EB-5 Exempt from Trump’s Executive Order

President Donald Trump issued an executive order on April 22 barring some classes of immigrant and non-immigrant visas. The eight section proclamation notes that “we must be mindful of the impact of foreign workers on the United States labor market, particularly in an environment of high domestic unemployment and depressed demand for labor.”

The executive order acknowledges the well-established effect of immigration on American workers. Yet it curiously excludes all guestworkers and instead pauses only some immigrant visas for 60 days. Worse still, it exempts the EB-5 program – a “golden visa” scheme derided by critics on both sides of the immigration debate. In fact, the proclamation specifically protected this group of investor immigrants from the order.

The order itself, despite the inordinate attention it has receive, is extremely narrow, which as the Center for Immigration Studies’ Jessica Vaughan notes “applies to only a few immigrants who represent a tiny fraction (about 5 percent) of total annual admissions, and will actually restart admissions that have been paused, well before this health crisis is over, and well before the employment crisis is over.”

The Trump Administration continues to oscillate between reforming the EB-5 program and gutting its protections and making it easier to abuse. In November 2019, the Administration issued new rules that greatly improved the program by increasing the required minimum investment amounts and rewriting the rules for the oft-abused and gerrymandered Targeted Employment Area (TEA) designations. These are positive steps that immigration reform advocates pushed for years.

Yet at the same time the administration and their allies flirt with EB-5 expansion. Senator Lindsey Graham (R-S.C.), a close advisor to the president, allegedly tried to force EB-5 visas into the must-pass Senate coronavirus stimulus package. The president’s son-in-law’s family pushed the EB-5 visa to Beijing investors in 2017, and Jared Kushner himself utilized the EB-5 to develop properties in New York City.

The Trump Administration’s defense of the EB-5 in the executive order is disappointing. Defenders of the EB-5 program note that the investors create jobs for Americans and infuse needed capital into economically distressed parts of the country. In reality, nothing could be further from the truth. The majority of EB-5 investments go to “regional centers” – companies that multiple EB-5 investors buy into. As the website EB-5 Investors notes, “the major advantage for regional center designation is that the regional center can take advantage of indirect job creation” (emphasis mine). Few jobs are ever created in areas that need them because of this convoluted process, made worse by the gerrymandered TEA areas that allowed developers to claim parts of Manhattan were “economically distressed.”

This pause in immigration would have been the perfect time to stop the EB-5 program and evaluate its use in 2020. Instead, wealthy Chinese investors will continue to benefit from this fraud-laden program. When the president reevaluates his executive order in late June, he should consider pausing, if not ending, all aspects of the EB-5 program.

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