Currently a rich alien can get a family-sized bunch of conditional green cards for $500,000 in the Immigrant Investor (EB-5) program; Homeland Security has suggested raising the minimum (set a quarter of a century ago) to $1.35 million.
Heavens to Betsy, say four Republican senators, that might ruin the program, which concentrates its investments in glitzy urban areas and runs up the profits of big city real estate developers. The four are Sens. John Cornyn of Texas, Dean Heller of Nevada, Rand Paul of Kentucky (whose state rarely sees a dime of this money), and Thom Tillis of North Carolina. This was reported recently in The Real Deal, the lively trade paper for the New York real estate business.
Though I think it crass to sell green cards to rich foreigners, which this program does, the senators' concerns suggest to me a public-sector experiment in which:
- The industry is guaranteed not to lose a dime in investments, and may gain many billions of dollars;
- There will be no increase in the massive current levels of migrant flows to the United States, now at a clip of over a million a year; the prospect of more EB-5 money within the existing system would reduce pressures to expand the number of these visas; and
- The proposed sharp reduction in Medicaid funding will be eased a bit at no cost to U.S. taxpayers, which might bring some Democratic support to the program.
All of this will require both legislation and more than the usual amount of open-mindedness.
Here's how it would work: 1,000 of the 10,000 visas annually allocated to the EB-5 program would be set aside for special treatment. The rest of the program would proceed as before. These arrangements would last for three years.
There would be an auction for the 1,000 visas, which would carry with them immediate conditional green card status, with no waiting because of the country of origin limits that have backlogged the $500,000 visas for the Chinese.
The auction would start at a mandatory $1.5 million minimum; once the 1,000 visas are gone, there would be no waiting list. If an alien does not bid enough to get a visa he or she would have to wait until the following year, a factor which might well increase the level of the bids.
The $1.5 million would be divided as follows: $1.35 million for the EB-5 investments, $50,000 to Homeland Security to fund a careful vetting of the investors' finances to make sure that the money is clean and really belongs to the bidder, and $100,000 as a credit to be used with the investor's future U.S. income taxes. The last segment would be a small, no-interest loan to our Treasury. Of the moneys raised beyond the $1.5 million, 100 percent would be used to fund Medicaid, a symbol that the benefits of the program do not simply go to rich aliens and rich citizen real estate developers, as they do now.
If the visas went at, say, an average level of $2 million and the 1,000 visas produced, say, 400 investments (since there are about 2.5 people per investment) this would bring in $800 million. If they were distributed, as they are now, at the $500,000 level, they would produce only a quarter as much money, $200 million. That would be a four-to-one difference, without issuing a single extra visa!
If the first auction is not successful, the visas would revert to the existing program, and the real estate developers would lose nothing. If the auction does turn out well, the Department of Homeland Security could increase the number of auctioned visas to as many as, say, 3,000 a year. If the system continued to draw substantial interest, then the law could be changed to eliminate future investments at the $500,000 level.
There would be many winners in this scenario, from the Manhattan real estate tycoons to the Medicaid-assisted poor. The only losers would be the rich aliens with $500,000 investments; they might have to wait a few more months before their visas were available — this is one of those odd cases in which a particular segment of the rich would be disadvantaged by a government program, and would be helpless to do anything about it.