Obama Says Overhauling U.S. Immigration Laws Is an ‘Economic Imperative’

President Barack Obama sought to recast the debate over revamping the country’s immigration laws in economic terms, arguing that that innovation from immigrants was vital to job growth and that an underground economy fueled by illegal immigration was undermining the U.S. middle class.

Making his first trip to the southern U.S. border as president, Obama told an audience in El Paso, Texas, that his administration has answered critics who demanded stricter border enforcement. Now, he said, it’s time to provide a legal path to residency for some of the 11 million people in the country illegally and revise an “outdated” system for legal immigration.

“Immigration reform is an economic imperative,” Obama said yesterday at the Chamizal National Memorial, which commemorates a 1963 treaty with Mexico that settled a century- long boundary dispute.

Obama invoked the successes of immigrants who went on to found Google Inc. (GOOG), Intel Corp. (INTC) and Yahoo! Inc. as proof that keeping the country open to foreign talent leads to job creation. Quoting Microsoft Corp. (MSFT) co-founder Bill Gates, Obama said the U.S. can’t remain competitive in the global economy by excluding talent.

“It’s for this reason that businesses all across America are demanding that Washington finally meet its responsibility to solve the immigration problem,” he said.

Economics and Enforcement

Yesterday’s speech marked the fifth time in three weeks that Obama has put an overhaul of the immigration system on his agenda as he seeks to step up pressure on Congress to act on revamping U.S. immigration laws. Along with the economic appeal, he emphasized the steps the U.S. has taken to deport criminals and secure the 2,000-mile border with Mexico.

Obama blamed Republicans for holding up action, accusing them of “trying to move the goal posts” on what constitutes border security.

“Now they’re going to say we need to quadruple the Border Patrol,” Obama said, drawing laughter. “Or they’ll want a higher fence. Maybe they’ll need a moat.”

“Maybe they want alligators in the moat,” he said. “They’ll never be satisfied.”

Along with entrepreneurial talent exemplified by high-tech companies such as Intel and Google, Obama said the U.S. is assisted by legalizing the flow of less-skilled labor.

Middle-income Americans will benefit when “there is no longer a massive underground economy that exploits a cheap source of labor while depressing wages for everyone else,” he said.

Stalled in Congress

Still, it’s unlikely that any legislation will be considered before next year’s presidential election.

Like his White House predecessor, George W. Bush, Obama has been stymied in getting congressional action on rewriting laws to create a path to citizenship for some of the people residing in the U.S. illegally and a temporary worker program.

Opposition to giving illegal immigrants a path to citizenship has hardened, with increased demands from border states that the federal government do more to secure the U.S. boundary with Mexico amid spreading drug violence there.

In response to critics, the Obama administration has stepped up border enforcement and deportations. U.S. Immigration and Customs Enforcement deported 392,862 illegal immigrants in fiscal year 2010, the largest number in the agency’s history. About half were criminals, setting a record for the number of criminals deported, the agency said.

Enforcement Concerns

Arizona Senators John McCain, a Republican who supported Bush’s overhaul efforts, and Jon Kyl, the Senate’s No. 2 Republican leader, have introduced their own border security plan. In a statement after the president’s speech the two invited Obama to visit southern Arizona, which they said has heavier illegal cross-border traffic.

“We hear from our constituents on a daily basis, and, while some progress has been made in some areas, they do not believe the border is secure,” they said in the statement.

Kyl told reporters in Washington yesterday that Obama can’t expect cooperation on an immigration overhaul without tougher steps first to curb the flow of illegal immigrants into the U.S.

“I think almost everybody recognizes that until the border is secure, any hope of additional legislation dealing with immigration problem is not likely to succeed in the Congress,” Kyl said.

Criticism From Hispanics

The federal enforcement steps have drawn criticism from some Hispanics, a key constituency that Obama is courting for his 2012 re-election campaign.

Representative Silvestre Reyes, a Texas Democrat who greeted Obama on the tarmac when he landed in El Paso, said many Hispanic lawmakers have given up on getting legislation this year, so it was more important for the president to galvanize public opinion.

“I don’t think any of us expect immigration reform to happen this year,” Reyes said. “We’ll see what sort of support he gets from the Republican side, that’s the key.”

Mexican President Felipe Calderon said immigration is a “crucial issue” for U.S. relations with Mexico and for the economies of both countries. Mexico’s abundance of labor complements the U.S.’s capital-intensive economy, he said.

“I really applaud his effort to solve the problem not only of millions of people living in the shadows, but also a problem for the American society and economy,” Calderon said in a Bloomberg Television interview in New York.

While in Texas, Obama attended two Democratic National Committee fundraisers in Austin at which the party was seeking to raise $2 million. At the first event, Obama mentioned the raid he authorized that killed al-Qaeda leader Osama bin Laden, drawing applause from donors.

“We are taking the fight to al Qaeda and because of the extraordinary bravery of men and women who wear this nations uniform, the outstanding work of our intelligence agencies, Osama bin Laden will never again threaten the United States,” Obama said.

To contact the reporters on this story: Hans Nichols in Austin, Texas, at hnichols2@bloomberg.net; Kate Andersen Brower in Washington at kandersen7@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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