How Immigration Could Save America

Desperate times call for innovative measures. Treasury Secretary Hank Paulson has already had to shift his focus from a flawed plan to buy toxic securities to one focused on taking equity stakes in financial institutions. Politicians in Washington would be well-advised to engage in a similar rethink about one of this election cycle’s whipping boys: immigration. Why? Because America’s attractiveness to the world’s best and brightest means we can put them to work solving the current crisis without vital companies falling into the hands of worrisome sovereign wealth funds or turning the U.S. government into a major shareholder. All that is required in exchange is a chance to be part of the American Dream.

America should immediately offer fast-track immigration to foreigners willing to do two things. First, they must buy a house in the United States worth a minimum of $200,000 or with a minimum area of 2,000 square feet, paying cash up front. Second, they must place a further $250,000 in a government-insured account with a U.S. financial institution or spend $250,000 to create a business in the U.S. employing a minimum of three U.S. citizens.

The need is immediate and urgent, so up-front entry requirements should be stripped to the bare minimum. In exchange for documented proof of health status, absence of a criminal record and the recommendation of a financial institution, major employer or government agency in their home country, they should automatically be granted a green card, good for three years, during which the U.S. government would be able to do fuller due diligence on these prospective citizens and their documentation. Their green card should automatically become permanent if the authorities cannot prove terrorist connections or fraudulent claims in the entry documents.

During this time, these newcomers would not be allowed to sell or mortgage their new home. The only grounds on which they would be allowed to withdraw money from their account would be if they failed to find a job, in which case they would be entitled to withdraw a maximum of $50,000 a year, ample to live comfortably when you don’t have a mortgage to pay. They would not be eligible for welfare and so could not fall on the public charge, guaranteeing that they would be adding significant consumption to their local community at no cost to taxpayers.

Suppose that one million new immigrants responded to this opportunity. Unlike most foreign investors, these are people who would be making the ultimate commitment to America, choosing to live there and ultimately becoming citizens. These one million new investors would put $200-billion into the housing market immediately, soaking up excess supply without drawing on the strained balance sheets of financial institutions.

The supply of unsold homes is now the equivalent of nearly a year’s demand. Average prices are down around the $200,000 mark and still falling. A flood of people with ready money looking to buy at the $200,000 level would help the market to find its bottom and reverse the trend, while reducing the risk of defaults and non-performing assets on financial institution balance sheets. By allowing homes of 2,000 square feet and more to qualify regardless of price, these immigrants would be especially attracted to areas where the housing collapse has been more severe, and where their investment would do the most to help the market turn the corner.

In the same vein, one million new immigrants placing $250,000 each into financial institutions would fill those institutions’ coffers to the tune of a further $250-billion — as much as the equity injection now being bruited in Washington, but without the risk associated with politicians’ being tempted to mix politics with business. Those that chose instead to invest in their own business and employ Americans would both help to alleviate rising concern about unemployment and improve the unfairly tarnished image of immigrants.

The target of one million such immigrants is reasonable. Those who have the capital in hand would be a self-selecting group of high-value immigrants bringing with them valuable skills and business acumen.

America’s strength has always been in its openness. That openness has always been richly rewarded. Now once again the rest of the world offers America the opportunity to renew and refresh itself by drawing in a wave of dynamic and motivated new potential citizens who ask for nothing better than a chance to buy a share of the American Dream.