It’s Time
For The Corporate Visa Giveaway To Go Away
The Washington Post Editorial Board
TWENTY-FIVE years ago, the federal government
launched the so-called EB-5 visa program under which foreigners who pump a
minimum of $500,000 into a U.S. business, creating at least 10
jobs directly or indirectly, qualify for permanent resident status. The theory
was that offering a place in the United States would encourage investment and
boost the economy. In practice, the program has flopped. The right way to mark
its anniversary is for Congress to let it expire when its authorization runs
out Sept. 30.
EB-5 has
shown paltry results — to the extent the results can be measured at all, given
the basic imprecise nature of measuring job “creation.” Last year, a Brookings
Institution report estimated that 8,500 foreign investors had received visas
since the program’s inception, along with about twice that number of family
members. In return, the U.S. economy got 85,500 full-time jobs
and approximately $5 billion in investment. This sounds impressive — until you
consider that the U.S. labor force includes more than 150
million people and that the United States gets more than $200 billion in
foreign investment annually.
To be
sure, “regional centers,” designated by government to promote business ideas to
wealthy would-be visa holders, have employed a small army of consultants,
lawyers and lobbyists — but they are still plagued by bureaucratic complexity
and, all too often, fraud. In 2013, the Securities and Exchange Commission sued
a Chicago-area businessowner who attempted to bilk more than 250 people out of
more than $150 million. A disproportionate number of EB-5 “investors” made
their millions in China ’s opaque economy, making the
origins of their wealth difficult to ascertain. The EB-5 program is supposed to
favor distressed economic areas, but the definition of a needy zone has been
stretched to include nearly the whole country, including hot downtown real
estate markets.
Senate
Judiciary Committee Chairman Charles E. Grassley (R-Iowa) and ranking member
Patrick J. Leahy (D-Vt.) are pushing a reauthorization bill that would
significantly reform the EB-5 program by strictly defining eligible geographic
areas, raising the minimum investment and strengthening executive branch
oversight of the regional centers. Yet even if it were reformed and everyone
obeyed the law, EB-5 would still be a bad idea. It’s corporate welfare,
enabling certain businesses to attract capital more cheaply than others based
on a government-conferred sweetener — namely, a visa. Perhaps inevitably, the
EB-5 has channeled funding to areas such as hotel ventures that suit the needs
of EB-5 seekers and their myriad highly paid consultants — but not necessarily
those of local communities.
Notice we
haven’t said EB-5 is wrong because it’s immoral for the U.S. government to sell visas. That’s
because, in effect, the government is giving away its visas to private
businesses, who then market them for their own benefit. All taxpayers get are
the highly attenuated benefits of economic development — with no guarantee, or
even any likelihood, that the visas couldn’t have been put to more productive
use by someone else. Let hotel developers compete for capital in the
marketplace like everyone else. And let the thousands of visas set aside for
EB-5 applicants be reassigned to immigrants who are worthy even if they aren’t
rich.
Ben Ferro
(Editor)
benferro@insideins.com