Give Us Your Rich, Your Money

The EB-5 visa program is a good idea, but it needs to be reformed
Illustration by Bloomberg View; Photographs by Getty Images (2)

This summer’s scenes of ragged Central American children and teenagers crammed into makeshift detention centers didn’t exactly affirm Lady Liberty’s invitation to “your tired, your poor, your huddled masses yearning to breathe free.”

Rest assured: Your well-rested, your rich, your coddled elites face their own difficulties opening the golden door to U.S. citizenship. Exhibit A is the dysfunctional U.S. program that’s meant to grant foreign investors green cards in return for investments in new U.S. enterprises that create jobs.

Here’s how it’s supposed to work: A foreign investor ponies up $1 million for a U.S. business that creates at least 10 full-time jobs within two years. Or the immigrant puts $500,000 in a venture located in a “targeted employment area”—certain narrowly defined rural areas or places where unemployment is 150 percent of the national average. In return, the investor (plus family) can apply for a green card. Every year, 10,000 visas are set aside for this.

In theory, the so-called EB-5 visa program should draw new capital to where it’s badly needed from investors willing to accept a lower rate of return in exchange for the benefits of U.S. residency. In practice, the program has been something between a boondoggle and a bureaucratic fiasco. The investments it has attracted have flowed not so much to risky manufacturing or technology businesses as to real estate ventures that don’t need help. Swanky neighborhoods have been designated as targeted employment areas to attract capital. The U.S. Securities and Exchange Commission has investigated several EB-5 ventures for allegedly lying to foreign investors and stealing their money.

On top of all that, the program has been badly managed. Applications take as long as 20 months to process. Record keeping has been so poor, the Department of Homeland Security’s inspector general reported, that administrators could only “speculate about how foreign investments are affecting the U.S. economy and whether the program is creating U.S. jobs as intended.”

What’s needed are ways to ensure that the money is channeled to places where it can make a difference. That means more stringent, and honest, designations of targeted employment areas and better scrutiny of business ventures. Immigration officials may not be qualified to handle this, but the Department of Commerce could lend its expertise.

Investment rules need tightening, too, so an investor with $500,000 who tags along on a $520 million project, for example, can’t take credit for all the jobs created. And how about raising that $500,000 price of admission, which was set in 1990 and is lower than similar programs in Cyprus, Ireland, Malta, and Portugal?

Some, but not all, of these ideas are in the immigration bill passed by the Senate last spring and awaiting action by the House of Representatives. A country where legislators from opposing parties work together to turn smart ideas into good laws—now that would be a country worth investing in.


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