The President has the constitutional obligation to “take care that the laws be faithfully executed.” (Article II, Section 3). That includes the discretion to allocate enforcement resources to best execute federal law, because the government does not have the power to enforce all laws all the time in all cases. Presidents can and should choose to throw the FBI and federal prosecutors, for example, at the highest-profile criminals who case the most harm to society. But prosecutorial discretion does not include the power to refuse to enforce an entire law’s application to millions of cases because of simple disagreement with the policy underpinning the law.
The only time that the President can refuse to enforce a law is if the law itself is unconstitutional (as when President Jefferson refused to enforce the Sedition Act, which made criticism of the government a crime). Here the President is refusing to enforce a law not because it is unconstitutional, but because he wants Congress to change its definition of illegal aliens and the circumstances for deportation. It will be difficult, if not impossible, however, to challenge President Obama’s possible immigration order because the courts have generally refused to entertain lawsuits that seek to force the executive branch to prosecute defendants if it does not wish to.
If President Obama seeks to issue an executive order that allows illegal immigrants to work in the United States with a permit, however, he will come into more direct conflict with Congress in an area — immigration — where the Constitution has long been understood to grant exclusive authority to the legislature. Federal immigration law imposes sanctions on employers who hire unauthorized aliens as workers. Private firms that hire illegal aliens will be exposing themselves to future prosecution, even if President Obama promises not to pursue them for now. These firms may have trouble doing business. Operating in violation of federal law may cause problems for raising money, getting loans, and dealing with other elements of the legal system. Would a bank issue a loan to a construction company that is violation of safety laws and codes, even if the company says that it’s been promised those codes won’t be enforced against them by the local inspector? A work permit order could also expose the whole scheme to challenge in the federal courts, as a plaintiff who is not hired in favor of an illegal alien with an Obama work permit would have the right to sue.