Home > Business, South Dakota > Thune, Johnson, and Noem not only support EB-5 cronyism, but also burdening business owners with immigration enforcement

Thune, Johnson, and Noem not only support EB-5 cronyism, but also burdening business owners with immigration enforcement

November 7, 2013
Pile of Stones by Petr Kratochvil

Pile of Stones by Petr Kratochvil

The federal investigation into the Aberdeen beef plant and EB-5 program is continuing. So far the best coverage of the situation comes from the Argus Leader and the Madville Times blog (I may not agree with all I read at either source, but it is well worth reading everything they write on this issue). A post by Mr Heidelberger mentioned how Senator Johnson, Senator Thune, and Representative Noem all voted to extend the EB-5 program for three years. Senate Bill 3245 extended the cronyism supported by the EB-5 program with almost no opposition. However the EB-5 program was not all that got extended in this small in size (yet large in scope) bill that passed into law.

Section 2 of the bill reauthorizes E-Verify for three years. For those unfamiliar with E-Verify, here is how the US Citizenship and Immigration Services (USCIS, a part of DHS) markets the program:

E-Verify is a free and easy web-based service that lets participating employers quickly verify the eligibility of their new employees to work in the United States.

That sounds reasonable enough right? Well, that one sentence doesn’t actually tell the whole story. When the E-Verify program was added to the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 it was a ‘pilot’ program. It was not ready for prime-time; it still isn’t. The Department of Homeland Security (DHS) has been lobbying Congress to make this program mandatory for business owners. It is looking like that will be more likely as immigration reform becomes a hot topic again.

Here are some of the problems with E-Verify that seem to be simply ignored by the DHS, Thune, Johnson, and Noem:

  • E-Verify is very unreliable and could account for hundreds of thousands of people not getting jobs or losing jobs because of errors in the system. Sadly some would tout these numbers as ‘acceptable’ because percentage-wise that is less than 1%. That will be very little comfort the thousands who will get caught in a bureaucratic nightmare trying to clear their name from a government naughty list. Remember the DHS also handles the “no fly list“.
  • E-Verify is a step towards national ID. The E-Verify system holds all personal data relevant that would be required to implement national ID. It also ties data from multiple government agencies together, thus allowing one-stop shopping for any federal agency that wants to know anything about anyone in the United States. The only part of National ID the E-Verify system does not include is a physical card. But honestly it isn’t the ‘card’ that makes National ID such a bad idea, it is the centralization of collecting all data on citizens.
  • E-Verify uses private sector businesses to enforce immigration law. It was estimated that E-Verify would have cost small businesses $2.6 billion in 2010 if the program had been mandatory at that time. I can only imagine the cost will have increased since that time. According to those same 2010 estimates the startup costs for businesses to comply would have been between $1254 to $24422 for the first year and average a cost of $435 for each additional year the program is in place. This “free” website is not so free to struggling small businesses with finite resources (namely time and experience in federal regulation compliance). This very simply is an attempt by DC to outsource immigration enforcement to the private sector.
  • The program has not been proven effective in states that have implemented mandatory E-Verify.

There are other reasons I don’t like the E-Verify system, but the above four are the ‘big ones’. It should be noted that all three South Dakota legislators in DC voted yes to extend the E-Verify system. They voted yes despite the very public and troubling problems with the quality provided by the E-Verify system. I’ll be watching the immigration bills that are debated in the House/Senate for the next couple of months. I would wager any immigration bill that makes headway will include an amendment to permanently make the E-Verify program mandatory. At that time it will be interesting to see if Thune, Johnson, or Noem will reject proven bad program; or will they vote yes to make it look like they are ‘tough of on illegal immigrants’.

PS.  SB3245(112th) also extended the Special Immigrant Nonminister Religious Worker Program, and the Conrad State 30 J-1 Visa Waiver Program. These are two subjects I have no experience with. If I find problems with those I will post that separately.

  1. Merlyn Schutterle
    November 7, 2013 at 6:30 pm

    I really don’t understand this, but if we are getting millions of dollars to get green cards for a few individuals, I’m not sure significant damage has been done. Here in Rochester, MN we have lots of people from Somalia who have contributed little other than lots of Muslims

    • Ken Santema
      November 7, 2013 at 7:14 pm

      The damage is usually from what the money is used on. It is oftentimes used on high risk projects that are poorly run with no accountability. EB-5 programs are notorious for creating dozens or hundreds of full-time jobs that are all lost when the project fails. The Beef Plant in Aberdeen was a textbook example of this.

      • Merlyn Schutterle
        November 7, 2013 at 7:37 pm

        OK, I get it. Building false hopes is a brutal thing.

  2. November 8, 2013 at 1:34 am

    if somebody wants to dump half a million dollars into the local economy I don’t care if they spend it on booze and hookers. Who cares what they invest it in??? think of them as high-rolling tourists and get over it!

    • Merlyn Schutterle
      November 8, 2013 at 7:11 am

      It’s all about the money then. People were led to believe they had good jobs and a future. Maybe they bought homes and cars and quit their jobs on the strength of that. Now we have some people in trouble and a beef plant standing somewhere that we might have to tear down. Taxpayers probably had to foot the bills for roads and whatnot.

      • Ken Santema
        November 8, 2013 at 1:16 pm

        Yeah. In this case it isn’t about where the money comes from. It is more where the money goes. Just like other corporate welfare programs it is poorly managed and corruption is quite rampant.

      • Merlyn Schutterle
        November 8, 2013 at 1:46 pm

        Who is getting the money?

      • November 9, 2013 at 10:05 am

        so if US citizens invest in a project and people think they are getting good jobs and buy homes and cars because of it, and the business fails, it’s okay? Why does it matter so much if the investors are foreign?

  3. Ken Santema
    November 9, 2013 at 3:32 pm

    Merlyn Schutterle :

    Who is getting the money?

    I believe that is what the federal investigation into the EB-5 beef plant situation is about. There were millions involved and it would seem some of that money was mishandled. So far we know that millions went to the project and the SDRC, but no true accounting of what went where.

  4. Ken Santema
    November 9, 2013 at 3:36 pm

    Anne Gross Beal :

    so if US citizens invest in a project and people think they are getting good jobs and buy homes and cars because of it, and the business fails, it’s okay? Why does it matter so much if the investors are foreign?

    I don’t think the source of the funds is the big issue, more what they were used for. Theoretically the EB-5 program does two things: it allows rich foreign investors to shortcut their way through the immigration system AND it uses money from those investors to create new jobs. If they felt this was necessary I think they should have required the investors actually start new businesses that created jobs or somehow became a stakeholder in how the money was used. The way it is now the investors have no connection to how the money is used so they don[‘t try to hold EB-5 companies accountable. Same goes for taxpayers, we have no idea how the money is being used so there is no accountability from any angle.

  5. March 13, 2014 at 9:57 am

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