The immigration-averse USA

By Felix Salmon
April 16, 2012
Ann Lee's op-ed on the EB-5 visa program, which is designed to give visas to people who invest at least $500,000 in the country and create at least ten jobs, is worth reading in conjunction with the WSJ excerpt from Kip Hawley's new book, explaining why and how TSA airport security is so broken.

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Ann Lee’s op-ed on the EB-5 visa program, which is designed to give visas to people who invest at least $500,000 in the country and create at least ten jobs, is worth reading in conjunction with the WSJ excerpt from Kip Hawley’s new book, explaining why and how TSA airport security is so broken.

As Reuters showed in an excellent report as long ago as December 2010, the EB-5 program is horribly broken, with the brunt of the pain being borne by people who have really done nothing wrong at all — immigrants who invested a lot of money in US businesses, and who created jobs, but who were then rejected by Customs when they applied for their green card. In our 2010 report, Reuters worked out that of 13,719 immigrant investors who tried to take part in the EB-5 program since 1990, just 3,127 ended up with green cards.

Anybody who’s ever applied for a US visa or green card will not be surprised, but at the same time it’s easy to see how the EB-5 program is never going to generate all that much investment in the US so long as stories like this continue.

Dozens of EB-5 immigrants have had their final residency applications denied because the businesses they invested in deviated from the plans filed with USCIS. These are the plans the immigrants must cite when they first apply for their conditional green card, using a form known as an I-526.

And it isn’t just businesses new to the program that are making mistakes, the analysis shows.

In a case earlier this year, an immigrant had invested in a partnership run by the Philadelphia Industrial Development Corporation and CanAm Enterprises, one of the biggest and oldest EB-5 companies. The partnership originally loaned money to a building materials company, which planned to use the funds to expand its warehouse and hire new workers.

But the downturn in the U.S. housing market stopped that expansion in its tracks, and the building materials company returned the loan. So the partnership, by unanimous resolution, decided to loan the money to a developer building an upscale steakhouse, which opened a few months later.

From a business perspective, it was a perfectly reasonable change of tack. But the switch jeopardized the applications of the immigrants who invested in the partnership. When one of them applied to get his permanent green card in 2008, USCIS denied the petition. When he appealed, USCIS’s administrative appeals office ruled against him.

Over the past year and a half, there has been a raft of such adverse “material change” rulings against immigrants. In some cases, the businesses insist they informally communicated the changes to USCIS personnel, who told them not to worry about them. The USCIS has rejected their appeals, saying: “the opinion of a single USCIS official is not binding and no USCIS officer has the authority to pre-adjudicate an immigrant-investor petition.”

It’s worth underlining that these rejections come after the investor has moved to the US and set up a new life here with their family. And once rejected, the investor has no choice but to leave the country.

The USCIS responded to the broken EB-5 system by announcing in May 2011 that it would be streamlined, including “the creation of new specialized intake teams with expertise in economic analysis”, as well as the ability to email the immigrant investors.

But here we are, a year later, and Lee is still saying that the government needs to “hire more business-savvy administrators and make the entire process more transparent” — essentially exactly what Secretary Napolitano has already announced. Lee’s also asking for penalties to be levied when brokers lie to would-be immigrant investors — something else which should be happening but isn’t.

Which is where Hawley comes in. He headed the Transportation Security Administration from July 2005 to January 2009, and has a pretty sophisticated view of what the agency should be doing.

The TSA’s job is to manage risk, not to enforce regulations. Terrorists are adaptive, and we need to be adaptive, too. Regulations are always playing catch-up, because terrorists design their plots around the loopholes.

I tried to follow these principles as the head of the TSA, and I believe that the agency made strides during my tenure. But I readily acknowledge my share of failures as well. I arrived in 2005 with naive notions of wrangling the organization into shape, only to discover the power of the TSA’s bureaucratic momentum…

By the time of my arrival, the agency was focused almost entirely on finding prohibited items. Constant positive reinforcement on finding items like lighters had turned our checkpoint operations into an Easter-egg hunt. When we ran a test, putting dummy bomb components near lighters in bags at checkpoints, officers caught the lighters, not the bomb parts.

I wanted to reduce the amount of time that officers spent searching for low-risk objects, but politics intervened at every turn. Lighters were untouchable, having been banned by an act of Congress. And despite the radically reduced risk that knives and box cutters presented in the post-9/11 world, allowing them back on board was considered too emotionally charged for the American public.

The passive voice here (“was considered”) is telling: even the head of the TSA can’t tell the TSA what to do. Instead, as in all large bureaucracies, there’s a way that things get done, and changing it is all but impossible.

Which says to me that for all the efforts by people like Napolitano and Lee to revamp the EB-5 system, they’re going to find doing so extremely difficult. Reuters found what immigration attorney Ira Kurzban calls “a basic hostility to the EB-5 program inside USCIS”, which is at heart a reflexive opposition to the idea that anybody can buy their way into the country. Despite the fact, of course, that the whole point of the EB-5 program is to enable exactly that.

Those of us who have had dealings with USCIS know that it is always looking for an excuse to say no: even people like me who get our green cards the “easy” way, by marrying a US citizen, find the process extremely fraught. No matter how much money I was earning, for instance, the USCIS would not let me have a green card unless my wife could demonstrate that she was earning enough, on her own, to support me. And a friend of mine, after marrying a US citizen and having two US children with her, actually got a notice of deportation at one point in his green card application saga, on the grounds that a certain piece of paperwork had been filed, years previously, a few days too late.

The TSA and the USCIS have grown, over the years, into agencies devoted to saying no. There’s very little downside, for these agencies, when they deport someone applying for a green card, or cause a mother to miss her flight because of a fight over breast milk. And it’s almost impossible to change that big-picture dynamic, no matter what Congress mandates, and no matter what the senior leadership in these organizations might want.

Which is why it makes sense to make skilled immigration as easy as possible. Resuscitate the Schumer-Lee bill giving a residency visa to anybody who spends at least $500,000 on a house here, except lower that number to $250,000, and make sure that the visa allows the homeowner to actually work and create jobs in this country. The less room there is for USCIS agents to say no, the more smoothly the program will run.

Will making immigration easier allow a few people into the country who weren’t the intended recipients of the bill’s generosity? Yes, of course. But all immigration is good for America. And with net migration from Mexico now down to zero, and the US economy desperately in need of entrepreneurial investment, now’s exactly the time to start opening our doors much wider.

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