"What would the new immigration bill do to EB-5?" the reporter asked me.
The answer is that RAISE would kill EB-5 (the immigrant investor) program as it stands, while still allowing some aliens to buy their way into the country. For more on the potential benefits of this legislation, see Mark Krikorian's blog here.
The proposal — which I hope against hope gets enacted — would give points toward a visa to those investing in this country. More specifically, an alien would need 30 points to get a visa, and could secure six of those points by investing $1.35 million, or 12 points at the $1.8 million level.
But these investments, unlike those in EB-5, would not be passive ones. The alien would not only have to come up with the $1 million-plus, he or she would have to actually run the business, as an article in National Law Review explains.
What the National Law Review does not discuss is the raw politics of the situation. What happens to investors has never been much of a consideration in EB-5 politics, as the investors are not yet voters, and often not yet in the United States.
But the proposed law would be devastating to the middlemen in the regional centers, who channel the money, and the big city real estate developers who use it to fatten their profit levels, as EB-5 money is, in effect, lent to them at rates as low as 1 or 2 percent a year. These U.S. businessmen would lose their current profits and they can be counted on to oppose RAISE.
While the EB-5 program is wildly inefficient, morally indefensible, and often an invitation to corruption, and while it does little good to the U.S. economy, the backers of RAISE might well be tempted to keep the program alive if that posture could ease the passage of the broader bill.
Wasting 10,000 visas each year on some rich EB-5 aliens would be a small price to pay for the annual reduction of 500,000 or so visas through the main provisions of RAISE.