Farm Help Wanted

We're happy to see that some Members of Congress haven't given up completely on passing comprehensive immigration reform this year. Today the Senate is scheduled to consider the Emergency Agriculture Relief Act, which would give U.S. growers greater access to legal migrant workers. Naturally, this measure is being denounced in the usual quarters as an "amnesty."

The legislation, which is co-sponsored by California Democrat Dianne Feinstein and Larry Craig, the Idaho Republican, is designed to address the perennial shortage of farmworkers in the United States; today, some three-quarters of this work force enter the country illegally. The bill does not provide a path to citizenship for these undocumented foreign nationals, or even a green card. Instead it would allow illegal farm workers who are already here to receive temporary resident status (for five years) if they pay a fine, pass a background check and meet other requirements.

The bill would also reform the H-2A program now in place for foreign farm workers. The current program is a 20-step process that is so unworkable that it facilitates just 2% of the U.S. labor force in agriculture. The Feinstein-Craig legislation would streamline the process and remove bureaucratic hurdles that have resulted in such low usage. Growers would still be required to advertise for domestic workers and hire anyone who's available. But the steps and time frames would be dramatically reduced to increase participation rates.

The hotter this issue became in recent years, the more Congress dithered. That has had real consequences, as the agriculture labor shortage manifested itself repeatedly across the industry. Back in 2006, we saw pear crops in Northern California rot because migrant laborers couldn't be found in sufficient numbers. Last year, a single county in western Michigan lost a million pounds of asparagus. But the more insidious problem is that the labor shortage is impacting what is planted in the first place. Or not planted.

Some growers scale back on their harvesting; a crew moves through an orchard just once to pick the best fruit, instead of moving through the land multiple times to pick nearly everything. Other growers decide to switch from producing high-value, nonsubsidized fruits and vegetables to producing low-value, highly subsidized row crops merely because the latter is less labor intensive. Still other growers are moving production offshore, reasoning that if they can't find the labor stateside, they'll go where labor is more plentiful.

The Feinstein-Craig legislation was voted out of the Appropriations Committee last week, with half of the Republicans voting to approve. Given the GOP's restrictionist lurch in recent years, Sam Brownback, Ted Stevens, Bob Bennett, Pete Domenici, Kit Bond, Arlen Specter and Mr. Craig deserve credit for their principled, if unpopular, vote.

The goal is to attach the measure to a must-pass War Supplemental bill. Certainly, no one is suggesting that the Emergency Agriculture Relief Act will fix our illegal immigration problem by itself. While most farm workers are illegal, most illegal aliens in the U.S. don't work in agriculture.

Still, it's a step in the right direction because it recognizes economic realities. Congress's attempts to micromanage the foreign-labor needs of the U.S. economy have resulted in 12 million-plus illegal aliens in the country. Why not let the free market take a shot at determining how many of these workers we need?

Investing in Japan

FROM TODAY'S WALL STREET JOURNAL ASIA

A new report shines a light on Japan's need to make itself a more hospitable destination for foreign investors. But what the country – not to mention domestic investors saving for retirement – really needs is more action to accompany all the talk.

That's not to disparage the authors of the latest recommendations, formally submitted to the cabinet-level Council on Economic and Fiscal Policy yesterday. The panel of 14 academics and business leaders, Japanese and foreign, urges a rethinking of Japan's high corporate tax rates, murky regulation of mergers and acquisitions, and oversight of the deals it does allow. For the most part, the report from the "Expert Committee for FDI Promotion" is a welcome dose of common sense.

The problem is that it's all been said many times before. Japan is notoriously averse to foreign investment. Its cumulative FDI stock totaled just 2.5% of GDP in 2006, compared with 13.5% in the U.S. and 48% in Britain. High corporate taxes play a big role. Who wants to operate in a place that charges almost 40% on profits, the highest level in the OECD?

Just as bad is an opaque regulatory system that shelters domestic companies from foreign competition. The resurgence in cross-shareholdings to protect against takeovers has met with little government resistance. Hostile takeovers are rare. The government is also starting to wield its veto power; look no further than the scuttled attempt by the Children's Investment Fund to increase its minority stake in Electric Power Development Co., known as J-Power.

Political consensus on opening corporate Japan remains elusive. The last major liberalization of foreign M&A, which went into effect last year, took five years to pass the Diet. And that was for a measure – changing the tax treatment of so-called triangular mergers – affecting a relatively small number of transactions. Other types of cross-border mergers, acquisitions and corporate restructurings common elsewhere remain subject to regulatory constraints and unfavorable tax structures in Japan.

Maybe this time will be different. Prime Minister Yasuo Fukuda has pledged to double FDI by 2010, a goal set in 2003 by former Prime Minister Junichiro Koizumi. He faces powerful domestic business interests that support the status quo. But until FDI liberalization unleashes a wave of animal spirits on Japan, the economy will continue to sputter. That's a good reason to stop writing reports and start writing better laws.

Democrats and Our Enemies

By JOSEPH LIEBERMAN

How did the Democratic Party get here? How did the party of Franklin Roosevelt, Harry Truman and John F. Kennedy drift so far from the foreign policy and national security principles and policies that were at the core of its identity and its purpose?

Beginning in the 1940s, the Democratic Party was forced to confront two of the most dangerous enemies our nation has ever faced: Nazi Germany and the Soviet Union. In response, Democrats under Roosevelt, Truman and Kennedy forged and conducted a foreign policy that was principled, internationalist, strong and successful.

AP

Harry Truman and John F. Kennedy, 1961.

This was the Democratic Party that I grew up in – a party that was unhesitatingly and proudly pro-American, a party that was unafraid to make moral judgments about the world beyond our borders. It was a party that understood that either the American people stood united with free nations and freedom fighters against the forces of totalitarianism, or that we would fall divided.

This was the Democratic Party of Harry Truman, who pledged that "it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures."

And this was the Democratic Party of John F. Kennedy, who promised in his inaugural address that the United States would "pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, to assure the survival and the success of freedom."

This worldview began to come apart in the late 1960s, around the war in Vietnam. In its place, a very different view of the world took root in the Democratic Party. Rather than seeing the Cold War as an ideological contest between the free nations of the West and the repressive regimes of the communist world, this rival political philosophy saw America as the aggressor – a morally bankrupt, imperialist power whose militarism and "inordinate fear of communism" represented the real threat to world peace.

It argued that the Soviets and their allies were our enemies not because they were inspired by a totalitarian ideology fundamentally hostile to our way of life, or because they nursed ambitions of global conquest. Rather, the Soviets were our enemy because we had provoked them, because we threatened them, and because we failed to sit down and accord them the respect they deserved. In other words, the Cold War was mostly America's fault.

Of course that leftward lurch by the Democrats did not go unchallenged. Democratic Cold Warriors like Scoop Jackson fought against the tide. But despite their principled efforts, the Democratic Party through the 1970s and 1980s became prisoner to a foreign policy philosophy that was, in most respects, the antithesis of what Democrats had stood for under Roosevelt, Truman and Kennedy.

Then, beginning in the 1980s, a new effort began on the part of some of us in the Democratic Party to reverse these developments, and reclaim our party's lost tradition of principle and strength in the world. Our band of so-called New Democrats was successful sooner than we imagined possible when, in 1992, Bill Clinton and Al Gore were elected. In the Balkans, for example, as President Clinton and his advisers slowly but surely came to recognize that American intervention, and only American intervention, could stop Slobodan Milosevic and his campaign of ethnic slaughter, Democratic attitudes about the use of military force in pursuit of our values and our security began to change.

This happy development continued into the 2000 campaign, when the Democratic candidate – Vice President Gore – championed a freedom-focused foreign policy, confident of America's moral responsibilities in the world, and unafraid to use our military power. He pledged to increase the defense budget by $50 billion more than his Republican opponent – and, to the dismay of the Democratic left, made sure that the party's platform endorsed a national missile defense.

By contrast, in 2000, Gov. George W. Bush promised a "humble foreign policy" and criticized our peacekeeping operations in the Balkans.

Today, less than a decade later, the parties have completely switched positions. The reversal began, like so much else in our time, on September 11, 2001. The attack on America by Islamist terrorists shook President Bush from the foreign policy course he was on. He saw September 11 for what it was: a direct ideological and military attack on us and our way of life. If the Democratic Party had stayed where it was in 2000, America could have confronted the terrorists with unity and strength in the years after 9/11.

Instead a debate soon began within the Democratic Party about how to respond to Mr. Bush. I felt strongly that Democrats should embrace the basic framework the president had advanced for the war on terror as our own, because it was our own. But that was not the choice most Democratic leaders made. When total victory did not come quickly in Iraq, the old voices of partisanship and peace at any price saw an opportunity to reassert themselves. By considering centrism to be collaboration with the enemy – not bin Laden, but Mr. Bush – activists have successfully pulled the Democratic Party further to the left than it has been at any point in the last 20 years.

Far too many Democratic leaders have kowtowed to these opinions rather than challenging them. That unfortunately includes Barack Obama, who, contrary to his rhetorical invocations of bipartisan change, has not been willing to stand up to his party's left wing on a single significant national security or international economic issue in this campaign.

In this, Sen. Obama stands in stark contrast to John McCain, who has shown the political courage throughout his career to do what he thinks is right – regardless of its popularity in his party or outside it.

John also understands something else that too many Democrats seem to have become confused about lately – the difference between America's friends and America's enemies.

There are of course times when it makes sense to engage in tough diplomacy with hostile governments. Yet what Mr. Obama has proposed is not selective engagement, but a blanket policy of meeting personally as president, without preconditions, in his first year in office, with the leaders of the most vicious, anti-American regimes on the planet.

Mr. Obama has said that in proposing this, he is following in the footsteps of Reagan and JFK. But Kennedy never met with Castro, and Reagan never met with Khomeini. And can anyone imagine Presidents Kennedy or Reagan sitting down unconditionally with Ahmadinejad or Chavez? I certainly cannot.

If a president ever embraced our worst enemies in this way, he would strengthen them and undermine our most steadfast allies.

A great Democratic secretary of state, Dean Acheson, once warned "no people in history have ever survived, who thought they could protect their freedom by making themselves inoffensive to their enemies." This is a lesson that today's Democratic Party leaders need to relearn.

Mr. Lieberman is an Independent Democratic senator from Connecticut. This article is adapted from a speech he gave May 18 at a dinner hosted by Commentary magazine.

Why a Housing Bailout Won't Help

"We are working with borrowers to keep them in their homes, but a lot of them really don't want to stay."

So spoke the chairwoman of a Southern California home lender to the Los Angeles Times, inadvertently putting her finger on why trying to bail out the mortgages behind today's uptick in the foreclosure rate may be self-defeating, and why many in Congress rightly have gotten cold feet.

Corbis

Look at a very instructive map found on the Web site of RealtyTrac.com. Not only are the big foreclosure hotspots concentrated in just three or four parts of the country – but a disproportionate share of foreclosures are concentrated in a single, nearly contiguous blob reaching from Sacramento to the environs of Las Vegas and Phoenix.

Another hotspot is southern Florida, and along Interstates 25 and 70 in Colorado.

Many of these homebuyers are underwater not just because they bought more house than their incomes could support, and not just because prices are falling. They were also betting on commute patterns and demographic expectations that are proving invalid.

These were bets on location, location, location – premised on the idea that people would be willing to live hours from anywhere for a chance to own a single-family home they could actually afford. No federally sponsored haircut can put these housing bets back in the money, or stop these houses from coming back on the market at distress prices.

Lo, the economy has not descended into a depression, the credit markets are healing, banks are raising new capital and putting their mistakes behind them. No wonder many in Congress – maps in hand – have lately begun to ask why taxpayers back home should pay for housing disasters elsewhere.

Then why do so many Wall Street types, including legendary (and shrill) bond investor Bill Gross, insist the economy is doomed without a concerted federal rescue of underwater homeowners? Good question.

Proponents say a bailout would benefit all homeowners, halting foreclosures and propping up prices. But it wouldn't. Even by the generous reckoning of the Congressional Budget Office, only a small fraction of the soon-to-be-foreclosed would voluntarily take up the House plan or Monday's proposed Senate version on its offer.

Of course that overlooks the possibility of a concerted effort by mortgage investors to get their worst customers into the government plan, which would pay 85 cents on the dollar for mortgages now selling for 50 cents or less. True, the House bill gamely seeks to exclude speculators and homeowners who lied about their incomes. But an ill-equipped FHA would be a sitting duck for lenders who tacitly permit nonpayers to remain in homes just long enough to pass the bag to government.

Remember, the estimated $400 billion in subprime mortgage losses are widely distributed among funds that are capable of swallowing them without folding. The bust once did seem to threaten the financial system, but only because uncertainty over who owned the losses poisoned investor confidence in asset markets and financial institutions generally.

The Fed seems to have fixed that problem. But the Fed can't fix the housing correction, though the housing correction was never the end of the world.

Data may show the first national home-price decline since the 1940s, but housing markets are local, and virtually every local market has experienced housing booms and busts at some point. Plenty of homeowners have had the experience of being underwater on their mortgages (show of hands here) without walking away – because they didn't take out more loan than they could afford to plant themselves in communities that now appear to have little future.

A real quandary for policy makers may soon be how to handle the subprime debris – the physical waste – of housing complexes far from town, unwanted by anybody with the wherewithal to maintain them. Here, a word on bubbles. Dropping a bundle to build a new fiber network as the Internet is taking off is not necessarily a bad idea. The decision by other people to do the same is what makes it a bad idea. That's what happened in housing too – helped by cheap money from the Fed and a credit-manufacturing process that gave too many homebuyers a one-way bet on home prices.

One sure way to guarantee bubbles without end is to institutionalize that one-way bet. That's what a bailout would end up doing for those ultimately responsible for directing a large chunk of the nation's savings into unwanted, uneconomic housing.

Obama says White House nod within reach

Barack Obama returned to Iowa, the state where he first beat Hillary Clinton
©AFP/Getty Images - Chip Somodevilla

WASHINGTON (AFP) - Barack Obama's camp Wednesday celebrated a potent milestone on the road to the Democratic presidential nomination after sharing the spoils with Hillary Clinton in the two latest contests.

Thumped Tuesday by Clinton in the socially conservative state of Kentucky, Obama won liberal Oregon handily to come within a mere 69 delegates of the 2,026 needed to win the party nod.

The Illinois senator, 46, held a victory rally late Tuesday in Iowa, the midwestern battleground state where he scored a shock win in the very first nominating contest in January.

"We have returned to Iowa with a majority of delegates elected by the American people," he told some 7,000 jubilant supporters who roared back, "Obama '08."

"You have put us within reach of the Democratic nomination for president of the United States of America."

Obama, seeking to become the first black US president, sewed up a majority of "pledged" delegates elected in more than five months of coast-to-coast nominating contests.

Hillary Clinton has said she will not quit the presidential race
©AFP - Robyn Beck

That majority leaves Clinton's fate entirely in the hands of Democratic "superdelegates," nearly 800 party grandees who pundits believe are unlikely to overturn the popular will of the regular delegates.

But Tuesday's results, especially in Kentucky, hinted at a continuing racial divide among Democratic voters and the Obama campaign was loath to alienate Clinton and her hard-bitten supporters.

"We don't think the race is over," Obama's communications director Robert Gibbs said on MSNBC, while stressing that reaching a majority of regular delegates was an "important marker" for the superdelegates to note.

"We respect Senator Clinton. She has been a tough and tenacious competitor," Gibbs added, looking to the end of the primary season on June 3.

"We believe that this campaign will go on probably for two more weeks and then we'll have a pretty clear idea of who that nominee will be."

The former first lady and current New York senator, 60, vowed to keep fighting at least until after the remaining voters in Puerto Rico, Montana and South Dakota have spoken.

"It's not just Kentucky bluegrass that's music to my ears. It's the sound of your overwhelming vote of confidence even in the face of some pretty tough odds," she told raucous supporters in Louisville, Kentucky.

"I'm going to keep making our case until we have a nominee, whoever she may be," Clinton said with a wide smile at her victory party.

Both Obama and Clinton were heading to Florida Wednesday. The Sunshine State's primary results, like Michigan's, were voided by Democratic bosses over a scheduling row.

Barack Obama and his family on stage in Des Moines, Iowa
©AFP/Getty Images - Chip Somodevilla

Clinton, however, claims she has won the popular vote, if Michigan and Florida are counted, and argues she would therefore be the strongest nominee.

She is hoping to persuade officials of the party's rules and bylaws committee to put the two election battlegrounds back into play, when they meet at a crucial meeting on May 31.

But the often-bitter campaign appeared to be winding down as both candidates went out of their way to assure a united front against Republican John McCain in the November election.

At the same time, Obama heaped some of his warmest praise yet on Clinton.

"No matter how this primary season ends," he said, "Senator Clinton has shattered myths and broken barriers and changed the America in which my daughters and yours will have come of age."

The Democratic presidential candidates have assured a united front against Republican John McCain
©AFP/Getty Images - Eric Thayer

But Tuesday's results held warning signs for Obama, with white, working-class voters as strident as ever in their backing for Clinton. Exit polls in Kentucky suggested that 41 percent of Clinton supporters would vote for McCain.

"Senator Obama could win them," Clinton's communications chief Howard Wolfson said of blue-collar voters in swing states. "We believe we will win them."

But New Mexico Governor Bill Richardson, a Hispanic politician who backs Obama, told CNN that Obama had won "every demographic" in overwhelmingly white Oregon.

"So this talk that he can't win among white voters is just wrong. In addition to that, what you're seeing is Democrats uniting around Senator Obama," he said.

With all precincts reporting in Kentucky, Clinton won 65 percent to 30 percent. With 88 percent of precincts reporting, Obama had a 58-42 percent edge in Oregon.

The Democrats

Still unresolved

Is Hillary Clinton still campaigning to be the presidential nominee, or for something else?

ON TUESDAY May 20th, as expected, two states produced a split decision in America's Democratic primaries. Kentucky voted for Hillary Clinton, by a stonking 35-point margin. Barack Obama won in Oregon, by a smaller but still impressive margin. Both candidates planned to campaign next in Florida, a big, swing state.

Mr Obama wants to pull the state his way in November's general election, when he expects to be the Democratic nominee against John McCain. Mrs Clinton, by contrast, wants to highlight the fact that Florida's delegates were stripped because the state voted too early for Democratic Party rules. Because a majority of Floridians voted for her anyway, she is trying to reinstate the state's delegates, and somehow cling to the notion that she can win the nomination.

What is she playing at? After Tuesday, Mr Obama’s commanding lead has been further cemented, despite Kentucky. He has finally secured a majority of pledged delegates (not including Florida and Michigan). Although he did not explicitly declare victory in the campaign, he is all but there, with just three primaries to come. He calls the nomination “within reach”. Mrs Clinton invoked Florida in her victory speech, along with another state, Michigan (which also voted for her, mainly because Mr Obama took his name off the ballot after it too broke party rules by voting early). She implies that if only their delegates are seated, the race looks different. It does not. If she does well in the final contests, and counts the disputed Florida and Michigan votes, she may come out with a popular-vote lead over Mr Obama. But even with those states she would lack delegates.

To overcome her rival she would have to convince a vast majority of the remaining 180 or so uncommitted party-insider superdelgates to overturn the big pledged-delegate lead that Mr Obama has built. That, too, looks unlikely. Ever since primaries two weeks ago in North Carolina and Indiana, superdelegates have been breaking heavily in his favour. That seems unlikely to change.

One theory is that Mrs Clinton is playing her cards to get the vice-presidency. This would be her best shot at becoming the first woman president: after eight years of serving as Mr Obama's second. She may have hinted at that, speaking of party unity and saying that she and Mr Obama saw “eye to eye” about beating John McCain, even as they stood “toe to toe” battling each other.

Mr Obama, presumably, would not be especially keen to pick her. She has done well among working-class white Democrats in the Appalachian mountains, who may break for Mr McCain in the autumn. But another vice-president might do just as well. Names bandied about include Jim Webb, a Vietnam-veteran senator and critic of the Iraq war from Virginia, or Sam Nunn, a conservative former senator from Georgia and expert on nuclear proliferation. Neither would be as likely as Mrs Clinton, and her husband, to distract from the nominee's message of change.

Another possibility is that she has her eye on becoming the Senate majority leader, a prize that she might expect after her strong showing this year, in exchange for bowing out.

But some of her foes think she has more sinister aims. Besides talk of unity, she took a few shots at Mr Obama in her Kentucky speech, implying that she was best positioned to win in November. Perhaps she is preparing herself, in the case of Mr Obama being defeated by Mr McCain, to seek the presidency in 2012. She would be well positioned, having run a long and strong race, to take on an elderly President McCain (he would be 76), or to rival a weaker non-incumbent.

For now, at least, Mr Obama is sanguine. He gave a confident speech in Iowa, repeating calls for hopeful change and taking a few harder-edged shots at Mr McCain. He is in general-election mode, trading barbs with the Republicans over the wisdom of negotiating with dictators. He even complimented Mrs Clinton, saying “we all admire her courage, her commitment and her perseverance.” Such admiration will fade, however, if her perserverance comes to look more like sabotage.