Last week, the Senate held a hearing on the EB-5 investor visa program. This is a visa category that provides permanent resident status for foreign investors who create jobs and invest billions in the American economy.
Some on the left dislike the program because they favor chain-migration policies, and some conservatives oppose any program that provides an eventual pathway to citizenship.
My organization, the Center for Freedom and Prosperity, has found that this special visa category is of great value to the U.S. economy and should be preserved. Sadly, the hearing lacked this perspective. It often went off the rails and focused on the issue of children being separated from parents at the border, yet when it touched on EB-5 issues, it was unreasonably slanted against the program.
Chairman Grassley opened with a statement mapping out his problems with the EB-5 program. But when you study the specifics of the chairman’s claims, they fail to make the case against it.
He mentioned some examples of fraud and abuse within the program, such as a lawsuit by a group Chinese immigrants claiming they were fraudulently coerced into investing over $60 million for a project that was eventually terminated by authorities administering the visas. Likewise, the SEC barred two EB-5 companies from selling securities after it was discovered the companies’ president and manager fraudulently raised $22.5 million in EB-5 capital from Chinese investors. And the chairman highlighted two Maryland residents charged with defrauding investors and misusing funds intended to create jobs after Hurricane Katrina.
Notably, these examples of fraud have one thing in common: they were all stopped and appropriately prosecuted. Crime is a fact of life, but if those attempting it are being caught and punished than that generally means the system is working.
Even though abuses pale compared to the thousands of projects successfully undertaken, EB-5 oversight could be improved, much like oversight on Medicaid abuse and other egregious examples of fraud could be better policed by the federal government. To that end, there are a host of widely accepted legislative reforms being discussed that have buy-in from the business community, which is all the more reason why Grassley errs in seeking the adoption of Obama-era regulations proposing requirements that would have the effect of severely restricting the program.
My organization recently joined a coalition of free-market groups in authoring a letter making the following case: “According to research by the American Action Forum, the program has increased foreign investment in the United States by $20 billion since 2008 and created over 174,000 jobs. If the EB-5 program was doubled, U.S. GDP would increase by $11 billion annually. In addition, according to a 2017 Department of Commerce report, the EB-5 program has increased investment in the U.S. by $5.8 billion in 2012 and 2013.” This program is a proven job creator and has the added political benefit of being consistent with President Trump’s desire for a more merit-based immigration system.
Sen. Grassley argued at the hearing that he has worked with members of both parties to reform the program, yet “every time we’ve gotten an agreement at the last minute, powerful, well-connected EB-5 industry groups have torpedoed our efforts.” It seems like, if the EB-5 business community blocked the agreements, they were not in fact consensus changes.
This is a common narrative from Grassley, repeated in a recent Washington Times op-ed that was rebutted by the Center’s Dan Mitchell, which is nonsensical on its face. Either his ideas had sufficient Congressional support to pass or they did not. And now rather than actually reach an agreement that could move through Congress, he is supporting a last-minute Obama regulation he could not enact by law. That’s not how our system is supposed to work.
According to his statement, Sen. Grassley supports the Obama regulations for the purposes of ensuring that “capital is actually flowing to rural and underserved urban areas.” Seemingly, he wants investment capital to flow to the places he desires rather than letting the market work to determine which investments will provide the greatest return and, therefore, create the most value for the U.S. economy.
Unfortunately, the hearing featured only a single witness, one sympathetic to Grassley’s views. Not represented were any of the estimated 174,000 Americans who have jobs thanks to EB-5 investments. That’s a shame. The American economy and workforce benefits when the U.S. competes to bring new foreign investment into the country, therefore the EB-5 program needs to be modernized, not sabotaged.
Brian Garst is Vice President of the Center for Freedom and Prosperity.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.