EB-5, H-2B and the Opaque Civics of the Continuing Resolution

By David North, December 13, 2016

Decisions in a democracy are made in many different ways, and the recent decision to extend the heart of the EB-5 (immigrant investor) program until April of next year was made in one of the least public ways possible, through the text of a "continuing resolution."

My high school civics teacher, Miss Garrity, did not tell us about continuing resolutions – in fact that legislative device may not yet have been invented when I was in high school.

A CR is the product of legislative gridlock. When both houses of Congress and the presidency are held by the same party, there is no need for one. Congress votes out about a dozen appropriations bills, and the President (probably) signs all of them.

But if that normal process does not work, as it often has not worked in recent years, then in order to keep the government operating, some way has to be found to appropriate the needed funds. What the CR does, in the blandest way possible, is to maintain spending at earlier levels; if there is a choice between a CR and a government shutdown for lack of funds, most legislators vote for the CR. It is not a difficult decision.

Since a CR is must-pass legislation, various forces seek to insert things in the bill that both meets their needs and hopefully is not too disruptive of this kind of emergency funding process. The leaders of Congress realize while this can be a useful strategy for a lobby, they do not want to see too many riders on a CR, so they try to have as few of them as possible, and try to make these special provisions as narrow as possible, so that the CR can flow through without too much opposition.

It is in this general setting that the core provisions of the EB-5 program, the use of $500,000 investments to buy immigrant visas, has been temporarily extended three times in a little over one year.

Always a temporary part of the program, the half-million dollar segment had been extended in three-year increments over the years with little controversy. But last year, with a sunset scheduled for September 30, 2015, the provision was extended for exactly one year in a CR.

Similarly it was extended again earlier this year to Dec. 9; and on that day, it was extended again, without changes – a "clean" extension in the Hill's lexicon – until April 28, 2017.

Now, a non-controversial government program would not face these Perils of Pauline crises, time after time. On the other hand, one with little political support would be terminated. But EB-5 has just enough political support to secure these short-term extensions, if not, or not yet, a full three-year extension.

So how is a troubled program with a looming deadline, but one with some powerful friends, treated in the context of a CR? The supporters can say, gee, we only want a few more months of the status quo; they can also say that we should not make basic changes in the program on short notice, so give us a couple of months. It is a soothing message to the congressional leadership that would rather the whole controversy went away.

Meanwhile, the CR is an unlikely vehicle for substantive change, and so it is easier to give a program a few more months, rather than a death sentence. (I think it deserves several death sentences, but that's another story).

Another part of the CR civics is the compression of time to make decisions, and an accompanying compression of the number of people who are making these decisions. CRs are the products of high-level deal making, not extended hearings or floor votes.

In the current Senate the Majority Leader, Sen. Mitch McConnell (R-Ky.), has said little if anything about the EB-5 program but is firmly in the corner of big business; the Minority Leader, Sen. Harry Reid (D-Nev.), who is retiring, has a son who works in the EB-5 field, and both the current Whips, Sen. Chuck Schumer (D-N.Y.) and Sen. John Cornyn (R-Texas), are strong and articulate advocates of EB-5. And Schumer will replace Reid next month.

Given that these four senators have much to say about the content of the CR, you can see where this is going. I have a sense that feelings are less strong about this issue on the House side, and thus the views of the Senate's leaders are key.

A puzzled (but knowledgeable) reporter asked me the other day: how come, with so many people having negative views of EB-5 does it keep getting extended? The answer is that in this parliamentary situation the position of the Senate leadership is what counts.

Victory on H-2B Provision. Meanwhile the H-2B program was also involved in the CR. That program brings up to 66,000 non-agricultural, non-skilled workers to the U.S. each year to work in, for example, forestry and landscaping. It is another one of those schemes designed to use inexpensive foreign workers to subsidize a small band of employers, and (though its supporters deny it) to deprive unskilled American workers of job opportunities. It is a smaller program than the other two H programs: H-1Bs for college grads (often computer types), and H-2As for farm workers.

Last year, in a sleight-of-hand designed to expand the 66,000 ceiling for H-2Bs without saying so, the CR carried a provision that said that workers who had entered under the ceiling in the three prior years would not be counted against the current ceiling were they to return to H-2B jobs. Theoretically that could have quadrupled the number of workers to be admitted.

What happened, and I am not sure why this is the case, is that only some 12,000 more workers were admitted as a result of this provision.

As a result of the minor utilization of this provision, and/or the relative political weakness of the H-2B employers, the special deal was not repeated in this year’s CR. Speaker Ryan who had played a major role in the earlier CR maneuver apparently pulled back his support, and meanwhile Numbers USA had mounted a campaign against the provision. It was a rare congressional victory for limiting immigration.

What I find interesting is the relatively low utilization of the increased numbers in this program this past year. It must have reflected either a low demand for this kind of alien worker by employers and/or the non-attractiveness of the program to the eligible aliens, most of whom would be male Mexican nationals.

Let me focus on the second possibility for a moment. The expanded H-2B ceiling could not be used to hire just any alien worker; it could only be used to hire aliens who: (A) had been in the program before and who (B) had not signed up for another year already, i.e., if you will, H-2B dropouts (or rejecters).

It may well be the case that very large numbers of aliens with actual experience with the program wanted to have nothing more to do with it. Maybe some enterprising reporter or graduate student could look into that possibility.

Another factor, which could operate at the same time as the one just described, might relate to the H-2B employers. This is a group that tends to be less organized and considerably less powerful than employers using the other two H programs. Perhaps there was no organized effort to make use of the CR-created opportunity to bring in more workers; perhaps there was no recognition than the limited use of that opportunity might endanger its revival in the future.

Typically when a congressionally imposed immigration ceiling is pierced, it is a "y'all come" situation open to anyone who qualifies. The H-2B employers may not have perceived – as I certainly did not – that their sleight-of-hand came with serious built-in limitations.

I would rather applaud Numbers USA, however, for its vigorous actions than dwell on the klutziness of the H-2B employers.