Tax cut deal: How it affects you

By Jeanne Sahadi, senior writerDecember 17, 2010: 1:16 PM ET

NEW YORK (CNNMoney.com) -- Now that Congress has passed the Tax Hike Prevention Act of 2010, it will be sent to President Obama for his signature. And taxpayers will have some certainty about their tax situation, if only for the next 24 months.

The bill contains a bevy of tax breaks -- new and extended -- and emergency help for the jobless. Its cost over 10 years is estimated at $858 billion.

Here's a rundown of some of the biggest ticket items that will affect individuals. (Except where noted, all provisions are for 2011 and 2012).

Extended income tax rates: $207.5 billion The six federal income tax rates will remain at the same levels they are today: 10%, 15%, 25%, 28%, 33% and 35%. In addition, itemized deductions will continue to be allowed in full for high-income taxpayers.

AMT fix: $137 billion More than 20 million tax filers will be protected from having to pay the so-called "wealth tax," otherwise known as the Alternative Minimum Tax.

For tax year 2010, the bill will raise the amount of income that is exempt from the reach of the AMT to $47,450 for individuals and to $72,450 for couples filing jointly. In 2011, those exemption amounts will increase to $48,450 and $74,450 respectively.

In addition, the bill will allow taxpayers to apply nonrefundable credits (which reduce one's tax bill dollar for dollar) to their tax liability -- whether under the AMT or the regular tax code.

Social Security tax break: $112 billion Workers will get a 2 percentage-point break on their payroll tax for one year. Instead of paying 6.2% on wages up to $106,800, they will only have to pay 4.2% in 2011.

What Social Security break means for your paycheck

This tax break replaces the Making Work Pay credit, which expires this year.

Unlike Making Work Pay, which was limited to workers making less than $75,000 ($150,000 for couples), the payroll tax holiday will be available to everyone who pays into Social Security.

Expanded child tax credit: $90 billion The bill will retain the $1,000 child tax credit (up from $500 before the Bush tax cuts). It also will retain the reduced-earnings threshold, which allows more people to claim the credit as refundable.

A refundable tax credit is one paid to a tax filer even if the value of the credit exceeds his tax liability. So if a filer doesn't owe any federal income tax but qualifies for the credit, it is paid to him in the form of a refund.

Smaller estate tax: $68 billion Barring any changes, the estate tax in 2011 and 2012 will be reinstated at an exemption level of $1 million and a top rate of 55%. But under the bill, the exemption level will be raised to $5 million and the top rate lowered to 35%.

The legislation will also reinstate the so-called "step up in basis" for beneficiaries of those who die in 2010, 2011 or 2012. A stepped-up basis means that when someone sells an inherited asset, his capital gains tax bill will be based on the asset's price the day he inherited it, rather than when the decedent originally bought it.

Practically speaking that means the beneficiaries of those who died in 2010 will be allowed to choose which estate tax rules to follow -- those of 2011 or those of 2010. Under 2010 rules, there is no estate tax but also no step-up rules; there is only an option to exempt $1.3 million worth of capital gains from tax.

Help for the jobless: $57 billion The unemployed will get a 13-month extension of the deadline to file for additional unemployment benefits -- which go as high as 99 weeks in states hit hardest by job loss.

Extended investment tax rates: $53 billion Everybody will get to keep their low investment tax rates for the next two years. For most people, that means their qualified capital gains and dividends will continue to be taxed at 15%.

Low-income tax filers (those in the 10% and 15% brackets), however, will continue to enjoy a 0% tax rate on their capital gains or dividends.

Marriage penalty relief: $27 billion Marriage will still be hard (sorry), but not because less-than-wealthy two-earner couples will owe more to the IRS than they did when they were single.

The bill continues to ensure that the standard deduction for couples is exactly twice that for single filers. It also maintains an expanded 15% tax bracket so that the amount of income in that bracket for joint filers is exactly double that for single filers.

Expanded college credit: $18 billion Paying for college tuition in 2011 and 2012 will be made a bit easier with the retention of the American Opportunity tax credit, which is an expansion of the HOPE tax credit.

The Opportunity credit is worth up to $2,500 (up to 100% of the first $2,000 spent and up to 25% of the next $2,500), and it may be claimed for four years' worth of college. Eligibility to take the credit is limited to those with modified adjusted gross income below $90,000 ($180,000 for couples filing jointly).

Individual tax break extensions: Costs vary The legislation will extend a number of tax breaks that have been introduced in the past few years such as the option to deduct on one's federal return state and local sales tax instead of state and local income tax -- at a cost of $6 billion. Also, it will extend a deduction for qualified tuition and other education-related expenses at a cost of $1.2 billion.

Less pricey extensions include a break for teachers to deduct up to $250 in classroom expenses (just under $400 million).

SOURCE: http://money.cnn.com/2010/12/15/news/economy/tax_deal_what_is_in_bill/index.htm?hpt=T1

Fox News Viewers Are The Most Misinformed: Study

Fox News viewers are much more likely than others to believe false information about American politics, a new study concludes.

The study, conducted by the University of Maryland, judged how likely consumers of various news outlets and publications were to believe misinformation about a wide range of political issues. Overall, 90% of respondents said they felt they had heard false information being given to them during the 2010 election campaign. However, while consumers of just about every news outlet believed some information that was false, the study found that Fox News viewers, regardless of political information, were "significantly more likely" to believe that:

--Most economists estimate the stimulus caused job losses (12 points more likely)

--Most economists have estimated the health care law will worsen the deficit (31 points)

--The economy is getting worse (26 points)

--Most scientists do not agree that climate change is occurring (30 points)

--The stimulus legislation did not include any tax cuts (14 points)

--Their own income taxes have gone up (14 points)

--The auto bailout only occurred under Obama (13 points)

--When TARP came up for a vote most Republicans opposed it (12 points)

--And that it is not clear that Obama was born in the United States (31 points)

• 54% believed that there were no tax cuts in the stimulus legislation
• 86% assumed their taxes had gone up (38%) or stayed the same (48%), while only 10% were aware that their taxes had gone down since 2009
• 53% thought that the bailout of GM and Chrysler occurred only under Obama, though it was initiated under Bush

SOURCE: http://www.worldpublicopinion.org/pipa/articles/brunitedstatescanadara/671.php?nid=&id=&pnt=671&lb=

Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes

By Jesse Drucker - Oct 21, 2010 3:00 AM MT

Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Google’s income shifting -- involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.

“It’s remarkable that Google’s effective rate is that low,” said Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Department. “We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.”

The U.S. corporate income-tax rate is 35 percent. In the U.K., Google’s second-biggest market by revenue, it’s 28 percent.

Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax.

The earnings wind up in island havens that levy no corporate income taxes at all. Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.

Countless Companies

Google, the third-largest U.S. technology company by market capitalization, hasn’t been accused of breaking tax laws. “Google’s practices are very similar to those at countless other global companies operating across a wide range of industries,” said Jane Penner, a spokeswoman for the Mountain View, California-based company. Penner declined to address the particulars of its tax strategies.

Facebook, the world’s biggest social network, is preparing a structure similar to Google’s that will send earnings from Ireland to the Cayman Islands, according to the company’s filings in Ireland and the Caymans and to a person familiar with its plans. A spokesman for the Palo Alto, California-based company declined to comment.

Transfer Pricing

The tactics of Google and Facebook depend on “transfer pricing,” paper transactions among corporate subsidiaries that allow for allocating income to tax havens while attributing expenses to higher-tax countries. Such income shifting costs the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon.

U.S. Representative Dave Camp of Michigan, the ranking Republican on the House Ways and Means Committee, and other politicians say the 35 percent U.S. statutory rate is too high relative to foreign countries. International income-shifting, which helped cut Google’s overall effective tax rate to 22.2 percent last year, shows one way that loopholes undermine that top U.S. rate.

Two thousand U.S. companies paid a median effective cash rate of 28.3 percent in federal, state and foreign income taxes in a 2005 study by academics at the University of Michigan and the University of North Carolina. The combined national-local statutory rate is 34.4 percent in France, 30.2 percent in Germany and 39.5 percent in Japan, according to the Paris-based Organization for Economic Cooperation and Development.

The Double Irish

As a strategy for limiting taxes, the Double Irish method is “very common at the moment, particularly with companies with intellectual property,” said Richard Murphy, director of U.K.- based Tax Research LLP. Murphy, who has worked on similar transactions, estimates that hundreds of multinationals use some version of the method.

The high corporate tax rate in the U.S. motivates companies to move activities and related income to lower-tax countries, said Irving H. Plotkin, a senior managing director at PricewaterhouseCoopers LLP’s national tax practice in Boston. He delivered a presentation in Washington, D.C. this year titled “Transfer Pricing is Not a Four Letter Word.”

“A company’s obligation to its shareholders is to try to minimize its taxes and all costs, but to do so legally,” Plotkin said in an interview.

Boosting Earnings

Google’s transfer pricing contributed to international tax benefits that boosted its earnings by 26 percent last year, company filings show. Based on a rough analysis, if the company paid taxes at the 35 percent rate on all its earnings, its share price might be reduced by about $100, said Clayton Moran, an analyst at Benchmark Co. in Boca Raton, Florida. He recommends buying Google stock, which closed yesterday at $607.98.

The company, which tells employees “don’t be evil” in its code of conduct, has cut its effective tax rate abroad more than its peers in the technology sector: Apple Inc., the maker of the iPhone; Microsoft, the largest software company; International Business Machines Corp., the biggest computer-services provider; and Oracle Corp., the second-biggest software company. Those companies reported rates that ranged between 4.5 percent and 25.8 percent for 2007 through 2009.

Google is “flying a banner of doing no evil, and then they’re perpetrating evil under our noses,” said Abraham J. Briloff, a professor emeritus of accounting at Baruch College in New York who has examined Google’s tax disclosures.

“Who is it that paid for the underlying concept on which they built these billions of dollars of revenues?” Briloff said. “It was paid for by the United States citizenry.”

Taxpayer Funding

The U.S. National Science Foundation funded the mid-1990s research at Stanford University that helped lead to Google’s creation. Taxpayers also paid for a scholarship for the company’s cofounder, Sergey Brin, while he worked on that research. Google now has a stock market value of $194.2 billion.

Google’s annual reports from 2007 to 2009 ascribe a cumulative $3.1 billion tax savings to the “foreign rate differential.” Such entries typically describe how much tax U.S. companies save from profits earned overseas.

In February, the Obama administration proposed measures to curb shifting profits offshore, part of a package intended to raise $12 billion a year over the coming decade. While the key proposals largely haven’t advanced in Congress, the IRS said in April it would devote additional agents and lawyers to focus on five large transfer pricing arrangements.

Arm’s Length

Income shifting commonly begins when companies like Google sell or license the foreign rights to intellectual property developed in the U.S. to a subsidiary in a low-tax country. That means foreign profits based on the technology get attributed to the offshore unit, not the parent. Under U.S. tax rules, subsidiaries must pay “arm’s length” prices for the rights -- or the amount an unrelated company would.

Because the payments contribute to taxable income, the parent company has an incentive to set them as low as possible. Cutting the foreign subsidiary’s expenses effectively shifts profits overseas.

After three years of negotiations, Google received approval from the IRS in 2006 for its transfer pricing arrangement, according to filings with the Securities and Exchange Commission.

The IRS gave its consent in a secret pact known as an advanced pricing agreement. Google wouldn’t discuss the price set under the arrangement, which licensed the rights to its search and advertising technology and other intangible property for Europe, the Middle East and Africa to a unit called Google Ireland Holdings, according to a person familiar with the matter.

Dublin Office

That licensee in turn owns Google Ireland Limited, which employs almost 2,000 people in a silvery glass office building in central Dublin, a block from the city’s Grand Canal. The Dublin subsidiary sells advertising globally and was credited by Google with 88 percent of its $12.5 billion in non-U.S. sales in 2009.

Allocating the revenue to Ireland helps Google avoid income taxes in the U.S., where most of its technology was developed. The arrangement also reduces the company’s liabilities in relatively high-tax European countries where many of its customers are located.

The profits don’t stay with the Dublin subsidiary, which reported pretax income of less than 1 percent of sales in 2008, according to Irish records. That’s largely because it paid $5.4 billion in royalties to Google Ireland Holdings, which has its “effective centre of management” in Bermuda, according to company filings.

Law Firm Directors

This Bermuda-managed entity is owned by a pair of Google subsidiaries that list as their directors two attorneys and a manager at Conyers Dill & Pearman, a Hamilton, Bermuda law firm.

Tax planners call such an arrangement a Double Irish because it relies on two Irish companies. One pays royalties to use intellectual property, generating expenses that reduce Irish taxable income. The second collects the royalties in a tax haven like Bermuda, avoiding Irish taxes.

To steer clear of an Irish withholding tax, payments from Google’s Dublin unit don’t go directly to Bermuda. A brief detour to the Netherlands avoids that liability, because Irish tax law exempts certain royalties to companies in other EU- member nations. The fees first go to a Dutch unit, Google Netherlands Holdings B.V., which pays out about 99.8 percent of what it collects to the Bermuda entity, company filings show. The Amsterdam-based subsidiary lists no employees.

The Dutch Sandwich

Inserting the Netherlands stopover between two other units gives rise to the “Dutch Sandwich” nickname.

“The sandwich leaves no tax behind to taste,” said Murphy of Tax Research LLP.

Microsoft, based in Redmond, Washington, has also used a Double Irish structure, according to company filings overseas. Forest Laboratories Inc., maker of the antidepressant Lexapro, does as well, Bloomberg News reported in May. The New York-based drug manufacturer claims that most of its profits are earned overseas even though its sales are almost entirely in the U.S. Forest later disclosed that its transfer pricing was being audited by the IRS.

Since the 1960s, Ireland has pursued a strategy of offering tax incentives to attract multinationals. A lesser-appreciated aspect of Ireland’s appeal is that it allows companies to shift income out of the country with minimal tax consequences, said Jim Stewart, a senior lecturer in finance at Trinity College’s school of business in Dublin.

Getting Profits Out

“You accumulate profits within Ireland, but then you get them out of the country relatively easily,” Stewart said. “And you do it by using Bermuda.”

Eoin Dorgan, a spokesman for the Irish Department of Finance, declined to comment on Google’s strategies specifically. “Ireland always seeks to ensure that the profits charged in Ireland fully reflect the functions, assets and risks located here by multinational groups,” he said.

Once Google’s non-U.S. profits hit Bermuda, they become difficult to track. The subsidiary managed there changed its legal form of organization in 2006 to become a so-called unlimited liability company. Under Irish rules, that means it’s not required to disclose such financial information as income statements or balance sheets.

“Sticking an unlimited company in the group structure has become more common in Ireland, largely to prevent disclosure,” Stewart said.

Deferred Indefinitely

Technically, multinationals that shift profits overseas are deferring U.S. income taxes, not avoiding them permanently. The deferral lasts until companies decide to bring the earnings back to the U.S. In practice, they rarely repatriate significant portions, thus avoiding the taxes indefinitely, said Michelle Hanlon, an accounting professor at the Massachusetts Institute of Technology.

U.S. policy makers, meanwhile, have taken halting steps to address concerns about transfer pricing. In 2009, the Treasury Department proposed levying taxes on certain payments between U.S. companies’ foreign subsidiaries.

Treasury officials, who estimated the policy change would raise $86.5 billion in new revenue over the next decade, dropped it after Congress and Treasury were lobbied by companies, including manufacturing and media conglomerate General Electric Co., health-product maker Johnson & Johnson and coffee giant Starbucks Corp., according to federal disclosures compiled by the non-profit Center for Responsive Politics.

Administration Concerned

While the administration “remains concerned” about potential abuses, officials decided “to defer consideration of how to reform those rules until they can be studied more broadly,” said Sandra Salstrom, a Treasury spokeswoman. The White House still proposes to tax excessive profits of offshore subsidiaries as a curb on income shifting, she said.

The rules for transfer pricing should be replaced with a system that allocates profits among countries the way most U.S. states with a corporate income tax do -- based on such aspects as sales or number of employees in each jurisdiction, said Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan Law School.

“The system is broken and I think it needs to be scrapped,” said Avi-Yonah, also a special counsel at law firm Steptoe & Johnson LLP in Washington D.C. “Companies are getting away with murder.”

To contact the reporter on this story: Jesse Drucker in New York at jdrucker4@bloomberg.net.

SOURCE: http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html

Job-Based Health Care Threatened

RICARDO ALONSO-ZALDIVAR | 11/28/10 01:21 PM | AP

WASHINGTON — Job-based health care benefits could wind up on the chopping block if President Barack Obama and congressional Republicans get serious about cutting the deficit.

Budget proposals from leaders in both parties have urged shrinking or eliminating tax breaks that help make employer health insurance the leading source of coverage in the nation and a middle-class mainstay.

The idea isn't to just raise revenue, economists say, but finally to turn Americans into frugal health care consumers by having them face the full costs of their medical decisions.

Such a re-engineering was rejected by Democrats only a few months ago, at the height of the health care overhaul debate. But Washington has changed, with Republicans back in power and widespread fears that the burden of government debt may drag down the economy.

"There is no short-term prospect of enactment," former Senate Majority Leader Tom Daschle, a leading Democratic adviser on health care. "However, in a tax reform (and) deficit reducing context in the long term, the prospects are much better," said Daschle. He opposes repealing the tax break by itself, but says he would be "willing to look" at it with other changes that improve access to quality health care while reducing costs.

Labor unions believed they had squelched any such talk. Now, they're preparing for another fight.

Tampering with health care tax breaks is "a terrible step in the wrong direction," said Mary Kay Henry, the new president of the Service Employees International Union, which represents many hospital workers. "We want the middle class stabilized, not destabilized."

Employer-provided health insurance is part of a worker's compensation. Unlike wages, it isn't subject to income and payroll taxes.

Repealing the tax break would raise several hundred billion dollars a year, depending on how it's done. Many economists believe employers would boost pay if they didn't provide health care. Proponents of repeal usually call for a tax credit to offset part of the cost of individually purchasing coverage.

The leaders of Obama's deficit commission – Democrat Erskine Bowles, a former Clinton White House chief of staff, and Alan Simpson, a former GOP senator from Wyoming – have proposed to limit the tax break or eliminate it along with other cherished deductions, such as the one for mortgage interest. That would allow for a big cut in tax rates.

The commission is supposed to report its plan on Wednesday. It's unclear if leaders have the votes to back their sweeping changes.

A separate group, the Bipartisan Policy Center, is proposing to cap the health care tax break in 2018 and eliminate it over the next 10 years. That's part of a deficit reduction strategy from Democrat Alice Rivlin, a former Federal Reserve vice chairman, and former Sen. Pete Domenici, R-N-M., who once led the Senate Budget Committee.

"The problem of rising debt is so serious that Republicans and Democrats are going to have go back and look at almost everything to see how we solve this," said Rivlin.

Simpson calls the health care tax break a "tax earmark." He said that "you cannot get anything done in this game unless you deal with every single aspect of the federal budget, and the biggest thing to wrap our arms around is health care."

Democrats struggled with proposals to curb the tax break during the health care debate, but strong opposition from organized labor won out. The compromise was a tax on high-cost health insurance plans, which won't go into effect until 2018.

In a twist, the health care law eventually may make it easier to pry people away from employer insurance, a system that dates to World War II and has sustained three generations.

Starting in 2014, new insurance markets will make it easier for people to buy coverage on their own. These state-based "exchanges" would work like the federal employee health plan. Taxpayer subsidies will help individuals and families with low to moderate incomes pay premiums.

"Before health reform, a declining role for employers would have raised concerns," Rivlin and Domenici said in their proposal. But well-run exchanges "will provide a viable – perhaps even superior – alternative."

One Democratic member of Obama's deficit commission is wrestling with the idea.

California Rep. Xavier Becerra says it's a very different situation from the health care debate. Back then, policymakers were looking for money to pay for covering the uninsured. Now, they're looking at rebalancing the role of government in the economy. He's not considering health care tax breaks in isolation.

"What we are saying is that we are going to examine every tax earmark," Becerra said. "They are all on the table. If you want to keep one, then show us how you are going to come up with the money. That's where you really have to put your money where your mouth is."

SOURCE: http://www.huffingtonpost.com/2010/11/28/health-care-tax-break-deficit_n_788852.html

GOP Majority in House May Not Happen, Says Chamber of Commerce Head

Tom Diemer

Correspondent

Hold the champagne. One of the business world's most powerful lobbyists, the head of the U.S. Chamber of Commerce, reportedly thinks Democrats will narrowly hold their majority in the House of Representatives in the Nov. 2 midterm election.

Two sources told CNN that Chamber President Tom Donohue has handicapped every key House race and thinks the Republicans will lose a few -- enough to shrink their net gains and keep Democrats in control for another two years. Donohue's analysis suggests Republican defeats would be part of an anti-establishment trend among the electorate that goes beyond displeasure with the Democratic Party and President Obama.

Chamber spokesman JP Fielder said he could not comment on any private conversations, but told CNN that "if there is anything we learned from last week, it's that surprises lay ahead in this election cycle." The chamber, which favors a conservative pro-business agenda on Capitol Hill, has promised to spend more than $75 million during the midterm campaigns -- most of it, but not all, on behalf of Republican candidates. The chamber recently endorsed Joe Manchin, the Democratic governor of West Virginia, in the Mountain State's Senate race.

Republicans need to pick up 40 seats in November to gain a majority in the House. The cable network's story did not address prospects in the Senate, which is also controlled by Democrats.

SOURCE: http://www.politicsdaily.com/2010/09/22/gop-majority-in-house-may-not-happen-says-chamber-of-commerce-h/?ncid=txtlnkuspoli00000003

I am calling Dems will hold Senate, at least 53 and Congress by at least 5 - most of 54 Blue Dog Dems can go!

by Dan Balz - Sept. 1, 2010 12:00 AM
Washington Post

WASHINGTON - The Gallup organization dropped a bomb on the political world this week. In shorthand, the pollsters said Monday that if the midterm elections were held now, Republicans would take control of the House, probably by a comfortable margin.

On Tuesday, James Campbell, a professor of political science at the University of Buffalo, weighed in with a prediction based on his modeling of the political climate. He said that Republicans are poised to gain 51 or 52 House seats, at least 11 more than needed to depose Democrats.

Election Day is still two months away, but the twin findings added to the fear among Democrats that their House majority is in jeopardy and possibly their Senate majority as well.

For decades, Gallup has asked voters the following question: "If the elections for Congress were being held today, which party's candidate would you vote for in your congressional district?"

This week's survey produced the largest lead for Republicans in the history of asking that question: a margin of 51 to 41 percent. The Gallup survey, based on interviews with registered voters, was taken Aug. 23-29 and has a margin of sampling error of plus or minus 4 percentage points.

Ninety-six percent of Republicans said they would vote for the GOP candidate, while 88 percent of Democrats said they would support the Democrat. Independents, who helped power Democratic victories in 2006 and 2008, split 48 to 31 percent for Republicans.

This measurement, known as the generic ballot question, has sometimes been considered an imperfect or misleading indicator of House election results. However, Frank Newport, editor in chief of the Gallup poll, said that Gallup's final survey of likely voters before Election Day has been an accurate predictor of the two parties' share of the national vote in House elections. The national vote, in turn, he added, is an excellent predictor of seats won or lost.

Four years ago, when Democrats won control of the House, the final Gallup survey of likely voters gave Democrats an advantage of 7 percentage points over Republicans. Their actual share of the national two-party vote was 8 points more.

In 1994, when Republicans won the House and Senate, Gallup showed the GOP with a 7-point advantage in its final survey, exactly the margin between the two parties on Election Day.

In both those elections, the Democrats' share of the two-party vote was almost identical to their share of House seats after the election. And in those elections - and all midterms between 1994 and 2006 - the number of seats won by the Democrats was within three of the number predicted by Gallup's models.

Gallup won't start measuring attitudes among likely voters until late September or early October.

There are some cautionary notes. Gallup's generic ballot measure has fluctuated between late August and early November in past midterm contests. Four years ago, Democrats were ahead by 6 points in August, by 19 points in October and by 8 points in the final survey. In 1994, the two parties were tied in August, October and early November, but the final survey showed the GOP with a clear advantage. So things can change.

SOURCE: http://www.azcentral.com/news/articles/2010/09/01/20100901dems-assess0901.html

Immigration and Customs Enforcement chief: President Obama not soft on illegal immigrants

by Daniel González - Aug. 13, 2010 12:00 AM
The Arizona Republic

The Obama administration is committed to tough enforcement of the nation's immigration laws and is not "pro-amnesty," the director of the nation's immigration-enforcement agency said Thursday.

The Obama administration removed a record 380,000 people during the past fiscal year and made a priority of deporting illegal immigrants who pose the greatest threat to public safety, said John Morton, director of Immigration and Customs Enforcement.

Morton was in Phoenix to announce that ICE agents had just completed a three-day sweep in Arizona tracking down illegal immigrants with criminal records. He also defended the agency's track record amid criticism that President Barack Obama's administration has been lax on immigration enforcement and hasn't done enough to secure the border.

Morton said this week's operation in Arizona was the largest ever conducted in the state. It resulted in the arrest of 63 illegal immigrants. At least 25 already have been deported.

The operation took place from Monday to Wednesday in conjunction with the U.S. Marshals Service. Officials fanned out across the state and made arrests in Phoenix, Tucson, Sedona, Mesa, Tempe and Prescott. ICE has launched five similar operations in other parts of the United States, and more are planned.

Of the 63 illegal immigrants arrested, 28 had been convicted of serious crimes, 24 were convicted of less serious crimes and three had been convicted of minor crimes.

Eight were non-criminal fugitives who had been ordered deported but didn't leave or who had been previously deported.

Those arrested were from nine countries: Canada, Czech Republic, Ecuador, Egypt, El Salvador, Guatemala, Honduras, Mexico and Uzbekistan.

The arrests included a 45-year-old Mexican woman convicted for conspiracy to commit wire fraud in a scheme that netted more than $820,000.

A 55-year-old Mexican man convicted of selling meth in 2003 also was arrested and will, for the second time, be prosecuted for re-entering the country illegally. The man was convicted of felony re-entry in 2009.

The operations are part of the Obama administration's strategy of targeting illegal immigrants who pose the biggest threat to public safety, Morton said.

The agency deported 81,429 immigrants from Arizona during the past fiscal year, which ended Sept. 30.

Through Aug. 2 of this fiscal year, ICE removed more than 66,000 illegal immigrants from Arizona, 24,950 of them convicted criminals.

Obama also planned to sign a $600 million bill today to pay for putting more Border Patrol agents and equipment on the border with Mexico.

The bill will fund the hiring of 1,000 new Border Patrol agents to be deployed at critical areas along the border, 250 more ICE agents and 250 more Customs and Border Protection officers.

It also will pay for new communications equipment and greater use of unmanned surveillance drones.

But tough enforcement alone will not solve the nation's problem with illegal immigration, Morton said. He said enforcement must be coupled with comprehensive reforms that include allowing illegal immigrants to earn legal status as long as they agree to pay fines and wait at the back of the line.

"The right answer is a balance of serious, and tough, sensible enforcement with rational bipartisan comprehensive federal immigration reform," Morton said.

Despite the number of removals, the Obama administration has come under fire for being lax on immigration enforcement and not doing enough to secure the southwestern border with Mexico against illegal immigration and drug traffickers.

Arizona Gov. Jan Brewer and other lawmakers have repeatedly cited federal inaction as the reason the state needed its own law requiring local police to question and arrest illegal-immigrant suspects.

At the end of July, some GOP lawmakers also accused the Obama administration of pursuing a "backdoor amnesty" for illegal immigrants after the draft of a government memo surfaced that discussed the possibility of allowing some illegal immigrants to remain in the country without fear of deportation through a program known as "deferred action."

Also in July, the union that represents 7,000 rank-and-file ICE agents and employees announced publicly that the union had unanimously passed a "vote of no confidence" for Morton and ICE detention-policy director Phyllis Coven, saying they had abandoned the agency's core mission of enforcing immigration laws and instead had directed their attention to campaigning for programs and policies related to amnesty, giving illegal immigrants who are now in the country legal status.

During a news conference, Morton bristled at the union's complaint that he and the Obama administration are anti-enforcement and pro-amnesty.

"Neither of which is true," said Morton, a former federal prosecutor. "We don't support amnesty. I don't support amnesty, and we are not anti-enforcement. . . .

"We are about enforcing the laws sensibly within the resources Congress gives us."

ICE has the resources to remove about 400,000 people a year, he said.

The question is, he added: Who should those 400,000 people be?

"From my perspective, it ought to be public safety, getting criminals off the streets, securing our border and making sure we go after people who game the system. Period," Morton said.

http://www.azcentral.com/news/articles/2010/08/13/20100813immigration-enforcement-president-obama.html

The American dream may in fact be slipping away.

The white picket fence, Social Security, sending your children to college -- what was once an attainable reality has become increasingly hard to achieve.

The harsh reality for today's middle class is that many of them go to work just to get by. Arianna Huffington's new book, "Third World America", sheds light on many of the crucial ways in which it has been short-changed. From our failing education system to the runaway greed of the financial services sector, America's middle class is facing on onslaught from all sides.

Below, we've compiled eight surprising and disturbing facts about America's shrinking middle class from Arianna's book - In 2005, the bottom 20 percent of household earners had an average income of $10,655 while households in the top 20 percent made nearly 160,000 – a disparity of 1,500 percent, the highest gap ever recorded, Arianna notes in Third World America.

"According to a report by the Center on Budget and Policy Priorities, at least twenty-nine states have made cuts to public health programs, twenty-four states have cut programs for the elderly and disabled, twenty-nine states have cut aid to K–12 education, and thirty-nine states have cut assistance to public colleges and universities.

America’s states faced a cumulative budget gap of $166 billion for fiscal 2010. Total shortfalls through fiscal 2011 are estimated at $380 billion—and could be even higher depending on what happens to unemployment. These are massive numbers. But when you remember that we spent $182 billion to bail out AIG ($12.9 billion of which went straight to Goldman Sachs), you realize that this amount alone would be more than enough to close the 2010 budget gap in every state in the Union. Toss in the $45 billion we gave to now-making-a-profit Bank of America and the $45 billion we gave to now-making-a-profit Citigroup, and we would be well on the way to ensuring that no state’s vital services are cut through 2011."
-Arianna Huffington, Third World America

"According to a report by the Center on Budget and Policy Priorities, at least twenty-nine states have made cuts to public health programs, twenty-four states have cut programs for the elderly and disabled, twenty-nine states have cut aid to K–12 education, and thirty-nine states have cut assistance to public colleges and universities.

America’s states faced a cumulative budget gap of $166 billion for fiscal 2010. Total shortfalls through fiscal 2011 are estimated at $380 billion—and could be even higher depending on what happens to unemployment. These are massive numbers. But when you remember that we spent $182 billion to bail out AIG ($12.9 billion of which went straight to Goldman Sachs), you realize that this amount alone would be more than enough to close the 2010 budget gap in every state in the Union. Toss in the $45 billion we gave to now-making-a-profit Bank of America and the $45 billion we gave to now-making-a-profit Citigroup, and we would be well on the way to ensuring that no state’s vital services are cut through 2011." -Arianna Huffington, Third World America

According to the White House, in 2004, the last year data on this was compiled, U.S. multinational corporations paid roughly $16 billion in taxes on $700 billion in foreign active earnings— putting their tax rate at around 2.3 percent. Know many middle-class Americans getting off that easy at tax time?" - Arianna Huffington, Third World America

"In studying car crashes across the country, the Transportation Construction coalition determined that badly maintained or managed roads are responsible for $217 billion in car crashes annually – far more than headline-grabbing alcohol-related accidents ($130 billion) and speed-related pile-ups ($97 billion)", Arianna writes in Third World America.

But Americans are paying an even higher price for our deteriorating roads. Of the 42,000 road fatalities each year, 53% are at least partially the result of poor road conditions. "We are currently spending $70 billion annually on improving our highways, but that’s nowhere near the $186 billion a year that is needed. It's a collision of need versus resources; for far too many of us, it can be fatal," she adds.

America's educational system is failing: "Eight years ago, amid much fanfare, the D.C. establishment passed No Child Left Behind...but it turned out to be reform in name only," Arianna explains Third World America . "Despite a goal of 100 percent proficiency in reading and math, eight years later we are not even close. In Alabama, only 20 percent of eighth graders are proficient in math. In California, it’s just 23 percent. In New York, it’s 34 percent."

“Barry Bosworth and Rosanna Smart of the Brookings Institution found that the catastrophic collapse of the 2008 sub-prime mortgage market resulted in the disappearance of $13 trillion in American household wealth between mid-2007 and March 2009... on average, U.S. households lost one quarter of their wealth in that period," cites Huffington. She continues, “We are facing nothing less than a national emergency: 2.8 million homes faced foreclosure in 2009, and an estimated 3 million more are expected to be foreclosed on in 2010. If there was ever a middle-class Katrina, this is it." - Arianna Huffington, Third World America.

"As MIT professor Simon Johnson recounted in the Atlantic, between 1973 and 1985, the financial industry’s share of domestic corporate profits topped out at 16 percent. In the 1990s, it spanned between 21 percent and 30 percent. Just before the financial crisis hit, it stood at 41 percent. The share of our economy devoted to making things of value is shrinking, while the share devoted to valuing made-up things (credit-swap derivatives, anyone?) is expanding. It’s the financialization of our economy." - Arianna Huffington, Third World America

"The vast majority of people who file for bankruptcy are middle-class folks who can’t pay their bills because they’ve lost their jobs or been hit with high medical bills. In fact, a 2009 study by researchers at Harvard and Ohio University showed that health-care problems were the root cause of 62 percent of all personal bankruptcies in America in 2007. When the same researchers did this study across five states in 2001, health-care problems caused only 50 percent of bankruptcy filings. According to the American Bankruptcy Institute, America had 1.4 million personal bankruptcies in 2009, a 32 percent increase over the previous year. Put another way: Every thirty seconds, someone in this country files for bankruptcy in the wake of a serious illness." - Arianna Huffington, Third World America.

SOURCE:http://www.huffingtonpost.com/2010/08/09/8-surprising-facts-about_n_675545.html#s121657

Four Deformations of the Apocalypse

By DAVID STOCKMAN

Published: July 31, 2010

David Stockman, a director of the Office of Management and Budget under President Ronald Reagan, is working on a book about the financial crisis.

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

The first of these started when the Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

It is also an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves. Just let the free market set currency exchange rates, he said, and trade deficits will self-correct.

It may be true that governments, because they intervene in foreign exchange markets, have never completely allowed their currencies to float freely. But that does not absolve Friedman’s $8 trillion error. Once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors.

In fact, since chronic current-account deficits result from a nation spending more than it earns, stringent domestic belt-tightening is the only cure. When the dollar was tied to fixed exchange rates, politicians were willing to administer the needed castor oil, because the alternative was to make up for the trade shortfall by paying out reserves, and this would cause immediate economic pain — from high interest rates, for example. But now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.

The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.

Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion.

Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.

The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.

The fourth destructive change has been the hollowing out of the larger American economy. Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes.

It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing — as suggested by last week’s news that the national economy grew at an anemic annual rate of 2.4 percent in the second quarter. Under these circumstances, it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

SOURCE: http://www.nytimes.com/2010/08/01/opinion/01stockman.html?_r=1&pagewanted=all

Tech companies seek to increase cap on visas for foreign-born skilled workers

by John Yantis - Aug. 1, 2010 12:00 AM

The Arizona Republic

A polarizing national debate on immigration isn't helping technology companies that have been trying for years to persuade Congress to change laws concerning foreign-born workers.

Specialty-jobs visas are often used by U.S. tech firms to hire foreign-born engineers and other workers with specific skills. But the number of visas issued annually is much too small, industry leaders say. The companies worry that as business picks up, they will be forced to turn away prime talent that could boost their company's research and development and performance.

Efforts to raise a 65,000-person annual cap on H-1B employment visas for foreign nationals and a parallel push to get them green cards swiftly are being overshadowed by a political debate that has nothing to do with ensuring cutting-edge companies can hire the best talent for specialty jobs, advocates say.

"We've been beating the drum hard on this issue for a long time, and lawmakers understand the argument," said Peter Cleveland, Intel Corp. vice president for global public policy. "Part of the problem is the general population has a view about immigrants, and we're trying to educate and explain the enormous value these highly trained immigrants provide."

Companies who want to increase the cap say they try to hire Americans first, but they insist the statistics don't lie.

"Half the master's and Ph.D. degree graduates are foreign-born students out of our universities, so we would like to recruit them," Cleveland said. "And to have a static cap on H-1Bs at 65,000 is self-defeating and counterproductive. The economy goes up and down. If there's more flexibility in that cap, if there's a market escalator, that is helpful to companies that are on the cutting edge of technology."

Graduate population

In many critical disciplines needed by the industry, particularly in science, math, engineering and technology, 50 percent or more of the post-graduate degrees at U.S. universities are awarded to foreign nationals, according to Compete America, a coalition based in Washington, D.C., that includes Intel and other advocates for reform of U.S. immigration policy for highly educated foreign professionals.

According to the American Association of Engineering Societies, for the 2008-2009 academic year, foreign nationals comprised 43.9 percent of the master's and 54.6 percent of the Ph.D.s awarded in engineering by U.S. universities.

At Arizona State University's Ira A. Fulton Schools of Engineering, 5.9 percent of its roughly 4,200 undergraduates last fall were international students. The percentage jumped to 50.6 percent, or 1,012, of about 2,000 graduate students enrolled in the schools.

To build the pipeline and keep U.S. students in the programs, the semiconductor industry has spent $319 million in the past three years in kindergarten through 12th grade on science, technology, engineering and math programs.

"Whether it's ON or any other members of the Semiconductor Industry Association, our use of visas are not an excuse to not hire U.S. citizens," said Colleen McKeown, senior vice president of human resources at Phoenix-based ON Semiconductor.

"That's not why we use the visas. We use the visas because that's where a lot of talent is for a lot of these positions."

Small numbers

H-1B visa holders represented 0.06 percent of the U.S. civilian labor force in 2009, according to the National Foundation for American Policy, a non-profit, nonpartisan organization based in Arlington, Va., that researches trade, immigration, education and other issues.

Including petitions exempt from counting against the H-1B quota, 85,133 new H-1B petitions were approved in fiscal 2009. The compares with a U.S. civilian labor force of approximately 154 million in 2009, according to the foundation.

At Intel Corp., 6.5 percent of its U.S. employees have H-1B visas. The company employs more than 40,000 in the United States and more and 80,000 worldwide.

At Chandler-based Microchip Technology Inc., 5.5 percent of the employees have H-1Bs. The company employs 5,100 people around the globe.

"When the cap runs out, it's difficult on everyone," said Lauren Carr, Microchip's vice president of human resources. "We certainly need the skills that they're bringing in. We look for all local talent, as well throughout the United States. We do feel there should be more a market demand than a set cap, but we deal with what we're given."

Others, including the Federation for American Immigration Reform, a Washington, D.C., group that seeks to improve border security, to stop illegal immigration and to promote immigration levels of about 300,000 people a year, believe H-1B reform is unnecessary.

"There's more than a sufficient amount of guest workers available to these industries," said Ira Mehlman, the group's spokesman. "Both in good times and bad times, they keep saying they want more workers even as there has been evidence that as they're bringing in H-1B workers, they are letting go of native workers. The mere fact that you have so many foreign H-1B workers in the labor force puts downward pressure on wages."

McKeown said wages are not the issue when it comes to H-1B hires.

"People get paid the same," she said. "It's one of the requirements of how the law works. And in a lot of the foreign countries where we do have design centers, the engineers may make as much or more than some of our U.S. folks."

How H-1B works

H-1B visas are tied to the sponsoring company, and are made on behalf of qualified foreign-born workers it would like to hire.

Employers who want to hire using the visas apply first with the U.S. Department of Labor for certification. They also apply with the U.S. Bureau of Citizenship and Immigration Services, or CIS. If both petitions are approved, the H-1B visa is good for three years. It can be extended but in most cases cannot go beyond six years.

The H-1B limit was not particularly relevant between 1992 and 1996 because it wasn't reached. During the next two years, as the dot-com boom took hold, Congress agreed to raise the number to 115,000 in 1999 and to 195,000 in 2001.

It went back to 65,000 in 2004 and has been maxed out every year since.

The annual cap of 65,000 visas runs during the government's fiscal year, from Oct. 1 to Sept. 30. But there are exceptions.

The first 20,000 petitions that are filed for employees with U.S. master's degrees or higher are exempt. Also exempt are those workers hired by universities and non-profit or government research organizations.

To get an H-1B visa, the prospective employee must have a bachelor's degree or higher, or the equivalent.

"The nature of the duties has to be so specialized and complex that the person hired has to have particular knowledge required to perform that job," said Marie Sebrechts, a CIS spokeswoman.

H-1Bs can lead to a green card, or permanent residency. But the wait time for green cards is six to 20 years. The time frame is unrealistic for companies hoping to hire green-card applicants, according to the National Foundation for American Policy. Because the supply of H-1B visas has been exhausted during or before the end of each of the past seven fiscal years, companies that operate globally often are left with no choice but to hire skilled foreign nationals to work outside the United States. Otherwise, they may see scientists, engineers and professionals lost to competitors overseas, according to a foundation policy brief released in March.

Student to worker

H-1B holders say the process to move from being a student to getting the visa was fairly easy, provided they were offered a job.

"There are so many recruiters from different companies that are not willing to sponsor H-1B just because you're a foreign national," said Angela Shao, who is from China, speaks several languages, and works in ON Semiconductor's human-resources department. "That's the most difficult part is to get an offer. Once you get an offer, the process works real well, I think."

Shao is one of 52 H-1B holders at ON Semiconductor.

After graduation, foreign nationals with student visas have two months to start optional practical training. Once the training begins, they have 90 days to find a job, or their student visa becomes invalid.

The H-1B is tied to the sponsoring company, so if the employee moves on, the hiring company must apply for the visa again.

Karthik Jayaraman, a design engineer from India who works at ON Semiconductor, said the company told him the path to a green card generally takes at least six years, so there is a nine-year time frame between getting an H1-B and becoming a citizen. Once the procedure for a green card is started, the applicant cannot change jobs or move.

Jayaraman would like to see a streamlined system in which it's possible to apply for citizenship during the first year of holding an H1-B.

"If the company really feels that the candidate who is applying for the green card is worthy of it, and the manager of the group really wants him to work on a long-term project, then it would be good if the green card can be gotten in a really quick time rather than having to wait for six or seven years," Jayaraman said.

When the H-1B cap was hit in 2007 and 2008, Microchip had to wait to hire the new college graduates in which it was interested.

"That was difficult because we could have hired them much sooner than we were allowed to because we couldn't get the visa," Carr said. "You can apply as early as April for the October year. If you don't get your application in before the cap is up, then you have to wait a whole year."

Stalemate on issue

Of course, the recession that took hold in 2008 made the 65,000 cap on H-1B visas less of an issue for companies.

But companies, as well as immigration advocates, worry that as business picks up, the caps will again be met quickly, forcing human resource managers to turn away prime talent.

"Obviously, when the economy is bad, it regulates itself as we see in the current environment," said Bob Sakaniwa of the American Immigration Lawyers Association in Washington, D.C. "But rest assured, as soon as we get out of this, because companies are expanding and business is gearing up again, we'll need workers from wherever we can get them. And to artificially cut it off doesn't seem to make sense."

Although action on the bill isn't likely in this session of Congress, Cleveland said legislation was introduced by Rep. John Shadegg, R-Ariz., that would increase the cap from 65,000 to 115,000 initially. If the larger cap is hit, the number would escalate on a small percentage basis so the same problem wouldn't exist in the following year.

The industry is hopeful the increased caps and an easier path to the green cards are part of a comprehensive federal package of immigration reforms.

And while Arizona's Senate Bill 1070 has put immigration reform front and center, technology leaders worry that Congress could be caught between the desire to change the laws for companies and members' fears of piecemeal legislation that could hurt broader attempts at change.

McKeown said, "There are those who are members of Congress, the federal government or the administration who only want to pass it if it's comprehensive reform. And then there are those who would say, 'Yes, we support your idea, but there's no way I'm doing comprehensive (reform.).' "

The Obama administration may be more agreeable to changes sought for years, lobbyists say.

"The current administration has said this is a priority, and obviously President Obama has made it clear this is something he wants to see done," said Jessica Herrera-Flanigan, co-executive director of America Competes, a coalition based in Washington that includes Intel and other advocates for reform of U.S. immigration policy for highly-educated foreign professionals.

"It's not merely a presidential call, however. You have to look at the political temper of the country, you have to look at Congress, and it has to be a joint effort. But I do think there is some will there."

Other options

The White House referred comment on H1-Bs to CIS, where Sebrechts said she could not comment on policy matters of the administration.

The agency announced recently that it would launch what it said is an unprecedented, top-to-bottom examination of its adjudication and customer-service policies, including those in the area of H-1Bs. McKeown, who chairs the Semiconductor's Industry Association's Workforce Committee, said her group advocates skipping the H-1B process altogether, essentially by stapling green cards to some diplomas.

Legislation proposed in Congress would allow foreign-born students who receive U.S. graduate degrees in science, technology, engineering and math to be put on a fast track to citizenship.

"There is some support from the federal government for that, but again, it gets caught up in the whole national debate about immigration," she said. "Most of these students who come here for their college education at the advanced level would want to stay here and work and contribute and add to our society."

Over the past 7 years, the number of visas has been exhausted

The technology industry argues that a limit of 65,000 H-1B visas for foreign-born employees is not enough to stay competitive with the rest of the world.

Year	Cap	Issued	Unused
1992	65,000	48,600	16,400
1993	65,000	61,600	3,400
1994	65,000	60,300	4,700
1995	65,000	54,200	10,800
1996	65,000	55,100	9,900
1997	65,000	65,000	0
1998	65,000	65,000	0
1999	115,000	115,000	0
2000	115,000	115,000	0
2001	195,000	163,600	31,400
2002	195,000	79,100	115,900
2003	195,000	78,000	117,000
2004	65,000	65,000	0
2005	65,000	65,000	0
2006	65,000	65,000	0
2007	65,000	65,000	0
2008	65,000	65,000	0
2009	65,000	65,000	0
2010	65,000	65,000	0

*Does not include exemptions from the cap, including those hired by universities and non-profit research groups and 20,000 individuals who received a master's degree or higher from a U.S. university.

Sources: Department of Homeland Security, National Foundation for American Policy.

Source: http://www.azcentral.com/business/articles/2010/08/01/20100801biz-tech-companies-seek-increase-cap-visas-foreign-born-skilled-workers-0801.html