California Governor Newsom Becomes the “Anti-Trump” on Immigration

by the Curmudgeon

Immigration Ban vs Handouts to Undocumented Workers:

Earlier this week, President Trump suspended immigration into the U.S. for 60 days, calling it an essential move to “protect American workers” impacted by the coronavirus pandemic. Trump’s Executive Order applies only to individuals seeking permanent residency (e.g. Green cards) and will not apply to those who enter the U.S. temporarily.

“By pausing immigration we’ll help unemployed Americans first in lines for jobs as America reopens,” Trump said during a news briefing Tuesday. “It would be wrong and unjust for Americans laid off by the virus to be replaced with new immigrant labor flown in from abroad. We must first take care of the American worker,” he added.

Now juxtapose that move with California Governor Newsom’s initiative to hand out financial aid to undocumented workers in the state. An estimated 150,000 undocumented adults in California will receive a one-time cash payment of $500 with a cap of $1,000 per household to deal with the financial impacts of the COVID-19 pandemic. They’ll be able to apply for this aid in May.

The state’s Department of Social Services will administer the Disaster Relief Assistance for Immigrants Project, which was announced April 15^th. It includes $75 million in assistance from the state and an estimated $50 million in philanthropic donations.

“We feel a deep sense of gratitude for people that are in fear of deportation but are still addressing the essential needs of tens of millions of Californians” in food gathering and other tasks, Newsom said at the time.

The fund is the first of its kind in the country. It could provide a critical lifeline for those who were left out of the federal government’s stimulus and relief packages. However, critics (including this author) say it is a misuse of taxpayer funds and even some supporters fear it will merely act as a “band-aid” amid a financial crisis that is quickly deteriorating.

The California governor’s office estimates that undocumented immigrants account for about 10% of the state‘s workforce, and many of these jobs can be found in the service industry, which has been disrupted by mass closures because of the state’s shelter-in-place policy.

An estimated $15 million will go to 30,000 undocumented immigrants in the SF Bay Area, who make up about 20% of the state’s undocumented population, according to Social Services. Governor Newsom’s office deferred questions about the relief fund to the Department of Social Services, which is overseeing the fund and defended its creation in a statement. They did not respond to reporters’ questions.

Critics have blasted Newsom’s announcement to dedicate $75 million in state taxpayer’s money, calling it unconstitutional and a violation of California law.

Two Republican state Assembly candidates who are represented by the Center for American Liberty in San Francisco filed an emergency petition Wednesday with the California Supreme Court, requesting that it halt Newsom’s $75 million contribution to the nonprofits that will distribute the money.

The plaintiffs in the lawsuit are Whittier City Councilwoman Jessica Martinez and Ricardo Benitez, an immigrant from El Salvador who is now a U.S. citizen. Both plaintiffs are Republican candidates for the state Assembly. Benitez is running to represent the 39th Assembly District in the San Fernando Valley and Martinez is vying to represent the 57th Assembly District in the southern San Gabriel Valley.

In the lawsuit, the nonprofit Center for American Liberty argues that state and federal laws bar unemployment benefits to those without legal status and that providing the money to nonprofit groups represents an improper gift of taxpayer funds.

Harmeet K. Dhillon, founder and CEO of the Center for American Liberty, said in a statement on Thursday that the governor is “ignoring the proper, and constitutional, channel to appropriate funds.”

“At a time when law-abiding Californians are crushed by unemployment, housing issues, business closures, and massive limitations on our normal lives, Governor Newsom is doing an end-run around the legal guardrails in place.”

“This is taxpayer money that may only be appropriated by the legislative branch. This is not a slush fund for the governor to spend as he sees fit,” Harmeet K. Dhillon, a San Francisco attorney and chief executive officer for the Center for American Liberty, said in a written statement Thursday. “At a time when law-abiding Californians are crushed by unemployment, housing issues, business closures and massive limitations on our normal lives, Governor Newsom is doing an end-run around the legal guardrails in place.”

“There is no accountability over the distribution of these funds to individuals legally not entitled to cash benefits,” Dhillon added.

A representative for the governor disputed the lawsuit, which was filed Wednesday, and said the state would fight the challenge in court.

“California is taking legally justified and morally necessary action to assist all Californians impacted by COVID-19,” said Jesse Melgar, a spokesman for Newsom. “These actions benefit public health and the economic well-being of families and communities hit hardest by this pandemic. We look forward to defending what we know to be right in court.”

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Cloward–Piven Strategy:

Victor compares Newsom’s state sponsored aid to undocumented workers to the “Cloward–Piven strategy” - a political strategy outlined in 1966 by American sociologists and political activists Richard Cloward and Frances Fox Piven. It proposed overloading the U.S. public welfare system in order to precipitate a crisis that would lead to a replacement of the welfare system with "a guaranteed annual income and thus an end to poverty."

This strategy was published in The Nation in 1966, under the title "The Weight of the Poor: A Strategy to End Poverty."

Michael Tomasky, writing about the strategy in the 1990s and again in 2011, called it "wrongheaded and self-defeating", writing: "It apparently didn't occur to [Cloward and Piven] that the system would just regard rabble-rousing black people as a phenomenon to be ignored or quashed.”

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Conclusions:

The problem with socialist schemes like this one in California is that none of them creates new wealth, but rather misuses taxpayers money and thereby destroys wealth! Effectively, such misguided transfer payments (but not all) spend existing wealth with a negative return on “investment.” It is like throwing cash into a furnace to keep you warm at night.

If these kinds of welfare subsidies spread to other states, many productive people might choose to no longer work, because they understand the futility of creating wealth when the government will only take it from them to give to someone else.

Advocates of welfare programs like this may be compared to the “useful idiots” described by Vladimir Lenin. He said useful idiots were non-communists in the West who supported the communist agenda thinking it would improve life without really understanding what it was they were supporting.

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End Quotes:

“The problem with socialism is that you eventually run out of other people’s money.” by Margaret Thatcher, former UK Prime Minister [Curmudgeon]

“The budget should be balanced, the treasury refilled, public debt reduced, the arrogance of officialdom tempered and controlled, and the assistance to foreign lands curtailed, lest Rome become bankrupt.” by Marcus Tullius Cicero [Victor]

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Good health, be well, good luck and till next time……………………………………...

The Curmudgeon
ajwdct@gmail.com

Follow the Curmudgeon on Twitter @ajwdct247

Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.

Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever changing and arcane world of markets, economies and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.

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