The Source of Illegal Immigration
Jude Wanniski
October 23, 1996


Memo To: Dan Lungren, Attorney General, State of California
From: Jude Wanniski
Re: Illegal Immigration

Caught you on PBS "NewsHour" last night. Did you ever hear Jack argue that you have to stop the flow at its source, which is the economic mismanagement of the Mexican economy? The peso devaluation caused the implosion of the economy, and the peso devaluation was generated by the Clinton Treasury Department and the IMF. If you donít thoroughly understand this, Dan, you are shoveling you-know-what against the tide. If Mexico would eliminate the capital gains tax on small enterprise, as it is on the oligarchies, it would again be creating capital at home and drawing it in from the Southwest -- with Mexican nationals going back instead of settling in California.

The way things are going, you should brace yourself for another wave from Mexico. They are under the thumb of the IMF and our big banks, led by Goldman Sachs, and are unable to do any of the things necessary to create economic growth. The peso is sliding again. On this side of the border, the widening gap between the blue chips and the broad market is telling us the foundations of the economy are crumbling. You should be getting Pete Wilson to back the idea of an executive order to index capital gains tax, which will reverse the economic slide here and transmit enough energy into Mexico to keep that economy from sliding. The worst of all worlds is a general recession from your Oregon border to Chiapas at the southern tip of Mexico.

My guess is that Pete, like so many other GOP governors and political opinion leaders, has given up on the Dole/Kemp ticket and is secretly relishing their defeat. This is the defeatism that spreads from George Will, Bill Kristol, and even Bob Bartley at The Wall Street Journal. The worst of the GOP governors is Voinovich of Ohio, who threw in the towel when Dole picked Jack. What a crybaby. The first guv to endorse Dole was the first to crap on him. If the Republican governors can get together for a real push at the end, they will be led by Michiganís John Engler, who was the last to endorse Dole.

Eighteen months ago, Bob Novak told me he did not see any way Dole could beat Clinton, having observed Dickie Morris develop the grand strategy by which Clinton copycatted the GOP. I told him then that the GOP candidateís use of the executive order for capital gains was the secret weapon. It will require that there be a real push in the closing days, with Republican governors and officeholders saying the economy is so fragile that it will not be able to wait for Congress to grapple with taxes for another two or four years. Dole still may not win, but at least you will be able to hold Clintonís feet to the fire to get him to do it after the elections.