The main part of the EB-5 (immigrant investor) program was extended by the Congress this week — but only until December 9.
The extension was included in the stop-gap funding bill, the Continuing Resolution, which passed both houses only after Democrats insisted on both Zika funding and the promise of money for lead-free water for the residents of Flint, Mich.
The provision in EB-5 allowing immigrant investors to get a family-sized set of visas for half a million dollars was about to die on September 30. A rarely used provision for the same set of visas for a managed million-dollar investment is a permanent part of the law. The half-million investment does not require the investor to do any managing; the funds are pooled, usually for real estate projects in prosperous, big city neighborhoods.
The industry has had to watch these extensions get shorter and shorter. Here is the recent record:
- Three year extension to September 30, 2015;
- One year extension to September 30, 2016; and
- Two-month-plus extension to December 9, 2016.
This appears to reflect the mounting scandals in the industry, as shown in the Center's own map on the subject and the resulting weakening of the strength of the multi-million dollar EB-5 industry lobby.
There is no visible lobby working for reform in this field. That task is being handled by the leaders of the Senate and the House Judiciary Committees, Sens. Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.), and by Reps. Robert Goodlatte (R-Va.) and John Conyers (D-Mich.).
The reformers, who will have another bite at the apple in the lame duck session after the elections, want two things: an integrity package, which will make it harder for grafters and perhaps foreign agents to manipulate the program, and a location package that will make it harder to continue to fund big, glitzy projects in prosperous parts of big cities — the current practice.
I suspect that the integrity package is less hard on the big city middlemen, and thus has a better chance of success than the efforts to get the program to do what it was originally intended to do, to funnel alien money to depressed American areas. The original purpose has been blunted over the years by both clever middlemen and by the sleepy federal regulation of the program.
A Bit of Comparative Legislative History. The increasingly short extensions of the EB-5 program remind me of the last days of the Bracero program in the 1960s.
That program, the peacetime continuation of a World War II emergency operation, brought Mexican males to work in the fields for American agribusiness. Given its war-time birth, it was always extended for two or three years, and like the heart of the EB-5 program, it never was the beneficiary of permanent legislation.
The program was obviously exploitative of the workers and came under increasing pressure, with both the Catholic Church and the labor unions opposing renewal, as did the Hispanic organizations (which were less powerful then than they are today).
In 1963, Congress, by the barest of margins, passed a one-year extension that President Kennedy signed reluctantly. That was the last gasp for the California and Texas growers and the program died on December 31, 1964.
I was in the U.S. Labor Department at the time and the talk was that the supporters of the program were both tired of the legislative fights and pessimistic about the program's future, and so gave up. (This is not a totally happy story; the West Coast growers then switched to illegal aliens and the East Coast ones to the somewhat better-regulated H-2A program, which previously had been a minor entity.)