Visa recapture deserves a place in the reconciliation bill

Restarting legal immigration after the pandemic.

Illegal immigration, the plight of long-settled undocumented residents of the United States, and the chaotic situation facing asylum-seekers at the southern border are the biggest hot buttons in the immigration debate.

But most immigration to the United States is through legal visa application channels, and it’s this kind of regular flow of foreign talent to our shores that brings the biggest benefits to the country. To that end, advocates for more legal immigration have developed an idea that they want to slide into the Democratic budget reconciliation package — “recapturing” unused visas from past years in order to allow for make-up legal immigration in the years to come.

The hope is that this should qualify for reconciliation under parliamentary rules because of the direct budgetary impact of the fees paid by people who get green cards, but also because increased legal immigration impacts tax revenue. Most important for American society is that it grows the economy and improves productivity, and my hope is that some of the recent public attention to inflation can help people see how complementarities matter in the economy and why extra workers mean more prosperity and higher real wages.

Rep. Zoe Lofgren, who chairs the immigration subcommittee in the House and is a longtime champion of expanded legal immigration, is the person who seems to be taking the lead on this. But while the idea doesn’t seem to have a ton of intra-Democratic opposition, there also doesn’t seem to be a ton of enthusiasm for it, especially on the Senate side of things. Folks should be enthusiastic about this idea, though! It’s good for the country, and while it doesn’t make a major contribution to helping the budget math add up, it does help. And you could, if you were so inclined, tweak the numbers to improve the budget impact.

What are we talking about here?

The recapture issue arises fundamentally because getting a green card to immigrate to the United States involves clearing two hurdles.

One is that you, as an individual, need to apply, go through the whole process, and have your eligibility be verified and approved. But the other is that each visa category comes with a specific numerical annual “cap.” So there are only so many employment-based visas each year, only so many family unification visas, and then there’s also a complicated system of per-country caps.

The paperwork processing all takes time, so basically, the government cuts off applications for green cards at Time X in anticipation that the processing of the applications accumulated by that point will lead to hitting the relevant caps. Because these are caps rather than targets, U.S. Citizenship and Immigration Services ends up sometimes undershooting but never overshooting. So over time, we build up a larger and larger deficit of green cards issued relative to green cards that have been authorized by Congress.

Ever since 1990, we’ve allowed 140,000 employment-based green cards (most of which actually go to primary workers’ spouses and young kids) and 226,000 family preference green cards per year. But each year, fewer than 366,000 people actually get green cards.

Every once in a while, Congress passes a bill allowing a “recapture” of unused visas, and basically, a little catch-up spurt of green cards goes out.

Now let’s note that green cards are an administrative contrivance and not a physical commodity. It’s not like there is actually a pile of unused green cards lying around that we need USCIS to go pick up and use. Congress could just as easily formally increase the green card cap as use the recapture mechanism. It’s just that in the past, recapture has proven to be a kind of politically convenient Schelling Point. Most people and most members of Congress don’t have particularly deep convictions about the correct level of legal immigration, and if you read the polls, both increasing and decreasing immigration are unpopular.

So the logic of visa recapture is that it gets you the substantive benefits of increasing immigration, while also allowing members of Congress who feel nervous to say they are sticking with the status quo. There is no permanent increase in immigration rates implied by recapture; you are simply bringing immigration numbers in line with stated policy.

This could be especially compelling this year because while the long-term shortfall is just a reflection of how the system is designed, we had a huge shortfall last year (and this year too, by all signs) due to the pandemic. It was perfectly reasonable to restrict international travel as a public health measure, but none of that was intended to alter the ultimate trajectory of American immigration policy. It’s a good time for a catch-up.

Three options for recapture

One way in which the visa shortfall actually is real is that within certain parameters, the executive branch has the ability to do recapture on its own. Jeremy Neufeld, Lindsay Milliken, and Doug Rand from the Niskanen Center ran the numbers on administrative recapture and on two legislative scenarios — one based on the recapture framework used 20 years ago in the American Competitiveness in the 21st Century Act (AC21) and one based on the immigration proposal the Biden administration put out at the beginning of the year.

As you can see, in all cases the extra visas boost immigration levels and therefore the economy.

Something to note here is that the “new arrivals” level is always much lower than the “green cards recaptured” level. That’s because a lot of skilled professionals are in the United States under what are technically guest worker visas. Subject to certain restrictions, people who have those visas can generally keep renewing them. But normally, someone who is continually renewing an H1-B would ideally like to switch to an employment-based green card that gives them more flexibility in their job choices and the opportunity to become a citizen down the road. Normal people in casual conversation don’t really distinguish between someone who’s been living and working legally in the United States for years on a non-immigrant visa and someone who has a green card. But in legal terms, the former group are not “immigrants” — they are just foreign-born people living and working legally in the United States.

In economic terms, though, the number of new people arriving legally is what counts, so the fact that fewer than 100 percent of the new immigrants are actually new arrivals somewhat reduces the economic benefits of recapture.

Improving the fiscal benefits of immigration

This is not part of the Niskanen analysis, but I’ve always thought it’s a little bit strange that we don’t do more to explicitly improve the budget impact of immigration.

After all, we know that the demand for green cards far exceeds the supply of them. And we also know that political considerations place severe constraints on our ability to increase the supply of green cards. Right now, there are fees associated with getting visas, but they are pegged at a level that is basically just supposed to defray the costs of operating the USCIS. You could raise the fees and still have tons and tons of applicants, thus creating a situation in which there is a strong mechanical impact of green cards on the budget picture that doesn’t depend on economic forecasts and projections.

I’m not going to go full troll and say we should auction off immigration slots to the highest bidder. But within the context of the current system, we still have a supply/demand mismatch, and it would make sense for the government to capture the fiscal benefits.

Not so much because I am so interested in the fiscal benefits, but because every year there is some congressional negotiation or other that involves people trying to find ways to offset the costs of things. If you create a situation in which issuing more green cards very clearly generates a usable offset, that helps create a political system that is more likely to opt for openness. And ultimately I’d like to see us transcend these gimmicks around visa recapture and just break the taboo on adjusting the green card caps.

Busting the caps

The way immigration politics works in Congress is that sometimes, a member like Rep. Darryl Issa (R-CA) will write a bill that sounds good to me.

In this case, it was legislation to create 55,000 new visas for recent graduates of STEM programs to come work in the United States. But the final sentence of the bill eliminated the diversity visa program, which creates some extra slots for would-be immigrants from countries that don’t have a lot of residents living in the United States. This attack on the diversity visa program then became the main lens through which the legislation was covered and discussed.

But on a pretty basic level, either the new STEM visas are beneficial to the country or they aren’t. If they are (and they are), we should do it, and if they aren’t, we shouldn’t. You don’t need to take away someone else’s visas to create them.

There are lots of little corner cases where I’d love to try expanding immigration, like open borders with Canada. Any Canadian who wants to can come take a job in the United States. Is anyone sitting around worried about Canadians streaming across our borders to pay out of pocket for health insurance? Covid-19 aside, our normal practice is already to let Canadians come visit essentially without restriction. If someone wants to hire a Canadian, why not? If you insist on maintaining a global immigration cap, then any specific proposal, no matter how unobjectionable, will mobilize furious opposition from various interest groups and ethnic communities. But once you put on the table the possibility of expansion, then a lot of expansion ideas become potentially compelling.

That’s a bigger conversation than a reconciliation bill that isn’t going to be immigration-focused. In that context, the recapture focus makes a lot of sense. But I think a big part of the path forward on immigration has to be to try to pass a bill that features some increase — any increase — in the legal visa caps, just to remind the world that it’s possible.