Over the past 40 years, the field of behavioral economics has emerged to explain why humans make irrational decisions. We talk with one of the pioneers of the field to find out what’s behind the choices we make, and how we can use this knowledge for good.
Under current immigration law, international investors can obtain green cards if they fund businesses and projects that create or preserve jobs in the United States. “Investment immigrants” are bankrolling resorts and casinos, including a controversial new project in Maryland. We explore how the program works and how it’s shaping a new generation of immigrants.
- Stephen Yale-Loehr Attorney of Counsel, Miller Mayer; Adjunct Law Professor, Cornell University; Founder and Former President, The Association to Invest In the U.S.A.
- Demetrios Papademetriou President and Board Member, Migration Policy Institute
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. The speediest way to a green card just may be a half million dollar investment in a U.S. casino or a ski resort. Under a fast growing visa program, foreigners can obtain residency in the United States by injected capital into American projects. So long as they can prove that their investments are creating or preserving jobs in the U.S.
MR. KOJO NNAMDIThese so called EB5 visa program essentially allows immigrants to bypass the uncertainty of green card lotteries in exchange for their investments in the American economy. And some companies like the one building a controversial casino in Anna Rundle County, Md., are pitching hard to potential investors from places like China.
MR. KOJO NNAMDIJoining us to explore how investment immigration is shaping Americas economic landscape and whether this investment based visa policy is ethically sound is Demetrious Papdemetriou. Demetri is President of the Migration Policy Institute. A think tank dedicated to the study of international migration. Demetri, good to see you again.
MR. DEMETRIOS PAPADEMETRIOUGreat to see you.
NNAMDIThank you for joining us. Joining us from studios at Cornell University is Stephen Yale-Loehr. He is an attorney at the firm Miller Mayer and a law professor at Cornell. He's the founder and former President of the trade Association Invest in the U.S.A. Stephen Yale-Loehr, thank you for joining us.
MR. STEPHEN YALE-LOEHRGlad to be here.
NNAMDIWe invite listeners to join to the conversation at 800-433-8850. How do you feel about the idea of the federal government using green cards to attract investors to the United States, 800-433-8850? Demetri, one could say that, under the scheme, the American attitude about immigration has gone from, give me your tired, your poor, your huddled masses, to give me your deep pocketed investors who can cut big checks and maybe jolt some life into our economy. How would you describe the philosophy behind investment immigration?
PAPADEMETRIOUWell, there is an awful lot of what it is that you're saying behind this visa. I would call the genesis of this visa, back in the late 1980s, it passed and it became law in 1990. And, indeed, that's exactly what motivation was. Australian's, Canadians, particularly Canadians had been really promoting Canada as a safe haven for Hong Kong Chinese money.
PAPADEMETRIOUAt that time the Chinese were particularly concerned that when Hong Kong would go back to mainland China, they might need to, sort of, move their money and themselves very quickly out of Hong Kong. And exactly, that was the thinking in the U.S. Congress, if Canada is getting this, at that time was billions of dollars, why not us? And that's how we started with this particular visa.
NNAMDIStephen Yale-Loehr, the EB5 program doesn't just make visas available to everyone willing to make big investments, you need to prove that you're creating jobs. What exactly are the requirements?
YALE-LOEHRThere are a lot of requirements. First, you have to show that your money is going into either a high unemployment or rural area to be able to invest just $500,000. Second, you have to be investing in a company that's going to be creating or saving at least 10 jobs for U.S. workers. Third, you get what's known as a conditional green card for two years so that the immigration agency has an opportunity to look back at the end of that two year period to make sure you really did create or save the jobs you were going to do.
YALE-LOEHRSo it's a relatively hard thing to do, to manage all that and still be able to keep your money. And moreover, to answer your previous question, there are only 10,000 of these EB5 green cards handed out every year out of a total of more than a million people who come to the United States each year. We give out about 70,000 visas a year for people who are fleeing persecution. So this EB5 program, while important economically, is a tiny drop in the bucket in the overall immigration scheme of things.
NNAMDIHow does the program, in your view, appear? Do you think people interpret the investment as the price of admission to the United States or A $1 million green card? First you, Demetri.
PAPADEMETRIOUWell, I suspect that the motivations are rather complex. Hi, Steve, by the way. That, you know, people are seeking the safety of, you know, a visa, a green card to the United States. It's -- if you have the money, this is a good thing to be able to have for you and your children.
PAPADEMETRIOUThere is no denying that. But people are also seeking opportunities, you know, in the overall scheme of things, half a million dollars or $1 million is not a great price to pay if the opportunity to make money back and secure a U.S. permanent visa. With all the of the conditions that Steve noted, is at the end of that particular line.
NNAMDISo, Steve, the perception that somebody is simply dolling out half a million dollars to get a green card for himself, herself, and family is a skewed perception?
YALE-LOEHRIt's one perception but I don't think it's a complete story. The fact that you're creating jobs for U.S. workers and particularly in this economic climate, is very important. Particularly also a lot of developers simply cannot either start projects or finish projects because of the current domestic capital crunch. So having this EB5 money to come in to provide the link between getting the project off the ground and completion is really important.
YALE-LOEHRSo while the investor certainly attracted because of the green card and the opportunities for themselves and their children, it's also a win-win for U.S. economists, developers and the U.S. taxpayer because this is money that's being used for economic benefit without any cost to the U.S. taxpayer.
NNAMDILet's see what our listeners think, 800-433-8850. Do you think it should be easier to obtain a green card in the United States if you can prove that you're capable of creating or sustaining jobs here, 800-433-8850? Send e-mail to email@example.com, a tweet @kojoshow or go to our website kojoshow.org, join the conversation there.
NNAMDIStephen, this is an issue you know inside out, at one point you created and then served as President for a trade association of regional centers. The enterprises that are certified by the government to receive investments under this visa program. Why did you think it was necessary to organize those groups and what were your goals for doing so?
YALE-LOEHRWell, there's actually two parts to the EB5 program. The initial program, as Demetri mentioned, was enacted in 1990 but it really didn't take off. So in 1992, Congress added what's known as the regional center component to the EB5 program, allowing cities and states and private companies to form, so called, regional centers. And the advantage of investing in a regional center is you get to count not only the direct jobs that are created but also the indirect jobs that come from the employees spending their money in the local economy, etcetera.
YALE-LOEHRThe regional center, part of the EB5 program, has been a success. Over 90 percent of the people who get EB5 green cards, do it through one of these so called regional centers. And there are now 189 regional centers around the country, including three in the D.C., Maryland area. But the program for regional centers happens to be a pilot program.
YALE-LOEHRCongress said let's test out this regional center component and let's see if it works. And it has worked, but every so often you have to go back to Congress to get it reauthorized. And so I thought it was important for regional centers to make sure that their voices were heard in Congress, to make sure that the extensions could be procured more easily rather than more slowly.
NNAMDIBut what does the regional center have to do with the region or is it simply called a regional center because there are several of them located around the country?
YALE-LOEHRThe regional center is designed to promote economic activity in a city or a county or a state. Some regional centers are as large as a states, but many are just focused on a metropolitan area like Washington or Baltimore. They have to meet certain requirements in terms of obeying the EB5 requirements, complying with the securities laws and finding investors overseas, making sure that jobs are going to be created within a two year period.
YALE-LOEHRBut it makes it easier for an investors overseas because they don't know whether they should invest in a hotel in D.C. or Baltimore and whether it's a good investment. So these regional centers act as middle men between the developers who want the money and need the money and investors who are looking to invest in the United States.
NNAMDIDemetri, it's my understanding that this program was not built to be permanent, that it's actually due to sunset next year. What are your expectations for whether or not it will continue?
PAPADEMETRIOUI think, that it will continue. I suspect that if Congress can ever agree to anything, they're likely to agree to make not only continuing with that but also making it permanent. And if you look at the strange bedfellows that are actually supporting this program, a lot of these legislations that continues to extend these regional centers, it's co-sponsored by two very, very unlike persons, Mr. Sessions, Senator Sessions and Senator Leahy.
PAPADEMETRIOUI don't think that these two individuals see eye to eye on any other aspect of immigration and possibly, you know, other issues. So I expect that certainly it's going to go forward. And I think that we need to think of these regional centers as investor or investment consolidators. I mean, you know, I think it's a good description that Steve gave it, the middle men.
PAPADEMETRIOUIt provides a bit of safety, you know, safety in numbers. It gives a bit of a imprimatur, you know, that somehow, you know, public institutions, whether it's a state development agency or what have you, are also invested in the success of these projects. So there is a sense, you know, that somehow, you know, this is a safe investment. And it does have some benefits, you know, in terms of creating jobs, etcetera, etcetera.
PAPADEMETRIOUBut there are also some threats, you know, to this program. And I think these are also fairly sort of live, as it were, very real. If one of these investment projects were to collapse and you had a 100 or 200 or 300 people, sort of, lose their investment, I suspect that an awful lot of people are going to look at this concept again but through a different lens. I suspect that, you know...
NNAMDINot only if they lose their investment, but if significant numbers of Americans lose their jobs.
PAPADEMETRIOUAnd in the process, you know, presumably, Americans will lose their jobs. There is also a threat in the, you know, we're looking at some of the blogs on this, you know, among conservatives that were suggesting that this was selling American, you know, visas and all that. So there's always an undercurrent of opinion over there that somehow, you know, sort of disdains this particular visa.
PAPADEMETRIOUAnd where some of that money comes from, the nationality of this money. But I think the program has now proven itself, you know. I'm surprised that there are only about 3,500 or so visas by the end of the year, the fiscal year. Because a year or two ago, we had about, a little over 4,000 visas, if I'm right, Steve. So, you know, it's not taking off nearly as much as it could. It is not nearly as used as the Congress had intended.
PAPADEMETRIOUOf course, in 1990, thinking in terms of 10,000 visas was, you know, sort of, completely, you know, the number was taking completely out of the air. But, I think, it's going to go forward.
NNAMDISpeaking of the number of visas, here is Ray in Washington, D.C. Ray, you're on the air. Go ahead, please.
RAYHi, Kojo. I was wondering if -- my question is for Stephen. I was wondering if the United States has a cap for how many visas that they give out per year? I don't know if Demetri just answered my question or not but I'm just kind of wondering if the United States has a cap on the specific amount of visas that they hand out per year?
NNAMDIAnd if so, what is that cap now, Stephen?
YALE-LOEHRRay, that's a good question.
YALE-LOEHRAnd it's -- Ray, that's a good question. And it's actually fairly complicated. We hand out 10,000 EB5 green cards each year. But we also have caps in other kinds of employment related visas. In our employment related scheme, we have five categories and overall we can handout 140,000 green cards each year for employment related basis. Then we also have family relationships that allow people to get green cards.
YALE-LOEHRAnd one of those categories for citizens who have spouses or children who are joining them is not capped, but the other family relationships are capped at various levels ranging from 65 to 270,000. So overall, we admit about a million people a year under the caps of the current system. But there are problems with the system and perhaps later in the show we'll go to a discussion of why we need to reform our general immigration system.
NNAMDIGot to take a short break. When we come back, we'll continue this conversation on what's known as investment immigration. Have you or anyone close to you had recent experiences trying to obtain a green card? Share your story with us, 800-433-8850. Send us a Tweet at kojoshow. E-mail to firstname.lastname@example.org or go to our website, kojoshow.org, join the conversation there. I'm Kojo Nnamdi.
NNAMDIWe're discussing what's known as investment immigration with Stephen Yale-Loehr. He's an attorney at the firm Miller Mayer and law professor at Cornell University. He joins us from studios at Cornell. He's the founder and former president of the trade association Invest in the U.S.A.
NNAMDIIn studio in Washington is Demetrios Papademetriou.. Demetriou is -- Demetri is the president of the Migration Policy Institute, a think tank dedicated to the study of international migration. We're taking your calls at 800-433-8850. How do you feel about the idea of the federal government using green cards to attract investors to the United States? 800-433-8850 or send us a tweet at kojoshow.
NNAMDIDemetri, the last time you joined this broadcast we talked about visa rules for highly skilled immigrants, H1Bs. So much of that conversation is about drawing skilled immigrants to the United States, competing for them. To what degree is the United States competing for investment immigrants and the money they're promising to put into the economy?
PAPADEMETRIOUTo a very significant degree. And not only are the, what we call the traditional countries of immigration or the English-speaking countries, New Zealand, Australia, Canada and others are going after the same investors with fewer requirements, but even countries that no one would accuse of being particularly immigrant friendly or open, such as Germany is actually having the same idea in their books.
PAPADEMETRIOUNow, they're attracting very few people which probably has to do with, you know, how people perceive different countries. But the fact remains that this is a popular visa, although really not particularly well used.
NNAMDIHow -- as far as China's concerned how has its pool of potential immigrant investors been affected by the takeover of Hong Kong in 1997?
PAPADEMETRIOUWell, actually, you know, the story is that there was no story in 1997. You know, there was a changeover. By that time tens of thousands of people had moved to Vancouver primarily and other parts as a safe haven. They had moved their families there. Their children were able to enjoy a good education, et cetera, et cetera. But the fact remains, you know, circumstances did not change for the wealthy in Hong Kong. But for them it was a safety valve, I mean, just in case something were to go wrong.
PAPADEMETRIOUIt's not unusual. You know, people do that all the time in the UK and elsewhere. If you have money you want to sort of make sure that you have lots of opportunities in case things go wrong.
NNAMDISome 70 percent of the participants here are either from China or South Korea. Why South Korea?
PAPADEMETRIOUWealth. Remember this is about investors and entrepreneurs. You have to have money. South Korea has an elite that is extremely well off. It has some extremely competitive companies. And, again, wealthy are always trying to make sure that, if things were to go wrong, you know, they had different places in which they could land.
NNAMDIPlus, in the lottery, there's a cap on the number of green cards they can get otherwise.
PAPADEMETRIOURight. It's very, very difficult because, you know, Steve tried to explain and he did a great job. But, you know, there're sort of caps within caps. You know, countries can bump other countries on the basis how many -- on the basis of how many use -- the visas they have used. Categories can actually shift.
PAPADEMETRIOUThere's competition, you know, across categories. It's a maddening system. If you were trying to come to the United States today you or I, you know, would probably be -- not be enjoying, you know, trying to get here.
NNAMDIHere is Jessie in Harpers Ferry, W.V. Jessie, you're on the air. Go ahead, please.
NNAMDIYes, Jessie, go right ahead.
JESSIEI'm not sure this is even a talking point, you know. As the guy just said, all developed countries do this and it's not a huge problem. There's a very small number of the visas issued. And it's fair for everybody so I'm not even sure how this has become such a big issue. It is a nothing thing and I really didn't expect you to answer my call already. So I'm going to leave it there. Okay.
NNAMDIAll right. Thank you very much.
NNAMDII'll tell you one of the reasons it came to our attention is because, as we mentioned earlier, there is a controversial casino being built in Anne Arundel County, Md. And the people who are building it have been making a pitch to foreign investors to participate in it including people from China. But, Stephen, that brings me to this. Not all investments are created equal. The risks seem to vary from project to project. People are investing in everything from, as I mentioned, Casinos to ski resorts. What safeguards are there within the EB-5 program to ensure that all of these ventures are legitimate?
YALE-LOEHRWell, the investor has to put his money at risk. He just can't simply park it in a bank account in the United States and get a green card that way. So they have to accept some risk. But it's up to both the immigration agency and the regional center and the developer to try to make sure that they do things properly so that the risk is minimized.
YALE-LOEHRAnd not all projects are going to be good projects for EB-5 purposes. As I mentioned before, the jobs have to be created within a two-year period. So if you're building a nuclear power plant, for example, you're not going to be able to use EB-5 money 'cause the jobs simply aren't going to be created in a short enough period of time. Or if you're in the middle of Manhattan, you know, it may not be worthwhile from a marketing perspective because that's not a high unemployment area and therefore you're going to have to charge a million dollars for people to invest there. And from a marketing perspective people would rather spend half a million dollars to get their green card.
YALE-LOEHRBut there is a variety of projects and the investors ultimately have to decide which ones they want to invest in either because they like the project or they think it's safe enough. In Washington, for example, there's a program there that's trying to bring $5 million to a new Giant grocery store in the Shaw neighborhood. And similarly, there was EB-5 money that was put into (unintelligible) ...
NNAMDII just rode through that neighborhood the other day and realized that the old Giant in Shaw was closed. I didn't even realize that.
YALE-LOEHRYeah, so EB-5 money...
NNAMDISo they're trying to build a new one. Yes.
YALE-LOEHR...is trying to build a new one and EB-5 money is being used there. And not every project has to use EB-5 money. The casino project, for example, they could have just used regular money because it's a large enough company. But it was cheaper to use EB-5 money than domestic money.
YALE-LOEHRBut there are other projects. For example, the Philadelphia Convention Center was recently expanded. And that project nearly stalled because while the city and the state kicked in some money, it wasn't quite enough. And if the EB-5 investors had not gone forward and put in some more money that project would not have been completed. But because of it, it was a crucial link and the convention center has now been expanded in Philadelphia.
NNAMDIHere is Tunday (sp?) in Springfield, Va. Tunday, your turn. Tunday, you've got to listen on your telephone and I'm going to put you on hold. And if you're listening on your telephone, you won't be getting that feedback. I will come to Tunday's call later. Here is Peter in Washington, D.C. Peter, your turn.
NNAMDIGo right ahead, Peter.
PETERAll right. Hey, I understand that the whole reason for doing the EB-5 is to create American jobs. So as a little background I've been in this country for several years now and I have gotten my MBA from a top school and paid full tuition. And I've paid full taxes for several years. And I wanted to start a company and hire at about 12 people here in northern Virginia. And I was not allowed to start this company because I'm here on a regular work visa and I'm not on a different visa.
PETERSo my suggestion is this. Why can't we take the EB-5 visas that are left over each year and not used by classical EB-5s, why can't we take those visas and give it to people who have a U.S. education, who paid taxes, who proved themselves and want to start businesses and hire people here in the U.S.?
NNAMDIHere is Demetri.
YALE-LOEHRThat is a really good question, Peter.
NNAMDIOh, okay, first Stephen.
YALE-LOEHRThere is a concept known as the startup visa concept that now is circulating in congress, that they would propose a new category specifically for people who want to start companies but they don't have the money themselves. And the startup visa concept would allow people then to get green cards that way by having angel investors or venture capital firms basically back their good ideas. It's a way to promote hopefully the next Google. And that proposal is now pending in congress.
NNAMDIThat proposal, if passed, would be able to get Peter a green card?
YALE-LOEHRIt could depending on how exactly the terms and conditions.
PETERBut this is -- as I understand it this is waiting for approval for at least -- I have been waiting for at least one-and-a-half years already -- over a year. Many people say then people like myself will be at the mercy of venture capitalists, even more so than today. So why don't we just take what we already have and if there's a couple thousand left over each year why can't we use those visas?
PAPADEMETRIOUWell, all of these things I -- all of these things require legislation. You know, there is no some sort of a magical administrative way where you can just shift visas around. And this is really a -- the overall immigration issue is basically one in which one part of the system holds other parts of the system hostage. So, you know, what is not moving, the reason that the start of these and other changes that would make sense to any reasonable, or for that matter unreasonable room full of people, cannot move forward because there are some others who basically will block them because they want their changes to be introduced to the immigration law.
PAPADEMETRIOUSo as with so many different things in Washington nowadays, when it comes to immigration even the simplest things become impossible to move forward in congress. And I want to make, you know -- and I don't want to pick a fight here, you know -- but I think that, you know, it's not correct either historically in terms of the beginning of the visa or in any other context to say that the visa was created in order to sort of give jobs to Americans. The visa was created to bring investors' money to the United States. And in order to sweeten that we created the idea of either ten new jobs or ten saved jobs.
PAPADEMETRIOUSo it's important to remember this. In today's world with the economy where it is, with the job market where it is, there are plenty of ideas of how we might engineer, you know, a bit of a job growth. And some of those ideas have to do with investors, but congress has to act.
NNAMDIWe're talking with Demetrios Papademetriou. He is the president of the Migration Policy Institute, a think tank dedicated to the study of international migration. And Stephen Yale-Loehr, attorney at the firm Miller Mayer. He's a law professor at Cornell University and the founder and former president of the trade association Invest in the U.S.A. Peter, thank you so much for your call. Good luck to you.
NNAMDIIf you'd like to call, the number's 800-433--8850. What do you think the federal government should be doing to attract immigrants who can help to jumpstart our economy? 800-433-8850 or you can send e-mail to email@example.com. Let's try Pegemon (sp?) in Arlington, Va. You're on the air, Pagemon, go ahead, please.
PEGEMONYes, hello. My partner and I have been contemplating the idea of establishing a startup regional center in the southern Californian area. My question is about the requirements for the founders of the company. Are they required to invest any money (unintelligible) foreign investment? Or if there is any what are the limits and how long does the approval process take for the regional center to get approved?
NNAMDIStephen Yale-Loehr. Stephen?
YALE-LOEHRSure. It can be a lot of money not because of the application fee, which is $6,000, but because of the other requirements. You have to have a good business plan. You have to have an economic report showing what your first project would be and how it would create or save a lot of jobs. You have to put together the offering documents that you would give to investors such as private placement memorandum, so you have to hire an attorney to advise you on how to draft those in compliance with the securities regulations. And you need an immigration lawyer who can explain to you the EB-5 requirements so that you do everything the proper way.
YALE-LOEHRWe have found through our experience at our law firm that it frequently will set somebody back about $100,000 simply to file a regional center application. Then the immigration agency looks it over and they frequently take six to nine months before they will approve it because they have a very thorough vetting process. So only after all that can you go out and actually start to market your project to foreign investors.
NNAMDIPagemon, thank you for your call. We return to Tunday in Springfield, Va. Tunday, you're on the air. Go ahead, please.
TUNDAYThank you, Kojo, for taking my call. I'm kind of concerned with African country these, some (unintelligible) money and bring it down here to invest (unintelligible) is there consideration given to the kind of money that is being brought in even though going to boost the economy?
NNAMDII'm not sure I understand your question. You're saying there are a number of people in Africa who would like to invest. And is there consideration being given to the amount of money that they would...
TUNDAYNo -- yeah, to the amount of money in the sense that most of the money was either stolen from the government or individual embezzling money and then bring it down here to invest.
YALE-LOEHROh, I can answer that.
NNAMDI...the source of the money. Stephen Yale-Loehr.
YALE-LOEHRYeah, the congress put that right into the law. They said that the money has to be legally obtained. They don't want terrorists or drug smugglers to be able to launder their money into the United States and get a green card that way. And so the immigration agency does a very thorough job to make sure that the people earned their money legally and paid whatever taxes were due before they allow them to invest that money in the United States.
NNAMDIThank you very much for your call, Tunday. Here is Gabray (sp?) in Springfield, Va. Gabray, your turn. Go ahead, please.
GABRAYYes, thank you, Kojo. Also thank you for your guests. My question is, is there any reflection based on nationalities? That's one. The second one is I guess one of the -- one person asked it, but I want to ask it again. If there is an H1B holder already and has money here can they switch to EB-5? And if the investment is for technology does a deemed export license apply? For example, if the person is of Chinese nationality or, you know, other nationality that deemed export applies.
PAPADEMETRIOUI think that Steve -- you know, this is your opportunity, Steve, to offer expert and free legal advice.
YALE-LOEHRThat's right. In terms of nationality we don't have any limitation. People can be from any country and apply for an EB-5 visa. In terms of H1B workers or anyone else in any kind of temporary visa, sure, if they have $500,000 and invest it in a company that's going to create or save ten jobs, they can get an EB-5 green card. And sometimes that may be a faster or easier way than the traditional way of getting the green card by having your employer sponsor you.
YALE-LOEHRThird, in terms of the deemed export control requirements it depends. If you are going to be working in the company that is creating and saving jobs than the deemed export control rules would apply to you because you're an employee there. But if you're just an investor in a company than it's just up to the company to decide whether whatever it's doing would have to comply with the export control administration regulations.
NNAMDII read that some of the adjustments made to the program -- and, Gabray, thank you for your call -- that some of the adjustments made to the program in 2002 came about because of the problem with fraud and abuse with investors. What kind of fraud and abuse were we talking about?
MR. STEPHEN YALE-LOEHERWell, in 1990, Congress set forth sort of general rules, you have to invest $500,000, but they didn't specify a lot of details. And so both the Immigration Agency and investors were trying to figure out what exactly these rules meant. For example, do you have to put all $500,000 in up front, or could you be investing $500,000 over the course of the two years? Could you put some of the money up front and then have a promissory note to pay the rest off later on?
MR. STEPHEN YALE-LOEHERAnd, you know, as more and more people tried the EB-5 program in the mid-1990s, more people began to get more aggressive, and in 1998, the Immigration Agency cracked down and said no, we think some of these rules are too lax. People should be putting all of their money in up front and they said, from now own we want all of the money to be put in up front so that we know it's there and not just promised to pay it later.
MR. STEPHEN YALE-LOEHERAnd that really put a temporary halt to the program until they figured out how to adjust and work under the new regime, and in about 2002, Congress passed a law making it slightly easier for indirect exports to be considered, and that has also helped the program.
NNAMDIYou told the New York Times a few years ago, Steven, that the EB-5 program was not always popular, but that in recent years it has, quoting you, "risen from the ashes." What was holding it back and what changed?
YALE-LOEHERI think 1998 changes really put the EB-5 program in the ashes temporarily because people didn't understand the new rules that the Immigration Agency imposed, and it took a while for both investors and regional centers to adjust. And so in 1999, 2000, 2001, we had probably only a couple of hundred EB-5 investors each year.
YALE-LOEHERBut as regional centers figured out how to comply with the new rules, and particularly in 2007 and 2008 as the economic crisis hit in the United States, more and more people saw the EB-5 program as an alternative way to raise money that they had not explored before, and that's when the program really took off.
NNAMDI800-433-8850. How do you feel about the idea of the federal government using green cards to attract investors to the United States? 800-433-8850. Do you think it should be easier to obtain a green card in the United States if you can prove that you're capable of creating or sustaining jobs here? You can also go to our website, kojoshow.org, join the conversation there, or send us a tweet @kojoshow.
NNAMDIBefore we go to a break, Stephen, how can the federal government track the effectiveness of these investments? What data does it use to calculate whether or not they are creating or preserving jobs here?
YALE-LOEHERWell, that's a great question and the government has not been able to do that on an aggregate basis. It does it on an individual basis, in that two years after the person gets their individual green card, they have to come back with proof that they created or saved ten jobs, and so they know on a petition by petition basis what, uh, investments have actually worked. But they haven't been able, until now, to put all the data together to say collectively, nationally, we have created or save X number of jobs over the last year.
YALE-LOEHERThey finally came out with a form, the government, like everybody else, loves forms, and now regional centers have to submit an annual form to the immigration agency so that the immigration agency can now finally, starting next year, track this at a national level.
NNAMDIGot to take a short break. If you -- Demitri, you wanted to say?
PAPADEMETRIOUYes. I mean, what Steve is saying reminds me of how attractive our country continues to be to so many people. I mean, this is really making people's lives difficult. There is a great deal of uncertainty, because at the end of two years you have to prove all sorts of things, and we probably take many more investors by ourselves than probably all of the other countries combined. So I think that, you know, for all of the potential weaknesses of programs like this, the fact remains that we continue to be particularly attractive the rest of the world.
NNAMDINow we're going to take that short break. You can still call us at 800-433-8850. What do you think the federal government should be doing to attract immigrants who can help to jump start our economy? You can also go to our website kojoshow.org, or send us a tweet @kojoshow. I'm Kojo Nnamdi.
NNAMDIWelcome back to our conversation on investment immigrations with Demetrios Papademetriou. Demitri is the president of the Migration Policy Institute which is a think tank dedicated to the study of international migration. Joining us from studios at Cornell University is Stephen Yale-Loeher. He's an attorney at the firm, Miller Mayer, and a law professor at Cornell, and founder and former president of trade association Invest in the U.S.A.
NNAMDII'll go directly back to the telephones where Obila (sp?) in Baltimore, Md. awaits us. Obila, you're on the air. Go ahead, please.
OBILAYeah. Hello, Kojo, how are you doing?
OBILAOkay. It was just yesterday that I actually (unintelligible) after listening to your program, I've been wondering your kind of name, Kojo Nnamdi. So just yesterday that I -- I -- somebody told me, you know, a little story about that, but that's by the way. I'm a new immigrant from Nigeria. I come to the United States last year. So -- but before I came I was thinking about using an investment way to get a green card before I was lucky to win the green card lottery.
OBILASo -- but what I want to ask is this. A friend of mine went to Canada and bought a commercial property, what about $800,000, and he was given a green card right away. So I want to ask, if somebody's a commercial property because, you know, of course he's going to rent it out, so it's going to provide from jobs about people working in it and people doing cleaning and stuff like that. Does that qualify for the kind of program that we are talking about?
NNAMDITry to keep paying attention to your GPS, as Stephen Yale-Loeher answers. Stephen, go ahead, please.
YALE-LOEHERWell, to answer the latter part of your question about whether your proposal to buy a commercial establishment in the U.S. would create the opportunity to get a green card, I -- it doesn't sound likely. You've got to create ten new jobs, and if you buy an apartment building you may have one or two janitors or a superintendant that's working there, but it's not gonna be ten full-time jobs there.
YALE-LOEHERSo you need to find something that's more labor intensive like building a restaurant or a hotel that's gonna create a lot of jobs. I'll defer to Demitri as to whether simply buying a building in Canada might get you an equivalent kind of green card there more quickly.
PAPADEMETRIOUIt does. And the amount is much less, it's $100,000. Again, it's all about how desirable a destination is, and that's what it comes down to.
NNAMDIWhat else goes into the application process? One would assume that it's not just open to anyone who can cut a check, that you'd have to prove that, as one caller pointed out, that you didn't make the money in some illegal manner. Demitri?
PAPADEMETRIOUYes. This was a big concern of the legislation -- of the legislatures at the time. It was at the very beginning of concerns that this may lead to laundering schemes, money laundering schemes that would then find their way back into the United States in the form of these investor visas. Steve made a reference, you know, to that simple statement in the legislation that is trying to control against that.
PAPADEMETRIOUBut this is something that is why it has taken so much time for the government to actually adjudicate some of these applications, you know. Everything has to be clean about it, otherwise I don't know whether the program goes back to the ashes, just to quote Steve, but certainly, you know, you do not want to have the program come under the wrong scrutiny, the wrong light in all of this.
NNAMDIWe got an e-mail from Trumble, Steve, who says, "The EB-5 program is a jobs program, a jobs program for the middlemen, economists, and attorneys who run it. If you pay an economist enough money, he can find ten new jobs from any investment. If a person makes an investment that creates 20 new jobs, but displaces 25 jobs, how is that counted?"
YALE-LOEHERThe Immigration Agency really requires economists to follow generally accepted economic methodologies. If I just pull and economic theory out of my head and say I'm going to use this theory to say that ten jobs will be created, the Immigration Agency is not going to let that pass muster on the front end of deciding whether to let someone have or get a conditional green card.
YALE-LOEHERMoreover, on the back end, two years later, the person really has to prove by submitted I-9 forms or W-2 forms, that the jobs really were created or saved. So that kind of situation simply isn't going to happen because of the way the immigration system made sure that it was going to verify that real jobs are being created.
NNAMDIHere is Dirk in Bethesda, Md. Dirk, your turn.
DIRKYeah. Good afternoon. I don't know, I've been listening to the conversation and I guess I'm 50 and I'm looking at things from a different perspective. I think it's insane that we would be willing to basically -- I mean, this is the selling of America in black and white. We can create jobs in the United States with American companies and American employees, and I'm thinking that with this visa companies coming in from different countries, they'll more than likely be hiring countrymen to work in these countries where we have plenty of homegrown Americans looking for jobs.
DIRKI just feel as though that it's basically the selling of America. If you got enough money and you can, you know, prove that you can create jobs, it's just these foreigner -- foreign investors are just gonna be coming in and reaping the benefits of our system and earning more money. They wouldn't be doing it if they weren't gonna be earning money for themselves as well. So we're basically, you know, allowing them to come in and earn money in our system and -- for free, and then hire other people to work where we should be hiring Americans.
NNAMDIDemitri, Dirk raises not that only specific question, but part of a broader question, and that is where do you think this EB-5 program, investment immigration, fits into the broader conversation about the kinds of immigrants the United States should be trying to attract? Dirk clearly feels that this should not be the kind of immigrant we're trying to attract.
PAPADEMETRIOUWell, in the mix -- in the overall scheme of things, this is just a few thousand visas out of more than a million, 1.1 million visas that we do out every year. The issue of whether it -- the employees are American, you know, the visas -- the jobs have to go to people who are legally here or permanent residents or U.S. citizens. I don't think that there is any evidence whatsoever that somehow these jobs go to foreigners.
PAPADEMETRIOUSo I think, you know, that that part of the premise is extremely suspect in my -- to my ears. On the issue of selling, you know, America, this is, you know, certainly something that anything that even the very concept of giving a visa to someone to come to work in the United States will, you know, sort of get a negative reaction among some people, you know. Why doesn't this job go to an American?
PAPADEMETRIOUSo this is -- we have to acknowledge that this is part of the argument. This is how some people feel about it, but I don't think this is something that, you know, we have to be particularly concerned about.
PAPADEMETRIOUOn, therefore, to Suraka (sp?) in Germantown, Md. Suraka, you are on the air. Go ahead, please.
SURAKAThanks, Kojo, for taking my call. I just wanted to make a comment on H1-B, which is employment visa green card. I have been legally staying here from Laos seven years. I have graduated from high school, done decently with the grades. But my suggestion would be for the immigration policies is they need to make changes, like if I have been on H1-B for six years, if I've paid my taxes good, in time, and done good in terms of laws, they should be given a green card in six -- after the six years.
SURAKAAnd one thing I want to make a comment is (unintelligible) pretty good in the schools and right now (unintelligible) if they want to buy a house, it's not -- the don't know whether they're going to get a green card or not, and I would strongly believe that there are thousands of immigrants like us who want to buy a house and can jump start the housing market and create -- start our own industries, but this green card immigration policies are like dragging. It takes six to seven years to get a green card right now, so...
NNAMDIHe has an H1-B visa, Demitri, and it recalls the statement you made earlier about how one part of the system often seems to be competing against another.
PAPADEMETRIOUAnd, you know, this is, as you said earlier, this is a conversation that we had on a previous show. I don't think anyone would argue that the system is not broken. Sorry about the double negative. Certainly we seem to be making at least an implicit promise that if you have the right skills, you have the right skills, you come here, you play by the rules, you stand on line on this H1-B visa, which explicitly when it was created in 1990, was supposed to be a visa that would allow someone to convert from temporary status to permanent status.
PAPADEMETRIOUAnd then at the end of this process, there are no permanent visas to give to people. So, you know, I think it's obvious that everybody would like to change this, but, you know, Congress, if somebody can motivate Congress to actually do some smart things...
NNAMDIComprehensive immigration reform is pretty much of a political non-starter right now.
NNAMDISo here is Sampson in Washington, D.C. Sampson, go ahead, please.
SAMPSONYes. I want to know if there's a website where this general information can be obtained?
YALE-LOEHERSure. If you go the Trade Association's website, IIUSA.org, it has a lot of information about the EB-5 visa program.
SAMPSONThat's II what again, please?
YALE-LOEHERIIUSA. That stands for Invest in the USA.org.
SAMPSONRight, okay. Thank you.
NNAMDIThe Obama administration hasn't put a lot of its political muscle behind comprehensive immigration reform. What sense do you have for what's achievable in Congress? Stephen, we only have about 40 seconds left.
YALE-LOEHERI think it's very hard to get anything through Congress these days on any topic, and I think there could be bite-sized pieces of the immigration puzzle that could be broken off or...
NNAMDISuch as the extension of this program.
YALE-LOEHERExtension of this program, for example. I think the Dream Act is another one that should get passed through Congress, but I fear the politically it's not going to happen, but I think it's gonna be 2013 before we finally tackle the larger issue of comprehensive immigration reform.
NNAMDIStephen Yale-Loeher is an attorney at the firm Miller Mayer, and a law professor at Cornell University. He's the founder and former president of the trade association Invest in the USA. Stephen, thank you very much for joining us.
NNAMDIDemetrios Papademetriou is the president of the Migration Policy Institute, a think tank dedicated to the study of international migration. Demitri, glad you could join us again.
PAPADEMETRIOUIt has been my pleasure.
NNAMDIThank you all for listening. I'm Kojo Nnamdi.
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