How to Reduce the Federal Debt and H-1B at the Same Time

By David North on May 8, 2023

Here are two policy problems that are routinely discussed separately. There is much talk about the cost of the federal debt; but there is relatively little about the abuse of the H-1B program for foreign tech workers by employers overstating their needs for such workers, thereby denying citizens these jobs.

We propose a program that would lower the size of the H-1B program which, at the same time would lend tens of billions to the Treasury, interest-free.

For the Democrats it would save scores of thousands of well-paying U.S. jobs for our citizens; for the GOP it would reduce the cost of indebtedness without imposing more taxes on individual citizens. Who could ask for anything more?

Under the current system, beyond some fairly stiff fees paid to the Department of Homeland Security for handling the paperwork, H-1B employers do not pay for the benefit that has been lavished on them – being allowed to save money by securing talent from foreign labor markets that is less expensive than if they had to compete (as most other employers do) in the American labor market.

Meanwhile, on the big scale – because we have a situation in which the Democrats want to spend more money, and Republicans want to reduce taxes – we have a soaring national debt.

On a smaller scale we have H-1B employers wanting far more low-cost alien workers than Congress allows (85,000 new ones a year for the private, for-profit sector) and thus seeking to game the lottery system that DHS has created to solve the imbalance. Some to many of these employers not only overstated the number of workers they would use if they win the lottery, they did not, in fact, make use of the slots they win, which, last year, caused DHS (at some considerable expense) to run one follow-on lottery, and then another, in order to dispose of the 85,000 foreign jobs.

Our proposal seeks, simultaneously, to reduce the number of citizens losing jobs to H-1B workers, perhaps to eliminate the need for a lottery, to shave billions from the national debt, while still permitting employers to hire foreign workers if they really needed them. It would have these elements:

  • Instead of the $10 fee employers now have to pay to enter the H-1B lottery, such employers would have to make a no-interest, $50,000 deposit to the U.S. to guarantee that they would hire the requested H-1B worker. If they did not hire the worker the loan/deposit would be turned into a payment to the Treasury. This should reduce the number of applications sharply.
  • A similar interest-free deposit/loan of $50,000 would be required of employers seeking to extend the tour of duty of those with current H-1B visas.
  • These loans would be repaid by the U.S. once the H-1B worker left the nation, vowing not to return, or became a green-card holder.

Since there are probably about 600,000 H-1B workers in the country at any one time this could produce, after three years — unless the H-1B population diminished – an interest-free loan of $30 billion to the U.S. treasury; this, at five percent return, would reduce the cost of our debt by $1.5 billion a year. (Canada once had an immigrant investor program that gave residency to aliens making five-year-long interest-free loans to a province.)

Another possibility would be to lay on a special tax on foreign workers getting more than $80,000 a year in salaries, which would cover all or nearly all of the H-1Bs. Let’s say that tax is at two percent a year. Assuming 550,000 of them at $80,000 a year this would produce another $880 million annually in taxes. Not one penny would be paid by a voter.

The notion here is that they (the H-1Bs) should pay something a little extra for the unusual break that they are getting – working in the American labor market. These workers always have the opportunity to return to their homelands if the two percent tax proves onerous.

The employer class will complain to high heaven, and the passage of such reform is unlikely under current political conditions, but here is a way to reform the H-1B program, open jobs to citizens, and reduce the cost of the national debt.