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Angelo Paparelli on Dysfunctional Government

Two Market-Based Proposals for Immigration Reform: Cap-and-Trade or Uncap-and-Grow?

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2 wild guys.jpgThe federal government regularly auctions airwaves and drilling leases.  Should it also auction humans?  This is the startling question posed recently at a May 15, 2012 Hamilton Project conference in a paper, a slide presentation and the transcript of remarks offered by Giovanni Peri, an economics professor at the University of California (Davis). Prof. Peri provides an intriguing, market-based proposal ("Rationalizing U.S. Immigration Policy: Reforms for Simplicity, Fairness, and Economic Growth") -- in three phases -- to reform America’s sputtering immigration system. 


Surprisingly to me, a well-griddled and grizzled immigration lawyer, conference participants expressed largely enthusiastic support for his proposal, but doubted that Congress has the near-term will or ability to tackle comprehensive immigration reform. In my view, while Prof. Peri’s description of current immigration dysfunctionalities is spot on, his ideas for a better system are replete with moral dilemmas, inequities and logistical impediments. 


In Phase One, Peri would have the Department of Commerce supervise (or outsource) two online auctions of three-year permits allowing businesses offering the highest bids to employ foreign citizens on provisional U.S. visas.  One auction would be for low skilled immigrants (similar to the H-2 visa) to fill jobs that Americans tend to shun; the other would be for H-1B workers in specialty occupations (and possibly also TN workers from Mexico and Canada under NAFTA and L-1 intracompany transferees). The number of permits to be auctioned would be based on average annual usage in the corresponding nonimmigrant categories over the prior ten years. Permits could be traded in a secondary market to hire a replacement foreign worker, or resold for the unexpired term, if a foreign worker invokes the right of job portability.  Peri says he would also protect small businesses by allocating a minimum number of permits to them or by capping the number of permits that any single employer could buy via auction. 


Phase Two would extend the auction to all other “labor-based” nonimmigrant and green card categories.  Phase Three would take into account the number of foreign citizens who have entered under the labor-based categories and then adjust (“rebalance&rdquo the family-based categories (presumably because fewer family-based immigrants will be needed).  Along the way, he would create a path to legalization for the 11.5 million undocumented foreigners in the U.S., and use funds from the permits to enhance E-Verify, protect the border, pay for Commerce Department auction expenses, and allow the Labor Department to conduct more immigration audits, given that the agency would no longer be supervising tests of worker availability under the temporary and permanent labor certification programs. 


Prof. Peri does not dub the monies paid through the Commerce Department auctions as new taxes but that’s in effect what they are.  I suspect that Grover Norquist and his obeisant promise-keepers might agree that a levy imposed on companies for the privilege of employing a foreign worker seems just as much a “tax” as the gas-guzzler tax that must be paid for the privilege of buying a fuel-inefficient luxury vehicles. More troubling to me, however, is that Prof. Peri’s proposal and those of other auction proponents seem too reminiscent of 18th Century slave auctions except that the auctioned permits convey not ownership but a temporary right to import a foreign worker for up to three years as long as employer and employee remain satisfied with the arrangement. 


I share Peri’s interest in market-based solutions, but believe market-testing has already proven that -- at least in the nonimmigrant sector -- artificial visa quotas are not necessary.  History shows (as Peri notes) that when the economy sizzles, the annual allotment of quota-based visas has been consumed in days, but when it is frail, the quota supply has not run dry. 


There are better ways of improving the immigration system that nonetheless promote Peri’s goals of simplicity, fairness and economic growth.  Here are a few: 


1.      Simplicity. By reducing unneeded visa categories and consolidating immigration authority in one department, the unnecessarily byzantine complexity of immigration laws could be replaced by a far more rational system. 



  • Each employment-based nonimmigrant and immigrant visa category was created for a specific purpose, but many categories overlap.  Sometimes the overlap is beneficial, e.g., the B-1 in lieu of H-1 subcategory of business visitor serves as a safety valve when H-1B quota numbers have run out and provides a ready alternative to the cumbersome and costly H-1B category for short-term entrants who will remain employed abroad and not be hired by a U.S. employer.  But many times the duplicative categories make little sense.  We don’t really need four types of intern/trainee categories: a J-1 intern/trainee, an H-3 trainee, and a B-1 in lieu of H-3 trainee and a Q-1 cultural trainee.

  • We don’t need multiple categories of dependent family members of principal work-visa holder (H-4, L-2, E-1, E-2, E-3 ad infinitum); they should be grouped under a single dependent category with spousal employment rights. 

  • We don’t need multiple agencies administering their separate immigration turf across multiple Executive Branch departments.  We really only need one enforcement directorate and one benefits directorate within a single Department of Immigration led by a Secretary who sets policies and resolves intra-departmental disputes, as well as an independent Article III Federal Immigration Court to perform traditional judicial functions within this specialized area.   


2.      Fairness. By insuring procedural due process, consistency and transparency, our immigration system would be less a trap for the unwary and unlawyered, and more an example to the world. 



  • Congress should declare an Immigration Stakeholder Bill of Rights and Responsibilities that, wherever possible, would apply uniformly across all immigration categories, and allow for attorneys fees and costs to be reimbursed if a party claiming material infringement of rights prevails in an administrative claim against the infringer, whether that be the government or an employer. 

  • There is no reason why applicants for adjustment to green-card status in H and L visa categories may travel on their existing visas and thus are relieved of the burden of applying for advance parole travel authorization while those in E, F, M, J, O and other categories are treated as having abandoned their adjustment applications if they leave the country without advance parole and reenter on their valid nonimmigrant visas. 

  • There is no reason why EB-5 investors and Special Immigrant religious workers may not apply for adjustment of status unless they have an approved immigrant visa petition, while virtually all other applicants can apply for adjustment concurrently with the filing of an unapproved immigrant visa petition.

  • There is no reason that numerous parties with a legal interest in an immigration matter should be deprived of the right to be heard in a case affecting that interest.

  • As noted, all spouses of principals on work visas should be given open-market employment authorization, not just E and L spouses.

  • The fault or adverse actions of others should not be attributed to innocent parties.  DREAMers brought here through the violations of their parents should be given avenues for relief.  A worker faultlessly fulfilling the terms of a particular employment-based visa should not lose status when his/her employer terminates employment.  Adjustment of status portability should be a benefit enjoyed by the employer who sponsored the worker’s labor certification application as well as the worker/beneficiary (the “cell-mitosis” theory of portability that I’ve espoused before). 

  • Foreign citizens in removal proceedings should be given meaningful rights akin to those of criminal defendants.

  • Unfair and unevenly applied legal presumptions, such as the presumption of immigrant intent, should be eliminated; instead, applicants for visas and immigration benefits must merely be required to establish eligibility for the visa or benefit sought based on the facts and law.

  • Vested rights, such as the right to work, should not be taken away while an adverse decision is pursued in a non-frivolous administrative appeal.

  • The newly created Article III Federal Immigration Court should conduct de novo hearings and review appeals of denials of visas, waivers and applications for extension, change or adjustment of status without any deference accorded to the agency because of its presumed expertise but decide the case solely on the facts and law. 


3.     Economic Growth. In addition to the usual recommendations (elimination of per-country immigrant visa quotas, expedited green cards for STEM graduates, etc.), there are many ways that immigration can spur economic growth: 



  • Nonimmigrant visa quotas should be eliminated since it makes no sense to have a quota on the number of smart, talented and hard-working people we allow in to help us grow the economy and create jobs.

  • Just like the spouses of U.S. citizens, immediate family members of lawful permanent residents (who can provide support to sponsored relatives at 200% of the federal poverty guidelines) should not be subject to immigrant visa quotas.

  • Dependents of employment-based immigrants should not be charged against the annual immigrant visa quota.

  • Congress should enact the $$$ Visa, allowing three-year, renewable periods of authorized stay and work permission, for foreign citizens who purchase homes in the U.S. valued at $500,000 or more.

  • Congress should pass a law granting the newly established Department of Immigration authority to conduct an annual immigration “race to the top” whereby states who propose market-based immigration incentives that are likely to promote significant local hiring of Americans or investment in the state are awarded a set number of work visas and green cards to confer on grantees.

  • Family-owned businesses with real jobs for real money should be allowed to bring in their relatives from abroad to work in those jobs as a means of promoting family values and immigrant entrepreneurship.

  • Congress should create a Golden-Spoon/Retirees’ Green Card for high-net-worth immigrants who have no desire to work in the U.S. but who purchase and hold at least $3 million worth of U.S. Treasury bonds.

  • Congress should authorize a Create-American-Jobs program that would provide blanket approvals and expedited adjudications of applications seeking immigration benefits for U.S.-based with a proven track record of using the immigration system to create jobs in the United States. 


Just like the anticipated Congressional reaction to Prof. Peri’s proposals, the realist in me knows that my suggested immigration policy reforms will likewise be rejected in the near term.  That said, he and I are not “two wild and crazy guys” unfamiliar with the way things are done here.  We merely believe that later, or preferably sooner, our people and our leaders will come to see that the immigration status quo is “broke" and desperately needs "fixin’.” 

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