A looming financial disaster for the Federal Givernment.

I could have used the word government instead of my creative typo as the title but this is about a giveaway program to foreign nations that may just bite us even worse than the Savings and Loan disaster of a few years ago. For quite a few years now companies have been investing in China. This should not be news to anyone who shops or reads any economic news. The exact size of the American investments in China I do not have an accurate measurement on yet but I did not wish to delay a first thread until I finished my research. Accurate numbers for the size of American Companies investments in China are not that easy to come by at least for me on a weekend. Yet a recent thread on Free Republic “ China plans to grab imported technology” brought up an aspect to this issue which could IMHO result in a doubling of the Federal budget or more just in meeting the obligations under US government political risk insurance.

OPIC is an agency of the US government that provides political risk insurance to companies that invest overseas. Thus if their investment is nationalized by the nation the have invested in the US government guarantees to indemnify their loss. Now china has issued a draft of a new policy for automobile manufacturers.

If enacted, executives said here last week, the provision could force foreign manufacturers to turn their technology and patents over to their local partners as a condition for remaining in business.

"If you're a joint venture, then you pretty much have to transfer your technology to your Chinese partner," said one foreign executive who declined to be named.

The transferred technology then could be used against the foreign partner, as the draft policy also states that China intends for its local carmakers to be capable of competing in world markets…

China has long made it clear that technology transfer is one reason for allowing foreign joint ventures in the first place. Companies that already have automotive joint ventures in China, such as General Motors and Volkswagen AG, have built plants that tapped into their worldwide technological expertise…

Another provision of the draft policy specifies that any foreign company taking a 10 percent stake or larger in a Chinese company must share r&d [sic] and production and sales know-how with the partner.

Another provision upholds the regulation that any automotive venture must be at least 50 percent owned by a local partner, effectively ruling out the possibility of a wholly owned foreign auto manufacturing venture in China. “

Now if one considers the implications of this draft from China this is effective nationalization of the investment in China. OPIC could well be on the hook for the losses from this. If Companies transfer ownership of their technology to Chinese companies they will face write offs that could make them insolvent. Hence if they have OPIC insurance they will be there exercising the full faith and credit guarantee given them by the US government that they would be indemnified. If it is $1 it is too much but how do we as a nation deal with billions or trillions of federal expenditure to meet our obligations under this program? If we repudiate the obligation what are the affects of reneging on a full faith and credit guarantee? Can you trust the FDIC after that? It too relies on a full faith and credit guarantee.

There is also a problem with those American companies that have invested in China. If they have to write off their China investments what happens to their balance sheets? It is certain that the need to write off substantial investments hurts a company and causes its market price to fall. Remember some of the Companies that are invested in China Motorola, Intel, HP, Microsoft, Boeing, General Motors, GE, and just about every Fortune 1000 company one can name.

Now many Free traders have long pointed out that the paper dollars flowing to China will eventually be devalued if China keeps up its current trade policies. What they do not mention is those devalued dollars will be quite useful for purchasing companies in the USA that have technology they want. In 1995 the company that has the most important patents for making rare earth magnets an essential technology for our smart bombs was allowed to be sold to investors from China by the Clinton administration who described China as our “Strategic Partner.” Within the past two weeks it has come to light the last manufacturing facilities of this company Magnaquench that were in the USA are being moved out of the USA to China.

So what we are facing is some combination of the following the Federal Government having to increase spending to pay companies for their China investments alongside a lowering of value of those companies that are not getting full reimbursement, all of this as a result of Chinese nationalization of assets. I have probably missed several aspects to the problem we as a nation will be facing from this.

I wish I could offer a good solution. I know that a complete end of any future OPIC political risk insurance will not solve the problem but it is necessary and will prevent the problem from getting worse than it already is. My question for Freepers and anyone else is “How do we, as a nation, address these issues?” I have a real problem of repudiation of the guarantees as it will affect the perception of what the full faith and credit of the USA is worth both in the USA and in the rest of the world. I do not know what specific terms have been given on the in force OPIC insurance and if we can raise premiums to reflect the actual potential risk of loss under these policies. Clearly if we can do that we should do that. Price the insurance out of the market so that companies will face the consequences of their decisions without the subsidy of the US government. In short in this case make the government a government not a giverment.

Now we come to the case of the uninsured investment in China and its implications for the US economy. Here I must go to a solution I really hate so I am asking for ideas. The best I can come up with is the seizure of Chinese assets in the USA. I have several problems with this not the least of which it may be too little too late and I do not like the government seizing property, even the property of a nation engaging in a form of asymmetrical warfare against the USA. Of course should the warfare become open then this would happen anyway.

I am seeing a potential problem and Free Republic is one of the great think tanks in the world IMO. I am presenting this early before my research is complete and asking for more information from anyone who has it. I am asking for ideas for solutions.

A comprehensive measure that addresses this issue:

1. Get rid of government subsidies for offshore investment of US companies. OPIC is the first such program which should go but support of World Bank programs that subsidize the outflow of Capital would be another.

2. Use tariffs on those nations which are engaged in unfair trade practices such as currency manipulation (China and India for example), those nations which refuse to open their markets to US products (China for example with its 50% tariffs on US consumer goods and non tariff barriers), those nations that subsidize competition to American Industry (airbus for example) and those nations which have slave conditions for their workers.

3. Use tariffs and other means to prevent the relocation of jobs offshore that are essential to the national defense. If necessary take control of the company seeking to export vital technology or industry by means of eminent domain (No I do not like this last option and I will only defend its use as an absolute last resort like say in the case of rare earth magnets essential to smart bomb technology).

4. An immediate end to guest worker programs. If people wish to come to the USA to work and make a life let them immigrate according to the rules.

5. Provide economic development zones where the corporate income tax is zero for operations within these zones. In order to operate in this zone a company must agree to only purchase American components if available and employ only American citizens or legal immigrants in these operations. These economic development zones shall be eventually be expanded to include every bit of every state once the benefits are shown I would like them to be totally implemented immediately but I realize that may be overreaching.

6. Scale back unnecessary regulation including the tort system. Institute a cap on punitive damages, limits on class action suits, and limits on liability to the actual percentage of liability with no plaintiff able to collect if said plaintiff was involved in the commission of a felony at the time of the alleged tort or was more than 49% negligent in the alleged tort. Note that the loser in a frivolous lawsuit shall pay the attorney fees of the winner. There are many other regulatory structures that also need to be included that need to be included such as repealing the Family leave mandate, getting rid of OSHA etc.

7. Increase the domestic content in purchases by the Department of defense and give absolute preference in non-domestic content to proven allies of the USA over say the French or Germans. The only reason any content for DOD purchase may come from non US allies is that content is not available elsewhere and is essential.

8. Do not allow expense involved in moving operations overseas to be included in business expenses under the IRS code.

9. Prosecute for perjury anyone who has made a false statement in order to employ an H1B or L1 visa worker. I will be lenient on the actual perjurer if he/she was ordered to make this false statement and he/she provides testimony to aid in the conviction of the person ordering the perjury. Just because a person is a CEO does not give them a pass on criminal behavior.

10. Prosecute anyone who orders the transfer of vital defense technology or funds a R&D project that could be of use to our military overseas except to strong allies of the USA. Make the necessary enhancements to our espionage laws so that continued support or funding of any R&D in a nation whose government has threatened the USA is guilty of espionage. The UK and Australia come to mind as meeting these criteria for being eligible for transfer of technology first. There will be other nations and a gradation of what can be transferred to which specific nation. Under no circumstances may technology be transferred to any nation whose government has threatened the USA within five years without a complete change of government or specific exemption from Congress and the administration.

11. Deport all illegal aliens immediately and take measures that prevent the entry of any more illegal aliens. Fine [and sanction] all companies knowingly employing illegal aliens. Criminal sanctions should be imposed on anyone helping an illegal alien stay in the USA in violation of our laws.

12. Decrease the punishing levels of taxation on companies and eliminate the double taxation on corporate dividends. See effects of item 5 for how minimal this will be if item 5 covers the entire USA. Eliminate all IRS provisions that inhibit free use of independent contractors by businesses for example section 1706.

13. Eliminate the minimum wage so that the workers can be paid based on productivity. Overtime compensation will remain the same but instead of 150% of the "wage" the worker would receive 150% of the production pay. If one through 13 are enacted, #14 becomes an irrelevancy as no one will be working for that low a wage.

Question: Who'd be on board to support this?

Although you are probably too smart to fall for their sales pitch, here's some ammo for you if anyone you know does.
This is an older article that gives fully documented information on OPIC. See the link for the footnotes and charts.

The Overseas Private Investment Corporation: Myth and Realities
by Brett D. Schaefer
http://www.heritage.org/Research/PoliticalPhilosophy/BG1127.cfm
In the coming weeks, Congress will debate the future of the Overseas Private Investment Corporation (OPIC), a government corporation founded in 1971 to extend political risk insurance, loan guarantees, and direct loans at subsidized rates to U.S. companies that invest abroad. According to Nobel laureate Milton Friedman, OPIC fails to justify its own existence: "I cannot see any redeeming aspect in the existence of OPIC. It is special interest legislation of the worst kind, legislation that makes the problem it is intended to deal with worse rather than better.... OPIC has no business existing." Congress should close down this government corporation to prevent it from continuing business as usual.

In an attempt to convince Members of Congress to maintain this wasteful organization, OPIC officials and their supporters are advancing a number of myths.

Myth #1: OPIC creates a net increase in U.S. jobs
This is a curious myth because OPIC activity does not lead to any net increase in U.S. employment. OPIC subsidies merely shift employment from certain sectors of the economy to subsidized businesses.

Myth #2: OPIC creates a net increase in U.S. gross domestic product (GDP)
In fact, subsidies to businesses like those provided by OPIC distort the market-driven distribution of capital and labor resources. Therefore, OPIC subsidies are most likely to have no effect—and may even have a detrimental effect—on overall national income.

Myth #3: OPIC reduces the deficit by earning a profit
Over 80 percent of OPIC's "profits" is made up of paper transfers from the U.S. Treasury that do nothing to reduce the deficit. The remaining 20 percent is lost to the taxpayer in government appropriations for OPIC. In fact, according to the Congressional Budget Office (CBO), preventing OPIC from engaging in new activities would save U.S. taxpayers more than $500 million over a ten-year period.

Myth #4: OPIC is needed to encourage U.S. firms to invest in the developing world
In 1996, sources other than OPIC provided 93 percent of the financing and 75 percent of the political risk insurance for businesses in countries in which OPIC has a presence.

Myth #5: OPIC is needed to combat the export and foreign direct investment subsidies of other countries
In fact, OPIC's portfolio is concentrated in regions in which foreign countries have little interest. Furthermore, many countries have been reducing their role in providing export and investment assistance. Finally, OPIC assistance plays only a minor role in U.S. exports and foreign direct investment: 1 percent of U.S. exports in 1996, less than 2 percent of financing for foreign direct investment, and less than 10 percent of political risk insurance for U.S. investment abroad.

Myth #6: OPIC emphasizes assistance to small businesses Using the standards set by the Small Business Administration, only 5 percent of the firms that did business with OPIC in 1996 could be classified as small businesses. Moreover, only 3 percent of OPIC-assisted projects in 1996 involved small businesses.

It is clear that if Congress is to make an informed decision on the fate of OPIC, the truth about OPIC's ineffectiveness must be understood.

LEGISLATIVE HISTORY OF OPIC

The legislation creating OPIC was signed into law by President Richard Nixon in 1969, and the agency began operation in 1971. OPIC was envisioned as a more market-oriented alternative to traditional foreign aid programs, which transfer income to foreign governments in unsuccessful attempts to spur development. At the time, some were concerned that OPIC would become just one more way to provide a government handout to business; others questioned OPIC's potentially negative impact on the federal budget and on private-sector international lenders and insurers.2 Despite these concerns, Congress approved the creation of OPIC and has allowed it to continue since 1971 with only minor changes in operational emphasis, such as legislation in 1974 and 1978 requiring OPIC to focus on poor and developing countries.

Last September, the House unexpectedly failed to pass the Exports, Jobs and Growth Act of 1996 (H.R. 3759), which would have reauthorized OPIC through 2001 and doubled its political risk insurance and financing statutory limits. Instead, the program was allowed to continue for one more year only. Congress appropriated $72 million for OPIC in FY 1997, the same as the amount appropriated for FY 1996, and refused to expand the program's statutory limits on financing and political risk insurance.3 As a result of this one-year extension, OPIC will cease to exist in September 1997 unless it is reauthorized by Congress.

The Clinton Administration has indicated in several public statements that it wishes to see OPIC continue. The proposal favored by the Administration would authorize OPIC through 2000 and expand its ability to extend insurance and loans by 38 percent over a three-year period.4 An alternative to the Administration's proposal has been offered in both the House and the Senate. This legislation, the OPIC Termination Act, has been introduced by Representative Robert Andrews (D-NJ) as H.R. 387 and by Senator Wayne Allard (R-CO) as S. 519. Essentially, it would forbid OPIC from issuing new insurance or loans.5

EXPLODING THE MYTHS OF OPIC

Fearing a replay of Congress's surprising refusal in September 1996 to reauthorize OPIC, the corporation's proponents continue to conduct a strong lobbying effort on Capitol Hill to preserve it. To support their efforts, they have circulated a number of myths. At best, these myths distort the facts about OPIC and its impact.

Myth #1: OPIC creates a net increase in U.S. jobs.

Proponents claim that OPIC creates jobs. In its 1996 annual report, OPIC claimed to have created 225,000 American jobs since its founding in 1971. Proponents also contend that OPIC has a positive impact on job growth in the export sector but no detrimental effect on existing employment in the other sectors of the economy.

Reality: Not true.

Numerous studies have concluded that government subsidies to business have little impact, no impact, or even a detrimental effect on net job creation.6 When the government takes labor and capital from the economy through taxation and then gives it to private companies in the form of export or foreign direct investment subsidies, it merely shifts resources from one sector of the economy to another.

In other words, OPIC creates nothing; it merely reshuffles existing resources within the U.S. economy. Therefore, it causes no net increase in jobs. In the words of the Congressional Research Service (CRS), there is "little theoretical support or empirical evidence that supports claims that subsidizing exports or overseas investment offers a positive net gain in jobs to the U.S. economy."7

Furthermore, the methodology employed by OPIC to determine its effect on employment is questionable. The first flaw in this methodology is that assertions of job creation are based on the estimates of U.S. firms that are applying for OPIC insurance or loans. Because firms must demonstrate that they are creating (or at least not reducing) domestic employment in order to receive OPIC assistance, self-interest encourages them to skew their estimates favorably. The second flaw is that OPIC makes no effort to estimate the effect of its activities on the entire job market. Firms reporting increased employment due to OPIC assistance may be hiring workers away from other employers, but all this means is that jobs are shifted from one employer to another. These flaws in OPIC's methodology led the CRS to conclude that there is "no way of verifying the employment effects of the individual OPIC transactions."8

Myth #2: OPIC creates a net increase in U.S. GDP.

OPIC's 1996 annual report asserts that projects supported by the corporation created $9.6 billion in exports in 1996. Supporters claim that the corporation increases the overall economy by creating these exports.

Reality: Not true.

The belief that OPIC can increase the overall U.S. economy by subsidizing exports contradicts accepted economic wisdom. By lowering costs through subsidies, OPIC may make selected exports and investment more attractive, but these subsidies shift domestic capital and labor resources to the subsidized firms away from other sectors of the economy. With resources diverted from activities to which they would be allocated under market-driven conditions, the economy operates less efficiently.

Moreover, the costs of reducing efficiency in the economy offset the benefits garnered from subsidizing exports and investment. CRS researchers note that most economists oppose subsidized credit to promote trade or foreign direct investment abroad "because such actions negatively affect the efficient allocation of resources, thereby lowering the overall standard of living."9

Therefore, while overall exports may be increased, there is no net benefit to GDP or to the American people generally. In fact, according to The Economist, such subsidies as those provided by OPIC result in taxpayers' "subsidizing exporters to produce goods, while paying foreigners to take them away."10 Far from benefiting Americans in general, OPIC subsidies transfer income away from taxpayers to selected U.S. exporters and foreign consumers.

Myth #3: OPIC reduces the federal deficit by earning a profit.

The financial statement in the 1996 OPIC annual report indicates that the corporation earned nearly $209 million in profits. Because OPIC profits must be invested in government bonds, proponents claim that they reduce the U.S. deficit.

Reality: Not true.

Although this argument looks good on the surface, it collapses under scrutiny. In 1996, 80 percent of OPIC's profits was derived from interest earned on holdings of government bonds. These "profits" are merely a transfer of paper from the U.S. treasury to OPIC; nothing is done that would reduce the deficit. Moreover, money appropriated to OPIC (some $72 million in 199711) is not fully accounted for in the corporation's financial statements. If these revenues and appropriations were counted correctly, it is unlikely that OPIC could be shown to be making any profit at all.

This conclusion is supported by two independent studies. The first is a CRS analysis of OPIC financial data. Despite OPIC's claims of prosperity, this study shows that it actually operated at a deficit in two of the past five years. Further, the study estimates that OPIC will run a deficit of $39 million in FY 1997.12 The second study, a revised budget accounting by the CBO, is even more damning. It examines what would happen if OPIC were forbidden to engage in any new insurance, loan, or investment fund activity as required in the bills sponsored by Representative Andrews and Senator Allard. The CBO finds that taxpayers would save $296 million in the first five years, and over $500 million in ten years, after the legislation was adopted.13

Myth #4: OPIC is needed to encourage U.S. firms to invest in the developing world.

Proponents claim that OPIC's subsidized insurance and loans are needed because private financing and political risk insurance are unavailable or carry prohibitive rates in emerging markets.

Reality: Not true.

Numerous private-sector businesses—including American International Group, Exporters Insurance Company, Ltd., and Mid Ocean Ltd.—specialize in political risk insurance, international business loans, and market analysis. These firms are active in nearly all of the countries to which OPIC extends insurance and financing, but OPIC enjoys an unfair advantage because its insurance and financing are backed by the power and faith of the U.S. government.14

The evidence shows that the private sector will insure and finance foreign direct investment in developing countries if OPIC is not present. For example, over $285 billion in private foreign direct investment flowed into the developing world last year from the United States and other Western countries—largely without benefit of government subsidy.15 Total U.S. private foreign direct investment increased by over $89 billion in 1995, with nearly $26 billion of this going to the developing world.16 Of this total, $24 billion was invested in OPIC-eligible countries, while $67 billion went to OPIC-ineligible countries.17 Even if one considers only countries eligible for assistance, OPIC provided financing that was equivalent to only 7 percent of U.S. investment, and its share of the political risk market in these countries was equivalent to only 36 percent of total U.S. foreign direct
investment.18

Moreover, OPIC is not active in many of the most desirable destinations for foreign direct investment in the developing world, such as Mexico, the People's Republic of China (PRC), and the Republic of Korea (South Korea). Yet, by 1995, Americans had invested over $21 billion in these three countries.19

Colombia is the one country in which OPIC has ceased its activity, 20 but this has had no negative impact on U.S. foreign direct investment. If proponents of OPIC were accurate in their claims, U.S. investment in Colombia should have declined (or at least leveled off) after OPIC's withdrawal. The opposite, however, occurred. The private sector filled the sudden vacancy left by OPIC, and foreign direct investment continued apace, increasing by $351 million (10 percent) from 1995 to 1996.21 Clearly, OPIC is not essential to U.S. foreign direct investment.

Finally, the fact that the private sector is willing—even eager—to assume OPIC's current portfolio defies OPIC's claims that it operates only in places in which the private sector will not. Exporters Insurance Company, Ltd., has offered to buy out OPIC's insurance portfolio, assuming up to $5 billion of OPIC's outstanding insurance policies immediately and possibly the entire portfolio by 2002. According to its proposal, "All policies would be reinsured to their natural date of expiry or termination, all countries would be included, and all terms and conditions of the policies would remain as originally issued by OPIC."22

Myth #5: OPIC is needed to combat the export and foreign direct investment subsidies of other countries.

Proponents of OPIC claim that subsidies provided by foreign governments are far greater than those provided by the U.S. government and that, without OPIC, American exporters and investors would be at a disadvantage.

Reality: Not true.

Even though other countries do provide some OPIC-like subsidies, they commonly do not compete with U.S. exports and foreign direct investment. 23 For example, Japan, the only country with a subsidy program comparable in dollar terms to OPIC's, has focused on Asia in general and China in particular.24 OPIC is not active in a large portion of Asia, including the Democratic Republic of Korea (North Korea), Myanmar, the PRC, Pakistan, the Republic of Korea, Taiwan, or Vietnam; 70 percent of its portfolio is in Latin America and the former Soviet Union and its allies—regions in which Japanese investors have shown much less interest.25

In addition, many countries are reducing government involvement in export and foreign direct investment subsidies. For example, the three largest economies in Western Europe are working to privatize their export credit facilities. England's Export Credit Guarantee Department has sold its short-term credit portfolio to NCM Credit Insurance, Ltd., a private-sector business from the Netherlands. France's Compagnie Francaise d'Assurance pour le Commerce Exterieur (COFACE) has hired a private-sector company to manage its investment insurance underwriting and insurance portfolio. Finally, Germany's export credit facility, HERMES, also utilizes the private sector to reinsure and underwrite its insurance.26

Furthermore, OPIC operates at the margins, involving only a very small portion of the exports, foreign direct investment, and foreign direct investment insurance of the United States. In its annual report, OPIC claims to have created $9.6 billion in exports in 1996. Total U.S. exports of goods and services during 1996, however, were nearly $835 billion.27 OPIC supported only 1 one percent of total U.S. exports in that year. According to its annual report, OPIC financed $2.2 billion in U.S. foreign direct investment and sold $16.5 billion in political risk insurance in 1996.28 The total net gain in U.S. direct investment abroad during 1996, however, was $96 billion. Thus, OPIC extended financing equivalent to only about 2 percent of U.S. investment abroad, and provided insurance covering the equivalent of only 17 percent of U.S. direct investment abroad, in 1996.29 Over 98 percent of foreign direct investment financing and over 83 percent of political risk insurance were successful with no assistance from OPIC (see Chart 3).

The fact is that OPIC is not active in the primary country destinations for U.S. exports and foreign direct investment. OPIC-eligible countries constituted less than 25 percent of the net increase in foreign direct investment in 1995; most of the growth in U.S. foreign direct investment is occurring in countries—both developed and developing—that are ineligible for OPIC assistance. For example, the two largest developing country destinations for global foreign direct investment are the PRC and Mexico, which together represent 33 percent of total foreign direct investment from all countries in the developing world during 1996.30 If OPIC is supposed to combat the subsidies of foreign countries, it logically should focus on countries in which competition for foreign direct investment and export opportunities is the fiercest. Obviously, however, OPIC is doing little or nothing to counter the export and foreign direct investment subsidies of foreign governments.

Myth #6: OPIC emphasizes assistance to small businesses.

Proponents claim that small businesses will suffer if OPIC is eliminated. OPIC's acting administrator, Mildred Callear, insists that a "large portion of OPIC clients are small businesses—not big corporations."31

Not true.

An examination of OPIC insurance, loan, and loan guarantee activity listed in the 1996 annual report clearly refutes this myth. OPIC extended insurance or financing to 95 businesses involving 146 projects in 1996. Only 5 percent of the businesses for which financial data were available could be qualified as small businesses.32 Moreover, these small businesses received only 2 percent of OPIC's insurance and no OPIC financing,33 and benefited from only 3 percent of all OPIC projects, in 1996 (see Chart 4).

Conclusion

Congress should heed the advice of noted economist Milton Friedman as it debates the future of the Overseas Private Investment Corporation. The defense of OPIC presented by its proponents consists largely of myths with no basis in reality.

OPIC does not benefit the United States. It does not create jobs or exports or help combat foreign business subsidies: It creates distortions in the overall U.S. economy by encouraging a misallocation of capital, labor, and resources that is likely to reduce national income. Moreover, the private sector is eager to assume OPIC's niche in the private foreign direct investment insurance market, a beneficial development that would render one of OPIC's main functions superfluous. Instead of perpetuating this counterproductive program, Members of Congress should recognize the seriousness of its flaws and work to eliminate it.

The following plan is a proposed remedy for the trade issue available on my homepage here at Free Republic.

In no particular order of importance.

1. Get rid of government subsidies for offshore investment of US companies. OPIC is the first such program which should go but support of World Bank programs that subsidize the outflow of Capital would be another.

2. Use tariffs on those nations which are engaged in unfair trade practices such as currency manipulation (China and India for example), those nations which refuse to open their markets to US products (China for example with its 50% tariffs on US consumer goods and non tariff barriers), those nations that subsidize competition to American Industry (airbus for example) and those nations which have slave conditions for their workers.

3. Use tariffs and other means to prevent the relocation of jobs offshore that are essential to the national defense. If necessary take control of the company seeking to export vital technology or industry by means of eminent domain (No I do not like this last option and I will only defend its use as an absolute last resort like say in the case of rare earth magnets essential to smart bomb technology).

4. An immediate end to guest worker programs. If people wish to come to the USA to work and make a life let them immigrate according to the rules.

5 Provide economic development zones where the corporate income tax is zero for operations within these zones. In order to operate in this zone a company must agree to only purchase American components if available and employ only American citizens or legal immigrants in these operations. These economic development zones shall be eventually be expanded to include every bit of every state once the benefits are shown I would like them to be totally implemented immediately but I realize4 that may be overreaching.

6. Scale back unnecessary regulation including the tort system. Institute a cap on punitive damages, limits on class action suits, and limits on liability to the actual percentage of liability with no plaintiff able to collect if said plaintiff was involved in the commission of a felony at the time of the alleged tort or was more than 49% negligent in the alleged tort. Note that the loser in a frivolous lawsuit shall pay the attorney fees of the winner. There are many other regulatory structures that also need to be included that need to be included such as repealing the Family leave mandate, getting rid of OSHA etc.

7. Increase the domestic content in purchases by the Department of defense and give absolute preference in non-domestic content to proven allies of the USA over say the French or Germans. The only reason any content for DOD purchase may come from non US allies is that content is not available elsewhere and is essential.

8. Do not allow expense involved in moving operations overseas to be included in business expenses under the IRS code.

9. Prosecute for perjury anyone who has made a false statement in order to employ an H1B or L1 visa worker. I will be lenient on the actual perjurer if he/she was ordered to make this false statement and he/she provides testimony to aid in the conviction of the person ordering the perjury. Just because a person is a CEO does not give them a pass on criminal behavior.

10. Prosecute anyone who orders the transfer of vital defense technology or funds a R&D project that could be of use to our military overseas except to strong allies of the USA. Make the necessary enhancements to our espionage laws so that continued support or funding of any R&D in a nation whose government has threatened the USA is guilty of espionage. The UK and Australia come to mind as meeting these criteria for being eligible for transfer of technology first. There will be other nations and a gradation of what can be transferred to which specific nation. Under no circumstances may technology be transferred to any nation whose government has threatened the USA within five years without a complete change of government or specific exemption from Congress and the administration.

11. Deport all illegal aliens immediately and take measures that prevent the entry of any more illegal aliens. Fine all companies knowingly employing illegal aliens Criminal sanctions should be imposed on anyone helping an illegal alien stay in the USA in violation of our laws.

12. Decrease the punishing levels of taxation on companies and eliminate the double taxation on corporate dividends. See effects of item 5 for how minimal this will be if item 5 covers the entire USA. Eliminate all IRS provisions that inhibit free use of independent contractors by businesses for example section 1706.

13. Eliminate the minimum wage so that the worker can be paid based on productivity. Overtime compensation will remain the same but instead of 150% of the "wage" the worker would receive 150% of the production pay. If one through 13 are enacted # 14 becomes an irrelevancy as no one will be working for that low a wage.

What I am seeking is the magntude of teh specific problem of nationalization of American companies assets and what the FEderal Governments actual indemnification liability is.

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