Those who have been following the immigration reform debate in Congress may have heard the argument from low-wage employers that America needs more immigrants because such people "only do the dirty jobs that Americans won't do." Never mind that, as farmers in California's Central Valley are proving this summer: You can find Americans willing to do any job, as long as the pay is commensurate with the work. With unemployment in some California towns above 20 percent, farmers there have been able to harvest their crops by boosting pay 12 percent from last year.
Unfortunately, something akin to the argument that immigrants only take jobs Americans won't do is now being used in the finance and related industries to raise capital from foreign investors. Here's how it works: First, a group of entrepreneurs savvy in immigration law applies to the United States Citizenship and Immigration Service to become an EB-5 Regional Center. Second, the USCIS approves a business plan that purports to demonstrate how the newly created Regional Center will promote economic growth and create jobs. Finally, the Regional Center, which is a private entity, then sells green cards that are used to attract wealthy foreigners to invest in U.S. development projects in return for a percentage of the amount invested. The foreign investor gets a green card, the U.S. developer gets cheap capital and the Regional Center in the middle gets a commission.
The problem is that the setup is a magnet for corruption. The Government Accountability Office, for example, issued a report in 2005 that exposed extensive fraud and corruption throughout the EB-5 program. More recently, a February 2013 Securities and Exchange Commission investigation busted a $150 million EB-5 scam in Chicago that had defrauded more than 250 Chinese investors.
But even when it operates entirely legally and as intended by Congress, the EB-5 program amounts to little more than corporate welfare. Like the supposedly impossible-to-fill farm worker jobs, Regional Center investments are supposedly for employment situations in which American entrepreneurs can't persuade American investors to put capital on the line. But that's hardly ever the case, as seen in how the EB-5 program has become a favorite of commercial real estate developers. Growing numbers of developers avoid paying interest on bank loans by instead raising capital from foreign investors who are eager to gain admission to the U.S. and willing to pay for the privilege.
The Schumer-Rubio "Gang of Eight" immigration reform bill about to be debated in the Senate not only expands the EB-5 program, the legislation also creates a new sister program that grants legal residency to foreigners who buy at least $500,000 of residential property in this country. American citizenship should never be sold, but if Washington is determined to sink to that level, at least do it in a manner that benefits the public interest rather than special interests. Cut out the Regional Center middlemen and charge wealthy foreigners $1 million for a green card. Then use the funds to make working-class Americans' lives easier, starting with a permanent payroll tax cut.