Yesterday, President Obama issued an Executive Order (“EO”) titled: “Improving Regulation and Regulatory Review.” It is technically a supplement to a 1993 Clinton era EO (# 12866). President Obama first announced the EO in a Wall Street Journal Op-Ed that he authored. In that Op-Ed, he wrote:
“This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth.”
In a follow up blog post, Office and Management and Budget Director, Jack Lew, elaborated on the EO:
“We believe that it is particularly critical now, as our economy continues to recover and create new jobs, that our regulatory strategy be as evidence-based, predictable, cost-effective, and carefully targeted as possible to enable American businesses to continue to grow and innovate.”
The focus in the DC Beltway is clearly shifting to economic growth and job creation. With that in mind, why not take it one step further by asking Congress to do a review of “pilot” (i.e. requiring legislative action to continue) programs that are suffering from uncertainty of their future existence and leading to unnecessary hindrance of economic growth? A review of this nature would, of course, quickly highlight the EB-5 Regional Center Program (“the Program”) still in “pilot” status despite IIUSA estimates that it attracted well over $1B in foreign direct investment and creating or saving tens of thousands of U.S. jobs in the process in just the past two fiscal years (FY2009 and 2010). The Program is currently due to expire – or “sunset” as the lingo goes – on September 30, 2012, a mere 650 days away (about 20 months).
The typical term of investment for an EB-5 investor is at least three to five years. These investors, willing to risk capital and immigration status on the U.S. economy, should not have to worry about whether the Program will even exist while their investment and immigration status (for themselves and their immediate family) are in limbo. This uncertainty was a contributing factor for a marked slowdown in EB-5 investor subscriptions. EB-5 visa usage was down from 4,218 in FY2009 (according to U.S. Department of State (“DOS”) statistics) to 1,886 in FY2010 (according to preliminary statistics reported by U.S. Citizenship and Immigration Services (USCIS) from DOS). Note: FY2010 numbers have not been published on the DOS website yet.
I should also note that the number of I-526 petitions filed with USCIS jumped from 1,028 to 1,955 in that same time frame. For those unfamiliar, approval of an I-526 petition allows the EB-5 investor to then file for conditional permanent residency. So, why did visa issuance decrease by over 50% while I-526 petition filings increased by about 90%? That is a good question, with no definitive answer. Most likely, it is a combination of a tepid global economic recovery and an effort to get visas issued before the Program’s previously avoided “sunset” dates in September and October 2009. With the current three-year extension only passing at last minute, as part of the DHS FY2010 appropriations bill that President Obama signed into law in October 2009, USCIS had good reason to make sure approved EB-5 investors got their visas before the Program potentially expired. There is no reason to re-live that level of uncertainty in the coming “sunset” date of September 2012.
In today’s globalized economy, it is imperative that the U.S. compete with other existing immigrant investor programs around the world. Attracting these investment-oriented foreign nationals – and their resources – to the U.S. is an essential part of a 21st economic policy that we, as a country, cannot afford to miss out on. The Program in an example of this type of policy already in action, taking advantage of the powerful forces of globalization to address the specific problems of unemployment and a weak domestic capital market. Hopefully Congress takes note of the President’s EO and examines what “legislative uncertainty” is out there hindering economic growth. If they do, the EB-5 Regional Center Program will jump out as a federal program with bipartisan support, that costs the public nothing to operate (the nonpartisan Congressional Budget Office scored a piece of legislation that extended the Program five years as “revenue neutral”), and specifically aimed at addressing the most pressing economic issues of today.