbers, although retail consultant Candace Corlett sniffs desperation: "It's like the panic button has been pushed." Sales for the rest of the weekend weren't as strong. And mythical or not, Cyber Monday, capped a fat four days for e-tailers. Visa International says e-tail charges on its card were up 26% over last year.


Later, Baby
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