Economic Prosperity: What Obama Got Right About Immigration

Late last week, President Obama invoked the power of the executive order. He decided to grant legal residency to an estimated 5 million undocumented foreign nationals.

But the 800-pound donkey in the room, however, is the reality that Obama could have been much more aggressive.

After all, he could have very easily pardoned all of the roughly 11 million people who entered the country illegally.

Why is that good news? Well, while a presidential pardon is permanent, a presidential executive order is not.

So, it can be reversed by a subsequent president — whether it’s two years from now or 100 years from now.

Or, more likely, by a Congress that’s determined to fix a broken system the right way.

Everyone is up in arms about the way President Obama decided to address immigration, and understandably so. But he might have just ensured our nation’s economic prosperity … to the tune of $1 trillion to $4 trillion.

You and I stand to benefit from it. Let me explain how …

How the GOP Can Win the Immigration Debate

For the next two years, presidential executive orders on immigration will prevail. But it doesn’t have to be that way.

The Republicans controlling Congress can turn this decree to their advantage and wind up with three potentially big wins on immigration.  

First, consider their ability to impeach the president. The House sued President Obama Friday over the "Obamacare" implementation.

If Congress decides to impeach the president over immigration, it can come up with its own bill instead — one that’s tougher than the Senate bill.

Then, by passing immigration legislation by a veto-proof majority — they can render the President Obama’s executive order worthless.

They could also get a bipartisan immigration reform bill (heavily leaning with GOP provisions) passed in fewer than the 180 days it will take for the president’s executive order to go into effect.

A key outcome for Congressional Republicans would be higher ground with the Hispanic and Latin community … just in time for the 2016 election.

Resolve Immigration,

Restore Prosperity

How immigration is ultimately addressed remains to be seen. But a resolution can begin a new chapter of economic prosperity for the United States.

That’s because hundreds of billions of dollars in economic growth have been bottled up for many years as a direct result of this lingering problem.

The fact is …

Resolving the legal status of as many as 11 million undocumented U.S. residents … so they can work and invest without fear of deportation … is going to incredibly BULLISH for the U.S. economy

I’ve told my subscribers that the Dow and the S&P 500 would likely finish 2014 at 18,000 and 2,100, respectively.

It appears now that I am going to be proven right by Chinese interest rate cuts and an ironclad commitment by the European Central Bank to quantitative easing and re-igniting of an acceptable rate of inflation.

My newest prediction that the U.S. stock market will rise sharply in 2015 looks like a solid bet.

Lower oil prices, favorable monetary and interest rate policies in China and Europe guarantees in my mind that the Dow will breach 20,000 and S&P will break the 2,500 level in 2015.

And a resolution on immigration is part of that outcome.

In fact, we are in the beginning of what I suspect will be a two-, even three-year melt-up in U.S. equity prices.

This should bring with it a new "housing boom," which is the one thing missing from the current economic recovery.

5 Million People Protected,

$4 Trillion in Profit Potential?

Legalizing 5 million new residents — much less 11 million — means we can expect the Dow Jones, S&P 500 and Russell 2000 stock indexes to jump sharply in the next two to five years.

The Dow Jones could very well climb above 30,000 by 2020, just 4 years from now.

If you are an aggressive investor and understand the brightening picture, you could turn a modest IRA or stock account into a very comfortable retirement.

Legalizing the residency of the 11 million who are currently in the shadows could have a tremendous impact on our national economy.

One of the most-quoted numbers puts the economic stimulus as high as $1 trillion over the next 10 years.

I and others think this $1 trillion estimate is low-balling the potential impact of these new taxpayers/consumers.

When you figure the multiplier effect, the impact could be nearly four times as great — potentially creating $4 trillion in economic growth during the next 10 years.

This is why dozens of the largest technology companies in the United States, as well as some of our biggest banks and financial institutions, have been pushing for immigration reform.

Streamlining and modernizing immigration to fit a 21st-century business model is big business. It requires hundreds of thousands of new computer code writers, engineers, designers, physicists and high-tech talent.

This is so hard to accomplish under the current system, legendary billionaire innovators like Bill Gates, Steve Jobs, Mark Zuckerberg and dozens of others have all lobbied for immigration reform.

The Real Potential Impact of Immigration Reform

Instead of battling the president’s executive orders on immigration legalizing 5 million, Congress can outdo him and legalize the full estimated 11 million.

That’s more than twice the impact when it comes to increasing the nation’s workforce; boosting local, state and national tax revenue collections; and igniting what could be a transformational improvement in the housing market.

People who go from illegally to legally living in the United States can invest in real estate, buy homes and invest their money in our country. People who are not legal tend to hide their money and live between the lines.

Bringing people into the light of day also helps build stronger communities and makes it much easier for law enforcement to do their jobs.

All of these and other direct economic and national security benefits are now being delivered by the stroke of the presidential pen … without granting a single person citizenship.

That last leg of the immigration equation is now and forever in the hands of the U.S. Congress.

The citizenship side of equation is not being addressed by the president’s decision to legalize millions of people.

The reality is that no one is being given citizenship. So, the GOP still has time to score a huge win by passing a comprehensive immigration reform bill.

One with a 12-year pathway to citizenship could help transform its defensive posture with Hispanic and Latin Americans into a positive position.

Think about it — the Republicans could become the party that actually delivers immigration reform.

And that’s not just one win, but actually three …

  • Rendering Obama’s executive order worthless.
  • Getting the immigration provisions (including border security and law enforcement the GOP has been insisting on) written and finalized by Republican House and Senate leaders.
  • Turning a tenuous relationship with Hispanic and Latin voters into a very big positive.

There is solid evidence that President’s Obama previous unilateral executive actions on immigration back in 2012 — via his deferred action program, or DACA — had an economically positive impact on our country.

The program allowed young immigrants who were brought to the U.S. as children receive temporary visas. It generated 670,000+ applications for the legal status since its inception.

Since June 2012, roughly 86% of those applying received approval, according to data collected by the U.S. Citizenship and Immigration Services.

A study conducted by the Immigration Policy Center shows these legalized immigrants are going on to get good jobs, are contributing to local economies.

The study indicates that …

  • Approximately 61% of young adult immigrants got a new job.
  • 54 % opened their first bank account and 38% obtained their first credit card.
  • 61% got a driver’s license since receiving the deferred deportation status. This is often a clear indicator that they have found a job.

Consider the economic boom legalization could deliver by just looking at the effect on California alone …

It’s amazing that a little more than 25% of all Californians are in fact immigrants. It’s also notable that more than one-third make up the state’s workforce, according to the 2011 U.S. Census Bureau.

Even more amazing is that, if all undocumented immigrants were removed from the state, California would lose $301.6 billion in economic activity, and knock down the numbers of those working by a whopping 17.4%.

Meanwhile if all undocumented workers in California were legalized, we would see some 633,000 jobs added to the economy, and above-the-table income could jump by $26.9 billion … and increase tax revenues by $5.3 billion, according to a 2011 study by the Immigration Policy Center and the Center for American Progress.

The numbers in New York, Texas and Illinois are equally impressive.

So what stocks and ETFs will most benefit from Obama’s Executive Order or, even better, a GOP-backed immigration and naturalization bill?

One of the biggest winners in this new bull market on Wall Street should be …

Banks and Financial Institutions

Some of the names I expect to jump 50% in the next 12-24 months are JPMorgan (JPM), Bank America (BAC) and Citigroup (C) among the banks.  I also like Goldman Sachs (GS) and eBay (EBAY).

Yes, eBay — which now must be considered a financial institution thanks to the explosive growth of PayPal.

Our Alpha Scorecard reflects the current 12-month picture for EBAY. I think it has bigger potential in the next few years, but you can’t sneeze at a 25% to 41% estimated rise in the next year.

The next four years — the tail end of the decade — may be one of the greatest money-making periods of time ever in U.S. equities.

The dollar’s strength is wholly based on the reality that the best place to invest and see your money grow is in the United States — and a true immigration reform bill would only fortify that reality.

There was already lots of money to be made in the weeks, months and years ahead. But now, there looks to be even more upside in store!

Always Watching Your Chickens,

James DiGeorgia

Your thoughts on “Economic Prosperity: What Obama Got Right About Immigration”

  1. What am I missing? your theory is lacking much common sense. For one thing most of these illegals make less than the poverty level which in turn makes the illegals automatically eligible for income tax credits and a rebate for just filing income taxes, my hard earned tax dollars which are suppose to go for Legal budget items, like welfare, food stamps, free housing, aca, etc. will be then going to folks that have chosen to break our laws. Reward for not following our laws, Not in this mans world.

  2. James,
    I think there is a part of the immigration equation that you and others fail to see or comprehend. I submit that most of the illegals are just fine with with their status in this country. They are able to earn more money than in Mexico (or other countries), they get educated, free medical care, etc. Why? would they want to become legal and be required to divert heir income to “pay” for these things? AND why would the company employing these people want them to become legal? these companies would also be required to pay more from their profits. I feel the system has been too tolerant for too long, and there is just NO incentive to make any serious changes!!! I will wait and see, but I think jobs could be LOST if they are legalized!! Truly, if these people and the companies that employ them wanted to be “legal” they could have chosen to abide by the current laws and the problem would have never become as large as it has!! Just a different insight.

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