The Nine Best Immigration Practices for U.S.-Inbound Businesses, Entrepreneurs and Investors

Over more than the last 30 years, I’ve advised countless foreign businesses and investors seeking to establish operations in the United States. Many thrived, but some, regrettably, failed to survive. Often, the founders’ inattentiveness to the requirements of U.S. immigration law has been a primary cause of rough beginnings or failures to launch. This blog post will offer best immigration practices and identify traps to avoid when a foreign firm or individual plans to start a business in America.

1.  Respect the Law – It’s Not a Game. The U.S. is no doubt the world leader when it comes to the complexity of immigration laws. Too often, foreign owners and corporate executives assume that just getting past the consular officer and the border inspector are the only hurdles in the path of pursuing their U.S. business objectives. Many entrepreneurs and company founders have yielded to the temptation of claiming to be a visitor seeking entry for business reasons when in fact their purpose is to start an enterprise and begin working in the U.S. These “stealth visitors” also tend to jump the gun by issuing a press release announcing their appointment to head the U.S. subsidiary before they even have a proper work visa in hand. Cutting corners on immigration compliance is no way to launch a U.S. business but an excellent way to face stiff fines and penalties, be deported or end up in jail. The Obama Administration, with enthusiastic goading by Congress, has dramatically ramped up immigration enforcement at all levels. Lesson 1: Understand that playing by the immigration rules is the only prudent way to start and operate a new business in the U.S.

2.  Develop a Viable Short- and Long-Term Immigration Strategy from the Outset. At the start of every new business, passions and enthusiasm are high. Foreign executives and entrepreneurs often want to obtain the quickest and most easily attained work visa possible. They shop for an immigration lawyer with a low fee who will provide the minimum service need to obtain that visa. Little thought is given to the statements made to the government in the process. Descriptions of the applicant’s prior career often are sketchy. Regrettably, in too many cases, long term strategies and initial statements presented to the government in supporting documents provided in order to get the “easy/quick” first visa may be given short shrift. These types of short-sighted thinking often will narrow future options available to obtain a long term visa or a green card (permanent residence). Lesson 2: Take the time to find an experienced immigration lawyer who will outline all options over time and guide the enterprise strategically for the long haul.

3.  Consider Tax and Employment Law Consequences. No worthwhile immigration strategy is devised in isolation. Other U.S. laws, especially those relating to taxation and employment, must be considered and harmonized with the long-term immigration plan. After considering all applicable laws, a wealthy foreign citizen may decide that obtaining a green card, and thereby becoming subject to U.S. taxation on worldwide income, is not quite so desirable as first perceived. An E-2 investor visa, allowing easy entry and exit as well as a long-term, perpetually renewable U.S. visa and the right to work (including work permission for the spouse) may be just as functional as a green card and still offer the possibility of less costly non-resident tax status in the U.S. Similarly, employment laws, especially in heavily regulated and litigious states such as California, may warrant the use of professional employer organizations (“PEOs”), temporary employment agencies or vendors rather than direct hiring – strategies that may affect the immigration plan. Lesson 3: Choose a solid, inter-disciplinary team of tax advisors and immigration and employment lawyers, preferably – for the sake of efficiency and convenience – in a single firm.

4.  Prepare a Solid Business Plan. Increasingly, U.S. consular officers and immigration agencies are demanding a sophisticated set of supporting documents to assure the government that the proposed business will be viable and likely to result in the hiring of U.S. workers and/or the generation of healthy profits. U.S. immigration officials want to be confident that every work or investor visa issued is in full compliance with law. Officials are alert to a variety of frauds perpetrated by visa applicants who may merely wish to frolic in the U.S. or engage in subversive or criminal activities rather than work. The centerpiece to any employment-based visa application and work-visa petition is a detailed business plan. Here is what the immigration authorities want to see in a “credible” business plan:

  • A description of the U.S. business, as well as its products or services, and the firm’s business objectives, strategies and goals.
  • A market analysis identifying the target market, prospective customer demographics, and the relative strengths and weaknesses of competing businesses.
  • A side-by-side comparison of competitors’ products or services and pricing.
  • A listing of required permits and licenses obtained.
  • A process map depicting in words or images the enterprise’s manufacturing, production or service-delivery processes, required materials, and suppliers.
  • The particulars of any executed contracts for supplies, vendor services and distribution channels. The firm’s intended business-development, marketing and sales strategies, including pricing, advertising, customer service and quality assurance.
  • A description of the business’s organizational and ownership structure and the relevant education and experience of its board of directors and key officers and management.
  • An explanation of anticipated staffing levels, a timetable for hiring, and job descriptions for all significant positions.
  • Financial projections outlining anticipated sales, costs, income projections and underlying economic assumptions.
  • A description of the source of funds used for capital investment, together with proof that the funds were lawfully obtained, deposited with the U.S. business and properly applied for legitimate start-up purposes (e.g., acquisition of premises, equipment, insurance, staff, professional services, etc.)

An immigration-related business plan is not necessarily drafted in the same way as a plan intended for submission to angel investors, hedge funds, venture capital firms or financial institutions. The plan is not “pitching” for financing or investment funding; rather, an immigration-related business plan seeks to persuade the government official reading it that the visa applicant and petitioning entity are serious and bona fide. Lesson 4: Make sure to submit a credible, fully-documented business plan.

5.  Gather Foreign-Source Documents and Information Ahead of Time. At the outset of every work-visa application, immigration counsel should provide a detailed list requesting all documents and information needed. The business entities and individuals receiving the list should take pains, before departing for the U.S., to obtain all items and arrange for full word-for-word translations. (The translations need not be officially certified by a government or formal translation bureau, but may be supported by the translator’s certificate attesting that the translator is fluent in the particular foreign language and English and that the translation is an accurate word-for-word rendering from the foreign to the English language.) Lesson 5: Think ahead and gather all required papers and data when readily accessible in the home country.

6.  Be Prepared for the U.S. Visa Interview and Border Inspection. The first step in preparation is making sure that all information entered into the very difficult online nonimmigrant visa application form, the DS-160, is complete and accurate, and that a digital copy is preserved before uploading (electronically submitting) the form to the consular post or embassy. The visa applicant should review with immigration counsel the likely questions to be posed by the consular official at the visa interview or border inspector at the port of entry as well as the applicant’s proposed answers. The applicant should be rested, well dressed and groomed, in business attire, with a minimum of jewelry, makeup or cologne. Any papers carried to the interview or border inspection should be well organized and easily accessed for presentation to the officer. Particulars of the proposed business and job duties, salary, investment amount, etc., should be accurately described, if questions are posed. Applicants should maintain a confident and relaxed attitude but remember at all times that he or she is speaking to a government official with police powers. All statements made must be truthful and complete. Information not asked should not be volunteered. Lesson 6: Treat the consular interview and border interrogation as oral examinations for which preparation is essential and the passing grade is the grant of the requested visa and work-authorized status in the U.S.

7.  Pay Heed to Expiration Dates. At the U.S. port of entry, the inspecting officer will confer on firm deputees allowed admission to the U.S. a nonimmigrant work-visa “status” on an entry card known as a Form I-94 (arrival/departure record). The I-94 “departure” portion of the card will note the visa category and the period of authorized status, either a date certain or for some visa categories, a notation (“D/S”), meaning the entrant may remain in the U.S. for the “duration of [lawfully maintained] status.” Make sure at the airport or land border that the proper period of authorized admission for the particular visa category is granted and that an improperly shorter period is not noted. Request a correction at that point. One should never allow a passport, visa stamp or I-94 form to expire without first having obtained a renewal or extension. Otherwise, the individual may face serious, adverse consequences such as removal (deportation), detention, and a bar to reentry for up to ten years. Lesson 7: Obtain the right length of status authorization at the port of entry and develop a calendaring/tickler system to renew or extend status long before it expires.

8.  Maintain Required Immigration Paperwork and Be Ready for a Government Audit. Employers are required to complete and maintain a variety of immigration paperwork and to present it upon request to the government, and if employing H-1B specialty occupation workers, to any member of the public who asks to see the documentation. The papers (or electronic records) required to be maintained will include the Form I-9 (Employment Eligibility Verification) confirming that each and every U.S. and foreign worker hired has confirmed eligibility to work under an authorized status and has presented documents of identity and work permission for inspection to the employer. The employer in turn must certify on Form I-9 that the documents chosen for presentation by the employee appear genuine and relate to the individual. In the case of an H-1B employer, the business must also maintain a public access folder and relevant payroll and tax records. Lesson 8: Be ready for an immigration-related government audit by preparing and retaining the required business records, and periodically engaging a competent immigration lawyer to audit the firm’s immigration compliance practices.

9.  Achieve Your Vision of the American Dream but Stay Vigilant about Immigration Compliance. Every new business has big dreams. America encourages entrepreneurial dreamers to pursue their goals within the bounds of the law. Initial business plans, however, may change over time. Companies reorganize, merge, are spun off, sold or dissolved. Job duties may “morph” into new assignments and materially different responsibilities. Foreign employees of the initially sponsoring U.S. firm may desire or need to be transferred to the payroll of an affiliated or wholly unrelated business. Foreign owners, investors and officials of new U.S.-based businesses should realize that employment-based work visas are tethered to the original visa petitioner or sponsor and that material changes in employing entity, job duties, job location and other eligibility criteria may require prior notice and approval of the federal government before the chance is allowed to occur. Lesson 9: Stay in touch with your immigration lawyer and let the lawyer know in advance when changes to the terms and conditions of the initial visa petition and application are likely to arise. Your lawyer can then guide you on required immigration-compliance action items.

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With the U.S. still the largest economy in the world, foreign businesses and individuals still yearn to get a “piece of the pie.” As this post has shown, close attention to U.S. immigration laws will make it more likely that the pie will be tasty and satisfying. Welcome to America!

ICE's New Employment Compliance Inspection Center to Target the Largest U.S. Companies

Practicing employment-related immigration law seems much like serving as consigliere to the biblical David and advising him on Goliath's points of vulnerability ("[smite] the Philistine in his forehead"). As the bar knows well, in immigration matters the brobdingnagian federal government tends to go after the most lilliputian of American businesses. 

The early case law interpreting the duty of employers to complete Form I-9 (Employment Eligibility Verification) illustrates this proclivity.  The immigration enforcers quickly learned that it is far easier to secure an I-9 victory against a small furniture maker or sausage factory, than a national steakhouse chain. Recent history reinforces this trend, as confirmed in the successful prosecutions of predominantly small employers by Immigration and Customs Enforcement (ICE). 

Emboldened by its parade of victories against mostly tiny employers ($7 million in fines against 2,740 firms in 2010), ICE is now poised to target some of America's largest companies.  As reported on January 20 by the Wall St. Journal's Miriam Jordan ("Crackdown on Illegal Workers Grows") in an interview of ICE Chief, John Morton, the agency has opened an "Employment Compliance Inspection Center." According to Mr. Morton, the new ECIC would "address a need to conduct audits even of the largest employers with a very large number of employees."  Just as the WSJ scoop reported, ICE's new ECIC debuted late this week in Crystal City, VA.   It will start with an initial crew of "15 auditors who will support ICE's worksite enforcement strategy by helping agency field offices around the country expedite Form I-9 audits of businesses selected for inspection by ICE."

While announcing the new ECIC last week, ICE also continued to trumpet its IMAGE program, an acronym for the ICE Mutual Agreement between Government and Employers.  The name, IMAGE, is a spot-on coinage because the program has proved to be little more than a public relations tactic garbed as a supposedly valuable "self-policing partnership" with the business community to improve immigration law compliance.  IMAGE should instead stand for ICE Makes you Agree to Get Enrolled, since most "voluntary" participants in the program are businesses that faced serious sanctions unless they agreed to enroll in IMAGE and fulfill its requirements in order to settle an ICE enforcement action.

Large corporations not under ICE investigation, however, have generally declined to join IMAGE because its major prerequisite for admission (allowing ICE to conduct an I-9 audit) is a non-starter. 

Why might a large, law-abiding and civic-minded company decline to be audited?  Because voluntary submission to an ICE audit would likely be a violation of fiduciary duty to the company's stockholders and could well lead to a securities class action.  A savvy plaintiffs' class action securities lawyer could easily make a winning case against a publicly-traded company that willingly enrolled in IMAGE by asserting the following readily proven facts in a complaint:

  • Approximately 8 million workers are Illegally employed in the U.S.;
  • Pervasive acts of document fraud, identity theft and false attestations of the legal right to work are the means by which law-abiding employers unknowingly hire unauthorized workers;
  • Fastidious compliance with all I-9 requirements will not prevent a company from unwittingly employing unauthorized workers because the I-9 only requires the employer to verify that the documents of identity and work permission presented by the new hire appear genuine and appear to relate to the individual;
  • Enrollment in E-Verify -- an online verification system maintained by the federal government, a system still vulnerable to fraud and misuse, according to the General Accounting Office -- will not result in the discovery and termination of unauthorized workers currently employed (except for such workers assigned to work under a narrow class of federal contracts) because E-Verify may not be used to determine whether everyone on the current payroll is authorized to work;
  • Given the foregoing situational realities, Defendant Company, if it had operated as a prudently managed corporation, should have known that a voluntary IMAGE-inspired I-9 audit by ICE would likely result in an order from the agency, effective immediately, without grace period, to terminate a material percentage of current workers whom ICE identifies as unauthorized for employment;
  • The abrupt termination of a significant percentage of current workers at Defendant Company has resulted in a major disruption of this IMAGE-enrolled business;
  • Defendant Company's voluntary enrollment in IMAGE is the foreseeable and proximate cause of the loss of such current workers and has adversely affected Defendant Company's revenues, expenses, profits, corporate brand and worker morale, thereby leading to a foreseeably precipitous decline in the price of the Defendant Company's shares listed on public stock exchanges;
  • WHEREFORE, by virtue of its voluntary enrollment in IMAGE, Defendant Company has breached its fiduciary duty to Plaintiff Shareholders, and accordingly this Court should order Defendant Company to pay Plaintiffs a Gazillion Dollars in damages plus attorneys fees (at 40+% of the damage award).

If IMAGE remains a no-go for large companies, what prevents ECIC's Crystal City auditors from (1) identifying unauthorized workers at a large company served with an ICE Notice of I-9 Inspection and (2) prompting the agency to order the same type of disruptive firing that IMAGE participation would trigger? Apparently nothing (save for due process of law and the prowess of their immigration lawyers). 

ECIC thus may well succeed where IMAGE has failed, as a Washington Post editorial predicts:

If the current policy [of targeting larger companies] turns up the heat on corporations, so much the better; they may in turn increase pressure on Congress to reform America's broken immigration system. As it stands, that system ignores the fact that millions of undocumented workers play an integral role in the economy and that the nation needs a realistic mechanism for admitting sufficient numbers of low-skilled employees to fill jobs that Americans don't want, even with the nation suffering from high unemployment.

Ironically, the cutting of ECIC's red ribbon came within days of Pres. Obama's announcement in his WSJ op-ed ("Toward a 21-st Century Regulatory System") of a new executive diktat designed to "bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades." 

Surely, the I-9 process -- a compliance program plagued by "overlapping rules," long-term legislative "tinkering" and the "influence" of union and management lobbyists -- could stand a fresh look.  Just as the Obama Administration determined that it should not proceed with its Social Security No-Match amendment to the I-9 regulations, the Administration and a bipartisan Congress should take other felicitous steps: 

  1. The Administration should update and reissue the INS 1998 proposed regulation and then at long last promulgate a final rule that would offer definitive guidance to employers by formally interpreting the 1996 statute -- the "Sonny Bono Amendment" found at INA § 274A(b)(6)(A), (B), and (C) -- that forgives employers acting in good faith who are found to have committed "technical or procedural" I-9 paperwork violations if the mistakes are corrected within 10 days of notice by ICE.
  2. Congress should scrap E-Verify or let it expire on schedule in 2012 and replace it (as well as the I-9 obligation) with a system that relieves employers of the governmental function of serving as the immigration police by developing a tamper-proof photo ID card that workers could swipe at the time of hire and thereby prove to employers their entitlement to work.
  3. Congress and the Administration should establish an "Employment-Based Immigration Truth and Reconciliation Commission" as part of a comprehensive immigration reform which would regularize the status of unauthorized workers and allow for orderly, humane and adequate future flows of workers on lawful visas.

Until these or other workable proposals are enacted, the salutary potential of our immigration laws to unleash the powerful forces of innovation and job creation will remain but an unrealized and wistful opportunity. Meantime, ECIC will presumably ensnare some large employers whose workforces will be decimated or whose immigration lawyers successfully fend off, in true Davidian style, the increasingly gargantuan ICE.

Rethinking Employment-Based Immigration: Stop the GOP's Slide toward Socialism

The title of this blog is preposterous, you say. The "Grand Old Party" and "Socialism" -- the words are simply inaptly juxtaposed in the same sentence. Strange as it seems, however, when it comes to immigration policy, a reading of the political tea leaves foreshadows a new trend line for the Republicans, one indeed headed down a slippery slope toward socialism's hallmark, the "bureaucratization of economic life."

Rep. Lamar Smith (R. Tex.), incoming Chairman of the House Judiciary Committee, recently told Politico that his first two hearings will focus on (1) immigration-related worksite enforcement by the Obama administration, and (2) the expansion of E-Verify, Homeland Security's still-error-prone system of electronically verifying employment eligibility for all workers in the U.S., citizens included.

For now, E-Verify is arguably voluntary except for certain federal contractors and -- depending on how the Supreme Court decides an already argued Arizona case -- for businesses in states and municipalities that require it. Smith appears poised to make E-Verify mandatory for all U.S. employers. He also seems eager to become a tougher sheriff than the President, a particularly aggressive immigration law enforcer who (by means of "silent raids") has assiduously targeted businesses suspected of violating the immigration laws.

According to Rep. Smith:

[Worksite enforcement and E-Verify] are what I call 70 percent issues — 70 percent or more of the American people support those efforts . . . I think they are popular across the board, and I think they will be appreciated by all American workers regardless of their ethnicity or background or anything else.

How will Republicans expand E-Verify and surpass Pres. Obama's precedent-setting enforcement record yet maintain any hope of keeping one of their key promises in the GOP's Pledge to America? The Pledge promises that the Republicans "will rein in the red tape factory in Washington, DC by requiring congressional approval of any new federal regulation that may add to our deficit and make it harder to create jobs."

Ironically, elsewhere in the Pledge, the GOP lays bare the very problems with increased worksite enforcement and E-Verify:

An unchecked executive, a compliant legislature, and an overreaching judiciary have combined to thwart the will of the people and overturn their votes and their values, striking down long-standing laws and institutions and scorning the deepest beliefs of the American people. . . .

We will end the attack on free enterprise by repealing job-killing policies and taking steps to assure current businesses and future entrepreneurs that the government will not stifle their ability to compete in the global marketplace.

A "compliant legislature" of Republicans and Democrats, with the help of an "unchecked executive," Barack Obama, resurrected and extended E-Verify for three years even though the program was set to expire in 2009. Indeed, Sen. Jeff Sessions (R. AL) argued at the time that three years was not enough.

E-Verify and its paper-based, complementary mandate, the Form I-9 (Employment Eligibility Verification) -- a one-sided form requiring four pages of instructions and a 56-page manual to explain -- indirectly imposes costly, time-consuming and distracting burdens on employers. These duties are an indirect imposition that the federal government, in an efficient system, ought to bear on its own, namely, the identification of foreign citizens who have no right to work in this country.

A truly Republican approach to the verification of employment eligibility would lift the burden to verify the right to work from the shoulders of employers. Instead, the federal government would itself determine eligibility and confirm each worker's employment authorization by issuing a tamper-proof work permit that the worker could swipe at the worksite on the date of hire. Employers would thus no longer be required to maintain any I-9 paperwork. Thus, Republicans would keep their Pledge. They would "rein in the red tape factory in Washington" and refrain from "stifl[ing] the ability of U.S. employers to compete in the global marketplace."

There are other things Republicans can do to reverse their slide into socialism, especially if they want to create jobs for unemployed citizens. The GOP can start by recognizing that carefully crafted laws promoting legal immigration will materially increase the economic security and prosperity of all Americans. The Republicans should also take these baker's-dozen EBI-promoting steps:

  1. Enact NEVA (which would allow employers to outsource the burden of employment verification to licensed third parties) as an interim measure leading to the abolition of the E-Verify and I-9 programs.
  2. Create a Cabinet-level immigration position with sufficient authority, staff and budget whose sole mission would be to promote "Employment-Based Immigration" (EBI).
  3. Expand or eliminate EBI Quotas. These quotas have not been adjusted since 1990 and have not grown apace with the size of the economy. Republicans should look at recent usage levels and recognize that the market is the best indicator of need for foreign workers and either create an elastic cap or eliminate the quota entirely.
  4. Enact the AgJobs and DREAM Acts. Food security and national defense -- twin totems revered by Republicans -- go hand in hand with the enactment of these two measures.
  5. Enact the E-2 Nonimmigrant Investor Adjustment, Start-Up Visa and Founder's Visa bills into law. What is it about the word "entrepreneur" that Republicans don't understand?
  6. End the hoax that is the Labor Department's PERM program and instead require the agency to identify jobs for which there are labor shortages. This would "eliminate government waste and red tape," a time-honored Republican chant.
  7. Enact a documented worker nonimmigrant visa category (with a dependents category reserved to spouses and children) for the eight million undocumented migrant workers in this country. Require the worker to pay a steep user fee in return for permission to work in the job they already hold, and allow them to travel abroad and reenter the U.S., thereby spurring job-creation for the airlines and travel industry. Just as Republicans refused to raise taxes in the middle of a recession, they likewise should not exalt the need to punish violation of a misdemeanor (entry without inspection) over costly and ultimately unattainable enforcement objectives that would substantially add to the deficit. If they must (although I don't agree), the GOP could include a spoonful of sugar, an express bar to permanent EBI benefits or a path to citizenship through this program (but no bar to permanent residence and citizenship if they qualify in other legally recognized ways).
  8. Enact an EBI Truth and Reconciliation Commission. Everyone knows that the broken immigration system, especially in industries that have historically employed large numbers of low skilled workers, has led to the creation of a "look-the-other-way" and "these-documents-seem-fine-to-me" mode of business in which employers may claim "plausible deniability" or (wittingly or unwittingly) turn lower-level employees into lawbreakers, naïfs or stooges. The GOP should give employers and their managerial staff willing to come forward the chance to admit their knowledge or suspicions of having employed unauthorized workers, pay a hefty fine, and receive "immunity" because the "tribe has spoken." Sounds extreme? Compare it to the recent IRS announcement that the taxing authorities are considering the renewal of criminal immunity for tax law violators.
  9. Enact an EBI waiver of unlawful presence. Rep. Smith's baby, born in 1996, the unlawful presence three- and ten-year bar has trapped many an EBI beneficiary or dependent. The waiver should be granted by USCIS upon a showing of either a non-wilful violation or of hardship to the worker or the employer if the waiver were to be refused.
  10. Enact a law that requires video-recording of all EBI visa applicants at consular interviews. Video-recording will provide a record that enhances homeland security while making sure that consular officers are disinclined to browbeat or treat visa applicants unfairly.
  11. Expand the Premium Processing Program for all EBI-related cases. Premium Processing fees for expedited decisions should be expanded to B-1 business-visitor change of status requests and all EBI nonimmigrant and immigrant visa petitions as well as to appeals to the AAO of all types of business, investor and other EBI cases.
  12. Expand Judicial Review of EBI cases. Allow the courts to determine whether the immigration agency in question acted improperly or exercised discretion unreasonably in denying EBI cases. Also, repeal the jurisdiction-stripping provisions of immigration statutes that preclude fair process and meaningful review in EBI cases.
  13. Give the States limited authority over immigration. Republicans should let individual states more directly determine their own economic policies by permitting enactment of EBI laws that allow creation of state-specific immigration benefits, as Ezra Klein of the Washington Post argues persuasively. This type of enactment would play well with the GOP's 10th Amendment and devolution supporters, while expressly preempting as an exclusively federal domain all other state and local immigration laws.

My principal disagreement with Rep. Smith and his Republican colleagues is in their choice of low-hanging fruit. They can readily resolve their immigration quandary by opting for the easy-to-grasp objectives of the EBI-powered, job-creation strategies outlined above. These strategies, as shown, are founded on often-espoused but inconsistently-applied GOP principles.

Or, they can perpetuate the GOP trend du jour which (1) positions them as espousers of anti-business (read: "socialist-on-immigration") opponents of civil rights for Hispanic and Asian people, and (2) tries to be as draconian as possible on immigration and employment, like many of their Republican colleagues at the state level are now doing. Simply stated, the members of the Grand Old Party must ask themseves: When it comes to immigration reform, are we Republicans or Socialists?