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Immigration Reform: Why Business Could Get Burned

How important is immigration to the business community? Very. On Mar. 16, Bill Gates trekked to Capitol Hill to tell key leaders of both parties that immigration is Microsoft's No. 1 issue in Washington. "If we hope to maintain our economic and intellectual leadership in the U.S., we must renew this commitment," Gates said in an earlier letter to lawmakers. "Unless there is reform, American competitiveness will suffer as other countries benefit from the international talent that U.S. employers cannot hire or retain."

Both Sides Now

Gates and his fellow CEOs have good reason to be nervous. Politicians in both parties are seizing on public concern about 12 million illegal immigrants living in the U.S. to craft legislation limiting cross-border mobility for skilled and unskilled workers alike. And while corporations are accustomed to anti-business potshots from the Left, they are now fighting a defensive battle against angry populist Republicans who want to seal the border and punish companies that employ illegals. At the Conservative Political Action Conference in February, Representative Tom Tancredo (R-Colo.) won a standing ovation for skewering companies that profit from imported labor. "The conservative movement can either be the voice of principle or it can be the voice of the Chamber of Commerce," Tancredo roared. "But it cannot be both."

Facing rhetoric like that, many corporations feel pressured. By opposing the GOP's anti-immigrant faction business runs the risk of ushering in more Democrats in the 2006 elections. But Tancredo and his allies pose a more immediate threat to business' long-term need for a steady stream of foreign workers.

The immigration hardliners want serious penalties to make businesses think twice before hiring immigrants. Legislation approved by the House in late 2005 would make it a felony for businesses to hire illegal workers: Companies that incorrectly fill out certain paperwork on employees could be fined up to $25,000. "It doesn't take too many of those [fines] to drive a small business out of business," says John Gay of the National Restaurant Assn.

Business is doing better in the Senate. Corporate lobbyists believe they have the votes to water down the tough financial penalties and win their top priority, a guest-worker program that lets foreigners take jobs Americans don't fill.

But the prospect of a House-Senate negotiation has the business community on edge. A compromise is likely to include language requiring companies to confirm the legal status of all employees and prospective hires. Angelo I. Amador, the U.S. Chamber of Commerce's immigration policy director, says that plan would be a bureaucratic nightmare costing employers at least $12 billion for compliance. The current federal pilot program to confirm whether employees are legally in the U.S. has been unreliable, he adds.

Yet business must tread carefully to avoid angering GOP immigration foes. "I'm worried that the clearly harsh voices in the Republican Party are the loudest voices," says former House Majority Leader Dick Armey (R-Tex.), leader of a pro-business coalition. Business frets that populism could foster a GOP faction hostile to such corporate priorities as trade liberalization and tax breaks. Already, the political schism has sparked showdowns in Republican primaries between anti-immigrant candidates and business community favorites. Among the contests: the San Diego district long represented by convicted ex-congressman Randy "Duke" Cunningham and the districts of retiring Republican Representatives Butch Otter of Idaho and Jim Kolbe of Arizona. Business is digging in for a long battle. "

This is a long-term issue, because this is a workforce issue," says Bernadette Budde, senior vice-president of the Business Industry Political Action Committee. "We're going to have to find labor someplace." But corporate critics don't cut companies any slack. "The illegal immigration lobby in the U.S. is big business," says Tancredo spokesman Will Adams. "They have an addiction to cheap labor."

With struggling President Bush mired in an unpopular war, GOP discord over immigration is just one more threat to the party's grip on Congress this fall. Demo-crats, says independent political analyst Charlie Cook, "have settled into their seats with popcorn to enjoy the spectacle of Republicans ripping themselves apart." That's a lot easier than coming up with a solution to this divisive issue.

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