In an earlier blog I said that it would cost about $100,000 each for a rich alien family of five to secure green cards through the investor visa program. I also said that the program generates jobs for Americans. I was wrong on both accounts.
The jobs can be hard to identify and the costs can be much less.
I had been, thoughtlessly, accepting the definitions of the Open Borders types and their journalist allies in the Washington Post.
On closer examination I learned that the investor program (EB-5) had morphed over the years. Originally one had to invest one million dollars, or under some circumstances half a million, in a venture that would produce ten jobs for legal U.S. residents, people other than close family members of the investor. The investor would then get a visa for himself, his spouse, and his children.
But the program, as extended by Congress in the fall of 2003, blurred the job-creation provision as long as one invested half a million in a government-defined, depressed area in the States. As a British immigration agent's website put it "Additional legislation was introduced at the end of 2003, eliminating the need for direct employment when the investment is made into a Government designated Regional Center." (These regional entities relate to depressed areas of different sizes, and are identified by the state in question.)
So the investor no longer needs to actually run a business, or worry about actually creating jobs.
The immigration agent in question, American Life Incorporated, is happy to help would-be EB-5 immigrants invest in real estate in a designated part of Seattle. As to the employment angle, their web-site says: "American Life uses an economist to quantify sufficient indirect employment before making properties available to EB-5 investors."
So the investment can be made to a property-management company just so long as the property is the right neighborhood; the whole state of Hawaii and all of Vermont are among the targeted areas. (The senior senator from Vermont, coincidentally, is chair of the immigration-law-writing Judiciary Committee.) The investor does not have to even visit the property in question, just write the check.
As to the costs, it now evident that there are some fees to be paid in addition to the investment, and the investment can be sold within three years; these facts put a new light on the de facto costs of the visas, which I had set at $100,000 each for a family of five.
There is no need to part permanently with $100,000 for each of the visas (in this family of five), but what must do, for a few years, is to invest $100,000 for each family member in one of the regional center schemes, such as that proposed by American Life of London.
Now millionaires usually have diversified investments – some real property, a business or two, stocks, bonds, and bank accounts. The alien investor wanting to take advantage of the EB-5 program would have to transfer some funds from one of his existing investments to an EB-5 investment in the States; he probably would draw from an investment – such as bonds – which are doing the least well for him. It might well be $500,000 in U.S. Treasuries, which are currently paying under 4 percent a year.
That transfer would cost the investor about $20,000 a year for three years in foregone interest.
The total price, based on the $60,000 in lost interest and costs noted by American Life, when extrapolated to a five-member family, would look like this:
Agents' and legal fees $50,000 (estimated)
U.S. gov't fees $2,835
Medical exams $665
Total $113,500, or $22,700 per visa
American Life says that it is paying investors 5 percent a year on their investment, so the cost might be considerably less. On the other hand, given the real estate market, perhaps the investor would lose some money on the investment – or perhaps gain some.
The points are that this is not necessarily a real job-creation scheme, and the concept of a million dollars a visa, which one might pick up on a quick reading, is a totally inappropriate way to look at the financial costs of this program.
I am sure that the program will be oversubscribed in a year or two, be hailed by its agents and real estate interests as a resounding success, and Congress will be pressed to increase the current limit of 10,000 visas a year. Nobody will notice that the moneys will really be used primarily to prop up depressed real estate markets, rather than to actually create jobs for the unemployed.