Many pundits believe that if Republicans win both the Senate and the House in the midterm elections, the country will face two years of partisan bickering, stalemate and finger-pointing. That’s probably true. But there would be a silver lining. The 118th U.S. Congress, which will be sworn-in in January, could fix the two most significant challenges facing businesses today: inflation and labor shortages.
Most agree that higher prices today are the result of two factors: pandemic-related inventory shortages caused by supply-chain bottlenecks and government over-spending, which has caused more than a $5 trillion-dollar explosion in our money supply and has flooded financial markets with too many dollars chasing too little demand. The good news is that both of these problems are already being addressed.
A global recession has helped to reduce the pressure on factories – particularly overseas – and most are catching up with demand. Already, ports in Long Beach are reporting a drop in activity, whereas just over a year ago there were enormous backlogs. Recessions aren’t great, but this one is providing a breather for many suppliers to get caught up.
On the fiscal side, the Federal Reserve is taking aggressive action, through interest rate increases and bond buy-backs, to reign in the current over-supply of money in the economy. It’s guaranteed that a Republican-controlled Congress will support the Fed in continuing this strategy for the foreseeable future.
During the past two years, the blowout Build Back Better and Inflation Reduction Act spending bills have added to our money supply woes. With a Republican Congress, it’s highly unlikely that new spending bills would gain approval, other than the normal pork and higher allocations to defense that will be proposed during the next budgetary cycle.
It will take more time, but all these factors would ultimately serve to drive down inflation and lower pricing volatility for businesses. That’s good news. But what about labor? How would a Republican-led Congress fix that vexing problem when there is a historically low level of unemployment and more than 10 million unfilled jobs? The solution to that problem is immigration reform. And my bet is that a Republican Congress will deliver this with enough Democratic support to earn a presidential signature.
Don’t laugh. Immigration is a high priority on both parties’ legislative agendas. There are significant differences between the two sides. Generally, Republicans’ priority is to aggressively clamp down on the border to stop illegal immigration, and Democrats prefer to find a way to give those who entered the U.S. illegally some form of legal status. But both parties know that this is a pressing economic and social problem that needs to be addressed. And there is much common ground here.
The White House is already gearing up for an immigration push shortly after the midterms and, although I don’t see that happening until the new Congress takes control, many Democrats, like Senate Majority Whip Dick Durbin (D-Ill.), want to make something happen too.
“The right thing to do is what we did nine years ago – a bipartisan approach to fixing the immigration system,” Durbin said on the Senate floor last month. “Instead of exploiting it for political purposes, let’s fix it. We’ve done that. We’ve passed legislation on a bipartisan basis, even in this evenly divided Senate … I’m ready to do that, and the Senate Judiciary Committee would start as soon as we have Republicans of goodwill willing to sit with Democrats and work together. But continuing to exploit these people and the children of these families is just plain wrong.”
Many experts, including Essential Worker Immigration Coalition Chair Laura Reiff, aren’t so optimistic. She told Politico that she “doesn’t think we will see comprehensive reform again” if something doesn’t happen during the lame-duck session after the midterms.
I don’t agree. Of course, there will need to be compromise. But what’s really needed to pass a significant immigration reform bill that will help our country’s labor shortage is a realization that, frankly, no solution will be fair.
Any immigration bill that gives illegal immigrants legal status would be extremely unfair to the people who followed the rules and worked so hard to gain residency in the U.S. legally. But was it fair to forgive college loans when so many people fully paid for theirs? Or is it fair that the oil and gas industries are penalized while competing industries are given favorable treatment? Is it fair that some states allow abortion and others do not? Or that suburban public schools get more funding than urban ones? Life is unfair.
Giving illegal immigrants legal status will create problems, most significantly more costs for our government welfare and other social systems. But it will also provide millions of capable (and desperately needed) workers for our economy who will not only pay taxes but also help businesses better control their costs and more efficiently and timely produce their products and services.
Republicans have an opportunity to fix both inflation and immigration, which in turn would fix the two biggest problems businesses are facing today. Will they step up?
Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.