59

very much like to get on the record, that would help edify us as
to what we ought to be doing in this area?

Let’s go down the line. Mr. Puleo, you and your colleagues—each
colleague feel free to put something on the table here. We're
searching for some answers that make sense. Mr. Velde has given
us a great history of this and some good suggestions as to some
systems that are already in place that we might network together.
T'd like to know how INS feels.

Mr. PULEo. I'm searching for a question.

Mr. Horn. Well, give me the answer, and I'll figure out the ques-
tion.

Mr. PULEO. It’s like Jeopardy.

Mr. Horn. That’s right.

Mr. PULEO. I’m trying to recall the legislative initiative that
we're working on now, with both the department and OMB, to send
forward. There are some loopholes in the I-9 that we would want

ou to consider. The self-attestation can, in fact, give us a problem.
But T'll have to pass. Other than that, I don’t remember.

Mr. Horn. Well, let me just say, we're going to probably send
several written questions to all of you, rather than take your time
today, with other witnesses. We would appreciate it if you would
answer those. You are still under oath, in terms of any followup
questions from the committee.

Mr. PUuLEo. Absolutely.

Mr. Horn. Commissioner Hill.

Mr. HILL. Well, you’ve taken me a little bit off guard, but I sup-
pose that if I wanted to pet a point through on the record, I would
reiterate the point that I made in my oral testimony with respect
to the cost being an investment, a sound investment, and hope that
the resources that are needed to do the job are fully given to the
INS and the Social Security Administration so that they can do the
work that’s necessary to develop the infrastructure and clean up
the data bases that they have to do.

Mr. Horn. Dr. Martin, would you like to add anything?

Ms. MartTw. Only in addition to the points with regard to the in-
frastructure and data that Commissioner Hill mentioned, the other
point that is in the written testimony, that the cost be looked at
in relationship to the long-term savings that will accrue if illegal
immigration is reduced; that the States and localities have been
asking the Federal Government for funds to reimburse the costs of
health, education, criminal Justice costs, those are very high costs;
and that the investment of a small amount of money up front to
devise some of these systems for better verification will help save
a lot of costs in the long term.

Mr. Horn. Thank you.

Mr. Velde.

Mr. VELDE. Mr. Chairman, I’ve already made a number of rec-
ommendations in my statement, but I would urge the subcommit-
tee to commission a survey of Federal departments and agencies to
identify and understand the number of identification systems that
are in use now and try to make some sense of what the policies
are, as far as who is issued, who has access, how do you maintain
the security of the data bases, and so on, and hopefully obtain a
comprehensive understanding of what is there.


25

Executive Office for United States Attorneys—Immigration-Related Criminal Fraud Case Disposition Totals—

Continued
Ob
iit et Taste Tas; Guy lity gt ant Daina amie
als: Tals: Gull i i
FY Taal Guity Guity Toate Ver ee Geta Del se
Pla: Plea eae
Case Del. Case
1987 33003163

1986 4 78 SBD 3 2 3 47

Question 3, The Automated Fingerprint Identification System (AFIS) and the
Automated Finge rint Image Reporting and Match (AFIRM) system are reportedly
in use now to 0 Brady ‘Act background checks for gun purchases. Is it true that
the FBI is developing a more powerful and sophisticated system that will not be
able to interact with either AFIS or AFIRM? If so, what greater good will offset this
disturbing situation?

Answer, The INS and FBI are communicating regularly to maintain an effective
partnership and exchange data concerning the status of their fingerprint system ini-
tiatives, The INS and FBI fingerprint initiatives will be able to interact with tech-
nica] limitations.

The FBI is currently in the process of designing and developing a new state-of-
the-art system identified as the Integrated Automated Fingerprint Identification
System ({AFIS). In addition, the National Instant Check System (NICS) is being de-
veloped in accordance with the mandates set forth by the Brady Handgun Violence
Prevention Act (Brady Act), and will access databases in the National Crime Infor-
mation Center (NCIC) 2000 and the IAFIS. The NCIC 2000 System will provide ex-

anded criminal justice information as well as increased functionality. The present

CIC telecommunications network is used to support interim Brady Act require-
ments.

IAFIS is designed to completely modernize the criminal identification services and
work processes of the FBI'S Criminal Justice Information Services (CJIS) Division
by providing an automated approach for Performing Sngerprint comparisons. The
following three inter-related segments of IS will work together to perform the
tasks jired in the processing, storage, and dissemination of criminal history
records. First, the Automated Fingerprint Identification System (AFIS) will perform
automated ten-print and latent fingerprint searches. AFIS will produce ranked can-
didate lists in response to ITN and remote search requests. Second, Identification
Tasking and Networking (ITN) manages the electronic processing of fingerprint im-
ages by CJIS service providers. ITN interacts with both the III and AFIS and links
networks to the FBI. Finally, the Interstate Identification Index (III) will perform
automated name and biographic searches in response to ITN and NCIC requests.
Upgrades to III will allow expanded criminal history record exchange.

e Department of Justice is responsible for and has tasked the FBI with the de-
velopment of a NICS which will replace the five-day waiting period currently im-
posed under the interim provisions of the Brady Act. This system will provide users
with immediate information on persons prohibited from purchasing firearms and in-
sure the privacy and security of the NICS information. The Nies is expected to
process in excess of 300,000 name check inquiries per week, including actual fire-
arms purchases as well as concealed weapons permits, multiple purchase records in-
quiries, etc. This System will become operational by November 1998.

Background checks for gun purchases are currently compared against criminal
history records maintained in the Interstate Identification Index (II). The NICS
will be integrated with NCIC 2000 and the III segment of IAFIS to provide criminal
history record information and other disqualifying data, as identified in the Brady
Act, in response to back; ind checks for firearm purchases. However, some states
do submit the purchaser's fingerprints to the FBI for a more complete criminal his-
tory check than can be provided by NCIC/III alone. In addition, many states conduct
a preliminary inquiry at the state level prior to making an NCIC/III inquiry.

e INS’ Identification System (IDENT) is a planned biometric-based identifica-
tion system and is the cornerstone of the INS biometric identification program,
IDENT will assist the INS in quickly identifying persons of interest (e.g., criminal
aliens and those wanted by other law enforcement agencies). Additional benefits of
IDENT include improving the INS's ability to track recidivists and supporting sec-
ondary inspections at ports-of-entry. The use of this technology enables the Service
to detect and prosecute criminal aliens upon apprehension.


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, JR., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York CARDISS COLLINS, Illinois

DAN BURTON, Indiana HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, JR., West Virginia
STEVEN SCHIFF, New Mexico MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York
WILLIAM H. ZELIFF, JR., New Hampshire JOHN M. SPRATT, JR., South Carvlina
JOHN M. MCHUGH, New York LOUISE McINTOSH SLAUGHTER, New
STEPHEN HORN, California York

JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
PETER BLUTE, Massachusetts GARY A. CONDIT, California
THOMAS M. DAVIS, Virginia COLLIN C. PETERSON, Minnesota
DAVID M. MCINTOSH, Indiana KAREN L. THURMAN, Florida

JON D. FOX, Pennsylvania CAROLYN B. MALONEY, New York
RANDY TATE, Washington THOMAS M. BARRETT, Wisconsin
DICK CHRYSLER, Michigan GENE TAYLOR, Mississippi

GIL GUTKNECHT, Minnesota BARBARA-ROSE COLLINS, Michigan
MARK E. SOUDER, Indiana ELEANOR HOLMES NORTON, District of
WILLIAM J. MARTINI, New Jersey Columbia

JOE SCARBOROUGH, Florida JAMES P. MORAN, Virginia

JOHN B. SHADEGG, Arizona GENE GREEN, Texas

MICHAEL PATRICK FLANAGAN, Illinois = CARRIE P. MEEK, Florida

CHARLES F. BASS, New Hampshire FRANK MASCARA, Pennsylvania
STEVEN C. LATOURETTE, Ohio CHAKA FATTAH, Pennsylvania
MARSHALL “MARK” SANFORD, South —

Carolina BERNARD SANDERS, Vermont
ROBERT L. EHRLICH, JR., Maryland (Undependent)

JAMES L. CLARKE, Sto/f Director
KEVIN SABO, General Counsel
Juprns McCoy, Chief Clerk
Bup MYERS, Minority Stoff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman
MICHAEL PATRICK FLANAGAN, Iinois = CAROLYN B. MALONEY, New York

PETER BLUTE, Massachusetts MAJOR R. OWENS, New York
THOMAS M. DAVIS, Virginia FRANK MASCARA, Pennsylvania

JON D. FOX, Pennsylvania ROBERT E. WISE, JR., West Virginia
RANDY TATE, Washington + JOHN M. SPRATT, JR. South Carolina
JOE SCARBOROUGH, Florida PAUL E. KANJORSKI, Pennsylvania

CHARLES F. BASS, New Hampshire

Ex OFFIcIo

WILLIAM F. CLINGER, JR., Pennsylvania CARDISS COLLINS, Illinois
J. RUSSELL GEORGE, Staff Director
TONY POLZAK, Professional Staff Member
ANDREW G. RICHARDSON, Clerk
Marr PINKuS, Minority Professional Stoff
DAVE MCMILLEN, Minority Professional Stoff

a


68

INS considers this first pilot to be a success and is finalizing plans to expand it
to include 200 employers. According to INS officials, during the first year of oper-
ation, employers verified the employment eligibility of 2,486 alien new hires—of
which 72 percent were verified during the primary verification. Two hundred and.
thirty-six of these new hires were determined to be ineligible for employment—151
ultimately were terminated and the remainder quit work.

We agree with INS that this type of verification system has potential for helping
to reduce the number of ineligible alien workers. However, such a system is no bets
ter than the data on which it relies. How much INS uses time-consuming, expensive
validation efforts, such as what is needed for the secondary validation, will depend
on the extent to which data in the primary database is inaccurate, incomplete, or
out of date. We have reported on several occasions that INS’ database is incomplete
and inaccurate.? INS officials said they recognize that these problems continue to
exist and that they are initiating several improvements. One such effort is a plan
to interface several systems, which will allow a single point of data entry and reduce
key stroke mistakes.

Another issue that must be considered is the security and integrity of information
that is transmitted over telephone lines, Depending upon the level of security de-
sired, encryption and message authentication may be required. Encryption is a
mathematical process that transforms plain text data into ciphertext. Beeause this
ciphertext is meaningless to an unauthorized individual, it can provide coniidential-
ity and security. One method that provides integrity is the use of electronic signa-
ture techniques, which help ensure that data received are identical to the data that
are transmitted.

Even if INS’ databases were complete and accurate, three additional problems
could prohibit proper identification of illegal aliens. First, the telephone verification
system relies on the employer to contact INS to determine that the newly hired em-

loyee is eligible to work. Some employers may choose not to verify their newly
fired employee. Second, if, on the basis of erroneous information, the employer de-
termines the employee is a U.S. citizen, the employer would have no reason to con-
tact INS to verily employment eligibility since US. citizens are not included in the
database. Finally, aliens that are not legal may never be identified if they use bor-
rowed, stolen, or forged cards of legal aliens.

Other Systems Initiatives

There are several other initiatives that SSA and INS are currently considering
to improve eligibility determinations, For example, SSA and INS are looking at
ways to share databases to help employers verify the work eligibility of their em-

loyees. These agencies plan to test a two-step process to cross check INS and SSA
Files. Each agency will acess both INS and SSA databages to assist employers ia
verifying (1) the social security numbers and claims to U.S, citizenship and (2) work
eligibility against INS files if the SSA check is not conclusive. SSA also has plans
to test expanded, automated methods of providing quick-response verification of s0-
cial security number cards that are used as proof of employment eligibility.

CONNECTICUT CASE STUDY—SUCCESSFUL USE OF TECHNOLOGY

Let me now focus on one state that has successfully used some of the technology
mentioned above. In December 1989, Connecticut implemented an eligibility man-
agement system that improved service to both the state and its citizens. The state
spent about 4 years and $27 million to totally automate its eligibility management
system and interface with nine databases so that its state employees could guickly

letermine an applicant’s eligibility for three federal programs (Aid To Families Wi
Dependent Chit ren, Medicaid, and Food Stamps) and several state programs.>
With this system, applicants only need to visit one office to be considered for bene-
fits from all these programs. A angle automated file contai ng the complete record
of the approved applicant is maintained to manage the case. In February 1995 the
system had a caseload of approximately 325,000 clients. ;

State officials have reported the following productivity gains, cost savings, and re-
lated benefits from this automated technology:

2 [Information Management: Immigration and Naturalization Service Lacks Ready Access to
Bosentiel Data (CAOAMTEC-90-76, Sept, 27, 1990); Criminal Aliens: Majority Deported From
the New York City Area Not Listed in INS' Information Systems (GAO/GGD-87-41BR, Mar.
3, 1987).

These nine databases are the Department of Motor Vehicles, Department of Labor, Bureau
of Collection Services, Federal State Data Exchange, Beneficiary Data Exchange, Interna} Reve-
nue Service, Absent Parent Data, the Medicaid Management Information System, and banks.


79

PROTECTING PRIVACY IN THE 21ST CENTURY

Only the criminal community enjoys a degree of privacy. People who pay their
toxes share with anonymous clerks the most intimate details of how they earn and
spend their money, child care payments for an illegitimate offspring or their gam-
bling losses. In their physicians’ offices, in hospitals and in the nationwide central:
ized data bank of health insurance companies, people with a venereal disease can-
not hide their misfortune. Every one of us in this room has voluntarily shared more
information with his video store, mortgage company and credit cards company than
we can remember.

We all surrender a lot of privacy in return for the good life beyond the dreams
of our forefathers-—to travel without money and pay our bills with a credit card, to

a mortgage on our home from investors who have never met us and to rent mov-
fes to show in the privacy of our video. Hotels can keep records of who orders “x”
rated pay films, data which few persons would want to have publicly disclosed,

No one running for public office is immune from character assassination. If there
is anything even remotely emberrassing in their life history—let us say a ticket for
speeding at the age of 16, with a beer bottle in the car, they have good reason to
worry that the incident will be leaked in the next election campaign by an investiga.
tive reporter or an employee with access to the thirty year old pertinent record.

Millon R. Weasel and Jobn L'Liley may exaggerate «Iie when they estimate
that “that over half of our work force (is) busy producing, storing and transferring
knowledge."! Much of it is secret and proprietary. Its privacy can be protected only
by using the very same technology which allows Us to keep it in digital data banks.

The following five techniques are available:

1. Feedback to the Individual, Whenever a Privacy Sensitive Personal File Is

Accessed

Through reliance on biometric identity documents, all employees with access to
our TRW credit rating, can be required to leave a trace oF when and why they
accessed our file. Their authorization to enter the data bank could be made subject
to insertion of their ID card into a digital reader, verified at the same time by put-
ting their thumb in another digital device. Only when the two machines record the
same digital code will the computer permit them to access our file.

Few people would care to know when someone looks at their credit file. But
should it matter to them, the data would be available at low cost. A single “print”
command can generate a copy and another “mail” command can send the informa-
tion to the person who requested it.

2. Standards for Data Base Matching

Comparison of different data sets is an increasingly important source of knowl-
edge. Science lives on free exchange of information, including contradictions. The In-
ternal Revenue Service could not function without the capacity to compare our
claimed ‘earnings to payments reported on W-2 and 1099 forms by those who had
employed us.

‘or over 200 years in the United States the Census has succeeded remarkably
well in preventing the information it is required to collect each decade from every
US. resident from being shared with newspaper reporters, divorce lawyers—not
even with the FBI and the CIA.

Paper files are hard to make secure. Anyone with access to an office door can
sooner or later open a pertinent file drawer without being detected. Such an inva-
sion of privacy becomes much more difficult in digitally stored data banks, where
Data Base Matching must be preceded by an official authorization.

3. Bonding and Licensing of Sensitive Data Bank Owners and Employees

Not only physicians and attorneys need to be licensed. This requirement has been
extended to many occupations—stock brokers, real estate sales persons, plumbers
and electricians. The privilege of maintaining a privacy sensitive data file could be
subjected to a similar requirement to maintain a reasonable level of security and
an efficient procedure to expunge false or outdated information.

4, Privacy Versus Freedom of Information

The news media industry has succeeded having its rights to access information
protected by the Constitution and a good deal of State and Federal Legislation. Pri-
vacy rights have a much more vaguely defined when privacy protection laws are

1Milton R, Wessel and John T. Kirkley, “For A National Information Committee”,
Datamation: 234-246.


15

[Witnesses sworn.]

Mr. Horn, All witnesses affirmed.

Very well, I'd like to start with Mr. Hill, who is a member of the
U.S. Commission on Immigration Reform; and Susan Martin ac-
companies him, who is the Executive Director of the U.S. Commis-
sion on Immigration Reform.

Mr. Hill.

STATEMENT OF ROBERT CHARLES HILL, MEMBER, U.S. COM-
MISSION ON IMMIGRATION REFORM, AND SUSAN MARTIN,
EXECUTIVE DIRECTOR, U.S. COMMISSION ON IMMIGRATION
REFORM; JAMES A. PULEO, EXECUTIVE ASSOCIATE COMMIS-
SIONER FOR PROGRAMS, IMMIGRATION AND NATURALIZA-
TION SERVICE, ACCOMPANIED BY JOHN NAHAN, DIRECTOR
OF SYSTEMATIC ALIEN VERIFICATION FOR ENTITLEMENTS
BRANCH, AND GIDEON EPSTEIN, SENIOR FORENSICS ANA-
LYST, FORENSICS DOCUMENTATION LABORATORY

Mr. HILL. Mr. Chairman, Representative Maloney, members of
the subcommittee, on behalf of Professor Barbara Jordan, our
chair, and my fellow members of the U.S. Commission on Immigra-
tion Reform, I want to thank you for this opportunity to testify be-
fore you today.

Dr. Susan Martin, Executive Director of the Commission, is here
with me to assist in answering any questions you may have.

In our first report to Congress last fall, entitled “US. Immigra-
tion Policy: Restoring Credibility,” we sought to recommend a com-
prehensive strategy to control illegal immigration. Because I have
submitted written testimony for the record, let me just sum up a
few points regarding our proposals for development of a more effi-
cient system for verification of employment authorization and the
reliability of government documents in this critical area.

First, in order to prevent employment of persons not authorized
to work in the United States, while ensuring that Americans and
other legitimate workers are not discriminated against, we simply
must develop and implement a better system to verify work author-
ization at the work site.

Let me be very clear. The verification system we now have, the
I-9 process, does not do what it was supposed to do. It does not
effectively deter the employment of illegal aliens. What it does do,
we don’t want; namely, is to burden businesses with paperwork
while creating abundant opportunities for fraud and forgeries. It
may even provide an excuse for, if it does not actually provoke, dis-
crimination against American workers who happen to look or sound
foreign.

The Commission staff has provided each member of the sub-
committee with a copy of the I-9 form, in case you are not familiar
with it. At the root of these problems with the I-9 is the prolifera-
tion of counterfeit documents. During our investigations, the Com-
mission learned that illegal aliens can now purchase counterfeit
drivers’ licenses and Social Security cards for as little as $25.00. A
green card is slightly more expensive.

Moreover, we also learned that counterfeits of any document,
even the most tamper-resistant, would soon be available on the
open market, largely through the innovation of desktop publishing.


74

States, for example, that have 86 percent of the workload, those
kinds of details were not provided. So I really can’t tell you.

Mr. Davis. OK. Thank you. That’s all.

Mr. Horn. We just asked GAO to check out their possible fee
schedule, which would include, as maybe you heard me say, the
total transaction costs and labor costs as well.

Let me ask here, your assessment in response to Mrs. Maloney,
it seems to me that while 86 percent of the illegal problem is in
five States, if you concentrate on those States, it’s like chasing
gangs in one city; they just go to the next city. And you will simply
be spilling over into other States.

The fact is, illegals are in every State. They are spread around
the country. We don’t talk about the northern invasion across the
Canadian border as much as the southern invasion, or the Atlantic
and Pacific invasions. The Congress finally awakened 2 years ago
when you had boats of Chinese crammed full, waiting to land in
the Pacific Coast and the East Coast. That finally woke most peo-
ple up here who hadn’t done much or cared much, frankly, about
illegal immigration.

Td like to think the argument I made that they lost a number
of seats to California in the 1990 census also woke them up. We
went from 45 to 52, and of those roughly 7 seats, I think probably
4 or 5 are due to our illegal alien population in that decade, be-
cause they count as persons under the census. Pennsylvania lost 2.
Kentucky lost 1, et cetera. That will happen again in the year 2000
if we don’t solve the problem.

Now, has GAO gone in and looked at the total cost of illegal
aliens to this country? Have you ever done a study on this? The
Urban Institute has looked at one aspect, the cost of alien pris-
oners. As I remember, their figure is something like—in California,
it would be $250 million; whereas, the Governor says it’s $350 mil-
lion, this kind of discrepancy for the 20,000 or so illegal alien pris-
oners we incarcerate in California, in the State prison system.

Mr. REILLY. Have we? Ms. Edwards.

Ms. Epwarbs. We have not conducted any independent analyses
in those areas. As you point out, the Urban Institute has done
some work. But at the base of all of the analyses is the lack of suf-
ficient and specific data.

What we have done is look at the basis upon which the Urban
Institute study was conducted and essentially came to the conclu-
sion that we can’t make a decision one way or another as to the

‘oodness of the numbers, given that the data was so skimpy, aside
from the incarceration data, which is easier to track.

On a separate front, we are continuing to look at other studies,
and I think there is some work presently underway at GAO to look
at other studies which attempt to quantify the expenses associated
with the illegal alien population. But the extent of our work has
been to review other independent studies.

Mr. REILLY. Mr. Chairman, if I may, my response to Congress-
woman Maloney is, the problem that we constantly run into in
technology is the cost of it. I mean, everybody has raised that issue
today. at we're saying is that if we’re going to do pilot tests, it
would certainly be the lace to do it in the five States that have


32

work. Thus, employers are now able to determine if an alien has exceeded the time
limit for his or her work authorization by checking the alien’s INS document.

COUNTERFEIT-RESISTANT SOCIAL SECURITY CARDS

Originally, due to the limited purpose of the Social Security card, no special ef-
forts were made to prevent them from being counterfeited. However, as counterfeit-
ing became a concern, actions were taken to address this problem. For example, leg-
islation enacted in 1983 required that new and replacement Social Security cards
be made of banknote paper and—to the maximum extent practicable—be resistant
to counterfeiting. The current card incorporates these and a number of other secu-
rity features. It is now difficult to produce a high-quality counterfeit of these cards.
If the Social Security card were the only work eligibility document, it would have
to contain features that would allow employers to easily detect counterfeit cards.
Some types of humanly readable security features that make the card more counter-
feit resistant are already incorporated in the current Social Security card. However,
employers would have to look for them and be trained to recognize counterfeit cards.
Under current law, employers are only required to make a good faith effort to en-
sure that documents are genuine, and they are not required to be document experts.
But for the same reason that most of us will accept a counterfeit $20 bill—lack of
experience and expertise in identifying a counterfeit bill—counterfeit Social Security
cards may be accepted by emplayers
When improved versions of Social Security cards have been developed, they have
been issued only to new applicants because of the prohibitive cost of replacing all
cards still in use. Thus, there are now 46 valid versions of the Social Security card
in use. Approximately 61 percent of active card holders have been issued a counter-
feit-resistant card. But; as I mentioned, previous versions are still valid and employ-
ers generally have no reason not to accept them.

‘$8a’S ROLE IN SSN VERIFICATION

It is important to keep in mind that the personal identity and Social Security card
appearance issues that I have been discussing are quite separate from the issue of
SEN verification. By SSN verification, we mean the process by which SSA deter-
mines whether a name and SSN match SSA's records, that is, whether SSA issued
a given SSN to a given pergen. This process cannot determine whether the person
presenting the name and SSN is, in fact, the person to whom the SSN was issued.

SSA has always had the capability to verify SSNs, which is an important function
in ensuring accurate wage reporting and, ultimately, accurate benefit payments.
Employers may immediately verify SSNs for payroll purposes by calling our 800-
number or local office. This option'is also available to employers who want to verily
the SSN as part of the employment eligibility verification process. Relatively few
employers call for either purpose, however, because they tend not to question the
name and SSN provided by an employee. And although this option is available to
employers, neither the 800 number nor local offices are equipped to handle large
numbers of SSN verification requests.

With the expansion of the SSN’s use over the years, especially as a result of wide-
spread dependence on computers, SSA began to experience more and more requests
for SSN verification for purposes other than the Social Security program. Many of
these requests were from government agencies for the purpose of ensuring the accu-
racy of other Federal and State benefit programs, and automated data exchange sys-
tems were developed to comply with these requests.

On the other hand, SSA does not verify SSNs for the private sector for purposes
other than employer wage reporting and employment eligibility verification. The law
and our disclosure policy are designed to protect individual privacy—a fundamental
and widespread concern—and the confidentiality of the SSN because of the potential
for its use as a means of unauthorized access to personal records.

One of the systems that, was developed to verify SSNs for States is available to
employers to verify SSNs for employment eligibility verification purposes. The Enu-
meration Verification System (EVS), which was designed to carry out SSA’s role
with respect to the Federal-State Income and Eligibility Verification System (IEVS),
verifies SSNs based on ASPA such as name and date of birth. Since the mid-1980’s,
each State has been required to have an JEVS to match financial information re-
ceived from public assistance claimants with information in Federal and State data
bases so that they can identify claimants who are ineligible or who receive incorrect
benefit payments.

‘Although EVS is used primarily by States, employers may also use EVS to verify
SSNs for wage reporting or employment eligibility purposes. However, because EV:
consists of a high-volume process, under which the requests are transmitted to SSA



39

“Progun” organizations generally favor the instant check and want to see it up-
graded to be more reliable and accurate. “Antigun” groups want the waiting period
retained, but also support upgrade of the instant system. Congress has appropriated
$100 million for implementing Brady, on top of $27 million of earmarked “Byrne”
formula grants made available pursuant to the 1958 instant check legislation.

The Brady money is being used for a general program of record conversion, not
just those( conviction or disposition) records that are directly relevant for compliance
with the Gun Control Act requirements.

The INS should make its data bases available for Brady Act checks. Brady checks
can be used by employers to determine employment eligibility just as gun dealers
use the “network” through local chiefs of police(CLEOs).

The Social Security Administration should make SSN data available for these
purposes aa well.

A supercomputer network with five thousand terminals on line to DMVs or crimi-
nal justice agencies or employment agencies, could easily handle the workload of a
national employment check system. It would have a capacity with today’s state of
the art of supercomputer technology of handling all terminals at the same time and
processing inquiries at a rate of sixty billion calculations(MFLOPS) per second.

Similar networks are already in place in the U.S. Government. This would be in-
credible overkill, but easily affordable and could be supported by “user fees.” Or it
could be linked through Internet, as is now being demonstrated by a pilot project
involving the entire State of Iowa, and several cities.

The network could be decentralized or “distributed” with identifier data bases
maintained at the state or local DMV installations and exchanged through NCIC,
NLETS, or NDR( the National Drivers Registry of bad drivers maintained by
NHSTA for background checks on commercial drivers). This network is funded at
about $2 million per year( excluding state costs).

MOTOR VOTER & CHILD PROTECTION LEGISLATION

Last year Congress enacted national motor voter legislation which mandated the
states to amend voting laws for federal elections so that persons who have valid
drivers licenses would Automatically be entitled to vote. This legislation was enacted
over vigorous protests that it would lead to widespread vote fraud.

Unless Congress repeals or drastically amends this legislation, at the very least
it should provide for the states to bring drivers license requirements. As with Brady
checks, BEFORE a license is issued or renewed after the effective date of the federal
legislation, background checks should be made to determine voting egilibility.

10 can’t vote? Most convicted felons, non citizens and underage children. Who
can't buy guns? The same groups. Again, the DMVs should be able to access rel-
evant federal and state data bases to determine voter egilibility. This. egilibility in-
formation should be annotated on the drivers license, in much the same way that
the social security card now states whether the bearer is entitled to work.

The National Child Protection Act of 1993 requires criminal hist background
checks for those working the child care professions. This includes ions of work-
ers such as teachers, day care workers and volunteers for organizations serving your
people, As is the case with motor voters, who cannot work in child care? Most con-
victed felons, and of course, illegal aliens cannot work anywhere, including child
care. Employers should have access—it need not be more than indirect—to relevant
data bases for these checks.

FRAUD ON THE IRS

More than 200 million tax returns will be filed this year, with about 10 million
filed electronically. This is down from 13.5 million filed last year. According to the
March 6, issue of Government Computer News, the IRS intends to run electronic
matching programs on SSNs on all returns. Special fraud checks are being per-
formed on the electronic returns, especially those applying for early refunds. 5 mil-
lion such returns have been held up with the prime target being the earned income
tax credit(EITC).

i estimates that the fraud this year in this area alone might approach $5 bil-
ion.

A suit against the IRS seeking an injunction to stop the hold up was filed last
week bya financial company that had many loans against the anticipated quick re-
fonds. jocuments relating to this suit will be made available to the Subcommittee
for its use.

It is highly likely that many thousands of illegals have filed fraudulent claims in-
volving the EITC, in which non-existing dependents or those residing in foreign
countries have been utilized in attempting to qualify for the EITC.


64

STATEMENT OF FRANK W. REILLY, DIRECTOR, U.S. GENERAL
ACCOUNTING OFFICE; ACCOMPANIED BY HAZEL EDWARDS,
DIRECTOR, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, AND JOHN CHRIS MARTIN, ASSISTANT DIRECTOR

Mr. REILLY. Mr. Chairman and members of the subcommittee,
it’s a pleasure to be here today to discuss the efforts that INS and
Social Security are taking to improve the integrity of data used to
determine the eligibility of workers to work and receive benefits.
The efforts that they are taking include assessing the feasibility of
tamper-resistant cards and expanding the use of the telephone ver-
ification system.

Joining me today are two of my colleagues: Hazel Edwards on my
left here, who is Director of Information Resources Management of
the General Government Issues Group, and Chris Martin, who is
on her left, who is the Assistant Director, responsible for security
issues.

We are just going. to focus on three issues, and we will touch on
some af those very lightly, since you have heard so much testimony
already.

We want to talk about the opportunities and limitations of the
technology that INS and SSA are assessing for their systems; we
want to look at how one State, Connecticut, successfully used mod-
ern technology to implement a one-step eligibility management sys-
tem, which is probably fairly significant in the concerns that you
are talking about here today; and finally, issues to be considered
for implementing systems that are cost-effective and meet program
needs.

I wanted to emphasize one thing at the beginning: In the worker
identification business—because this, as you can see, is going to be
a big business, however it is done—there are two universal prob-
lems of data integrity and eligibility. It is difficult to determine the
real identity of the person applying for work. Frank Reilly shows
up someplace for work, whether he’s dark complected or whether
he’s light complected. To know that he is who he says he is is ve
difficult. Additionally, the eligibility of the person to receive the jol
or benefit has to be determined. These are really the two major
technical issues. No matter what we talk about, it always comes
back to those two points.

Now, when we talk about tamper-resistant cards, we would like
to make a few comments about them. They do help reduce fraud
by making it difficult to alter or duplicate the card. Various meth-
ods are available to make it tamper-resistant, and they have been
talked about today. Intaglio printing, which is used in currency,
and Social Security is now using this, creates that raised effect,
and it’s difficult to duplicate. It can be done, but it’s expensive.

Another method, biometric identifiers—and I think the speaker
after ourselves will talk about that—such as fingerprints that are
unique to the individual cardholder. INS is developing an employ-
ment authorization card that will include a photo and a fingerprint.
INS officials said this new card should help deter fraud by improv-
ing employers’ ability to verify employment.

here are problems, however, with these cards. A problem with
SSA use of tamper-resistant cards is the number of cards that have
to be replaced, 250 million to 270 million. They have currently 44


35

Mr. Horn. Thank you, Commissioner. As you were talking, I
happened to pull out my Social Security card, which says on the
back—this is the I-46 of about 1946, really—and I notice it says
on here, “For Social Security purposes, not for identification,”
which I gather has been dropped, because it is used, in a sense, for
identification. In universities that you and I presided over, that
was the basic student number.

Ms. CuaTER. It is still not intended to be an identification card.

Mr. Horn. No. I know.

Ms. CHATER. And I happen to have a new one with me, and it
says that it is the official verification of your Social Security num-
ber, period.

Mr. Horn. Yes. Interesting.

Well, the next panel is a person well experienced in Government,
former Administrator of the Law Enforcement Assistance Admini
tration, member of the staff of the U.S. Senate Judiciary Commit-
tee on two occasions, and an attorney-at-law in Washington, DC.

Mr. Richard W. Velde.

STATEMENT OF RICHARD W. VELDE, FORMER SENATE STAFF,
ATTORNEY-AT-LAW, WASHINGTON, DC

Mr. VELDE. Thank you, Mr. Chairman.

This is a daunting task which this subcommittee faces. Having
been working in these precincts for a number of years now, I’m be-
ginning to have some appreciation of the magnitude of the problem.

My institutional memory goes back to the mid-1960’s, and as a
young Senate staffer, the first legislation that I worked on was
what became the Gun Control Act of 1968. We were searching for
a means to identify gun buyers and gun dealers. The solution at
that time was to utilize, as a matter of Federal law, the State driv-
er’s license.

Indeed, the Brady Act checks, which are conducted today, are an
amendment to the 1968 act. The driver’s license or State identifica-
tion card is still the backbone of that system. A Brady check is only
as good or as bad as that driver’s license.

T also became involved, in my years at the Justice Department,
with the development of criminal identification and criminal his-
tory record systems, particularly automation of criminal history
records. This culminated, in 1976, with the issuance of a set of reg-
ulations which govern the interstate exchange of criminal history
information.

In recent years, this system has evolved so that now non-crimi-
nal-justice uses of criminal history records are more widespread
than criminal justice uses. As an example, examine four pieces of
recent Federal legislation, and you find common threads in all.
Who cannot buy guns? Convicted felons, illegal aliens, and under
age persons. 0 cannot vote in most States? Most convicted fel-
ons; illegal aliens, by definition; and underage persons.

I could cite other similar pieces of Federal legislation which have
similar requirements. Motor voter is another one and, of course,
the recently enacted Oprah Winfrey Act, which requires criminal
history background checks for all persons in child care. That’s ap-
proximately 40 million people. Again, who cannot work in child
care? Persons not lawfully entitled to work or live in the United



67

« issues to be considered for implementing cost-effective systems that meet pro-
gram needs.

OPPORTUNITIES AND LIMITATIONS OF TECHNOLOGY

INS and SSA are currently assessing several options to enhance the detection of
workers who are illegally seeking employment and benefits. These options include
the use of tamper-resistant identification cards and a telephone verification system.
However, these technologies could be costly and they will not, taken separately, ad-
dress all of the problems. For example, as we testified before the Subcommittee on
Social Security and Family Policy, Senate Committee on Finance in 1990, usi
tamper-resistant cards will not correct the underlying condition that leads to socia
security card and number misuse.! We noted that even with tamper-resistant cards,

eople will still be able to obtain one or more social security numbers by using false
Socuments, such as birth certificates or drivers licenses.

Tamper-resistant Cards
‘Tamper-resistant cards help to reduce fraud because they are difficult to duplicate

or alter. Various methods are available to make identification cards tamper-resist-
ant. For example, intaglio printing, such as what is used in U.S. currency, creates
a raised effect in the card, making tampering difficult because the process for in-
taglio printing is not widely available and itis difficult to replicate.

other method to make cards tamper-resistant is to use biometrics identifiers,
such as fingerprints, that are unique to the individual card holder. INS is develop-
ing a tamper-resistant employment authorization card that includes a photo and fin-

print. INS officials stated that this new card should help deter fraud by improv-

ing employers’ ability to verify employment,

problem facing SSA as it assesses the use of tamper-resistant cards is the num-
ber of cards that will have to be replaced. SSA currently has 44 valid versions of
social security number cards in use. To fully obtain the benefits of a tamper-resist-
ant card system, SSA will have to replace all of these versio officials esti-
mated that it will cost $3 billion to $6 billion to replace all of its active social secu-
rity number cards.

nally, as I mentioned earlier, the use of tamper-resistant cards alone will not
ensure the integrity of the information, because the cards do not address all of the
underlying conditions contributing to misuse. For example, people will still be able
to obtain cards by using false evidentiary documents, such as birth certificates, driv-
ers licenses, and “green cards.” And, unless biometrics identifiers, such as finger-
prints, are used, individuals will continue to be able to use cards belonging to oth-
ers.
INS’ Telephone Verification System

On March 30, 1992, INS initiated a 1-year telephone verification system pilot
project to assist employers in confirming whether an alien employee is authorized
to work, Nine corporations that traditionally attract large numbers of alien workers
within five states (California, Florida, Illinois, New York, and Texas) volunteered
and were selected to participate in this initial ‘pilot. After hiring an individual, em-
ployers from these companies could access the verification system's database usi
an electronic device connected through telephone lines, Once connected, they woul
provide the employee's INS case file number, date of birth, and the initial of their

rst name. The system, in turn, would use this information to confirm the individ-
ual’s employment eligibility,

INS used an extract of its central database of work authorization information as
the primary verification file for the system. This extract contains over 28 million
records of aliens who live in the United States. When primary verification from this
file cannot be made, a secondary verification process is conducted.

This secondary process includes INS queries of other databases as well as manual
searches of paper files. This secondary process, which must be completed within 10
business days from the date of the request, is much more costly and time-consum-

ing.
“ENS officials told us that the employers in this pilot saw two key benefits of this
system. It provided timely assurance that an alien employee is eligible for employ-
ment, and it enabled employers to minimize disruption to their business, which oc-
curs if they have to hire and train new employees to replace employees who at a
later time are identified as ineligible.

1Comments on S. 214—A Bill to Enhance the Integrity of the Social Security Card (GAO/T-
HRD-90-23, Apr. 18, 1990). eee re see y Card (GAN


45

Mr. EpsTeIN. Yes, Mr. Chairman. Prosecutions have increased
considerably in the area of fraudulent documents. There have been
very large counterfeiting operations, primarily located in Los Ange-
les, Westminster area, where we've identified that as being the
source for fraudulent documents nationwide.

There are a great many undercover operations that are resently
ongoing. We've had hundreds of prosecutions. There are hundreds
of individuals who have been prosecuted, and the conviction rate is
extremely high in all of those cases. We do have certain rules by
which we have to go. There have to be three undercover buys from
a particular seller. These are laws that we have to abide by, that
have been set down, before we can actually-—

Mr. Horn. This is a law that we passed that says there must be
three buys?

Mr. EPSTEIN. It’s a procedure that has been set down.

Mr. Horn. In other words, it’s the agency that sets that down,
not the Congress. I can’t believe we're that stupid.

Mr. EpsTEIN. I believe the U.S. attorney’s offices have set that
down as a policy.

Mr. Horn. The U.S. attorney’s office set it down. In other words,
the Congress hasn’t set it down. They just said, this is a violation
of the law.

Mr. PULEO. We are going to ask for changes in the sentencin,
guidelines to raise—limit—reduce the number of cases, with re; ard
to sentences, to raise the sentences, reduce the number of docu-
ments you will need to produce to meet the threshold. So we are
asking for changes in that.

Mr. Horn. at are the sentences? Do the judges sentence
them? Are these jury cases? What happens; do we know? Are they
probation, and “Good-bye; hope you’ré good little boys and girls?”

Mr. EPSTEIN. The major cases, those where we've actually, lit-
erally, found hundreds of thousands of documents on the premises,
and where we have made the buys and then identified the cards
that have been purchased against the documents that are actually
found on the premises, that type of case normally results in a con-
siderable amount of jail time.

That has gone up. It is taken much more seriously now by U.S.
attorneys. In the past where some of those sentences were light,
they are now becoming much stiffer, and the time served is much
longer.

Mr. Horn. Well, that’s good to hear, because my next question
was going to be, have you had the cooperation of the U.S. attorneys
in the relevant areas?

Mr. EPSTEIN. We have. Obviously, in certain areas, they have a
considerable amount of crime, and it has to be sometimes a major
case before they will consider it for prosecution. But I can say that
in my experience with U.S. attorneys across the country in these
counterfeiting cases, they are much more apt now to take these
cases on and to try them, whereas a number of years ago they
weren’t that excited about taking them.

Mr. Horn. One of the areas this committee is looking at is the
proper allocation of U.S. attorneys. We had a major hearing on that
in the 103d Congress. I'd like INS to file for the record how many
cases have they brought to the U.S. attorneys in this area and


87

not least you have the ability to tie the presenter to the document which is accom-
plished through the biometric information contained in the smart card.

‘This concludes my testimony. 1 know I have presented my position here today in
a brief simplified manner. If the technologies I have elaborated on are put into use
by the government I strongly feel there will be a great impact on the fraud picture
aa we see it today.

Mr. Horn. Thank you very much.

Representative Maloney.

Mrs. MALONEY. Thank you, Mr. Chairman.

A number of witnesses have testified earlier today about how
easy it is to forge a birth certificate. From a birth certificate, one
can then get a passport, a license, and probably a green card. How
would we first deal with securing the birth certificate?

Mr. MELTZER. Is that for any of us?

Mrs. MALONEY. Any of you.

Mr. MELTZER. First of all, you would have to go to a different
technology. Birth certificates, as they exist today, I don’t think can
be prevented from being compromised. They are a paper document.
Most people transport this document, even with the certified seal
that most counties put on, to a place that accepts it. So all they
are accepting is a piece of paper with some notations on it and
some type of stamp.

Again, with the imaging processes out there today, you can dupli-
cate anything. One has to keep in mind the theory behind these
imaging processes is to make a duplication of something without
your being able to notice that it has been duplicated. So I think you
would have to go into some new technology, if you really want to
start at the basis, and again, maybe you have to issue a smart card
at this time, with certain information in there that can’t be altered.
Tf you try to crack that chip, it all just turns to mush on you.

Mrs. MALONEY. We routinely read stories about counterfeit smart
cards, credit cards. What is the extent of this problem?

Mr. MELTZER. Not counterfeit smart cards; counterfeit credit
cards, yes. The majority of cards that are counterfeited are all mag
stripe type cards. That’s why the card-issuing industry is moving
to the second level of technology or the second generation of cards,
which will be the smart card.

In Europe, you will find that the majority of cards that are being
compromised over there that are——

Mrs. MALONEY. Is that a biometric card? What’s a smart card?

Mr. MELTZER. A smart card is a chip card.

Mrs. MALONEY. A chip card.

Mr. MELTZER. Right. The terminology is one and the same. It’s
an integrated circuit chip placed in your credit card, and that’s like
a little computer chip that contains all the information you put in.
You can put in different levels of security in there, depending on
how elaborate you want to get. These systems can be tailored to
your specific needs that nobody else has access, or they can be tai-

lored to where there is a public key access.

In Europe now, France has gone totally to the smart card. There
you are seeing a lot of fraud, but when one analyzes that fraud,
they currently have dual—

Mrs. MALONEY. Fraud with the smart card?

Mr. MELTZER. Yes. They have dual technology on that card be-
cause they are unable to use the card outside of that country. So,


8

Mr. Horn. Thank you for coming.

In deference to Representative Becerra’s schedule, I did not have
either Representative Maloney or myself make an opening state-
ment, which we will do now. I have a brief one.

The subcommittee is meeting today to solicit from interested par-
ties Suggestions for improving the integrity of documents that enti-
tle people to gain public benefits or to be hired for work. A Com-
mission on Immigration Reform, headed by former U.S. Represent-
ative Barbara Jordan, made several recommendations last fall for
restoring credibility to the Nation’s immigration policy.

The commission cited widespread counterfeiting of documents ac-
ceptable for verification of identity and employment authorization
as a factor undermining the current process. It recommended de-
velopment of a “simpler, more fraud-resistant system for verifying
work authorization.”

In the President's 1996 budget, the administration proposes to
reform the nation’s immigration process, in part through develop-
ment of a nationally available employment verification system.
Such a system very likely will depend heavily on the accuracy of
a supporting data base, and will rely even more critically on the
integrity of documents used to inquire against it.

Today, we will hear from several qualified witnesses with varied
experiences in matters that relate to document and data base in-
tegrity. I look forward to everyone’s testimony and to working with
all of you on how best to fix what is wrong with our system for
verifying benefit entitlements and work authorization.

May I say that I have had a longstanding interest in this, and
I will insert this as part of my statement: a dissent and additional
statement I filed in 1980, as vice chairman of the U.S. Commission
on Civil Rights. I noted that, on August 4, 1977, the Carter admin-
istration proposed a package of legislative proposals to reform our
immigration laws. One of the key recommendations was the call for
employer sanctions to make illegal the hiring of so-called “undocu-
mented workers.”

Various ethnic communities quite properly expressed concern
that employers might be reluctant to hire those with a shade of
skin other than white for fear that they were undocumented work-
ers and illegal aliens. In brief, the administration left out the es-
sential element which is key to a fair employer sanctions policy,
and that is what some have described as a “secure” or “counterfeit-
proof” Social Security card.

I agree with that criticism. If we are to deal with reality and not
find ourselves still discussing this matter a decade from now, while
millions of American citizens continue to be denied job opportuni-
ties, then the establishment of such a secure and counterfeit-proof
Social Security card for any who wish to be employed must be a
first order of business on the national legislative agenda. That was
1980. It is now 1995. I was wrong about the decade discussion; it’s
a decade and a half discussion.

So here we are, and without objection the full statement will be
added to my opening statement.

[The prepared statement of Hon. Stephen Horn follows:]


INTEGRITY OF GOVERNMENT DOCUMENTS

TUESDAY, MARCH 7, 1995

U.S. HousE oF REPRESENTATIVES,
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 2:15 em in room
2154, Rayburn House Office Building, the Honorable phen Horn
(chairman of the subcommittee) presiding.

Present: Representatives Horn, Flanagan, Davis, Bass, and
Maloney.

Staff present: J. Russell George, staff director; Tony Polzak, pro-
fessional staff member; Andrew G. Richardson, clerk; Matt Pinkus,
Dave McMillen, minority professional staff members.

Mr. Horn. A quorum being present, the hearing will begin.

Our first guest on the first panel is a distinguished Member of
Congress from southern California, Representative Xavier Becerra.

Representative Becerra.

STATEMENT OF HON. XAVIER BECERRA, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. BECERRA. Thank you, Mr. Chairman.

Thank you to Mrs. Maloney and the members of the committee
for the generous opportunity to come before you to talk a little bit
about something that I believe is getting a great deal of attention
these days, and that is, of course, the whole issue of tamper-proof
identification cards, counterfeiting; what we can do to try to make
sure that any document for identification purposes which the Gov-
ernment issues, or perhaps anyone in the public or private sector,
issues, that we ensure that that card is used for the purpose that
it was first issued.

In the process of providing some testimony here, let me try to
focus on the three salient points that I think must be addressed by
any body that is considering the whole issue of tamper-proof identi-
fication cards.

First, I think you have to take a look closely at the system and
the data that is used for the purpose of developing a tamper-proof
identification card. Is the data base clean? Is it accurate?

Second, I think you need to take a look at the whole issue of the
risks posed by going toward some form of identification card which
may be used to identify the general public and the concerns with
privacy that may be involved there.

q@


42

Mr. Horn. OK. When we get to that, I notice you point out that
there’s a difference in who pays what in the Social Security Admin-
istration. Let me ask you: Do general funds pay for that 800 num-

er?

Ms. CHATER, Let me see. The operation of our agency comes from
our administrative budget. So the answer to your question is, yes,
it comes from general funds.

Mr. Horn. Now, just explain, because I think people are prob-
ably—this member is a little confused. Your administrative budget
is appropriated by Congress?

Ms. CHATER. That is correct.

Mr. Horn, It is not out of the trust fund money that comes in
to Social Security, now at $1 billion surplus a week?

Ms. CHATER. Let me just correct what I said to you. The 800
number, I am told, is operated partially out of the trust funds.

Mr. Horn. Out of the trust fund?

Ms. CHATER. Yes.

Mr. Horn. Now, the 65,000 employees, what funds pay them?

Ms. CuHaTER. Our administrative budget.

Mr. Horn. Your administrative budget appropriated by Con-
gress?

Ms. CHATER. Some of it, because we administer the SSI program,
which is paid fully by general funds. We administer the Social Se-
curity program, and those administrative expenses are funded by
the trust funds.

Mr. Horn. What does that general fund budget appropriated by
Congress amount to nowadays?

Ms. CHATER. For 1996, we have requested in the President’s
budget $6.2 billion. But I would like to also add that that’s only
1.6 percent of our total budget.

Mr. Horn. Well, you've run a very efficient agency over the
years, and the Congress has high respect for it. I know you are
overwhelmed with a lot of things to do. But I guess what worries
me is—and this becomes a philosophical question that Ways and
Means would have to handle—I don’t understand why, when we've
got funds flowing in, why the administrative costs can’t be paid out
of those funds, unless they are programs that are not related to So-
cial Security.

That’s the way any other pension system would work; you would
have your basic administrative expenses, and because you are so
vast, it would be a fairly low percentage that is paid out of it or
paid out of the investments of your funds, in Government bonds or

owever.

I say this because we seem to be differentiating on the cost of
the card as a sort of flag waved out there saying, “Gee, it’s hard
for us to do it. It’s $3 billion to $6 billion.” Well, if we can do the
800 number out of trust funds, I don’t understand why we can’t re-
place cards out of trust funds, or we have a fee for the replacement
of the card,

Ms. CHATER. As I understand it, according to the law, replace-
ment of cards must be paid for by general funds.

Mr. Horn. OK. Well, we'll take a look at that.

Representative Maloney.

Mrs. MALONEY. Thank you, Mr. Chairman.


3

we don’t know, I think you would certainly want to start with those
five States.

I think those five States, if they have 86 percent of the popu-
lation that you’re trying to deal with, that’s certainly the place you
would begin. And if you find it really works well there, then I think
you would move someplace else. But I couldn’t raise any disagree-
ment with what you said.

Mrs. MALONEY. Do you believe you can protect privacy with a na-
tional ID system?

Mr. REILLY. I think protecting privacy is going to become one of
the most critical issues for the Cangress—and I don’t know wheth-
er this Congress or subsequent—because it isn’t just these cards,
Social Security and INS, we're all going to be—in a few years, ev-
erybody is going to have computerized medical records. And there’s
probably nothing more private than a person’s medical record.

And we're going to have to have this because, if we have an
emergency room and somebody shows up in an emergency room,
and we have all the capability in the country to have people’s
records computerized, then you are certainly going to want to have
that information to be available in that emergency room, when you
show up, and you're unconscious and they want to take care of you,
and they need that kind of information.

So this is going to become a real issue, in terms of our health
and our longevity and the ability of doctors to take care of us prop-
erly, going from one HMO to another, going from one doctor to an-
other. So we know that coming down the road these kinds of tech-
nologies are in the marketplace and are being developed.

So this privacy issue is not just related to INS and Social Secu-
rity; it’s going to be related to technology. And I think it can be
dealt with, and I think that ultimately it will be dealt with.

Mrs. MALONEY. Well, how do you deal with it?

Mr. REILLY. The last Congress had a number of bipartisan sup-
porters of a privacy law, in both the House and Senate, and unfor-
tunately it was not able, at the last moment, to get attached to a
piece of legislation. But my understanding is, this legislation was
quite complete and it dealt with all of the various kinds of privacy
issues. And I don’t know where the legislation stands now, but I
think that might be a good place to begin.

Mrs. MALONEY. Thank you very much.

Mr. Horn. The gentleman from Virginia, Mr. Davis.

Mr. Davis. Thank you, Mr. Chairman. I apologize for not being
here. I had another subcommittee meeting today.

I think you talked about the INS problem of the disparate com-
puter data bases. How long is it going to take and what level of
resources will it take to overcome the problem? What are the budg-
et implications? Any thoughts on that?

Mr. REILLY. Mr. Davis, before you were here, the people from
INS and Social Security, they had extensive discussions on this,
and I did not hear a definitive answer on what it was going to cost
or how long it was going to take.

What they are working on now are pilot tests. They currently
have nine employers, and they were talking about what it would
cost for the nine employers, but what it would cost to do the five


82

mutually exclusive. To the contrary, incorporation of technology
and systematic safeguards result in better resource allocations in
both arenas.

That concludes my remarks, sir.
[The prepared statement of Mr. Rasor follows:]

PREPARED STATEMENT OF ROBERT Rasor, SPECIAL AGENT, U.S. SECRET SERVICE,
DEPARTMENT OF THE TREASURY

Mr. Chairman, thank you for the opportunity to address this Committee on the
subject of counterfeiting of documents and false Identification. I am Robert H.
Rasor, representing the United States Secret Service in my capacity as the Special
Agent in arge of our Financial Crimes Division.

__As a law enforcement bureau of the Department of the Treasury, the Secret Serv-
ice historically has been charged as the lead agency in the detection, prevention,
and suppression of counterfeit currency and Government obligations. To 1)
the Secret Service became the lead investigative agency in false identificatio
tigations as the result of the passage of the False Identification Crime Control Act
of 1982. This legislation was intended to control the use of false identification in
illegal immigration, drug trafficking, and flight from justice. In recent times, the use
of false identification, as a vehicle to commit financial crimes, has become a priority
concern to the Secret Service and the financial community. In 1994, the Secret Serv-
ice investigated financial crimes cases totalling $1.5 billion. A majority of these
cases involved false identification as a prerequisite to the crime. Counterfeit or
fraudulent identification initially does not seem as serious a crime as bank robbery,
thefts, or drug smuggling, until one realizes that fraudulent identification is the
base necessity for most financial crimes, illegal border crossings, and fraudulent ap-
plications for benefits from local, State, and Federal Governments. Fraudulent iden-
tification allows the criminal element to move freely through society, hidden from
Jaw enforcement and regulatory agencies, whose duty it is to protect the Nation's
financial systems, borders, and benefit agencies. If our currency was counterfeited
at the rate that false identification is being produced, the impact would be dramatic
to the economy and the confidence of the public in those same documents.

The United States Secret Service has had a number of opportunities this past
ear to testify before various congressional subcommittees regarding the problem of
financial fraud and the myriad of attacks being directed at this Nation’s economic
system. The Secret Service is in a position to observe this problem as a result of
its criminal investigative responsibilities concerning a wide variety of offenses, in-

cluding financial institution fraud, credit card fraud, food stamp fraud, counterfeit-
ing of U.S. currency, and the unlawful production and use of false identification doc-
uments.

In addition to conducting criminal investigations, the Secret Service has developed
a proactive risk analysis process which, when coupled with existing enforcement ex-
pertise, has produced major successes in combatting a broad spectrum of financial

crimes by addressing “system fixes” in the banking, credit card, telecommunications,
and government entitlement areas. The service endeavors to prevent crimes by iden-
tifying these systemic weaknesses which allow recurring criminal activity. Once the
weaknesses are identified, the service attempts to address them by suggesting pos-
sible program management solutions.

Secret Service investigations over the years have led agents to conclude there are
two fundamental areas where commercial and fovernmental financial systems are
vulnerable to attack: the introduction of fraudulent applications for entering into a
program and the use of counterfeit instruments to successfully complete a wide vari-
ety of fraud within these systems.

‘Application fraud occurs when an individual applies for a loan, credit card, or
even Government benefits in a fictitious name and produces false identification doc-
uments to assist in the scheme. This form of fraud allows the criminal to open, ac-
cess and obtain funds from multiple accounts, thereby causing the Government and
financial institutions to bear substantial monetary losses. Secret Service investiga-
tions have clearly identified a need for the implementation of better management
and training programs to combat this type of fraud.

The ‘second, vulnerable area of financial systems relates to a criminal activity
which uses “desk-top publishing” to counterfeit corporate checks, bonds, securities,
and false identification documents. Criminal activities involving the production of
counterfeit credit cards and false identification documents, counterfeit negotiable in-
struments, loan fraud and the use of fictitious bank accounts have increased dra-
matically over the past few years, due to the inexpensive and easily accessible com-



INTEGRITY OF GOVERNMENT DOCUMENTS

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION

MARCH 7, 1995

Printed for the use of the Committee on Government Reform and Oversight

es

U.S. GOVERNMENT PRINTING OFFICE
20-679 CC WASHINGTON : 1995

went Printing Office
les Office. Washington. DC 20402
020-7

Superintendent of Docu

a



IV

Letters, statements, ete., submitted for the record by—Continued
Velde, Richard W., former Senate staff, attorney-at-law, Washington, ne,
prepared statement of .



30

as a photograph, fingerprint or other biometric identifier, hologram, or magnetic
stripe that would make the card difficult to duplicate. er een

GAO was directed by the Immigration Reform and Control Act of 1986 (IRCA) to
look at this role for the Social Security card. GAO evaluated plastic and polyester
card technologies and found that these technologies are two to ten times more ex-
pensive than paper cards. In addition, GAO noted that plastic or polyester cards
wear out and have to be replaced every few years. In its March 1988 report, the
GAO concluded that, even with enhancements, the Social Security card would prob-
ably not provide an effective identity system.

‘AO also noted that an enhanced card would impose additional burdens on em-
ployers, yet provide no guarantee against counterfeiting. Data storage devices re-
quire the use of electronic equipment. Off-line readers would merely establish
whether or not the name and SSN displayed on the card match the encoded infor-
mation on the magnetic stripe. On-line systems, linked to a central data base, would
be needed to both confirm the name and number match and verify the identifying
data the card contains. The magnetic stripe on a plastic card is the technology most
in use today. GAO reported that magnetic stripe readers cost $100-$150, a consider-
able outlay for many employers who would have no other use for the equipment.
Also, they concluded that the commercial availabilty of readers and coding equip-
ment for magnetic stripes makes this technology highly susceptible to counterfeit-
ing. GAO also pointed out that rapid advances in card technology may quickly
render obsolete any hi-tech anti-counterfeiting efforts.

Changing the Social Security card by adding a photograph and requiring that it

signed when issued might make it more effective as an identity ‘document, but
people intent on fraud can substitute a photograph, modify their appearance, or re-

roduce signatures with Practice. In addition, pictures on the card would require up-
lating from time to time because of changes in personal appearance.

More effective biometric identifiers, such as fingerprints, require verification tech-
niques that are expensive and that cannot be applied by nomex pers, A technology
that has emerged for linking users to documents is the Personal Identification Num-
ber or PIN. Automatic teller machines in particular have popularized this tech-
nology. However, GAO noted that incorporating a PIN in a work eligibility docu-
ment would require the use of card readers and on-line access to a data base match-
ing the PIN with a unique code in a magnetic stripe on the card. Also, GAO re-

rted that law enforcement authorities Rave found that many users write their

IN on the card or elsewhere in their wallet or purse in case they should forget
it Thus, if the card is stolen, the thief also has the PIN that permits him to use
the card.

GAO concluded that the card would not be a good identifier because it does not
satisfy three criteria for a reliable identity document. It must be difficult to counter-
feit; allow verification that the person presenting the document is, in fact, the indi-
vidual to whom it was issued; and be difficult to obtain fraudulently.

‘We share GAO's views that these are the appropriate criteria to use in evaluating
identity documents. It appears that no single document can meet all three criteria,
primarily because a determined individual can obtain a counterfeit document or a
valid document through fraudulent means. Furthermore, efforts to develop a fraud-
proof identity document for employment eligibility verification purposes would re-
quire major ‘changes in the process of issuing birth certificates and be very expen-
sive. While it is possible to develop a more counterfeit-resistant Social Security card,
there are reasons aside from cost-effectiveness why it would not be an effective iden-
tity document.

FALSE DOCUMENTS IMPEDE THE SECURITY OF SOCIAL SECURITY CARDS

As I mentioned earlier, even if the Social Security card were enhanced, there
would be no assurance that the card had been properly issued to an individual. This
is because the documents which a Social Security card applicant must present—pri-
marily a birth certificate and immigration forms—are relatively easy to alter, coun-
terfeit, or obtain fraudulently.

In 1988, the Office of Inspector General (OIG) of the Department of Health and
Human Services (HHS) issued a report entitled Birth Certificate Fraud which exam-
ined vulnerabilities to fraud in birth certificate forms and issuance procedures and
in procedures of user agencies which receive birth certificates as documentation. The
problems found by the OIG included:

« False birth certificates are used to create false identities;

* An estimated 7,000 local issuing offices issue some 10,000 different versions of
birth certificate forms which may be submitted to user agencies for evaluation; and,


89

tificate can be updated to a simpler biometric indicator, where you
don’t have to take your shoes off, and thereby gradually improve
the identification system.

What we need to do—and this is, again, something that Congress
has to address; namely, the fact that birth and death certificates
are being issued by over 4,000 different jurisdictions. We need to
find some way of inducing all of these jurisdictions, by some kind
of a carrot program, to accept uniform standards. In 25 years we
will begin to make it more and more difficult for persons to forge
birth certificates.

Until we can do that, we have to go with the fact that the kind
of improvements that have been suggested will probably reduce the
amount of fraud by maybe 75, 80 percent, not absolutely.

Mrs. MALONEY. Thank you.

Thank you, Mr. Chairman.

Mr. Horn. Thank you, Representative Maloney.

Let me go down the line on a few questions here. You have heard
Mr. Velde’s comments on the various motor vehicle linkages across
the country, where generally they do see the person, take the
photo, get the fingerprint, et cetera. So one option here is the exist-
ing 50-State system of either State identification, State motor vehi-
cle licenses, and so forth, and to link that with some of the other
ones that are already being linked, in the sense—the Brady bill
was mentioned and others.

What is the reaction of this panel to that? Or should we try to
go for this great massive national approach, which people have
talked about for years but never seems to be getting anywhere.
There are constant demonstration projects but nothing much hap-
pening. What’s the feeling of you experts, in terms of the evolution
of what is already there and networking it together versus sitting
around hoping something will happen?

Mr. EaTON. Well, I would go for the State driver’s license system
for two reasons: The States are closer to the individuals than the
Federal Government. If the Federal Government sets up, through
legislation, standards for drivers’ licenses, in return for which
States are eligible for certain programs—even without that carrot,
probably more and more States will accept the same or comparable
technology. On that basis, 1 believe we can greatly reduce the
fraudulent use of identity documents.

Mr. Horn. Mr. Rasor, do you have any feelings on that?

Mr. Rasor. Well, I would tend to agree with the professor’s com-
ments relative to the importance of drivers’ licenses. I would say
that there probably is no single solution to the problem.

I think that you have to understand that what we have moved
from is a system that used to rely on a document as being genuine
and representative of either a right or a privilege or an identifica-
tion, and basically due to today’s desktop publishing problems,
there basically is no such thing anymore as something that cannot
be counterfeited, that cannot be replicated to be exact in every di-
mension as the original.

So whatever you do, you have to tie the identification symbol to
the individual. ‘And there are, as I said before, a number of ways
that that can be done. But what you're going to have to end up
with is the ability for society at large to be able to rely on the fact,


84

Mr. MELTZER. Must be in the Long Beach area.

Mr. Horn. It was near there. It was Newhall and Monterey and
other places that are now filled with houses, not oil wells, which
shows the success of the family.

Mr. MELTzeR. First of all, Tet me make a correction here. I just
got the notification this morning about this meeting and was asked
to appear here. My testimony is going to vary a little bit from what
it is titled as, but I think it will Graw the same conclusions,

T would just like to say, Mr. Chairman and members of the sub-
committee, I would like to thank you for the invitation to appear
before this committee. I wish to preface my testimony with the ad-
monition that my time to prepare testimony was extremely limited,
since I did not receive the invitation to appear before this commit-
tee until I arrived at my office this morning. So I feel somewhat
amiss at what we really can present.

Mr. Horn. Well, we are grateful to you, may I say. The problem
arose when the vice president of a major credit card company, who
will go nameless to protect the guilty, was told by his general coun-
sel he couldn’t appear because he might reveal proprietary informa-
tion, which is nonsense—so we are very grateful for you in sharing
your experience at the last minute.

Mr. MELTZER. I know that individual, and I will be having a talk
with him.

Prior testimony, government hearings, the news media, et cetera,
have established the fact that the integrity of government docu-
ments has been comprised. Therefore, I feel there is no need to dis-
cuss or establish the facts of compromise. My testimony will ad-
dress several issues which I feel are needed to institute a level of
integrity to the documents.

It is well-known knowledge on the streets that documents can be
duplicated, counterfeited, or altered; that when they are presented
to employers, merchants, et cetera, there is no mechanism to au-
thenticate these documents in a timely fashion. This appears to be
a basis for a substantial amount of fraud that is perpetrated
against the business community as well as the government.

The systems currently used by the government do not marry the
document to the individual or authenticate the document itself.
What I mean by this is that, when an individual presents an immi-
gration document to an employer, there is no way for an employer
to know if the document is counterfeit, duplicated, or altered. The
employer has to base his decision on what he thinks his ability to
discover a fraudulent document consists of.

With the quality of fraudulent documents today, the ability to de-
tect fraud is definitely out of the range for the majority of employ-
ers. When an employer accepts the document, how does he know
that the individual presenting the document is the true person the
document was intended for, since the alteration of photos on docu-
ments seems to be second nature to the crooks today.

One has to remember that the era we live in today has been in-
undated with low-cost imaging technology and color printers, which
has brought the ability to duplicate or counterfeit documents into
the living room and out of the print shops or manufacturing arena.
The expertise to utilize this equipment is at a high school level.


12

We need to keep our focus on this question: How can information
best _be used to meet society’s needs, while protecting individual
freedom and privacy?

We can all agree that one of the proper roles for Government is
to use information about individuals to ensure that the laws are
obeyed, and to prevent fraud and abuse. We will hear from the So-
cial Security Administration and from the Immigration and Natu-
ralization Service about how they can use information to achieve
these goals and the problems they encounter while doing so.

Members of Congress want to ensure the ability of government
to carry out its responsibilities under the law; we do not want the
government to go too far in employing new technology. The Amer-
ican people’s right to privacy must be maintained.

During this hearing, we will hear about advances in technology
which might soon make it possible to encode a vast amount of in-
formation on a small plastic card, including such data as a Social
Security number, fingerprints, and medical background. Many
Americans are concerned about the creation of a national identity
card which could track them from cradle to grave. Others welcome
it as a convenience and for simplicity.

We must all take steps to ensure the reliability of the data bases
which might be used to create some form of national identifier.
Questions have been raised about the dependability of the files of
the Social Security Administration, the Internal Revenue Service,
and other Federal agencies. We already know that the current So-
cial Security number, which has become a sort of de facto national
identifier, may not really be suited to that purpose.

Some have advocated the use of biometrics, such as fingerprints,
photographs, or DNA, to provide a unique identifier for every per-
son, while at the same time protecting personal privacy. It will be
interesting to see whether these potentially conflicting goals can be
achieved and at what cost.

Mr. Chairman, I hope we can have a broad-ranging discussion
today. It is tempting to focus on the technology and mechanics of
how a national identification system might work, and those issues
should be carefully explored, but we must also ask ourselves how
far we really need to go in this area and be wary of the con-
sequences of going too far.

Mr. Chairman, I request that you insert in the record a letter,
dated March 1, 1995, which I received from Frances C. Berger,
chair of the Committee on Immigration and Nationality Law of the
Association of the Bar of the city of New York. The letter expresses
reservations about the proposal by the U.S. Commission on Immi-
gration Reform for the creation of a computerized national registry
to verify the employment authorization of all workers. I request
that it be part of the record.

Mr. Horn. Without objection, it will be part of the record.

Mrs. MALONEY. Thank you.

[The letter referred to follows:]


54

of this, as well. They are very expert now at counterfeiting just
about any kind of document. But there are ways now to ensure—
also by automated techniques—to ensure the integrity of these doc-
uments, and the same with these automated data bases.

Mrs. MALONEY. Is there any way that you could secure, say, the
green card so that it couldn’t be forged? I think a telephone system
1s going to be very expensive.

Mr, PULEO. We're looking at the next generation. As the next
step from the employment authorization, we're looking at going to
a PVC, a polyvinyl card, plastic card, as the first step of the evolu-
tionary stage, using the EAD, then using the same platform, ex-
panding its capabilities to produce the next generation of green
cards.

You can see this is a WORM: write once, read many. The tech-
nology is very similar to your CD. This one here can hold up to 4
million bytes of memory. We're looking at something a little small-
er than that. That makes it extremely expensive to counterfeit,
backed up by a secure data base. So we are looking at that.

We're also looking at using similar technology for the border
crossing card, which are the three major use cards INS issues. So
we are looking at moving into the next century.

Mr. NAHAN. May I also make a point of clarification, and it’s per-
haps a problem with the way we chose to characterize. We call this
a “telephone verification system,” and, in fact, it does use telephone
communications. But so far the only device we've used is what's
called a point of sale device, which is like a credit card check.
There are just a couple of pieces of information input.

There is nobody—live assistance at the other end of the line or
a recorded message coming back, the way we've used this. Just like
a credit card check, and it comes back with an answer very shortly.

Mrs. MALONEY. Take it to an example of someone in New York
hiring someone in their home to babysit. In fact, I did that this
weekend, and I asked for the green card, and I made a Xerox of
it so I have my own record, and so forth and so on. But there are
many small employers who don’t have the Master Charge hook-up
type of system. And that way I think would be very cumbersome,
a telephone check, wouldn’t it?

Mr. PULEO. Well, you can use an 800 number. In fact, we have
it right now for a different system, our CLAIMS system, which is
the automated data base where we grant benefits under the Immi-
gration Act. You could call a number up, enter the receipt number,
and an electronic voice comes back and will tell you when it was
receipted, if it was approved, when it was submitted, when it was
submitted or sent back to you.

So there are simple systems that you can buy off the shelf right
now that can do that. en you hired the person over the week-
end, you could have used an 800 number to verify that, using just
your touch tone telephone.

Mrs. MALONEY. Thank you very much.

Mr. HILL. If I may, just briefly, Representative Maloney.

The example that you gave is a perfect one for one of the prin-
cipal problems under the I-9 process. Under that process, the
choice of documents, of course, is the employee’s to give, not the
employer’s. Congress wrote an amendment to the law that specifi-


96

come and complain if his or her privacy is violated, without a lot
of expense or complication. These people are underemployed. There
really aren’t that many violations, especially if the violations be-
come a source of punishment.

Let’s even think now in the United States where we have a tre-
mendous amount of information that all of us voluntarily provide.
The only people who have any real privacy are the criminals. You
and I, who pay our taxes, we don’t have any privacy. When you go
to a hospital, you don’t have an privacy, and there is a central
data bank that gets ahold of all the information of what they medi-
cally did to you, so that if you want to apply for insurance and
don’t tell them what your problems were, they catch you.

We don’t have much privacy. But I believe the best protection
about privacy, and that is not being used now in Europe, is to re-
quire a licensing of agencies that hold sensitive personal or security
records. And part of the licensing is that they have a procedure,
which several of the panel members have already referred to,
where the people who access a data base have to leave a record of
who they are, a biometric record, of the time and the length of ac-
cess,

So if at any time you become suspicious that, let’s say, some law-
yer got ahold of private information about you, you are able to
check. This is not now possible. This is also not now possible in
most countries of Europe. But the possibility is certainly there,
technologically. In some private corporations, they already have
mechanisms to make sure that, when you enter one of their data
banks, it is recorded who you were, how long you were active, and
what you did.

Mr. Horn. Very good. If there are no further questions on the
part of the ranking minority member, I see none on the part of the
majority.

Let me just say, thank you one and all. We appreciate your stay-
ing a little late. 1 apologize to all the significant others involved.

And I want to thank the staff director, Russell George, and his
staff, particularly Tony Polzak who is to my left, the counsel on
this investigation, who is a legislative fellow with the committee,
and Wallace Hsueh and Andrew Richardson of the staff. Thank you
very much, gentlemen, for putting the hearing together. We appre-
ciate it.

The hearing is adjourned.

(The prepared statement of Mr. Smith follows:]

PREPARED STATEMENT OF LAMAR SMITH, VICE PRESIDENT FOR GOVERNMENT
RELATIONS, VISA U.S.A.

Mr. Chairman, I am pleased to respond to your request that I appear today before
the Subcommittee on Government Management, Information and Technology. My
name is Lamar Smith. I am Vice President for Government Relations at V!
US.A, a part of VISA International.

VISA credit cards are issued by more than 21,000 financial institutions around
the world. The company that I work for, among other things, maintains the world-
wide telecommunications and data processing network that makes possible use of
those VISA cards at more than 12 million merchant locations worldwide. One func-
tion of that network is to authorize a merchant to accept a VISA card when a cus-
tomer presents the card as payment. In this way, the telecommunications and data
processing network is a key element in protecting the integrity of VISA cards.

Various features encoded on the credit cards themselves also are used to protect
the integrity of the cards. VISA works with the 21,000-plus financial institutions is-


15

the largest population, to see if they can effectively deal with those
populations.

Mr. Horn. Yes. Well, Los Angeles County, for example, when Mr.
Condit and I held a hearing of Government Operations out there
last year, we went over the figures, and some of them seemed a lit-
tle soft to me, in terms of the county claims that they have about
$1 billion in costs due to illegal aliens. There is no question that’s
true in the county hospital. There are tremendous—hundreds of
millions of dollars expended in the emergency rooms dealing with
the plight of illegal aliens, the births, so forth and so on.

But it would be, I think, helpful if GAO did an independent anal-
ysis, because otherwise you have the advocates and the detractors
of doing something putting forth their numbers, and very frankly,
all that does is lead to immobilization and confusion. If we could
have something a little more solid, it would be helpful.

If there’s a problem, let me know, and I will be glad to call
Comptroller General Bowsher and see if we can’t encourage this.
I think Congress needs some independent voice here that isn’t tied
to the advocacy of this or that proposal or the detraction of this and
that proposal.

Mr. REILLY. Perhaps, after the hearings, we can meet with your
staff and get some specifics, exactly what kind of a study you would
like, and we would be happy to pursue it.

Mr. Horn. Very good.

Are there any horther questions from members of the committee?

Representative Maloney.

Mrs. MALONEY. Following up on the chairman’s points, at what
point does protecting privacy become more important than identify-
ing the last 1, 2, or 3 percent of the illegals?

Mr. REILLY. Well, the legislation that was proposed last year had
severe penalties for people who violated privacy. And I think, in
the final analysis, that’s about the only way it will ever work, be-
cause whatever field of business you're in, whether it’s in health or
whatever it is, there are always going to be people who are goin;
to violate privacy, whether it’s for economic reasons or emotional
reasons or whatever.

The only thing that I can think of that can stop them is if they
have to pay a price. And I think that was the intent of the legisla-
tion that we saw last year.

You mentioned Mr. Condit, he was one of the people, I think,
who was proposing that legislation.

Mr. Horn. That’s right. And we held extensive hearings on that,
and obviously one of the major areas of difficulty are the hospital
and medical records of the country, where almost anybody can
walk in and get access. There is not very good security. And I think
a rather well-formulated piece of legislation did come out of the
committee on this subject.

Mrs. MALONEY. Thank you.

Mr. Horn. All right. If there are no further questions, we thank
you very much for coming over. Sorry you had to wait so long, but
that’s what happens with votes and interesting witnesses.

Mr. REILLY. It was an interesting afternoon. We learned a lot.

Mr. Horn. Good. That makes it all worthwhile then.


36

States; convicted felons, although not all; and, of course, underage
persons, as well.

The problem with our identification systems in the United States
is that they are literally a house of cards. They are only so good
or so poor as the breeder documents upon which they are based.
As was indicated here earlier and has been indicated in testimony
repeatedly, throughout the last 20 years in the Congress, and as
a result of a study that was conducted by the Justice Department
in 1976, 4,000 agencies issue 7,000 different forms of birth certifi-
cates.

Anyone with a copy machine can reproduce many of these breed-
er documents. They are then the basis for Social Security cards,
driver’s licenses, passports, military ID cards, you name it, Federal,
State, and local identification documents.

Since 1982, it has been a Federal felony offense to fraudulenth
misuse identification documents, as so defined. That includes Fed.
eral, State, and local documents. Since 1984, section 609(1) of the
Crime Control Act of that year has established Federal standards
for all identification documents: One, they shall be counterfeit-re-
sistant; two, they shall relate positively to the identity of a particu-
Jar individual. Yet we still have massive fraud.

Look at the debate on the floor of the House of Representatives
last week on food stamps; where it was agreed that there was at
least 10 percent fraud in that entitlement program. You look at the
newspapers today, IRS is deferring refunds for 3 million individ-
uals while detailed checks are being made on the validity of the So-
cial Security numbers attached to those returns. According to this
one press account, based on Treasury figures, at least $5 billion
worth of fraud, in just this one tax refund scam at the present
time.

I have here a summary of a report of the Senate Governmental
Affairs Committee, its permanent Subcommittee on Investigations,
until 1982, which estimates that the problem of document fraud
then was $15 billion. It’s probably at least $15 billion in the IRS
context alone today.

Yet today, what do we have? We have the worst of both worlds.
We have the onrush of technology, which makes it possible to coun-
terfeit or reproduce very authentic-looking identification docu-
ments, and yet this technology is not being used significantly to up-
grade existing identification documents so that they can meet the
standards that are already a matter of Federal law.

Mr. Chairman, I have discussed these matters in my statement
from a criminal justice perspective. We could just as well be talkin;
about fraud on the passports, fraud on military ID’s, fraud on al
kinds of entitlement and benefit programs, not to speak of em-
ployer sanctions in the Immigration Service.

Thank you very much.

(The prepared statement of Mr. Velde follows:]

PREPARED STATEMENT OF RICHARD W. VELDE, FORMER SENATE STAFF, ATTORNEY-
At-Law, WASHINGTON, DC

Mr. Chairman and members of the Subcommittee: Existing federal, state and
local identification systems have been subjected to massive fraudulent manipulation
over the years. This has resulted in tens of billions of losses in various federal and
state entitlement and benefit programs, as well as condoning and facilitating the


48

That’s the way to go. There are many Federal laws which require
the driver’s license to be used as a form of identification. You can-
not rely on any mail order system of issuing identification docu-
ments. That includes the passport, INS benefits, self-reporting and
identification on IRS returns and forms. None require positive ver-
ification of identity, and therefore the possibilities for fraud are
Massive.

The driver’s license or the State ID card is really the only way

to go.

Mr. Horn. Thank you.

Commissioner Chater.

Ms. CHATER. I would place my confidence in the two pilot
projects that are scheduled to begin very soon that were rec-
ommended as part of the Jordan Commission. And I say thai be-
cause I like very much the aspect that would prevent discrimina-
tion. In other words, a potential employee going to an employer
would only have to present a Social Security number instead of a
raft of documents, as we now have that process in place.

This pilot, as I understand it, will require every employee to be
verified, so there is initially no discrimination toward one group or
another. Together with the INS and SSA working very hard on the
integrity of the documents that lead to the SSN and the INS card,
T think we have the potential here for doing something that’s cost-
effective and that doesn’t trouble the employer so very much.

Mr. PuLeo. Mr. Chairman, if I may.

Mr. Horn. Mr. Puleo.

Mr. PULEO. Although I don’t agree in total with Mr. Velde, I do
agree about the breeder documents.

‘One of the major problems we have, not only with employer sanc-
tions, but to gain the other benefits of the Immigration Act, are the
breeder documents; for example, the birth certificate. As Mr. Velde
said, there are 4,000 entities that issue them, 7,000 different types.
It’s quite confusing to us, never mind the employer or anyone else.
And we see them daily, those individuals claiming to be U.S. citi-
zens by birth trying to gain benefits under the Immigration Act.

However, a secure document only goes so far. We have a folder
here on a lot of counterfeit documents that were supposedly secure.
So, as I mentioned, in our document, we're trying to make it coun-
terfeit-proof, more counterfeit-proof. But without the data behind
it, any document can be counterfeited, as long as you want to pay
the money.

Mr. Horn. Thank you.

Mrs. Maloney.

Mrs. MALONEY. We have others.

Mr. Horn. The vice chairman has come. Which one of you was
first under the rules of this committee?

Mr. Flanagan.

Mr. FLANAGAN. Thank you, Mr, Chairman.

Thank you for coming today. It’s truly fascinating testimony.

Mr. Chairman, I would ask unanimous consent that I may in-
clude a statement for the record, which I will not read now.

Mr. Horn. Without objection, so ordered.

Mr. FLANAGAN. I’m deeply troubled by this, and I won’t mince
any words, and perhaps I’m not understanding everything that's


53

about $700,000 a year. We estimate that just the telephone ver-
ification part of it, the cost of that is about $50,000 a year. And
there’s a nominal charge, I believe, for both, a transaction charge.

It’s very nominal; it’s not very expensive. On top of the $50,000,
there’s around $45,000 of INS personnel charges. So it’s not that
expensive. You're simply using a point of sale device that you al-
ready use for credit card verification.

Mr. Nahan is head of that.

Mr. NaHAN. Congressman Maloney, also, from the standpoint of
the employers we've dealt with so far and many others who are in-
terested, the assurance that they haven’t hired someone who really
was not authorized to work and who they then engage and make
an investment in, with the prospect down the line that they might
be removed from the payroll because they were not eligible, any lit-
tle cost that they have to pay for using telephone verification is
money well spent and is a very cheap proposition, in terms of the
cost-benefit, from their standpoint.

But, yes, I think if you put it on a national basis, yes, there are
going to be costs to run this kind of a system. No question about
that.

Mrs. MALONEY. The police commissioner in New York told me
there is just a huge forgery system of documents in New York City
that is very sophisticated, the green card and all employment docu-
ments.

Mr. NAHAN. Well, one of the things that we think is an extremely
attractive feature of our system right now, the one we're using,
which is strictly a pilot—it’s on a very limited basis, and it does
have some limitations—but one thing that I think is its real
strength is that this is the kind of system that Jim Puleo talked
about that can be backed up to see if those documents aren’t really,
in fact, counterfeit or fraudulent.

You check them against the data base, and in almost all in-
stances the data base is going to come back and say that’s really
a phony document.

Mrs, MALONEY. Thank you.

Mr. VELDE. In answer to your question, there is technology which
is now becoming available, it’s an offshoot of video conferencin,
technology and also digital compression technology, which wil
allow biometric verification of persons having access to computer
networks. Encryption software is becoming available, so that you
really have to have a verification of identity to gain access.

We all know of the hackers on Internet who are gaining access
to sensitive data bases. There was a notorious hacker just arrested
last week, after a nationwide search. But I think those days are
limited. You will find, in the not too distant future, ability to make
these data bases much more secure than we have been able to in
the past.

Mrs. MALONEY. But they are not now, even to the extent of being
able to enter military computers on troop movements. That’s pretty
scary.

Mr. VELDE. That’s true. It’s an evolutionary process. It’s the good
guys versus the bad guys, and sometimes the bad guys are ahead,
and other times the good guys. And the problem is, we have such
an onrush of technology, the Yad guys know how to take advantage


49

going on. I have read, in virtually every document—and I’ve heard
some of the testimony given today—nobody wants national identi-
fication cards. You know, we don’t want people walking around
with papers, having to demonstrate that they’re a citizen, seem-
ingly except in an employer context. We want to be able to tell em-
ployers that we’re citizens, but not anybody else.

What slippery slope are we on? ere are we going with this?
And I’m not sure I want to step out onto that line. I saw the INS
collectively shake their heads. And hearing the other discussion
earlier about whether we should have a State-controlled system or
a national, Federal system, and everybody kind of slapped their
head and said, “Well, you know, uniformity is important.” Uniform-
ity is not important.

We live in a Federalist society. We have 50 States, 50 independ-
ent laws. We have one national citizenship requirement, and to be
a citizen and live and move among the several States is one re-
quirement.

I understand the perplexing, complex—you know, that we have
to deal with 7,000 different kinds of birth certificates and the dif-
ficulty of having to demonstrate our national origin to any prospec-
tive employer. I am just deeply troubled by having to carry papers,
whether it includes, you know, 100 million pieces of paper of infor-
mation about it or whether it’s a driver's license.

I tried to get a Blockbuster card last week; they wouldn’t give me
one unless I gave them my Social Security card. I flatly refused.
They smiled sweetly at me and said, “OK. Let’s have your driver’s
license.” I gave them that. They took the Social Security number
right off of that. I found that deeply irritating. It was funny, and
I laughed with them about it, but I tore up my Blockbuster card
and walked out.

But the bottom line is, where are we going with a national iden-
tification card? And that’s a hard question, and frank answers
would be deeply appreciated. We can just start from one end and
move to the other.

[The prepared statement of Hon. Michael P. Flanagan follows:]

PREPARED STATEMENT OF Hon. MICHAEL P. FLANAGAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Thank you Chairman Horn. I am very anxious to hear expert testimony today ad-
dressing the serious immigration problem in our country. Specifically, I am looking
forward to understanding how we can work toward solutions, how much those solu-
tions coat, and who pays for the solutions. Growing up in the great state of Illinois,
I understand the serious problem of document fraud and how it adversely effects
American citizens in their search for employment. I also am encouraged that Illinois
ig one of the five chosen sites for a pilot program that will produce results by 1997
that the entire country can benefit from.

Mr. PULEO. Well, as far as the Immigration Service is concerned,
in 1986 Congress passed a law that made it illegal to hire illegal
aliens in the United States. The sanctions are provisions of that
Act. We take it extremely seriously.

We believe that there is confusion out there for both the em-
ployee and the employer. We're trying to reduce that confusion by
reducing the number of documents, improving the document sys-
tem that we currently have, hopefully reducing the number of doc-
uments that INS issues, too, the so-called “green card” for perma-


78

Biometric ID cards are increasingly used in moderate size business and govern-
ment programs. Nearly every Federal employee, including all Presidents of the
United States since Franklin D. Roosevelt, has been fingerprinted. The unique line
pattern of each person’s finger tips reveal nothing personal about them—not his or
her sex, race, religion, national origin, sexual preference or marital status. Madon-
na’s fingerprints are no more attractive than mine. This would not be true of our
respective drivers licenses. Hers would be a collector’s item, since it contains her
photograph, her birthdate and her address.

Almost twenty years ago, the U.S. Immigration and Naturalization Service issued
what were then called ADIT cards. Several versions included a machine readable
digitally coded fingerprint. Congress did not balance the budget that year or since
then, but it cut the modest funds needed to buy the machine readers that would
have made it possible to verify these documents against the user’s own finger-tip.
This simple feature would probably have cut illegal immigration more than an extra
50,000 border guards, equipped with police cars and machine pistols,

No one is required to carry a drivers license, other than when they chauffeur a
moter vehicle. Similarly, no one would need to carry their biometric ID card except
when they want a Government entitlement or access a privacy sensitive or secret
data file via their computer.

There is an added potential that could be derived from the Jordan Immigration
Reform Commission proposal. If a biometric and machine readable ID Card were to
be utilized, it could provide field tested evidence how large scale tamper resistant
identity procedures could be adapted to reduce many crimes, especially tax frauds,
drug smugy'ling, white collar and computer crimes on a nation wide basis.

e marketing of stolen goods by anonymous burglars through legitimate pawn
shops and other businesses could be made much more risky if State Legislatures
were willing to mandate more reliable identification procedures for persons trading
in precious metals, diamonds and other valuable collectibles. Foreign terrorists, like
those who tried to topple the World Trade Center and blow up Lincoln Tunnel in
New York would find it much more risky in the future to enter, travel and leave
the United States without detection.

This evidence notwithstanding, there continue to be members of the House and
Senate who are concerned about the privacy threat from computerized data banks.
Their immense capacity to store, analyze and retrieve is intimidating. They and
their staff should consider setting aside a few hours between April 10 and 13th to
visit the Washington Hilton Hotel. It will be hosting the annual Card Tech/Secure
Tech confercence, co-sponsored by the Biometric Authentification Consortium and
the Federal Smart Card User Group, Well over 100 American and foreign corpora-
tions will be exhibiting their equipment and its technology. They can provide cost
estimates of using their biometric card and machine readers system. They would
also be able to discuss how data files could be protected against unauthorized ac-
cess. Details can be obtained from Mr. Ben Miller, Conference Chairman at Phone
800-848-7242.

The utility of including a biometric indicator in important ID cards can be illus-
trated by the near ruination of Mr. Terry Dean Rogers. He came to the attention
of the Saginaw, Michigan police, after they were called to investigate a noisy fight
with his girlfriend. To his great shock, this part-time black college student found
himself suddenly handcuffed, accused of committing two burglaries and two mur-
ders in Los Angeles, a city he had never visited. The prime suspect of the crimes,
who had left his fingerprints at the scene, had used Mr. Rogers drivers license and
other identity cards left in a wallet which had been stolen in Detroit, a year carlier.
It was then marketed across the continent to a criminal who wanted a new identity.

What ultimately saved Mr. Rogers from a death row sentence was a FBI con-
firmation that his fingerprints did not match those of the criminal. But until that
clearance made its way into the National Crime Information Center files fourteen
months later, Mr. Rogers was arrested four more times in routine traffic checks. At
each stop, the police radioed for an identity check. Each time Mr. Rogers was sub-
jected to the indignity of an arrest with guns drawn by nervous policemen.

In conclusion, let me place into the record a summary of the evidence how biomet-
ric and machine readable ID cards can be used to enhance both our capacity to en-
force laws and to protect our privacy. Both vital objectives can be advanced more
effectively than if we continue to rely on our grossly outdated procedures. The Unit-
ed States should not enter the 21st century shackled to identification techniques
that have made many of us victims of con games, burglars and the many other
criminals who enjoy immunity behind a facade of false identity.



88

therefore, they have a mag stripe on it, so it’s still a universal pay-
ment tool that can be used in any country. When they take it and
utilize the stripe, again, the stripe can be compromised.

We're seeing a lot of counterfeiting of the mag stripe, alterations
of the stripe, skimming of the stripe. That stripe is strictly a mag-
netic piece of recording tape that has information on it. So where
they have a total use of the smart card, you do not see any com-
promise of that smart card, to my knowledge, to date.

When the smart card comes in here, you're going to probably see
some fraud for several years, because when the smart card comes
into the United States, you're going to have dual technology: you
will have a chip in the card, and you will have a stripe. Because
as they put the readers in, they are not going to just flip a switch
and there will be smart card readers from coast to coast. You are
going to have them migrate through the areas, and they will prob-
ably start in the high fraud areas first, would be the rational busi-
ness plan.

As long as you have that stripe, all you have to do is disable that
chip. If you go into a merchant who has a smart card reader, he
is going to fall back on the backup technology or the secondary
technology which will be that stripe, for several years to come.
Once the chip is totally implemented, I can’t say there will be no
compromise of that chip, but the compromise that could exist com-
pared to what we have today would be a drop in the bucket.

Mr. EaTon. Let me give a simpler suggestion.

Mrs. MALONEY. Could I just follow up? What does that tell us
about creating a secure national ID system?

Mr. MELTZER. From my law enforcement background and being
in the banking world for a while, prior to being in the manufactur-
ing world, every time I hear that I have to chuckle to myself, be-
cause if you really look at what we have in this country today, tell
me we really don’t have a national ID system.

If you want to work, you have to have a Social Security card. If
you want to claim your newborn as a dependent, you have to have
a Social Security card. If you're an immigrant coming into this
country, you have to have an INS card. Between those two data
bases, I don’t know who is not covered.

Now, it’s just a matter of terminology. I think it just depends, are
we willing to admit it or not? I know civil libertarians scream when
you mention this. But, you know, to me, I live in a real world. It
exists. Look at a driver’s license. Anybody of the age of, what, 17
or 18 now, who can legally drive, 1 hardly know anybody who
doesn’t have a driver’s license.

But if you start looking now from birth to death, in this country
you're going to find a Social Security card. Is that a national I
card? I don’t know. Is it voluntary? To a degree.

Mrs. MALONEY. And you wanted to add, sir?

Mr. EATON. Yes. To do anything about the 262 million people
who are now living in the United States would be very expensive.

But every new baby born, at least in most hospitals, gets
footprinted in order to prevent mixing up of babies. The technology
exists to digitalize these indicators and thereby issue the kind of
card that Mr. Meltzer is suggesting, with a digitalized identifier
that relates to each particular baby. At a later time, the birth cer-


43

I would like to ask you to respond to the possibility of unauthor-
ized access to a data base, or even to the data base that exists now
in Social Security. As you know, several years ago, employees were
caught selling information, supposedly secure information, to pri-
vate detectives. Have you now secured your offices for Social Secu-

rity?

Ms. CHATER. We have in place a system that ensures privacy.
Some of our employees, of course, have access to the data base.
Each understands the penalties for misusing that data base. And
when we find an employee who is suspected of having misused that
data base for purposes other than Social Security purposes, we, of
course, report that and follow through, because we simply must.
and want to protect the privacy of the data base.

Mrs. MALONEY. What happened to the two individuals that were
selling the information?

Ms. CHaTER. I don’t know what happened to the two to whom
you refer.

Mrs. MALONEY. One possible way to access any data base is by
telephone, and the Jordan Commission has recommended a system
that would allow employers to have access by phone to verify the
eligibility of potential employees. How secure can we make a tele-
phone verification system from unauthorized intrusions? Here in
Social Security we have had examples of intrusions or misuse of in-
formation.

Mr. HILL. Certainly, that’s a serious concern, Representative
Maloney, one that we would like to see both the Social Security Ad-
ministration and the INS address in the development of their pilot
programs. But the technology, we believe, is available and it can
be made to be secure, if the proper development is taken, much the
way that we bank by telephone today, with PIN numbers or other
forms of identification.

We think the technology will enable us to do it, but it’s some-
thing that has to be worked into the pilot program so that appro-
priate measures are designed.

Mr. PULEo. If I may, for INS, in our telephone verification sys-
tem, we download our information to a contractor so that it’s kept
away from the Immigration data base. The access is quite limited.
We feel that the security features that we have in place are quite
extensive.

Mrs. MALONEY. In Congressman Becerra’s testimony he men-
tioned some problems that he could see and some objections he
raised. And the letter that I’m sure you saw that the Hispanic Cau-
cus sent to President Clinton raised a number of points, and I'd
like to go over a few of them and have you respond to them.

Among their objections is that the pilot program is very broad in
scope and is virtually the equivalent of a national system. It relies
on an inaccurate Social Security and INS data base. It relies on po-
tentially easy to forge documents, such as birth certificates and
school records. And there is no obvious way for workers to prove
that Social Security numbers actually belong to them.

And they claim that it would foster discrimination against U.S.
citizens and legal immigrants, or any persons who might look,
sound, or seem foreign.

Would you like to comment on the objections that they raised?


CONTENTS

Hearing held on March 7, 1998 ...
Statement of:
Becerra, Hon. Xavier, a Representative in Congress from the State of
Celifornia
Chater, Shirley 8. 7 :
Eaton, Joseph, professor emeritus, Graduate School of Public and i
ational Affairs, University of Pittsburgh; Robert Rasor, Special Agent,
USS. Secret Service, Department of the Treasury; and Russell Meltzer,
director of security, Schlumberger Maleo, Inc. °
Hill, Robert Charles’ member, U'S. Commission on immigration Reform,
‘and Susan Martin, Executive Director, U.S. Commission on Immigra-
tion Reform; James A. Puleo, Executive Associate Commissioner for
Programs, Immigration and Naturalization Service, accompanied by
John Nahan, Director of Systematic Alien Verification for Entitlements
Branch, and Gideon Epstein, Senior Forensics Analyst, Forensics Docu.
mentation Laboratory .
Reilly, Frank W. Direetor, US. General Accounting Oilice: accompanied
by Hazel Eawérds, Dirttor, Accounting and Information Management
vision, and John Chris Martin, Assistant Director .. -
Velde, Richard W., former Senate staff, attorney-at-law. Washington, DC
Letters, statements, etc, submitted for the record by:
Becerra, Hon. Kavier, a Representative in Congress from the State of
California, prepared statement of ..
Chater, Shirley 8., Commissioner of Social Security Adi
pared statement of
Eaton, Josep, profes :
national Affairs University of Pittsburgh, prepared statement of ..
Flanagan, Hon. Michael P., a Representative in Congress from the
of California, prepared statement of
Hill, Robert Charles, member, U.S. Commission on immigration
prepared statement of i“
Horn, Hon. Stephen, a Representative in Congress from the State of
California, prepared statement of
Maloney, Hon. Carolyn B., a Representative in
of New York:
Letter dated September 28, 1994, opposing a national registry sys-

Congress from the State

tem a
Letter dated March 1, 1995, concerning the creation of a computer-
ized national registry .. 7
Meltzer, Russell, director of security, Schlumberger Malco, Inc., prepared
statement of
Puleo, James A., Executive Associate Commissioner for Programs, Immi.
gration and Naturalization Service, prepared statement of
Rasor, Robert, Special Agent, U.S. Secret Service, Depart:
Treasury:
Information concerning interstate compacts that relate to birth cer-
tificates
Prepared sts .
Reilly, Frank W., Director, U.S. fs San
Edwards, Director, Accounting and Information Management Division,
prepared statement of ..
Smith, Lamar, vice presiden
prepared statement of ..

(ty

76

15

64
35


66

State officials reported the following productivity gains, cost sav-
ings, and benefits: They have increased the workload by 76 percent
and added only 10 percent more employees. In one program alone,
the number of errors decreased from 5 percent to 2.7 percent, re-
sulting in a $10-million reduction in inappropriate expenditures.
And finally, State officials identified over $5 million in attempted
client fraud. So we think that system certainly paid for itself very
quickly.

Finally, in conclusion, Mr. Chairman, let me emphasize three is-
sues that must be considered: First, any system that is chosen
should support program objectives. Modern technology such as
tamper-resistant cards and telephone verification systems can help
prevent unauthorized persons from obtaining work or other bene-
fits. However, this technology will still be ineffective unless all
other aspects of the system are also reliable. For example, the tele-
phone verification system will be unreliable unless its related data

ase is reasonably accurate and complete. Likewise, tamper-resist-
ant cards will not be effective unless accompanying controls are in
place to prevent the use of stolen or duplicated cards.

A second key issue to consider is the cost-to-benefit ratio of the
given system: at is it going to cost? What are you going to get
out of it? No system can completely prevent fraud or abuse; thus,
it is important to assess the overall risk and determine how much
protection is needed to meet agency objectives. For example, on-line
employer identification of worker eligibility may be too costly to im-
plement on a nationwide basis. Depending on agency goals, imple-
Menting such a system in only those States with high immigration
statistics may be sufficient.

Finally, privacy issues need to be considered when selecting tech-
nology. While integrated or shared data bases can provide valuable
information, unauthorized use of this information would inappro-
priately infringe on the privacy of individuals.

Mr. Chairman, this concludes our prepared statement. We are
willing to answer any questions you may have.

[The joint prepared statement of Mr. Reilly and Ms. Edwards fol-
lows:]

JOINT PREPARED STATEMENT OF FRANK W. REILLY, Director, U.S. GENERAL AC-
COUNTING OFFICE; AND HAZEL EDWARDS, DIRECTOR, ACCOUNTING AND INFORMA-
TION MANAGEMENT DIVISION

Mr. Chairman and Members of the Subcommittee: We are pleased to be here
today to discuss agency efforts to improve the integrity of data used to determine
the eligibility of workers to receive benefits. Specifically, we will address efforts by

the Immigration and Naturalization Service (INS) and the Social Security Adminis-

tration (SSA) to address this issue. ;

These agencies’ efforts include assessing the feasibility of tamper-resistant cards
and piloting a telephone verification system. Both technologies are used to deter-
mine the eligibility of employees to work and receive benefits. As such, they are im-
portant elements in preventing individuals from illegally working and improperly
receiving benefits, but they are only one part of the complete solution. Other key
elements are the integrity of the data used to obtain these cards and the accuracy
and reliability of the Gatabases that support compliance activities.

Mr. Chairman, today we will focus on

the opportunities and limitations of the technology that INS and SSA are as-
sessing or using for their systems,

© a case study of a state that successfully used modern technology to implement
a one-stop eligibility management system, and


52

Mr. FLANAGAN. I’m not at all certain that collecting around an

ability to prove who I am is the right answer. I will forego the
last—

Mr. VELDE. Excuse me.

Mr. FLANAGAN. That’s quite all right.

I'm sorry. Madam Director, have you a statement to make in an-
swer to this?

Ms. CHATER. I would only add, to be sure that everyone under-
stands, the Social Security number is not considered an identifica-
tion number.

Mr. FLANAGAN. Thank you.

Thank you, Chairman, for your indulgence.

Mr. Horn. You're welcome.

Representative Maloney.

Mrs. MALONEY. Thank you. I'd like to just get back to the secu-
rity and privacy. Even during Desert Storm, Dutch teenagers
gained access to military computers that contained troop movement
information. If the government can’t protect military information,
why should citizens believe that any information is secure?

d how do we balance this? I know we have a need for identi-
fication that is accurate, with securing privacy of individuals. Any
ol ou.

is. MARTIN. I can begin. When the Commission looked at this
issue—and shares the same concerns—where we came down to on
that issue is that the ability to maintain the security of the type
of registry that we've discussed is very much contingent on having
a very, very select number of data items in it.

These are, basically, name, Social Security number, possibly an-
other one or two identifiers, such as date of birth and maybe moth-
er’s maiden name, that are fairly commonly used, and then the im-
migration information for those, in terms of their work authoriza-
tion, where it’s applicable.

If that data is kept in a separate registry where the data is
downloaded each night but not actually hooked back into either the
Social Security data base or the INS data base, then what is in
that data base is more easily securable than if you had a much
larger effort. Plus, the data that’s in that is not, clearly, of national
security import; it’s very, very basic information on name and So-
cial Security number.

So the idea is to actually make the technology work for the pri-
vacy and security benefits rather than try to fight it, by having it
as a very constrained data base.

Mr. PULEO. That’s exactly what I had mentioned before, when I
talked about the telephone verification system. We download lim-
ited identity information, very similar to what Dr. Martin was talk-
ing about, so that they don’t have access to the entire INS data
base, but sufficiently enough to either approve the employment sta-
tus of the individual or, if we can’t with the data we have, refer
them to our offices so we can continue the process.

Mrs. MALONEY. Wouldn't a telephone verification system be in-
credibly expensive and labor-intensive?

Mr. Puceo. Not actually. The dollar figures that we have for not
only the telephone verification system but for the SAVE system,
which is another area, both held with Martin Marietta, it costs us


26

INS also plans to spply this technology to its benefits servicing processes. Using
positive identification technology to verify benefit applicants will not only ensure ac-
curacy and integrity by tying the applicant to the proper records, but also deter
claims abuse (e.g., filing separate applications under dilferent names, imposing as
the original applicant, falsifying identity information, etc.).

e differing operational requirements of the FBI's National Crime Information
Center (NCIC) 2000 and the Integrated Automated Fingerprint Identification Sys-
tem (IAFIS) and the INS’ IDE! system demand differing telecommunication
media and technical characteristics to be used by the three systems.

NCIC 2000 is a rapid turnaround (seconds) inquiry/response system with a small
fingerprint (FP) database, and few FP transactions per day (under 3,000) designated
to accommodate operation over radio frequency networks. It will use one index fin-
gerprint and a high degree of data compression in order to minimize interference
with voice communications. NCIC 2000 is intended for missing persons and wanted
fugitives whom the submitting agency can legally detain.

DENT ig a fast turnarouml (occonds to. few minutes) inquiry/response system
with a moderate FP size database with a high number of FP transactions per day
(over 20,000). To do this it is planned to use two index fingerprints on standard tele-
communication circuits. This system does not provide positive identification and
must respond faster than IAFIS. The FBI IAFIS positive identification takes more
time due to the human interface/interaction required within the process.

is a moderate speed turnaround (two hours and 24 hours) positive identi-

fication system with a large FP database and a very high number of FP transactions

per day (over 60,000). It will use ten fingerprints and will be designed to use high

andwidth (capacity) communications facilities. IAFIS is designed to be a complete

criminal identification and history system capable of supporting crime scene inves-
gations and positive identifications.

[S users will have the capability to use the IDENT system and its compatible
fingerprint image records to access the NCIC 2000 database for fingerprint matches
for warrant checks. When IAFIS becomes operational, INS will be able to electroni-

cally submit fingerprint records to the FBI's IAFIS as required and to the extent
IAFIS can support the volume of civil prints.

This subject matter is extremely: technical and is difficult to properly explain in
lay person’s terms. If you would like a fuller explanation, the FBI and INS would
be happy to meet with you at your convenience.

Mr. Horn. Thank you very much. I appreciate that very thor-
ough statement, which I read last night, and I will get to more de-
tail in the question period.

Commissioner Shirley Chater of the Social Security Administra-
tion.

How does it feel to be independent? Do you report to anybody
now that we've made you independent with an act of Congress?

Ms. CHATER. Well, actually, we’re not independent for a few more
days, March 31.

Mr. Horn. A few more days. I see.

Ms. CHATER, I will tell you how it feels.

Mr. Horn. Which White House assistant will you talk to?

Ms. CHATER. Could I answer that later?

Mr. Horn. OK.

STATEMENT OF SHIRLEY S. CHATER, COMMISSIONER OF
SOCIAL SECURITY ADMINISTRATION

Ms. CHATER. Thank you very much for the privilege of being here
to talk with you about the integrity of the Social Security card, par-
ticularly as it relates to its role in the verification of the employ-
ment. eligibility process.

I do believe that my written testimony answers most of the ques-
tions and issues that you raised, sir, in your letter to us. We have
just begun, as you have heard, this enormous and very complex
task of developing pilot projects to test ways to strengthen the em-
ployment eligibility verification process. So some of the questions



22

ical to employer sanctions implementation and enforcement and an important prior-
ity of the Immigration and Naturalization Service (INS).

‘Until Congress passed the Immigration Reform and Control Act of 1986 (IRCA),
it was illegal for an undocumented alien to work in the United States, but it was
not illegal for an employer to hire that alien. IRCA changed the rules. It targeted
employment as the single most important and pervasive incentive for illegal immi-

ation and made employers responsible for their decision to knowingly hire unau-
thorized workers. It attempted to reduce the incentive of job opportunities for poten-
tial illegal immigrants and improve the conditions for all workers. This Administra-
tion is committed to strong enforcement of employer sanctions and worksite stand-
ards to reduce the workplace as a magnet for illegal immigration, while ensuring
that civil rights and privacy are protected.

The President’s budget request for fiscal year 1996 includes a $93 million initia-
tive to expand current programe and to reverse prior Administrations’ inattention
to the enforcement of labor standards and employer sanctions. The Administration
also has firmly endorsed the recommendations of the Commission on Immigration
Reform to conduct pilots to test various techniques for improving verification of em-
ployment authorization and is now seeking authorization and funding to develop
and implement these pilots. These worksite initiatives will help to ensure that jobs
are available only to those who are authorized to work in the United States and
to reduce the magnet of illegal migration.

EMPLOYMENT AUTHORIZATION VERIFICATION

In IRCA, Congress specified 8 documents and, by regulation, INS specified 21 ad
ditional documents to be accepted by employers to verify the identity, work eligi-
bility or both of newly hired employees, IRCA directs employers to accept documents
presented to them that appear reasonably genuine and relate to the person present-
Fig them. This system hes been susceptible to fraud and is confusing to same em:
loyers.
, ‘o counter some of these problems, the Administration is preparing to test alter-
native verification systems on a pilot basis and reduce the number of documents ac-
ceptable for establishing identity and work eligibility. While developing these pilots,
the Administration is paying careful attention to privacy and discrimination issues.

TELEPHONE VERIFICATION SYSTEM (TVS) PILOT

As authorized by IRCA, INS developed and initiated the Telephone Verification
System (TVS) Pilot as an alternate system for employers to confirm the employment.
eligibility of newly-hired employees.

IS, selected nine employers to participate in this voluntary program in which,
after complying with the Form I-9 verification procedures, they can access the INS
automated database to confirm the employment eligibility of the newly hired non-
citizens.

TVS works much like a retail credit card check. The employers gain access to the
INS automated database by telephone and receive an instantaneous response with
the employees’ employment authorization status. If INS lacks information or reports
the employee lacks authorization, the employer mails a secondary verification to a
designated local INS office. If the newly hired non-citizen’s employment authoriza-
tion cannot be verified through the secondary process, the employee is advised to
go to the nearest INS office for possible resolution of the matter.

Evaluation of Phase I of TVS demonstrated it to be technically feasible and uni-
versally favorable by employer participants. In the first test, INS confirmed employ-
ment authorization in 70% of the cases on the basis of the initia) inquiry. In the
remaining cases, secondary verification took between five and ten days. Of the sam-
ple of over 2,500 cases, 99.9% were satisfactorily resolved.

TVS will deter fraud since it immediately checks and verifies with INS the em-

loyee’s status. TVS will make fraudulent documents worthless because they cannot
Be backed up by INS records. This, in turn, will give employers greater assurance
that employees hired and verified are truly authorized to work in the United States.

In 1995, INS is expanding the TVS pilot program to 200 employers primarily in
industries that tend to attract illegal workers. Expansion of the TVS pilot program
will also involve increased safeguards to ensure it can be implemented without dis-
crimination or infringements on privacy. In 1996, the Administration is seeking to
expand the pilot program to 1,000 employers.

The direct costs to maintain the existing status verification database which sup-
ports TVS are approximately $50,000 a year. Based on the highly favorable re-
sponses of participating employers, INS believes that these and other associated and
indirect costs will willingly be borne by employers.


34

process and the counterfeit-resistance of the card. As I have indicated, we are con-
cerned about the possible use of the Social Security card as an identity document,
the costs associated with making it serve that purpose and its implications for indi-
vidual privacy; nevertheless, we are committed to testing effective, nondiscrim-
inatory means of improving the employment eligibility verification system.

We fully undestand and share the subcommittee’s concerns about improving the
integrity of the employment eligibility verification system. SSA will continue to as-
sist employers in verifying employment eligibility and we will gladly work with the
subcomittee to improve that system.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY Hon. STEPHEN HORN TO SHIRLEY
S. CHATER

800 Number

Question. What portion of the 800 number is paid for from trust funds and what
portion from general revenues?

Answer. The 800 number is funded by SSA’s Limitation on Administrative Ex-
penses (LAE) account which is financed from the Old-Age Survivors and Disability
insurance (OASDI) trust funds, the Medicare trust funds and the general fund ap-
propriation for the Supplemental Security Income program. Congress authorized
this mix of funding in the LAE account because SSA's trust funds and SSI service
delivery are so intcyrated. Based on the work that SSA does, the costs are allocated
among the different funding sources based on a GAO approved cost accounting sys-
tem. In FY 1994, about 51 percent of the SSA’s administrative expenses for the LAE
account was charged to the OASDI trust funds. The remaining 49 percent was
charged to the Medicare trust funds (about 15 percent) and the Supplemental Secu-
rity Income program (about 34 percent).

Enhanced Social Security Card

Question. Would an enhanced Social Security card be paid for from the trust funds
or the general fund? Would the purpose of the enhancement make a difference?

Answer. At the time the Social Security card was devised in the 1930's, its onl
purpose was to provide a record of the number that had been issued to the indi
ual so that the employer could accurately report earnings for the individual. This
is still the primary purpose for which SSA issues the card.

Currently, the entire enumeration process is funded exclusively from OASDI and
Medicare trust fund resources. If the purpose of enhancing the card were substan-
tially different, the additional cost would not be a legitimate use of the Social Secu-
tity trust funds and would need to be funded by general fund appropriation.
Limitation on Administrative Expenses (LAE) Request

Question. What was SSA's LAE request for FY 1995 and what did the President
request; same for 1996?

swer. Except for technical repricing and adjustments for government-wide deci-
sions on full-time equivalents, the Administration requested what SSA asked for in
FY 1995 and FY 1996.

‘The President requested $5,807,174,000 and the Congress appropriated
$5,540,071,000 for the LAE account for FY 1995. The President requested
$6,188,200,000 for SSA’s LAE account for FY 1996.

LAE and the Discretionary Caps

Question. Describe the status of limitation on Administrative Expenses (LAE) ac-
count and the discretionary caps, including which budget act imposed the caps.
Answer. The Balanced Budget and Emergency Deficit Control Act of 1985 con-
strains legislation that would increase spending or decrease receipts through FY
1998. It was extended and amended extensively by the Budget Enforcement Act of
1990 (BEA) and extended again by the Omnibus Budget Reconciliation Act of 1993.
In the BEA, Congress specifically exempted certain programs from the discre-
tionary spending cap, but not SSA’s administrative expenses, A subsequent ex-
change of correspondence between Senator James Sasser and Mr. Robert G.
Darmus, Acting General Counsel, Office of Management and Budget, reaffirmed
that SSA’s administrative expense, including the portion funded by the Old-Age,
Survivors and Disability Insurance trust funds, are subject to the discretionary
spending category and BEA enforcement guidelines. |
‘The most important thing is not whether SSA’s administrative expenses are in
or out of the cap, but whether SSA gets the resources it needs to get the job done.



58

But one of the purposes of this, besides telling people what they
can expect eventually and telling people what they have paid into
the Social Security fund, is an opportunity for them to write to us
or call us to tell us that there’s a mistake, that the number isn’t
correct, or they have not paid in as much as we say they have, or
whatever. This would cause us to look back to our records to see
what the error might be, and we would make every effort to correct
it.

As I indicated earlier, a second way that we check on the num-
bers is, when we find someone using a fraudulent number, we re-
port that to the inspector general. If it is an INS situation, we re-
port it there. Social Security is not an enforcement agency, so we
are required by law to report these fraudulent activities to others
and hope that there will be some appropriate activity taken.

Mr. Horn, Well, on that point, now you report it to the inspector
general, and you present the file to the inspector general, of the in-
vestigation in question.

Ms. CHATER. Yes.

Mr. Horn. Now, what does the inspector general do with it, pur-
sue it with the U.S. attorney, or what?

Ms. CHATER. Well, the inspector general has to make, as I under-
stand it, some decisions about what kind of fraud to pursue. We
worry, at Social Security, that they don’t have enough people to
pursue every incident that comes to their attention. And some-
times, if it’s low on their priority list, given whatever else they
have to do, it would take some time to look into it, or perhaps they
choose not to look into it at all. I would have to defer to our inspec-
tor general to explain that in more detail to you.

Mr. Horn. We are going to be meeting with the inspector gen-
eral, so we will pursue that.

Now, with your independence, you have your own inspector gen-
eral, or have you always had that with the Social Security Admin-
istration, and not simply the HHS Inspector General?

Ms. CHATER. We have never had our own inspector general, sir.
We have utilized, of course, the inspector general in the depart-
ment. However, we will have our own inspector general. I have just
finished interviewing, as a matter of fact, a semi-finalist list of can-
didates to hold the position of inspector general. We will be, next
week, doing reference checks on our semi-finalists, and we’re look-
ing forward to setting up our own inspector general office.

Because we won’t have an inspector general in place on March
31, we have asked—and we can do this because of the independent
agency legislation—the Inspector General of the Department of

ealth and Human Services to continue to provide services to us,
and she and I have worked out an arrangement that would focus
on Social Security immediately after the 31st of March.

Mr. Horn. Is the new inspector general your appointee or the
President’s appointee?

Ms. CHATER. It’s a Presidential appointee, but I have made it
clear that I hope to be an active participant in the selection proc-
ess.

Mr. Horn. I see. Very good.

Well, let me ask all of you, what question would you like to have
been asked that can get something on the record that you would


76

Now, can we have panel four come forward: Professor Eaton, Vice
President Smith, and Special Agent Rasor. Mr. Meltzer, I apolo-
gize. If you would all stand and raise your right hands, we will
swear you in.

[Witnesses sworn.]

Mr. Horn. All right. All the witnesses affirm.

_ Welcome. I have on my list first Professor Eaton, professor emer-
itus of the Graduate School of Public and International Affairs,
University of Pittsburgh, on biometric identification technology.

Professor Eaton.

STATEMENT OF JOSEPH EATON, PROFESSOR EMERITUS,
GRADUATE SCHOOL OF PUBLIC AND INTERNATIONAL AF-
FAIRS, UNIVERSITY OF PITTSBURGH; ROBERT RASOR, SPE-
CIAL AGENT, U.S. SECRET SERVICE, DEPARTMENT OF THE
TREASURY; AND RUSSELL MELTZER, DIRECTOR OF SECU-
RITY, SCHLUMBERGER-MALCO, INC.

Mr. Eaton. Representative Horn and committee, the hour is late,
so I will not read my prepared statement.

Mr. Horn. As you know, if you were here, I said all of the pre-
pared statements automatically go in the record in full, in lovely
print, and we would like you to summarize in 5 minutes.

Mr. EaTon. I prefer to make some comments on the thought-pro-
voking discussion that went on here.

Mr. Velde summed up the issue that needs to be confronted. It
has not been confronted by Congress: for several decades. We have
technology that allows us to reduce fraud to a very great extent.

Again and again, Congress has asked the various agencies, like
the INS and the Social Security Administration, to propose what
they would like to do, without being sufficiently aware of the politi-
cal constraints of an agency that gets all of its funding from Con-
press and where they have offices in every State of the Union. They

ad better be careful not to antagonize too many of them. It’s your
enemies that make the problems; your friends often are not around
to help you.

Mr. Velde pointed out that the truck driver system of identifica-
tion and the advanced technology that is being used in some of the
State drivers’ licenses provide us with an optimum system for re-
ducing fraud.

I’m addressing myself now not simply to the issue of immigration
and employment verification. Between the President and the Re-
publican-controlled Congress, you have the opportunity to cut the
deficit of this country by a very significant amount without cutting
any school lunch program or other worthwhile causes. What you
can cut are the earnings of the criminal community.

I don’t have an estimate, but 20 years ago there was a study
which probably very few people even know about, a study of the
cost of fraudulent crimes, and they estimated the cost of $25 bil-
Tion. Whether it is $50 billion or $100 billion today, one would have
to find out by careful study, but you can cut the deficit by reducing
fraud, not only in producing documents.

A great deal of the fraudulent costs come from the fact that bur-

lars are interested not in stealing minor personal items, they look
‘or gold, for silver, for jewelry. If we had a way of inducing the


28

is, if you could feel the card with your fingers, you would note that
the top blue band, over which “Social Security” is written, and the
two columns on the card are raised, much like you feel an engraved
name card.

It also has on it a sort of misty-looking marbleized blue color that
would reveal an erasure, if someone tried to do that.

Third, I would draw your attention to the planchets. These are
multicolored disks that are randomly placed on the face of the card.
If you look very closely, you see in the lower right hand side a red
one, and over to the right, a blue and a green one. These are ran-
domly placed on the card.

Despite the improvements, however, I want us to remember that
we don’t expect employers to be forgery and counterfeit experts,
and therefore they might, unknowingly, accept a counterfeit card.

Some have suggested that the Social Security card be enhanced
with features such as a photograph, a hologram, or a magnetic
strip. I would only point out what has been noted before, that were
we to replace everyone’s card, it would cost between $3 billion and
$6 billion. And that doesn’t include the cost to employers, who
would have to buy equipment to read, for example, the magnetic
strip on the back of the card.

We look forward to working with you, Mr. Chairman, and your
committee. We look forward to our pilot projects that have alread:
been mentioned, with the INS, because we want so very, very mucl
to make sure that the employment eligibility for newly hired em-
ployees is as good as we can make it.

Thank you.

(The prepared statement of Ms. Chater follows:]

PREPARED STATEMENT OF SHIRLEY S. CHATER, COMMISSIONER OF SOCIAL SECURITY
ADMINISTRATION

Mr. Chairman and Members of the Subcommittee: I am pleased to be here to dis-
cuss the integrity of the Social Security card as well as its role in the verification
of employment eligibility. We look forward to working with you to address your con-
cerns about the system.

‘The employment eligibility verification process is composed of two elements: veri-
fying the identity of the job applicant and ensuring that the applicant has authorit:
to work. SSA’s role in the current work eligibility verification process is limited.
worker must present to an employer documents which establish either identity or
authorization to work or both. Some documents serve as evidence of both elements,
but most documents establish only one or the other. The Social Security card is in
the latter category, indicating only whether the individual named on the card had
authority to work when the card was issued.

For a variety of reasons which I will explain in my testimony, it is not feasible
to use the current Social Security card for the purpose of establishing that the per-
son in possession of the card is the person to whom it was issued. Perhaps no single
document can guarantee identity.

HISTORY OF THE SOCIAL SECURITY CARD

Let me give you some background on the Social Security card. At the time the
Social Security card was devised in the 1930’s, its on se was to provide a
record of the number that had been issued to the indi 0 that the employer
could accurately report earnings for the individual. That is still the primary purpose
for which SSA issues the card. It was never intended to serve as a personal identi-
fier—that is, to establish that the person presenting it is actually the person whose
name and Social Security number (SSN) appear on the card. Although we have
made it counterfeit-resistant, it does not contain information that allows it to be
used to establish identity.

‘Over time, however, the use of the SSN and Social Security card has greatly ex-
panded, and the card is now used for purposes other than Social Security earnings



94

So if we just go from a 100-year-old system to the present tech-
nology. we will be much better off.
Mr. Horn. Well, that leads me to my next question to Mr. Rasor.
Given the Secret Service’s jurisdiction over the production and
transfer of non-Federal Government identification documents, such
as birth certificates and drivers’ licenses, what power or authority
does this convey over State vital records or motor vehicle adminis-
tration offices? Is the Secret Service working with the States and
localities to develop a standard document and security formats?
_Mr. Rasor. Well, the question is twofold. What power does it
ive us?
aM. Horn. Right.
Mr. Rasor. It gives us no power. In a partnership type arrange-
ment, based upon the whole process of the risk analysis assessment
that we do with the criminal investigative work, we do go to the
States. We have an agent assigned basically in every State to be
the false identification coordinator.
The first step in that process was just to collect the valid existing
identifiers that the State produced. In other words, a State may
have 8, 9, or 10 different drivers’ licenses. You know, we believe
that that system can be improved, and we try, within the limits of
what we have available to us, to encourage changes to make the
systems more verifiable and more complete.
Somewhere along the line, if one of these systems becomes com-
plete, it can stand as the base for all other systems. It’s either in
the driver’s license or the Social Security card or someplace else in
a system where you might get a completeness and be able to rely
on that.
That’s a long answer to your question. We’re trying, sir.
Mr. Horn. Yes. Well, I think that’s very commendable, because,
as you say, my heavens, it’s a wonder the States have any coordi-
nation of this. Are there State laws primarily on the books now
where there is a common birth certificate in some of these States?
Are there any interstate compacts that relate to birth certificates?
Mr. Rasor. I don’t know the answer to that question, specifically.
I can find that out for you and report back to you.
Mr. Horn. I would appreciate it, and we will put it at this point
in the record.
[The information referred to follows:]
The Secret Service has an agent in each state designated as the “ID” coordinator.
This agent maintains a liaison with the state agencies that issue identification docu-
ments. This allows the Secret Service to collect and maintain genuine samples of
identification documents to use for comparison purposes in analyzing counterfeit
identification documents. It also gives the Secret Service the opportunity to offer ad-
ice on methods that would make current identifications more difficult to counter-
‘or instance, our “ID” coordinator in Albuquerque, New Mexico, has been pro-
assistance in the re-design of the New Mexico driver's license.
Re-designing existing systems only provides a temporary fix to the significant
problem of counterfeit identification, Technology, primarily through the use of com-

uters, has made current systems of identification obsolete. The Secret Service has
Retermined that the only reliable method of identification of an individual is
through the use of personal identifiers. Reliable identification is available in today’s
technological markets through the use of the Automated Fingerprint Identification
System (AFIS). AFIS technology, through the use of inkless scanners, allows for a
positive verification of an individuals identity. AFIS technology could be adapted for

all forms of identification documents, including driver's licenses and birth certifi-
cates.



9

PREPARED STATEMENT OF HON. STEPHEN HoRN, A REPRESENTATIVE IN CONGRESS.
FROM THE STATE OF CALIFORNIA

The Subcommittee on Government Management, Information and Technology will
come to order.

The Subcommittee is meeting today to solicit from interested parties suggestions
for improving the integrity of documents that entitle people to gain public benefits
or to be hired for work.

A commission on immigration reform headed by former U. S. Representative Bar-
bara Jordan made several recommendations last fall for restoring credibility to the
nation’s immigration policy. The commission cited widespread counterfeiting of the
documents acceptable for verification of identity and employment authorization as
a factor undermining the current process. It recommended development of a “sim-
pler, more fraud-resistant system for verifying work authorization.”

the President’s 1996 Budget the Administration proposes to reform the nation’s
immigration process, in part through development of a nationally available employ-
ment verification system. Such a system very likely will depend heavily on the accu-
racy of a supporting database and will rely even more critically on the integrity of
documents used to inquire against it.

Today we will hear from several qualified witnesses with varied experiences in
matters that relate to document and database integrity. I look forward to everyone’s
testimony and to working with all of you on how best to fix what is wrong with our
system for verifying benefit entitlements and work authorization.

ADDITIONAL PREPARED STATEMENT OF HON. STEPHEN HoRN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

“THE TARNISHED GOLDEN DOOR” CIVIL RIGHTS ISSUES IN IMMIGRATION—A REPORT OF
THE UNITED STATES COMMISSION ON CIVIL RIGHTS, SEPTEMBER 1980

Civil Rights in Immigration

Nothing is more pitiful than a nation which stands helpless and immobilized
when it should meet the needs of its own citizens and lawful residents. Yet that
is exactly what is happening with respect to the lack of an effective national policy
concerning the illegal aliens who are coming to this country to seck employment and
a better life for themselves. Calling them by the euphemistic phrase “undocumented
workers” does not make their entry any less illegal nor reduce their impact on em-
ployment opportunities for our own citizens. As Secretary of Labor Tay Marshall
noted on December 2, 1979:

If only half, or 2 million of them are in jobs that would otherwise be held by
U.S workers, eliminating this displacement would bring unemployment down to
pre which is below the 4% full-employment target set by the Humphrey-Haw-

‘ins Act.

It should be clear that the illegal alien roblem isnot simply an Hispanic problem
and is not limited to the five Southwest States; it is a national problem.” If one ex-
amines the employment situation in the North-Central States, in New England, and
along the eastern seaboard, one can readily find thousands of non-Hispanic illegal
aliens widely employed in both the large industries and the small businesses of
those areas. As the Vice President’s Task Force on Youth Employment concluded:

1 Harry Bernstein, “IMlegal Aliens Cost U.S. Jobe—Marshall,” an interview with Secretary of
Labor F. Ray Marshall, Los Angeles Times, Dec. 2, 1979, p.l-1.
2Very simply, the estimate of illegal aliens is uncertain except that it is at least several mil
lion. Lawrence Fuchs, Director of the Select Commission on Immigration and Refugee Policy,
has claimed that there are no more than 6 million undocumented workers and that no more
than 50 percent of them are Mexican. Prof. Vernon M. Briggs, Jr., of Cornell, has also estimated
that “it is unlikely that, Mexicans account for no more than haif of the annual flow of illegal
ns into this country.” Vernon M. Briggs, Jr., “The Impact of the Undocumented Worker on
1e Labor Market,” in The Problem of the Undocumented Worker (Albuquerque, N. Mex.: Latin
American Institute of the University of New Mexico, n.d.), pp. 31-38, p. 33. In August 1978,
the Denver Post reported a belief of the Mexican Ambassador to the United States, Hugo D:
Margain, that without guest worker programs such as the so-called bracero program that there
could be'as many as 10 million illegal aliens in this country. (“Our Undocumented Aiens—Part
Four, A National Debate What To Do?” in Empire Magazine, the Sunday magazine of the Den-
ver Poat, Aug. 6, 1978.) Estimates of ilegal aliens in the United States have ranged from 3 to
12 million, For 1985 Lesko Associates estimated 8.2 million illegal aliens, of whom 5.7 million
were estimated to be Mexican. The U.S, National Commission for Manpower Policy concluded
that the average illegal alien population in 1977 was probably within the range of 3 to 6 million
persons,



77

States to require that people who sell precious metals identify
themselves with a biometrically generated ID card, there would be
a lot of reduction of burglaries, because burglars don’t go into our
homes just for the fun of it.

We should also keep in mind that biometric indicators are a pri-
vacy-protective element. They do not reveal the person’s sex, the
age, the national origin. The fingerprint lines of a beauty queen are
no different and no more interesting than the fingerprint lines of
somebody who perhaps added too much weight.

So from the point of privacy, the only way we can really guaran-
tee privacy and reduce computer hackers is to introduce the bio-
metric measures, not only for aliens, but for people who have ac-
cess to secret information systems. Now they only need a PIN sys-
tem. In order to enter important data files, if they had to put their
thumbprint on a reader and also enter their card, the digital com-
ponents of their thumbprint, there would be a considerable reduc-
tion of this kind of fraud. In fact, it probably would stop it.

So, in conclusion, I would like to suggest that both privacy and
security will be greatly enhanced if Congress has the courage to
look at the technology that exists today and legislate so that the
various agencies can do what they really would like to do, but feel
it is politically unwise to even publicly propose. There are officials,
Senators, and Members of Congress, who would object to such a
proposal.

[The prepared statement of Mr. Eaton follows:]

PREPARED STATEMENT OF JOSEPH EATON, PROFESSOR EMERITUS, GRADUATE SCHOOL,
OF PUBLIC AND INTERNATIONAL AFFAIRS, UNIVERSITY OF PITTSBURGH

The nation owes a commendation to the members of U.S. Commission on Immi-
gration Reform. Under leadership of Barbara Jordan, it has recommended an active
search for “a simpler more fraud resistant (computerized) system for verifying work
authorization”. Similar recommendations were made by study commissions during
the terms of Presidents Carter, Reagan and Bush. All of them became politically
controvorsial and were under-funded. What this recommendation means in plain
English is that if someone steals your wallet, he can use the dollar bills. But it
would be risky for him to use your driver’s license or the INS Green card. He might
as well send them back to you and collect a finder’s reward.

President Clinton and the Republican controlled Congress now have the oppor-
tunity to provide bi-partisan endorsement of this long overdue ID card reform. Fin.
gerprints or other biometric indicators will have to be included if there is to be a
significant enhancement in the efficiency of the identification and verification sys-
tem. Valuable entitlements, such as the right to enter and to work in the United
States, need to be verified by high quality identification documents.

My testimony will briefly summarize the pro’s and con’s of the available ID card
technology. I also want to utilize how biometric indicators can be used to enhance
our currently flawed data banks. Even the most confidential military or industrial
data files are not now immune to being compromised by criminals and/or juvenile
computer hackers.

Already nineteen years ago, the Federal Advisory Committee on False Identifica-
tion alerted the country to the mega billion cost of crimes by persons masquerading
under one or more false identities. Our nation attained world leadership in part by
quickly incorporating technological innovations in our weapons systems. Civilian in-

lustries are also in keen competition to update their products by incorporating per-
tinent inventions. But when it comes to modernizing our grossly flawed personal
identification methods, we have been much more cautious. This timidity exposes all
of us, as individuals and as a nation, to helplessness in combating the widespread
criminal use of false identification documents.

Biometric indicators are far less prone than Pin Numbers to being stolen or gen-
erated by invasive computer techniques. Loss estimates range from 25 to 100 billion
dollars. jatever the waste, it is real money, especially in the current budget deficit

lebate.


83

puter and printing technology. Related to this increase is the emergence of orga-

nized criminal groups which are developing fraudulent schemes designed to simulta-

Reously attack the various private and Government financial systems in the United
tates,

For example, techniques currently in place to corroborate identity are antiquated.
Birth certificates, the initial documents needed to obtain a host of other documents,
are easily obtained or counterfeited. Although counterfeit birth certificates and so-
cial security cards can and will be used to establish identity in the commission of
financial crimes, it is the counterfeit drivers license that is most often used. That
is due to the fact that drivers licenses are easy to counterfeit; and during the course
of business, the drivers license is the most popular and widely accepted credential
in support of a financial transaction.

Because of these problems, we need to seriously review measures needed to im-
prove these systems, We also need to make appropriate use of available technology
to thwart this problem. The reliable and positive Wdentification of a person’s identit;
is clearly the most significant means to prevent fraud and related activities. Reliable
identity verification systems are available in today’s technological markets. They
have been useful for large Government efforts to combat document related crimes.

As an example, some law enforcement agencies utilize state of the technology in
fingerprint identification through the Automated Fingerprint Identification System
(ARIS) As described, this computer system serves as a depository of electronically
scanned fingerprint files, This technology allows a quick comparison of these files
when attempting to match fingerprint records. The Secret Service has experienced
first hand the advantages and reliability of this technology. AFIS provides a means
for the Secret Service to identify suspects in investigations and presidential threat
cases by matching latent prints of unidentified individuals with a database of
known records,

AFIS technology js currently being utilized in the Automated Fingerprint Image
Reporting and Match (AFIRM) System in the Los Angeles County welfare program
to verify the identity of all applicants and to defeat fraudulent application schemes.
The AFIRM system was developed in response to multiple identity fraud cases in
the Los Angeles general relief program and was later expanded for use in the Aid
for Families With Dependent Children (AFDC) program.

A study of the AFIRM program was conducted by an independent audit firm who
found the AFIRM system is accurate in that no false positive matches of applicants
have yet occurred. The result of the audit indicate that the utilization of the AF!
system has, to date, been successful.

AFIS can solve the problems associated with the unlawful use of counterfeit finan-
cial instruments and identification documents by linking personal identifiers with
use of the bogus items themselves. AFIS technology in the Los Angeles County dem-
onstration project is proving to be an effective tool in combatting application fraud.

In closing, the Secret Service supports initiatives which speeiically incorporate
measures designed to minimize fraud while still meeting program goals. These ob-
jectives are not mutually exclusive. To the contrary, incorporation of technology and
systemic safeguards result in better resource allocation in both arenas.

Mr. Horn. Thank you very much, Agent Rasor. We now have Mr.
Russell Meltzer of Schlumberger-Malco on how private consumer
credit card charge authorization systems work.

May I first ask, is that firm related to the famous oil well tech-
nology company?

Mr. MELTZER, One and the same.

Mr. Horn. One and the same. When did they get in the
consumer credit card business?

Mr. MELTZER. A whole month ago. They just became our parent
copay. about a month ago.

Mr. Horn. I see.

Mr. MELTZER. Prior to that, they were heavily into the smart
card arena.

Mr. Horn. And you were Malco before that, were you?

Mr. MELTZER. Correct.

Mr. Horn. Very good. Fascinating. 1 grew up running around
their trucks as they pumped mud in various dry holes that my fa-
ther was drilling.


5

The report found that 56 percent of the 910 largest systems in federal agen-
cies can be accessed by private organizations such as health care providers,
marketing companies, and insurance companies.

In 1990 the GAO issued a report Computer Security—Governmentwide Planning
Process Had Limited Impact.

‘The report found that the plans which were designed by federal agencies to
improve security and restrict access had limited impact on “agency computer se-
curity programs.”

At the time of the GAO report only 38 percent of the 145 plans had been im-
plemented.

e GAO concluded that the government “faces new levels of risk in informa-
tion security...”

In March of 1993 the Department of Justice issued an audit on database access
problems at the INS. The databases at the INS contain information necessary to de-
tect, apprehend, and deport criminal aliens, as well as administer employer sanc-
tions provisions.

The audit found that additional access controls were needed, without which
the INS’ data was vulnerable to “accidental or intentional destruction, modifica-
tion, disclosure and unauthorized use.”

The audit reported on the case of an INS employee who created and altered
nearly 2,000 files in exchange for payments as high as $40,000.

The DOJ audit found that INS was vulnerable to “computer fraud”, and the
possibility that it might be unable to “recover critical data . . .”

In September of 1993 the Department of Justice issued an audit of the INS com-
puter risk analyses and contingency planning. Risk analyses are necessary in order
to ensure the security, integrity and confidentiality of data,

The audit found that the INS had still not performed risk analyses of its 24
application systems.

though the INS had adopted a contingency plan, at the time of the audit,
DOJ found that INS’ contingency plan had still not been tested at the time of
the audit, or approved.

Motor Vehicle Departments routinely sell the information contained in their
databases.

‘THE COSTS OF A NATIONAL VERIFICATION SYSTEM OR NATIONAL ID CARD

Several of today’s witnesses may propose that a national registry or national ID
card based on the Social Security database is the best way to verify a worker's eligi-

lity.

Such a system would inevitably mean that the SSA data would have to be
updated and corrected, and that everyone, citizen and non-citizen alike would
have to be interviewed.

According to the Social Security Administration everyone would have to be
interviewed in order to reissue 270 million cards, at a cost of $3-$6 billion.

The addition of magnetic stripes, photos or fingerprints would drive up the
costs considerably.

Issuing cards to only a portion of the population would save money, but would
inevitably leave a significant number of forged cards in circulation.

If more sophisticated cards are produced, for example cards which include
holograms, biometric identifiers, or magnetic strips, a system will have to be acces-
sible to employers to verify the information contained in the card.

Who will pay for the equipment which employers will have to utilize?

Polyester or plastic cards, according to the GAO are ten times more expensive to
produce than paper cards, and must be replaced every few years due to wear and
tear.

OTHER CONCERNS AND QUESTIONS

Proliferation of Cards, Numbers and Identifiers
co silferent documents ean be used to verily someone's work eligibility und identi
fication,

44 valid versions of social security number cards.

Each State has its own birth certificates, issued from 7,000 vital statistics offices
around the country.

In the words of Robert Rasor, there are “thousands of different identifications in
use today and personnel reviewing identification need to be able to recognize fraud-
ulent documents. The variety of identification documents makes this impossible.”


81

one realizes that fraudulent identification is really the basic neces-
sity for all financial crimes, illegal border crossings, and fraudulent
applications for benefits from local, State, and Federal Govern-
ments.

Fraudulent identification allows the criminal element to move
freely through society, hidden from law enforcement and regulatory
agencies whose duty it is to protect the nation’s financial systems,
borders, and benefit agencies. If our currency was counterfeited at
the rate that false identification is being produced today, the im-
pact would be dramatic to the economy and the confidence of the
public in those same documents.

It is important to understand that in addition to just straight
criminal investigations, the Secret Service has developed a
proactive risk analysis process which, when coupled with existing
enforcement expertise, has produced major successes in combating
a broad spectrum of financial crimes by addressing system fixes in
the banking, credit card, telecommunications, and government enti-
tlement areas. The Service endeavors to prevent crimes by identify-
ing the systemic weaknesses which allow recurring criminal activ-
ity. Once the weaknesses are identified, the Service attempts to ad-
dress them by suggesting possible program management solutions.

For example, the techniques currently in place to corroborate
identity are antiquated. Birth certificates, the initial documents
needed to obtain a host of other documents, are easily obtained or
counterfeited. Although counterfeit birth certificates and Social Se-
curity cards can and will be used to establish identity in the com-
mission of financial crimes, it’s the counterfeit driver's license that.
most often is used. That is due to the fact that drivers’ licenses are
easy to counterfeit, and during the course of business, the driver’s
license is the most popular and widely accepted credential in sup-
port of a financial transaction.

Because of these problems, we need to seriously review measures
needed to improve these systems. We also need to make appro-
priate use of available technology to thwart this problem. The reli-
able and positive identification of a person’s identity is clearly the
most significant means to prevent fraud and related activities. Reli-
able identity verification systems are available in today’s techno-
logical market. They have been useful for large government efforts
to combat document-related crimes.

AFIS technology is currently being utilized in the automated fin-
gerprint image reporting and match system in the Los Angeles

ounty welfare program to verify the identity of all applicants and
to defeat fraudulent application schemes. The AFIRM system was
developed in response to multiple identity fraud cases in the Los
Angeles general relief program and was later expanded for use in
the aid for families with dependent children, the AFDC program.

AFIS can solve the problems associated with the unlawful use of
counterfeit financial instruments and identification documents by
linking personal identifiers with the use of the items themselves.
AFIS technology in the Los Angeles County project is proving to be
an effective tool in combating application fraud.

In closing, I would like to say the Secret Service supports initia-
tives which specifically incorporate measures designed to minimize
fraud while still meeting program goals. These dbjectives are not


92

Mr. Horn. Mr. Rasor, do you have any help or advice you can
give us on that?

Mr. Rasor. Well, I mean, I come back to, you know, this prob-
lem, as I’ve mentioned, transcends a number of the issues here
today. It goes to the essence of a government expending funds for
one function or another and having the ability to be assured that
where that money is going is proper and complete.

I would put one more thought into the record and that is, the Se-
cret Service spends a great deal of time talking to the financial in-
dustries: the banking community, the credit card community, the
ATM systems around the country. One thing that we insist upon
is that their systems become as complete as possible, because the
violations that occur, that are a violation of Federal law, are time-
consuming and draw down on resources of law enforcement, gen-
erally, to investigate those crimes.

Where those crimes have systemic or technological fixes and they
become repetitive and cyclic, nobody wins. So I would say, in our
process here, we should look to the various safeguards that we
really demand of the private sector and make sure that we at least
match that, probably learn from that, and try to get ahead of
where that situation currently exists. Even with all the efforts they
put in, they have tremendous fraud losses. So I think that needs
to be blended.

Mr. Horn. Dr. Eaton.

Mr. EaTon. Well, the employer of a small number of persons, for
him, every hiring is important for his business. In our homes we
want somebody checked who looks after our children as much as
possible. We spend hours interviewing and calling references.

So the idea my colleague here suggests, that you go down to one
of the Federal offices and check the card, is really not a great bur-
den. Quite the contrary, I think it would be a great relief to both
employers and people who hire household help to be able to verify
the qualifications of the people they hire much more than they now
can.

Mr. Horn. I was just thinking, if you take them to the office, one
door would be, you passed, and the other is, youre boarding a
plane to go back to the country from which you illegally entered.

Representative Maloney.

Mrs. MALONEY. Thank you, Mr. Chairman.

How would biometrics work or help with ordering by phone or
from a mail catalog?

Mr. EaTON. Well, biometrics, after all, the fingerprint doesn’t get
transmitted; it’s the digital equivalent of the fingerprint which can
be read electronically. So the capacity to use it is very much the
same as the capacity that we use our credit cards now, when we
push them through a reader.

There are some problems. I mean, there is no 100 percent solu-
tion, even with biometrics, because of the possibility that people
who have high technology can take the biometric indicators from
the transmission system. But there would be tremendous reduction
of fraud.

And I would like to add one more thing, why I think it is unfor-
tunate that Congress has so far not really been responsible in look-


60

There certainly is a desperate need for Federal legislation which
establishes a uniform set of standards and policies relating to these
myriad of documents that are now in use. Hopefully the Federal
identification documents can be somehow integrated with those
which the State and locals have.

Mr. Horn. Thank you.

Commissioner.

Ms. CHATER. I appreciated the questions that members of the
subcommittee raised in regard to privacy and confidentiality, which
enabled me to say to you that Social Security will do all we can
to guard the confidentiality of our system and to pay attention to
the privacy of the American citizen.

Mr. Horn. Representative Maloney.

Mrs. MALONEY. I would like to follow up on the comment of Dr.
Martin, where you mentioned that we are now taking the steps of
reimbursing localities for the high cost of medical care and the
criminal justice system.

Wouldn’t it be the most cost-effective and practical way just to
take the first step of securing the green card, without having to
take all the other steps of a telephone ID system? If that new card
came into existence, that he said could not be forged, wouldn’t that
be a giant step forward?

Ms, MarrTIN. There’s a basic flaw, though, in relying only on im-
proving the green card, and that’s that there is nothing to stop an
illegal alien from claiming to be a U.S. citizen, and U.S. citizens,
obviously, don’t have to have a green card.

What ends up happening, in that scenario, is that either the
fraud works, or an employer or benefits office or anyone else who
is determining eligibility of that individual, if they start second-
guessing the person and saying, “Well, you have an accent, so we

lon’t really believe you're a citizen; we want your green card,” then
they will be practicing discrimination against legal permanent resi-
dents and U.S. citizens who may have the appearance of being for-
eign.
We are very concerned about leaving it to employers to make
that type of distinction. Subjective judgment as to whether or not
somebody is a citizen or an alien can only lead to fraud or discrimi-
nation. That’s really our concern about going down that route as
the exclusive way of dealing with the problem.

Mr. PuLEo. If I may, we have already taken steps to reduce the
number of documents, the number of green cards, as an example.
In fact, the program ends March 20 of this year, the old green card.
There were 17 different versions of it.

In all the counterfeit documents that we have run across, I be-
lieve that none of them have counterfeited the most secure parts
of it. If the employer is not interested in verifying—for example, we
had a demonstration of simply using a black light to show the ul-
traviolet features of the current green card; that has never been
counterfeited. An inexpensive device can verify that.

So if the employer doesn’t take that step, and they are willing
to take the step of verification by a telephone system, which is less
costly, it appears, then you can forge parts of the document suffi-
ciently enough to fool the employer, but unless you have massive


56

Mr. Horn. OK. What happens to it? Do you check it against your
own records so that they are similar, in the sense that these people
are not to be working?

Mr. PULEO. Essentially, what the annotation says on the Social
Security card is that if you, in fact, have one of these Social Secu-
tity cards, you also have to have authority from the Immigration
Service. So you have to show the EAD. I would say it was limited,
probably, to the EAD. If, in fact, there is a discrepancy, we would
check our data base to see if, in fact, the person was authorized to
work here in the United States.

I can tell you, though, the likelihood of us doing an individual
case is probably very remote, since we have limited resources in
our investigations program. We would target—the three major pri-
orities for our criminal investigators are: employer sanctions, fraud,
and criminal aliens.

If we're doing one of our sanctions operations and it includes a
large operation, if we come across this particular employee, then
they will be taken down as part of that operation. But we don’t
have the resources to do single-issue cases.

Mr. Horn. INS has an enforcement division to watch this.

Mr. PULEO. Yes.

Mr. Horn. I'd like you to file, for the record, both Social Securit)
and INS, over the last 2 years, what has the Commissioner of botl
operations asked for in enforcement funds, what has been granted
by OMB, as part of the President’s budget, and what has Congress
provided. I’d just like that laid out for INS and the Social Security
Administration,

Mr. PuLeo. If I may clarify, for 1995 and 1996?

Mr. Horn. Right.

Mr. PULEG. That will be fine.

Mr. Horn. Fiscal 1995, fiscal 1996. Of course, we haven’t proc-
essed the budget for fiscal 1996 yet, but at least we would have
your recommendations, and then the rest is up to us, shall we say.

Mr. PULEO, Exactly.

Mr. Horn. Commissioner Chater, I’d like to know, do you have
the figures on how much that 800 number really costs? I’ve
accessed it myself, just to see if the thing worked. If you could sup-
ply the figures, we would appreciate it. They are coming out of the
trust funds, and some of that is a live operator; some of that is just
simply leaving name and address, if you want to make certain fil-
ings. And I assume somebody types that up and gives it to the rei-
evant group to send the forms to the individual.

Would you say you have found the toll-free telephone line, gen-
erally, pretty successful in saving the agency a lot of time?

Ms. CHATER. Yes, it’s successful. We are working very hard to
make it even more successful than it is. We’re trying hard to do
what we call direct delivery services, so that anyone who calls our
800 number or anyone who walks into a field office will be served
fully by that person, as opposed to putting them off, or telling them
to come back, or even eventually making an appointment for them.

Mr. Horn. Now, with 65,000 employees, you have a lot of people,
a lot of field offices spread fairly conveniently around the country.
If we were to pursue making the Social Security card even more
related to the individual, as the card claims to be, couldn’t several


18

paper, could be replaced by a single electronic step to validate information every
worker must alre: provi .

The Commission also looked at the feasibility and effectiveness of reducing the
number of documents used in verification. Again, we support such efforts as interim
measures. But the fatal flaw here is the vulnerability of all documents to counter-
feiting. We heard expert testimony that any document, even the most tamper-proof
ones, can be forged so well that only experts can identify the fakes. Employers can-
not be expected to identify counterfeit documents.

The Commission believes electronic validation of the Social Security Number is
the most promising option because it holds great potential for accomplishing the fol-

lowing: |
. luction in the potential for fraud. Using a computerized registry, rather than
relying on documents, guards against counterfeits.

« Reduction in the potential for discrimination. All workers must present the
same information to be validated.

Reduction in the time, resources and paperwork spent by employers in comply-
ing with IRCA. INS employees who now chase paper could be redirected to chase
down those who knowingly hire illegal workers.

The Commission did not try to micromanage the Executive branch’s implementa-
tion of this recommendation in advance. We deliberately did not spell out precisely
how the software of the registry would be designed, although we did specify that
just six pieces of information seem necessary: name, Social Security Number, place
and date of birth, mother’s maiden name and status code. Nor did we limit the inno-
vation that might be applied in pilot projects to test the registry.

There must objective, systematic evaluation of the pilot programs. This Com-
mission expects to have meaningful results from the initial phase of pilot testing
by 1997. We will incorporate these results in our final report to Congress, so that
we can make an informed recommendation on whether that system should be imple-
mented nationwide, with particular attention to civil liberties and privacy concerns.
The features of pilot programs should include:

* A means by which employers will access the verification system to validate the
accuracy of information given by workers. We received conflicting testimony about
the best way to ascertain that a new hire is who he or she claims to be. Some be-
lieve that the tamper-resistant. driver's licenses now being issued by many states
can do the job; others strongly advocate testing a more secure Social Security card.

But it is also possible that electronic validation through a telephone system would
require no document at all. Every ATM system uses a PIN number to protect our
money. We should test to see if personal information, such as the mother’s maiden
name and date of birth, that is already part of the Social Security database, can
serve the same function for worksite verification.

« Measures to ensure the accuracy of the necessary data. Improvements must be
made in both the INS and Social Security Administration databases to ensure that
employers have timely and reliable access to what they need. Frankly, no one can
be opposed 1o improving the reliability of the data in these agencies. There is no
protection of liberty in government error.

© Measures to ensure against discrimination. One key to the Commission’s rec-
ommendation is that employers would no longer have to ascertain whether a worker
is a citizen or an alien, native-born or an immigrant. All workers would have to
present the same information to be validated.

* Measures to protect civil liberties. Explicit protections should be devised to en-
sure that the registry is only used for its intended purposes. The Commission be-
lieves that electronically validating the Social Security Number could be used to as-
certain eligibility for public benefits, without damage to civil liberties, because ev-
eryone receiving public assistance must already present a Social Security Number
just as they do for work. But the registry is not to be used for routine identification
‘purposes, and there must be penalties for inappropriate use of the verification proc-
ess. The Commission’s unanimous, unequivoca] view is that no one should be re-
quired to carry a document and produce it on demand to prove their right to be

ere.

* Measures to protect privacy. Explicit provisions must also be built into the sys-
tem to safeguard individual privacy. The information contained in the registry will
be minimal, given its limited purpose. But the Commission is aware that while ac-
cess to any one piece of information may not be intrusive, in combination with other
information it can lead to privacy violations.

« Estimates of the start-up time and financial and other costs. The Social Secu-
rity Administration made preliminary estimates for the Commission of its cost for
pilot projects: $4 million over the first two years for design ‘and development; and
annual costs of maintenance and operation of $32 million. Discrepancies referred to


AT

why we have recommended testing various means of access, be it
through a more secure driver’s license or Social Security card. But
we would be hopeful that no document, no particular document, is
necessary.

Mr. Horn. Are you talking about an 800 number when you say
telephonic communication?

Mr. HILw. More than likely it would be, yes.

Mr. Horn. Do you want to add anything, Dr. Martin?

Ms. Martin. Yes, if I could add one other element to that is that
a system that doesn’t rely, as Congressman Becerra was mention-
ing, on the self-attestation on the part of the worker, whether it’s
a citizen or an alien.

The current systems are really very much subject to fraud and
also to the potential for discrimination, because the worker has to
say, I’m a citizen or an alien. If they are an alien, there may be
a possibility of an INS check, but there’s nothing to stop an illegal
alien from claiming to be a citizen and thereby eluding the current
telephone verification process.

So we need a system which treats everybody the same way, so
that employers aren’t concerned that they may have somebody
claiming to be a citizen who is not, so that the illegal alien can gain
the system by claiming to be a citizen.

Mr. Horn. Very good. We're going to add 2 minutes to Mrs.
Maloney’s time. Let’s finish this round.

Mr. Velde, what would you suggest?

Mr. VELDE. Mr. Chairman, we don’t need a national identifica-
tion system; what we need is the functional equivalent of one,
which would mean the updating of State drivers’ licenses and State
identification documents. About half the States now, following Cali-
fornia’s lead, have digitized photographs, fingerprints, and signa-
tures on their drivers’ licenses.

In_1986, Congress passed legislation setting national standards
for the testing and issuance of truck drivers’ licenses. Since 1991,
these images on a truck driver's license must be digitized and veri-
fiable. That should be done for all licenses, not just truck drivers.
The Federal law is already precedent for it.

Furthermore, the 13 States, such as California, that still have
“open records.” Those laws should be preempted by Federal Gov-
ernment and uniform national standards applied for the issuance
of the breeder documents. Then the State identification document
systems, before they are issued, such as California does—they do
a 30-day background check—they should be cross-indexed with the
Social Security numbers and with Immigration data bases to make
sure that those individuals are lawfully entitled to live and work
and drive in the United States.

Then you would have the functional equivalent of a national sys-
tem at much less cost. The California driver’s license now, in quan-
tity, is under $1. It’s a very durable and relatively secure docu-
ment, as far as counterfeiting or alteration. There is technology
available now which will allow this card to be a private credit card
as well, to store enough memory on it, 2 or 4 megabytes of memory,
10,000, 20,000 pages of information, as much as you need, on the
face of the card.


51

Now, there are already a number of national data bases in the
United States. There are a number of highly automated, private
national data bases: medical records, insurance records, edu-
cational records, and credit records. If you go to buy a car, a dealer
can run a complete check on you in a few seconds.

Mr. FLANAGAN. All on a voluntary basis, though.

Mr. VELDE. All on a voluntary basis; many of them not on a vol-
untary basis, however, data collected without your knowledge or
consent. Look, on a CD-ROM you can get a data base of every tele-
phone number in the United States for $30. That’s a national data
base that has identifier information on quite a few million people.

What it is possible to do, is to build the functional equivalent of
a national identification system, using State drivers’ licenses or
identification cards, where the data bases can be decentralized,
their accuracy maintained where the people live. The driver's li-
cense has to be renewed periodically. There are many ways in
which the integrity of those kinds of data bases can be maintained
and secured; computer hardware and software, for example.

But we have a long way to go. As I mentioned earlier, we are
paying the price here. We have the worst of both worlds. Our auto-
mation and our computer technology is being used to invade our
privacy, and we don’t have the benefit of a secure national system.

If you look at the exchange of criminal history information over
the last 20 years, you will find safeguards in place. There is mas-
sive exchange of criminal history information, affecting the lives
and the privacy and the security of many, many people. And yet
we've had very little abuse of that system.

There are Federal and State laws in place that protect the pri-
vacy of individuals who are subject to these files, to ensure the
quality of the data. There is biometric verification, fingerprint, now
facial, now signature verification of the identity of the subject of
these files. If you’re going to be sentenced for an additional term
of 20 years because you had three prior felony convictions, the
court wants to make absolutely sure that you’re that individual
who had those three prior felony convictions.

So we are dealing, in the criminal justice context, with these
kinds of issues all the time. Sure, there are fundamental questions
of privacy and security, but now we have the worst of it.

Mr. FLANAGAN. Let me tell you, even the fact that you can safe-
guard that information for me does not get me over the threshold
of why should you be able to collect it and then have it recorded
in the first place. Whether it happens de facto or not is not reason
enough for me to succumb to a national identification card, should
I choose to be employed.

Mr. VELDE. Congress, in its wisdom, in the last several years has
passed all this legislation: Brady checks for buying guns; motor
voter; the Oprah Winfrey Act, background checks for child care em-
ployees; and employer sanctions under the immigration law.

Mr. FLANAGAN. Well, it may be too late to turn——

Mr. VELDE. You have all these Federal laws piled on top of each
other requiring positive identification, and yet no means of ensur-
ing it.


80

passed, they will be more easily enforced when information is digitally stored in a
computerized data bank than in handwritten or typed paper files.

5. Administrative and Legal Remedies

The almost infinite volume of information which is now being stored in computers
would otherwise require vast amounts of paper and carbon copies, The world’s sup-
ply of trees would be diminishing at an ever more alarming rate than at present.
An occasional unintended and accidental leak cannot be avoided. Care will need to
be taken to exempt these “accidents” from generating expensive litigation. They
could Guickly bankrupt even the most conscientious data bank operator.

A quite different standards should be applied to unauthorized data release for

rofit, for political purposes or to intentionally embarrass or harm an individual.

su

The risk of such a lawsuit will also help to keep those who operate data banks them
jonest.

CONCLUSION

No person, except for criminals, can live in America without revealing a great deal
about his or her private life. Privacy invasion begins at birth, when a baby’s foot-
rint is taken and, to issue a birth certificate, information is collected about its
ealth and its parents. Before my children went to college, I was able to send for
an extra copy of their birth certificate for two dollars each. A broker of false ID doc-
uments could have done the same thing. He could have enriched himself and the
underworld with clone identities of my sons and daughter.

‘The enforcement of privacy rights requires that ‘selected data files be subjected to
digitally coded monitoring of persons who are entitled to enter information, analyze
it, compare different files and then retrieve the outcome from a data file. This is
now being done largely with PIN codes, which can be stolen or carelessly recorded
in a person’s wallet. Computer hackers have proven again and again that even the
most secret PIN code can is broken.

Biometrically verifiable identity cards are much_more secure. About the only way
a computer hacker could gain access to the secret files of the CIA would be to invade
its headquarters or one of its field stations, put a gun to the head of an approved
operator and then force him to insert his ID document, while verifying it with his
thu eye grounds, digitally readable handwriting or other operating biometric
safety device.

‘The criminal hacker would be exposed to the risk that the hostaged CIA employee
could activate a computer “red light” warning by inserting an “in trouble” code, such
as pressing a digit in a normally forbidden manner.

lo major invention or addition to knowledge can be reversed. Not even the most.
devout Mullah in Saudi Arabia who wants to imprison women who drive a car, can
wipe out the evidence that the average woman driver has fewer accidents than
males. What is technologically possible are computerized instructions to protect
specified items of information from disclosure without a warrant from a judge or the
permission of the person who generated the information.

Such a protective system would have to require that those who are authorized to
access a confidential information data bank need to identify themselves with some-
thing more reliable than an access code or as a Pin number. Not even a social secu-
rity card, a passport or a birth certificate, provides secure proof of identity. Nothing
less than a Biometric identifier which is transformed into a digital number pattern
unique to each person, will provide us with reasonably secure privacy insurance.

Mr. Horn. Thank you. We appreciate gout testimony.

The next witness is Robert Rasor, Special Agent, U.S. Secret
Service, Department of the Treasury, on techniques for combating
the forgery of Government documents.

Mr. Rasor. Thank you, Mr. Chairman.

As a law enforcement bureau of the Department of Treasury, the
Secret Service historically has been charged with the suppression,
detection, and prevention of violations of counterfeiting of U.S. cur-
rency and obligations. To that end, we also became the lead inves-
tigative agency relative to false identification, back in about 1982,
pursuant to the passage of the False Identification Crime Control
Act of that same year.

Counterfeiting or fraudulent identification initially does not seem
as serious a crime as bank robbery, theft, or drug smuggling, until


13

THE ASSOCIATION OF THE BAR OF THE CrTy OF New YorK,
New York, NY
March 1, 1995

‘The Honorable Carolyn B. Maloney
United States House of Representatives
1504 Longworth Office Building
Washington, D.C. 20515

Re: National Computerized Employment Registry

DEAR CONGRESSWOMAN MALONEY: On behalf of the Committee on Immigration
and Nationality Law of the Association of the Bar of the City of New York, we write
to express our grave concerns with respect to the U.S. Commission on Immigration
Reform’s recent proposal for the creation of a computerized national registry to ver-
ify the employment authorization of all workers. In this Committee’s opinion, the

Foposal should be rejected for the following reasons: absent an expensive’ and
lengthy effort to improve the registry’s database, it would be too inaccurate to be
trustworthy; it would increase the occurrence of discrimination against foreign-ap-
pearing U.S. citizens and lawful permanent residents; and it would unreasonably in-
trude upon the privacy of all Americans.

The Commission’s Proposal calls for a verification system based upon Social Secu-
rity Administration ( .”) and Immigration and Naturalization Service (“INS”) in-
formation, yet both agencies have publicly admitted that their databases are incom-
plete, inaccurate and unreliable. The Commission has already received extensive
evidence of the tragic recordkeeping deficiencies of both agencies. Nevertheless, even
though the Commission’s report recognizes this is a major problem, it has not pro-
vided a sufficient explanation as to how this deficiency may be overcome. At a mini-
mum, we believe the Commission should recommend extensive simulation-testing of
computer registry prior to the implementation of any “pilot projects”. We cannot

lone the immediate implementation, even on a limited basis, of an inherently
unreliable system at the expense of individuals who would suffer great personal
hardship while flaws in the system are worked out. In our opinion, the goal of re-
ducing illegal immigration to this country will not be furthered by hastily imple:
menting an ill-conceived system in which U.S. citizens will inevitably be denied
work authorization due to a computer “glitch”. Without a highly accurate database,
the concept of a computerized employment registry is fatally flawed and, ultimately,
doomed to failure.

Moreover, this Committee is deeply skeptical of any estimates which would imply
that those pervasive database problems may be corrected by spendin a relativel:
modest amount. For the computer registry to be reliable, both the INS and SS:
databases must be thoroughly cleansed of inaccuracies and steps must be taken to
reduce access to fraudulent “breeder documents” (i.e. documents, such as birth cer-
tificates, which are used to obtain access to INS and SSA benefits). The Social Secu-
rity Administration indicates a requirement of $300 million over five years to create
the requisite database. Even if we assume that this estimate is accurate, it does not
include the amount necessary for INS to create a sufficiently reliable database nor
does it include the cost of making “breeder documents” more counterfeit-resistant.
Additionally, if a counterfeit-resistant identity card, possibly a new social security
card, is issued as a primary method of verifying identity in the proposed system,
it has been estimated that the total cost of the registry would increase by approxi-
mately $2.5 billion. It is this Committee’s position that the creation of a mult il.
lion dollar registry’ program to target approximately 1.5% of the U.S. population is
an extremely costly alternative which is unlikely ever to achieve its primary
obiective.

In addition, we are concerned that the computerized national employment registry
will directly cause increased discrimination against U.S. citizens, Taw ful manent
residents and other lawful U.S. workers, If the registry requires an application or
re-registration process, foreign-appearing persons applying for inclusion into the
registry are likely to undergo greater scrutiny and face wide-scale discrimination
from skeptical administrators in charge of the application process. Many legal immi-
grants and foreign-appearing citizens may be qenied or delayed entry into the reg-
istry solely because of their appearance and ethnicity. Additionally, if a counterfeit-
resistant dentity card is created, it is likely that it will be abused in a myriad of
situations outside the employment context. Given the current anti-immigrant senti-
ment in this country, it is reasonable to anticipate that foreign-appearing persons
will be routinely asked to present this identity document by police officers, land-
lords, bank officials, state/local government employees, etc. regardless of any restric-
tions on its use imposed by Congress. The ability to provide such an identity docu-



55

cally requesting any particular document is a per se violation,
known as document abuse. It’s one of the principal problems that
employers are faced with daily, when they are concerned about the
legitimacy of any particular document under the I-9 process.

ir, VELDE. If I may allude to the gun control context, in 1988,
Congress authorized a national instant background check system
for purchasing a gun. Today, I can submit for the record, Mr.
Chairman, a report that Treasury just issued on implementation of
the Brady Act 1 year later.

There are eight States that now have instant systems in place.
Virginia was the pioneer. It’s a system that costs the State about
$500,000 a yer, Any gun dealer can simply dial up the State po-
lice, give the identifier information, and then obtain a “name”
check back. You don’t get positive verification of identity, but that’s
permissible under the Federal law.

Those systems are working reasonably well, as long as you take
at face value the driver’s license that is submitted by the applicant
to buy the gun. I think about half the States are in compliance
with Brady. Either they have their own State licensing system or
some other equivalent of that. The States have until 1997 to build
a national instant system.

What do you check for when you buy the gun? Whether or not
youre a convicted felon, whether you're an illegal alien, whether
you're underage, and five other categories. It’s exactly the same
check required by employers under the immigration law.

Mr. Horn. The gentleman from New Hampshire, Mr. Bass.

Mr. Bass. I have no questions at this time, Mr. Chairman.

Mr. Horn. Let me begin with a few questions, then we're going
to have to break for another vote.

I noticed with interest, Commissioner, that in your statement, on
page 7, you refer to the cooperation and coordination between So-
cial Security and INS, and you say, “Since September 14, 1992,
ecards with the legend ‘VALID FOR WORK ONLY WITH INS AU-
THORIZATION’ have been issued to aliens lawfully in the U.S.
with temporary authority to work.”

I was just curious, how many nonwork Social Security cards have
received INS authorization? Have we found any gap there between
what you thought, based on your records, versus what INS pro-
vided, based on their records?

Ms. CHATER. I can tell you the number of nonwork SSN’s that
we have counted to date.

Mr. Horn. OK.

Ms. CHATER. We have 6 million nonwork Social Security num-
bers at the moment.

Mr. Horn. Now, does INS have all of those people; are they
knowledgeable about them?

Ms. CHATER. We report any discrepancy in our records to INS,
as well as to the Inspector General’s office of our department.
ra Horn. OK. So the Inspector General of HHS knows about
this.

Ms. CuaTER. That’s correct.

Mr. Horn. Does INS know about that?

Mr. PULEO. Yes, we receive that information, sir.


2

Finally, I would like to also touch on the whole issue of cost: Can
we do it? How much will it cost?

Turning to the first point of accuracy of data, I hope that, in lis-
tening to some of the eloquent testimony you will have from the
witnesses who will come before you today, you have a chance to ask
some questions about things like what we have right now in the
private sector that allows us to have identification cards or num-

ers.

I know that there have been some proposals that perhaps the
Government should go the route of the private sector and get to the
point where we have cards that are similar to ATM machine cards,
where you can use a PIN code and have access to information.

I would only point out that we’ve had some work done on that,
some studies done on that that show that error rates can be as
high as 46 percent in some cases. That was as a result of a study
done in 1991, which showed that two companies by the names of
Citicorp and TRW, not unfamiliar names to us, had a survey done
on their work in data matches that they had performed.

It was found that they had 46 percent and 28 percent error rates
based on incorrect data. And that’s from testimony that was
gleaned from a 1991 hearing before the Subcommittee on Social Se-
curity before the Ways and Means Committee.

We also know that there are many systems. INS, for example, is
operating under a system that is somewhat outdated. They are try-
ing to perfect the system, update it, but obviously it does cost
money and does take time. In order for these different systems,
whether it’s internally within an agency or between agencies, to
communicate with each other, they must be able to have data that
can correlate to each particular agency’s data base.

I know that there has been other evidence presented. Back in
1993, for example, in October, in a Banking Committee hearing, it
was revealed that over 1 million consumers use credit correction or
credit restoration services. Obviously, they do that because what
they find is that the credit information that is listed for them is
inaccurate. So we find that there is a need to make sure that,
whatever we do, we ultimately start off with good, solid, accurate

lata.

Let me move to the issue of privacy implications and access is-
sues within any type of national ID system or a registry system.
We first must take into account the current laws that we have that
protect privacy. We have the Privacy Act of 1974; we have the
Computer Security Act of 1987, both, along with other laws, are
there ts ensure against unauthorized use of information.

We have found in the past, through studies by the GAO or the
Department of Justice, that there are serious problems with the
quality and the availability of this data. According to the Immigra-
tion Reform Commission, impaneled by and headed by former Rep-
resentative Barbara Jordan, any type of registry will ultimately re-
quire that everyone, citizen and noncitizen alike, would have to
present the same information for it to be valid and useful.

In other words, you can’t ask just certain people for identifica-
tion, ethers not, because we do have laws which respect equal pro-
tection of the law. So you cannot ask one person who may look for-
eign-born for identification, but not ask another person. The other


72

an electronic signature. Specifically, the data in that system is not
linked to that signature. All I need is that digitized image and I
can attach it to any data record and, in effect, “forge” that record.

If you think of it in the paper world, it’s much like if we had a
class here and I asked everybody to sign to show that signatures
are different, and somebody goes to the trash can and picks it up
and then attaches that piece of paper to a mortgage document and
says, “You signed a mortgage for $1 million.” There’s not a link
there between the signature and the data, so it doesn’t hold up.
That’s why we use those four criteria in our systems.

Mr. Horn. Very interesting.

Would you like to add something, Ms. Edwards?

Ms. Epwarbs. On the subject of biometrics versus a PIN, there
are a couple of thoughts to hold in mind. One is that biometrics are
unique identifiers, such as your fingerprint, that would certainly
uniquely distinguish one person from another. With a PIN number,
as you now, it’s a series of digits that people remember, or fre-
quently, more than likely, write it down on a piece of paper. So one
is far more transferable than the other.

With regard to the use of a biometric versus a PIN, if the costs
were not a consideration, I think the preference would be for a bio-
metric, something that would uniquely identify an individual. The
application that’s chosen by an agency will determine which one is
most appropriate and cost-effective—whether the agency should
choose a PIN type structure or whether they should employ a bio-
metric.

Mr. MarTIN. There are weaknesses with PIN’s. If you think of
your bank card, most of those are four digits. That means there are
only 9,999 possibilities. You were talking earlier about the hackers.
If that PIN is transmitted over unsecured lines, a person can pick
up that PIN.

The same danger runs in biometrics. If, for example, I have my
fingerprint and I am here, and it takes a reading, and it’s sending
it clear across lines, there again, all I need to do is capture that
digitized image and I can masquerade as you, or you can masquer-
ade as me.

That’s why you need to link the data and the signature together
in such a manner that if one of them is changed, you know that
you have a problem.

Mr. Horn. Interesting.

Representative Maloney.

Mrs. MALONEY. The Urban Institute estimated that 86 percent of
the illegal aliens are in five States. What is the cost-benefit ratio
for expanding the system nationwide to capture the Jast 14 per-
cent?

Mr. REILLY. I would ask the same question. I would absolutely
ask the same question. I think that’s a very valid question.

Mrs. MALONEY. Well, if you instituted or set up a system in just
five States, do you think that then the problem would jump over
to other States?

Mr. REILLY. Well, you know, we're dealing with a cost-benefit
analysis. And if, as you said, 86 percent are in five States, then I
think you’ve got—I mean, unless there are some other facts that


27

that you asked will be answered with the data that we obtain from
those pilot projects.

Let me talk about the Social Security number. Verifying the
number for employers is a very important function of the Social Se-
curity Administration, in that it affects accurate wage reporting as
well as accurate benefit payments. Employers can call our 800
number or they can contact one of our field offices to find out what.
the Social Security number of a job applicant is. We can tell the
employer whether a name and a Social Security number match
SSA’s records for that number.

Furthermore, our SSN data base is highly accurate, and I want
you to know that we are proud to say that we update it every
night. But that brings us, really, to the matter of what the Social
Security card and the Social Security Administration cannot do. We
have no way of determining, for example, whether the person pre-
senting a Social Security card to an employer is, in fact, that per-
son to whom the number was issued.

In terms of verifying employment eligibility, all the Social Secu-
rity card can do is tell an employer whether the individual whose
name is on the card has or does not have the authority to work,
since the card has no features that can establish personal identi-
fication.

Now, we have taken steps to enhance the integrity of the Social
Security cards and numbers. It used to be, prior to 1971, that the
Social Security card was issued without any documentation at all
required from the individual. However, safeguards to protect the
integrity of the Social Security number issuance process were
gradually put into place. Since 1978, all applicants have been re-
quired to provide documentation of age, identity, and U.S. citizen-
ship or alien status.

We have taken some other steps over time to enhance the integ-
rity of the card. For gxample, we require all applicants who are 18
years or older, and who allege that they are requesting a Social Se-
curity number for the first time, to have a personal interview. For
those who say they were born in the United States, since most peo-
ple born here receive a Social Security number before age 18, we
perform additional verification such as checking with the State bu-
reaus of vital statistics for birth certificates.

Another project that we have in place is called our enumeration
at birth program. This allows parents in 49 States, plus the Dis-
trict of Columbia and Puerto Rico, to request a Social Security
number for their newborn child. When they complete the form used
to issue a birth certificate, the States provide SSA with the infor-
mation, and SSA assigns a number and issues the card. This
means that there will be fewer children without SSN’s whose birth
certificates could be used to obtain an SSN for another person.

Let me talk, if I might, about the card itself. We have worked
hard to improve the integrity of the card. Cards are made of bank-
note paper and are, to the maximum extent practicable, resistant
to counterfeiting. I would like to draw your attention to the cards
on display, if I might. The card on the left was in use until 1983.

The card on the right, used after 1983, incorporates some of the
features that I just described and, in addition, some features that
I can point out to you. It has, for example, intaglio printing; that


70

Mr. Horn. Of those nine data bases that you list in the footnote
on page 8, I believe, certainly we would agree the Department of
Motor Vehicles has the best probability of relating the actual per-
son to the name, with some evidence.

I don’t know what the Department of Labor data base is. I worry
about the Bureau of Collection Services, knowing so many people
who have had the same name and found suddenly their credit rat-
ing was a disaster, when they had paid every bill that had ever
been sent them. So that’s got major problems, I would think.
wm not sure what the Federal State data exchange is; what is
that?

Mr. REILLY. There are Federal programs that are computerized
and they have a data base, and they exchange this data, and the
State has access to this data.

Mr. Horn. Beneficiary data exchange, what is that?

Mr. REILLY. That is the welfare beneficiary data exchange that
States carry within their State and with adjoining States.

Mr. Horn. OK. We all know what Internal Revenue Service is.
Absent parent data, is that the situation where——

Mr. REILLY. Child support.

Chairman Horn [continuing]. A court order has been issued in
child support and somebody has ducked?

Mr. REILLY. That data base, by the way, is currently being imple-
mented nationwide. It’s due to be in this October. And the Federal
Government has put about $1.2 billion into that data base alone.
So, I mean, it should have a fair degree of value.

Mr. Horn. And that’s based simply on absent fathers running
away from responsibility?

Mr. REILLY. They get a court order and, you know.

Mr. Horn. Right.

Mr. REILLY. There’s a lot of data in that.

Mr. Horn. Well, the current welfare act coming through the
Ways and Means Committee will have a lot on that subject also.

And then the Medicaid Management Information System and the
banks.

Mr. REILLY. Correct.

Mr. Horn. Well, the banks don’t really tie photo, fingerprint, or
anything to it.

Mr. REILLY. No, they do not.

Mr. Horn. So you could have a lot of flubbing in that area, as
to whose account you really are.

So, when you look at it, isn’t the Department of Motor Vehicles,
assuming they still have face-to-face verification, face-to-face taking
of the fingerprint, as well as the photo, isn’t that really your best
identifier?

Mr. REILLY. Well, as I say, Mr. Chairman, that is a good identi-
fier. I mean, it can be tampered with like every other card can be.

Mr. Horn. Yes.

Mr. REILLY. If you have that together with these other ones—for
example, the Medicaid Management Information System, the way
Connecticut does it, they have taken the data base into their main
computer file, and they use this to—they can determine the kind
of medical condition that people have and are able to determine, for



63

er’s license or a State ID card, something that has a biometric on
it.

Mr. Horn. Can your inspectors tell from a Xerox that that’s a
fraudulent card?

Mr. PULEO. It probably would be very difficult on a Social Secu-
rity card, probably as difficult, maybe something less, when we
start looking at our own documents, from the Xerox. It’s not a re-
quirement. We don’t require the employer to do this, but they sim-
ply do it as a matter of course.

Mr. Horn. Should the employer simply hold the Social Security
card as long as that person works for them?

ir. PULEO. No. No. We don’t recommend that. Plus, for example,
on the green card, the alien is supposed to carry that at all times.
So we would certainly not recommend that they do that.

Mr. Horn. I guess I’m thinking of European hotels, when I have
to give up my American passport and feel very badly about it.

Mr. PULEO. We don’t have the same enforcement authorities, nor
are we seeking them, in the interior of the United States.

Mr. Hut. Mr. Chairman, may I add just one point here. The law
only requires that an employer keep the actual I-9 form. They
don’t have to keep any supporting documentation of any kind. In
fact, many large employers do not keep copies of the documents.
Also, as Mr. Puleo said, the green card, for example, is also a travel
document, so the employee would need that document if they were
to travel out of the country.

Mr. Horn. Well, should the law say more than simply the I-9?
I mean, why shouldn’t you Xerox whatever they showed you?

Mr. HILL. Well, if the problem for employers that they face now
is actually determining whether the document presented is an au-
thentic document, and that is so difficult to do, it would be even
more difficult to make that determination from a simple photocopy.
As Mr. Puleo pointed out, it would be very difficult for INS examin-
ers to make a determination based simply on a photocopy.

Mr. Horn. OK. Well, if there are no further questions by the
panel, we thank you very much for coming and your patience be-
tween these various votes. It has been very helpful information.
Thank you all.

Mr. PULEO. Thank you, Mr. Chairman.

Mr. HILL. Thank you, Mr. Chairman.

b My Horn. Would the panel please stand and raise their right
ands.

{Witnesses sworn.]

Mr. Horn, All witnesses affirm.

All right. We will begin with Mr. Reilly unless you have decided
on some order among yourselves. I’m not sure who reports to
whom.

Mr. REILLY. We're all here together, Mr. Chairman.

Mr. Horn. All right. So do you want to start, Mr. Reilly?

Mr. REILLY. I'll be happy to.

Mr. Horn. Fine. Thank you.


20

What we're going to do is wait on questioning until the whole
panel is given their 5 minutes, then we will have a dialog back and
forth.

Mr. Puleo, the Executive Associate Commissioner for Programs,
Immigration and Naturalization Service, is accompanied by John
Nahan, Director of Systematic Alien Verification for Entitlements
Branch, and Gideon Epstein, Senior Forensics Analyst, Forensics
Documentation Laboratory.

Gentlemen, proceed.

Mr. PuLEO. Thank you, Mr. Chairman, for inviting me here
today to discuss document fraud.

Improving the quality, the integrity, and the reliability of govern-
ment-issued documents is critical to employer sanctions implemen-
tation and enforcement, and an important priority of the Immigra-
tion and Naturalization Service.

Until the Immigration Reform Act of 1986, it was illegal for an
undocumented alien to be in the United States, but it was not ille-
gal for an employer to hire that alien. IRCA changed the rules. It
targeted employment as the single most important incentive for il-
legal immigration and made employers responsible for their deci-
sions to knowingly hire unauthorized workers.

This administration is committed to the strong enforcement of
employer sanctions to reduce the workplace as a magnet for illegal
immigration. The President's budget request for fiscal year 1996 in-
cludes a $93-million incentive to expand current programs and to
revise prior administrations’ inattention to enforcement of labor
standards and employer sanctions.

The administration also firmly endorses the recommendations of
the Commission on Immigration Reform to conduct pilots to test
various techniques for improving verification of employment au-
thorization. These work site incentives will help to ensure that jobs
are available only to authorized workers and to reduce the magnet
of illegal migration.

In IRCA, Congress specified 10 documents, and by regulation
INS specified 19 additional documents to be accepted by employers
to verify the identity, work eligibility, or both, of newly hired em-
ployees. IRCA directs employers to accept documents presented to
them that appear reasonably genuine. To counter some of the prob-
lems of the multitude of documents, the administration is prepar-
ing to test alternative verification systems on a pilot basis and to
reduce the number of accepted documents.

As authorized by IRCA, INS developed and initiated the tele-
phone verification system [TVS] pilot as a system in which employ-
ers can access the INS automated data base to confirm the employ-
ment eligibility of the newly hired noncitizens. TVS works much
like a retail credit card check. The employers access the automated
data base by telephone and receive an instantaneous response. If
the data base lacks information or reports that the alien has no au-
thorization, the employer mails a secondary verification to a des-
ignated local INS office.

Evaluation of phase one of TVS demonstrated it to be technically
feasible and universally favorable to employers. TVS will deter
fraud, since it immediately checks and verifies the INS employ-
ment status. TVS will make fraudulent documents worthless be-


37

resence of millions of “out of status” individuals. Many of these individuals have
Been a major drain on our institutions of government and taxpayers.

Although great strides have been made in the development and automation of
criminal identification and information systems in the past twenty five years, much
more must be done to build an integrated system that can fully take advantage of
new technology. Comprehensive federal legislation is needed to allow the interstate
exchange of criminal and civil sanctions must be put in place to insure the integrity
of the various data bases and to protect the privacy of individuals who are the sub-
jects of these data bases, : '

Existing federal law for the exchange of personal identifier information between
federal, state and local authorities must be reviewed and a new comprehensive, con-
sistent federal law enacted to enable fully the exchange of identifier information.
Current law is a hodgepodge of often conflicting and technologically obsolete provi-
sions which do not protect the privacy of affected individuals and which fall short
of the standards set in the Federal False Identification Act of 1982 and the Crime
Control Act of 1984.

Emergency legislation is needed to deal with endemic problems of massive fraud
involving employer sanctions under the Immigration Reform Act of 1986, The Brady
Handgun Violence Prevention Act of 1993, the National Child Protection Act of
1993, and The Motor Voter Act of 1994, to cite just a few of applicable federal laws
which require verification of identity.

All these federal laws plus thousands of state laws and local ordinances have com-
mon characteristics:

Convicted Felons, underage individuals and illegal aliens cannot buy guns. Many
convicted felons and illegal aliens cannot work in child care. Many convicted—not
all—felons cannot vote. Ron:citizens may not vote, nor can underage persons. Out
of status persons may not live and work in the United States.

Similar prohibitions apply to various federal entitlement and benefit programs
such as food stamps, education, medical and welfare.

Similar prohibitions apply in the thousands of state and local programs.

Yet all suffer from a common failing. All lack the ability to identify POSITIVELY
those who are lawfully entitled to benefit from the laws; All lack the ability to iden-
tify POSITIVELY those who are to be denied the benefits of the laws.

is failure is costing us tens of billions; it robs us of job opportunities; it affects
our elections; it results in increased violent crime and drug trafficking: it places
heavy burdens on health care, education and housing. It contributes to passport and
border crossing fraud, compromise of military identification systema and it is a mas-
sive drain on the social security system.

Our private financial and credit card industries also suffer major losses from iden-
tification fraud. All too often, they have relied on easily counterfeited or altered doc-
uments to extend credit or to provide goods and services.

Can we continue to afford this crazy quilt of conflicting and ineffective identifica-
tion legislation? Just examine the congressional debate last year on health care
fraud and look at the calls for a national health card. Just examine the debate on
the House floor last week on food stamps and the $2-3 billion annual losses in that
one program alone. Just look at the hearing records of the House Ways & Means
Committee and the Senate Finance Committee over the years on fraud on the IRS.
We all pay for that—but why?

‘The technology and the legal precedents are at hend—if only we look at the prob-
lem of identification documents in a systematic fashion and develop comprehensive
legislation to regulate the interstate exchange of criminal history information. Com-
prehensive legislation is also needed to provide uniform national standards for iden-
tification documents. Congress has provided for uniform national standards and
Bositive identification for commercial drivers and private pilots and aircraft owners.
not for all drivers and others who need state identification cards?

With due respect for the Jordan Commission, there is no need for a separate na-
tional immigration data base of persons lawfully entitled to live and work in the
United States to be accessed by employers under the 1986 Immigration Act.

The Commission has made a thorough investigation of the problems of document
fraud and deserves high praise for its attention to this achilles heel of the employer
sanctions provisions of the 1986 Immigration Reform legislation.

However, Section 101 of the 1986 Immigration Act focuses on the problem of docu-
ment fraud and authorizes INS to work with state DMVs to improve the driver's
license. It is laudable that INS now has a pilot program in this area—it is laughable
that it has taken this long.

‘This information can be shared with state Motor Vehicle Departments prior to is-
suance of drivers licenses—on line and in real time. The Immigration Service has
at least four mandates from Congress in 1986, 1988, 1990 and 1994 to share its



57

thousand of your people be trained to do that out of the 65,000, and
over time we could verify some of the cards? Presumably, there’s
what, 270 million cards out there?

Ms. Cuater. Yes. I would say that the training programs that
are in place now include teaching our employees how to identify
fraudulent documents. They have become sophisticated with the ex-
perience they have, but it’s already part of our training program
and is expected of our employees.

Mr. Horn. What I’m wondering is, if we took the approach of,
work backward from the present to double-check these documents,
verify the person in your area offices, couldn’t we do that system-
atically and fairly reasonably over the next few years?

Ms. CHATER. We could certainly do it systematically, because we
have verification processes in place as we speak. Large employers,
for example, who want to verify the Social Security numbers of
their employees, for the purposes of wage reporting—and for our
purposes, for benefits, eventually—there are around 450 large em-
ployers, who send us, on a regular basis, a magnetic tape of all the
employee names and numbers, so that we can verify those, find
mistakes, and correct them.

We also have, as I said, our 800 number, and our field offices
verify any request as to whether a name matches a number. We
do that on a routine basis. Now, could we take on 6.4 million total
employers and do a verification system today? I suspect the answer
is no, because we are, frankly, quite stretched to the limits about
what we are doing now.

And though we continue to automate and we continue to ask for
funds to continue putting into place our automated system, I think
we would be hard pressed to serve every employer at this moment,
which is why I’m looking forward to pilot studies that will target
a few, perhaps five or fewer, States, and give us some very specific
cost estimates for this process to be effective.

Mr. Horn. Very good. I hate to keep you, but I’m going to have
to recess for a few minutes till we cast this vote. We will be back.

[Recess.]

Mr. Horn, The committee will resume the hearing.

Let me ask you, Commissioner, what type of test does Social Se-
curity use on its accounts in a way to discover who might be using
that number on a multiple basis? Some of those fraudulent num-
bers have to go in the books somewhere. Maybe they are even pay-
ing into the Social Security fund.

Is there a way to determine when a person is holding a—I realize
we hold two jobs in this era, many people, some three jobs—but are
there checks you can make to discover misuse of the number and
then question it? What do you do?

Ms. CHATER. There are all sorts of ways to question the use of
a number. For example, one of the new initiatives that we have in
place this very year has to do with sending out a statement to peo-
ple who paid into Social Security, a statement that is called the
Personal Earnings and Benefit Statement, that will show people—
this year everybody over the age of 60 will receive one of these in
the mail.

I wrote you a letter to remind you that your constituents may be
asking you questions about this, because it’s a new initiative for us.


23

As we analyze and project new user requirements and workloads, we will invest
in technological improvements in the secondary verification process, and improve
the accuracy of the data that supports verification.

EMPLOYMENT AUTHORIZATION SYSTEM PILOTS

TVS is strictly limited to non-citizens and INS data bases. Therefore, we are
working with the Social Security Administration to develop a test of a two-step proc-
ess to verify all persons hired. Under this system, employers would query the SSA
data base to verify Social Security numbers and ‘check the citizenship/alien status
coding of all persons hired. If the employee was an alien at the time he or she ap-
plied for the Social Security card, the employer would query the INS data base to
verify employment eligibility.

This two-step pilot, which is currently in the design stage, will allow us to test
the technical feasibility of verifying information on all newly-hired employees, rath-
er than only noncitizen employees. It will also provide a test of on-line access to the
SSA data base which could be a part of a future verification system.

We are also planning to simulate methods for matching INS and Social Security
Administration (SSA) data to test approaches that would be restricted, secure, accu-
rate, and nondiscriminatory. In contrast to the TVS and two-step process, electronic
matching would not involve specific employees and employers.

FRAUD-RESISTANT INS DOCUMENTS AND DOCUMENT REDUCTION

An employment authorization verification system is only as sound as the validity
of the documents on which it depends. Therefore, we are developing a new, tamper-
resistant version of the current Employment Authorization Document (EAD) with
a number of credit card-like security features including, if feasible, a magnetic stripe
to permit immediate verification by an employer using a ‘point of sale” device. We
are also centralizing card production in order to lower production costs, speed serv-
ice to the public, and improve employers’ ability to authenticate legitimate docu-
ments.

Finally, reducing the number of documents will reduce the opportunity for fraud
and make verification simpler for employers. Therefore, within the next 30 days INS.
will propose a regulation to reduce the number of acceptable documents from 29 to
16 and the Administration will propose legislation further reducing the number of
acceptable documents by statute.

FORENSIC DOCUMENTS LABORATORY

INS has marshaled extensive scientific and technological weapons against docu-
ment fraud. The INS Forensic Document Laboratory (FDL) presently houses the
largest U.S. reference collection of known and counterfeit international travel docu-
ments, immigration documents and vital statistics documents. This collection per-
mits forensic comparison and identification of very high quality counterfeit docu-
ments and provides reference materials for training purposes. The FDL’s Document
Intelligence Section collects and analyzes information on current counterfeit travel
documents and methods of alteration and disseminates this information in the form
of high-quality color photographic document intelligence alerts to more than 200 lo-
cations throughout the United States and overseas. These alerts are the preeminent
fraudulent document intelligence tool in the field.

The FDL has led the way in the identification of counterfeiters and vendors of
fraudulent documents by identifying their fingerprints on documents which have
been purchased through undercover operations and by linking those fingerprints to
documents which have been sold in various parts of the United States and overseas.
The FDL's forensic Document Link Identification System (DLIS) has made it pos-
sible to connect counterfeit document cases originating in various states to common
sources and often to specific counterfeiters, thereby giving us a more accurate pi
ture of the counterfeiting problem and identifying the origin of many of the docu-
ments sold throughout the United States.

By providing expert testimony in major counterfeiting cases, FDL experts h.
strengthened our cases to an unprecedented degree. This has resulted in a convi
tion rate of major counterfeiters of more than 97 percent once the case goes to trial.
The FDL has played a major role in enforcement of employer sanctions, marriage
frond, student fraud, reentry after deportation, and the identification of criminal
aliens.



90

when somebody needs to present an identification document for a
particular reason, that it’s a reliable system. The system right now
doesn’t do that.

It’s tying, by a biometric identifier, a person with a card. It
would be for others to say what the expenses of that are, what the
practicalities of that are. Our job here is to point out the fact that
there are multiple attacks on the system as it currently stands and
that a change does need to occur.

Mr. Horn. Mr. Meltzer, do you have any feelings on that?

Mr. MELTZER. I think the States are going in the right direction;
it’s a step forward. But, again, I think it’s time that the govern-
ment has to make a decision: At what level are we going to accept
accomplishment, if we solve 60 percent of the problem, 70 percent
of the problem, or do you want to shoot for 100 percent of the prob-
em?

Again, I’m not in a position—I’m not affiliated with the govern-
ment, so I really don’t know what the views of the government are.
But from a private standpoint, I think that there are ways to
100 percent on the solution. I see there are ways, I feel, to probably
utilize a single card without calling it a national identity card, to
give a lot of the benefits to people that they have coming from the
government.

If you stop and think, you’re coming out with an electronic bene-
fits card. OK. If you move to the smart card arena in that, within
a chip in the card, you can add all kinds of stuff, all your Social
Security, the same card can have immigration stuff in. Anything
else in that the government wants the holder to have you can put
in one card, with one chip.

Of course, if you lose that card, you have to go back and get a
new one, and it has to be reloaded with everything. Then you
would have to take a hard look at the design of your data bases
because they would have to talk to each other, so when you
download to this chip, you know what you are downloading.

One of the biggest problems banks find, as they are growing,
their data bases are fragmented. You've got a million computers.
You've got a million computer horsepower there, but none of them
talk to each other. So every time you have to try something to
move information across the spectrum, it’s almost impossible, or
you have to design a third or fourth data base to do it.

So it just depends which way the government wants to go. I
think the technology is there. I know you have a very big problem
when it comes to privacy, but if you approach these systems cor-
rectly, with the right technology, privacy is built in.

You go into the encryption of this information; you say hackers
are running all over. You will find that most systems that hackers
get into are not encryption-protected. You will find stuff that’s
intercepted on wires is being transmitted in the open, not in
encryption mode. So there is stuff there. If you want to get into
that, you’ve got a powerhouse of information not too far down the
street in NSA, as far as encryption goes. To me, those guys are the
brainpower in that field. You have a lot of cryptologists there.
There is information you can seek there.

If you want to take a look at the rest of the problem, then you're
just going to have to figure out, what do you want to put and where


44

Mr. PULEo. I'll limit my comments to just the Immigration Serv-
ice, if I can remember how they went.

With regard to the data base, I would say that it’s not the inac-
curacy of the data, with regard to INS, but it’s in getting our data
to the data base. And that’s what we would hope to improve once
we go to the centralized issuance of our employment authorization
document from a remote process that exists in 200 separate loca-
tions throughout the United States.

By having it centralized, we will be able to download that infor-
mation, at worst, the evening that the document is produced, so
that the data will be timely. In fact, it would be in our data base
prior to the individual receiving the employment authorization doc-
ument.

We are, as I mentioned in my statement, reducing the number
of documents that you can use, as an employer to verify or as an
employee to gain employment, to 16. We hope to reduce that even
further by regulation, or if you approve the statutory change that
we are suggesting, to reduce it even further.

Mrs. MALONEY. Could I comment on that or ask a question?

Mr. PuLro. Sure.

Mrs. MALONEY. What basis do you use to select one as a better
form of identification than another? What is the underlying theme
or commonality that makes one document a better identification
object than another?

Mr. PULEO. If you're familiar with the I-9, there are three sepa-
rate columns. The first column provides both identity and author-
ity, such as the passport, which has the photograph and is issued
by the U.S. Department of State; the so-called “green card,” the I-
551, which INS issues to permanent residents, has a photograph,
biometrics, and our current employment authorization document.

What we’re looking at is, one, that it provides both authority and
identity, and provides the security features that would make it
fraud-resistant. There is no document that is fraud-proof. We be-
lieve, though, with improvements—and I have a mock-up here of
the employment authorization document that we’re going to pro-
pose—that the new document plus the data base behind it, that
you would improve the authenticity of the document and the eligi-
bility of that person to work in the United States.

Mrs. MALONEY. Thank you. My time is up.

Mr. Horn. We will be back to you.

Let me continue in a couple of other areas here. I will begin with
you, Mr. Puleo.

Talking about selling documents and the fraud that occurs, we
know it occurs every day in MacArthur Park in Los Angeles, on the
street corners of Santa Ana. It occurs in Miami. It occurs along all
the border areas.

Mrs. MALONEY. And New York.

Mr. Horn. And New York. Why can’t we arrest these people and
get them indicted and get them off the street?

Mr. PULEO. Well, as a matter of fact, we do. If I may, I will let
Gideon Epstein give you some examples of the cases that we've re-
cently broken and taken down.

Mr. Horn. Please. Mr. Epstein.


85

The technology to prevent the fraudulent reproductions or alter-
ations of documents is no longer on the horizon but in existence
today. Methods to protect systems that control documents have
been in existence for a considerable length of time. The ability to
marry a document to an individual is also in existence today. I will
now offer some suggestions on how these technologies can be used
to set up a system and issue documents that will maintain the in-
tegrity level we expect of a government document.

‘he theory of this system should be triangular in nature. Con-
sider the three sides of a triangle as information, identification,
and verification. This triangular system should be established
along the lines of the credit card industry’s authorization system.
In essence, the government would be the bank, and the users of the
system would be the merchants.

The government would maintain the data base which maintains
the relevant information to identify an individual. The data base
and the systems utilized to access it need to be projected through
the use of an encryption process. Terminals like those used at point
of sale in the retail community should be used to query the system.
These would be considered public terminals that could be utilized
by the business community, which, in this case, would be the gov-
ernment merchants.

These terminals should have the ability to query and not update
or alter the information in the data base. When the ability to up-
date exists, you now have presented the terminal with the ability
to compromise the integrity of the information in the data base.
The government, at their Giseretion, can place supervisory termi-
nals that have the ability to update or alter information in the data
base. These supervisory terminals would be required to have spe-
cific levels of security and access which now exist.

The second leg off the triangle is the document. This document
should be of a smart card nature. This will give the document the
required levels of security to prevent the counterfeiting or alter-
ations of the document, as well as the ability to upgrade security
at a later time. The smart card also presents the ability of
marrying the document to the individual. This can be done with
the use of biometrics.

The third leg of the triangle is the identification of the individual
presenting the documents. This is accomplished through the use of
a biometric system.

With the three legs of the triangle in place, you have the ability
to authenticate the document, which is done by the data base; the
ability to identify the presenter of the document, which is accom-
plished through the use of biometrics; and last but not least, you

ave the ability to tie the presenter to the document, which is ac-
complished through the biometric information contained in the
smart card.

One has to remember that the weakest link in the security chain
is the human element. If you want true security on a document,
you have to remove the decisionmaking ability of the human ele-
ment from the chain.

This concludes my testimony at this time, and I will be glad to
answer any questions.

(The prepared statement of Mr. Meltzer follows:]


62

way to deter illegal immigration, and further agreeing that we
must not victimize business along the way, and understanding that
we are going to make businesses a quasi-enforcement agency, to no
small extent, could you briefly outline how this enforcement proc-
ess would work and perhaps the penalties associated with forging
documents that may be involved?

Mr. HILL. Representative Flanagan, in fact, if the verification
system that we are proposing proves to be as effective and efficient
as we hope it will be, the enforcement aspect of the employer’s posi-
tion, in fact, would decrease, because they will no longer be re-
quired to verify any particular document, its authenticity.

They will be, hopefully, in the situation of asking for one piece
of information from all prospective employees, be they citizens, law-
ful permanent residents, or others, and that is, “What is your So-
cial Security number?” and then verifying that through the na-
tional registry.

So it would seem to us that the employer’s enforcement-related
activities, if you will, would be substantially reduced under such a
system, as well as the potential for fraud and counterfeit, and very
important, it has been pointed out, the reduction of the potential
for discrimination against legitimate American or other lawful
workers, either intentionally or otherwise.

Ms. Martin, If I could add one aspect to it.

The Commission has also recommended that if the system works
as we hope it will, that the law should be reconsidered, the em-
ployer sanctions provisions, to eliminate the penalties that employ-
ers now face for paperwork violations, for not filling out the I-9
correctly, and be focused on penalties only for knowing hire of ille-
gal aliens and failure to verify the Social Security number, and
that the ability to show that you verified the Social Security num-
ber be very simple, the confirmation numbers retailers have with
the credit card companies.

So we think that that will reduce the paperwork substantially for
the employers, giving them some economic advantage out of the
new system. And it also will mean that INS can now put much
more of its efforts into getting those who are knowingly hiring ille-
gal aliens, who are in the underground economy, who are failing
to report anything with regard to their workers and are probably
violating other labor standards as well, and get off of investigating
the employers who are really trying to comply with the system.

Mr. HILL. The point is, Congressman, the law already requires
employers to verify the authorization to work in the United States.
What we are proposing is a better system for doing that.

Mr. FLANAGAN. I understand that. I was just wondering if there
were some new attendant penalties, considering the cost of having
to do this.

Thank you, Mr. Chairman.

Mr. Horn. Let me follow up on that just a second.

Right now, when INS goes to an employer's office to verify, what
they face in a file, I assume, is a Xerox of one’s Social Security
card; is that correct?

Mr. PULEO. Yes, it’s usually the documents that were presented
to prove that the individual can, in fact, work. If it’s a Social Secu-
rity card, there would also be an identity document, such as a driv-


86

PREPARED STATEMENT OF RUSSELL MELTZER, DIRECTOR OF SECURITY,
ScHLUMBERGER-Malco, INC.

Mr. Chairman and members of the Subcommittee. I would like to thank you for
the invitation to appear before this commttee. | wish to preface my testimony with
the admonition that my time to prepare testimony was extremely limited since I did
not receive the invitation to appear before this committee until arrived at my office
this morning.

Prior testimony, government hearings, the news media etc. has established the
fact that the integrity of government ments has been compromised. Therefore
I feel there is no need to discuss or establish the facts of compromise. My testimony
will address several issues which I feel are needed to institute a level of integrity
to the documents.

It is well known knowledge on the streets that documents can be duplicated, coun-
terfeited or altered. That when they are presented to employers, merchants etc.
there is no mechanism to authenticate these documents in a timely fashion. Thi:
appears to be a basis for a substantial amount of fraud that is perpetrated against
the business community as well as the government.

The systems currently used by the government do not marry the document to the
individual or authenticate the document itself. What 1 mean by this is that when
an individual presents an immigration document to an employer there is no way for
an employer to know if the document is counterfeit, duplicated or altered. The em-

loyer has to base his decision on what he thinks his ability is to discover a fraudu-
lent document. With the quality of fraudulent documents today the ability to detect
fraud is definitely out of range for the majority of employers. When an employer
accepta the document how does he know that the individual presenting the docu.
ment is the same person the document was intended for since the alteration of
photos on documents seems to be of second nature for crooks today.

One has to remember that the era we live in today has been inundated with low
cost printing technology and colored printers which has brought the ability to dupli-
cate or counterfeit documents into the living room and out of the print shops or
manufacturing arenas. The expertise to utilize this equipment is at a high school
level.

‘The technology to prevent the fraudulent reproductions or alterations of docu-
ments is no longer on the horizon but is in existence today. Methods to protect sys-
tems that control documents have been in existence for a considerable length of
time. The ability to marry a document to an individual is also in existence today.

T will now offer suggestions on how these technologies can be used to set up &
system and issue documents that will maintain the integrity level we expect of a

ernment document. The theory of this system should be triangular in nature.
Gonsider the three sides of the triangle as: information, identification and verifica-
tion.

This triangular system should be established along the lines of the credit card in-
dustry’s authorization ‘system, In essence the government would be the bank and
the users of the system would be the merchants, The government would maintain
the data base which maintains the relevert information to identify an individual.
The data base and the systems utilized to access it need to be protected through
the use of an encryption process. Terminals like those utilized as point-of-sale in the
retail community Thould be used to query the system. These would be considered
public terminals that could be utilized by the business community which in this case
would be the goverment merchants. These terminals should only have the ability
to query and not update or alter the information in the data base. When this ability
exists you have now presented the terminal with the ability to compromise the in-
tegrity of the information in the data base. Thé government at their discretion can
place supervisory terminals that have the ability to update or alter the information
jn the data base. These supervisory terminals would require specific levels of secu-
rity and access.

e second leg of this triangle is the document. This document should be of a
smart card nature. This will give the document the required levels of security to
prevent the counterfeiting or alteration of the document as well as the ability to up-

ade security at a later time. The smart card also presents the ability of marrying
the document to the individual. This can be done with the use of biometrics.

‘The third leg of the triangle is the identification of the individual presenting the
document. This is accomy lished through the use of a biometric system.

With the three legs of the triangle in place you have the ability to authenticate
the document which is done by the data vase. The ability to identify the presenter
of the document which is accomplished through the use of biometrics. And last but



31

‘+ States have open access to vital records, and there is lax physical security of
blank forms and seal; especially in local offices.

In 1991, OIG issued a ollow-up report on efforts to control birth certificate fraud.
The relevant finding was that the nature and extent of birth certificate fraud ap-
peared to be relatively unchanged since 1988. OIG reported that major weaknesses
in the procedures used by issuing agencies continued to hamper the ability of user
agencies, both Federal and State, to rely on birth certificates as evidence of identity.

e cost of revamping the system by which birth certificates are issued would be
enormous, and while some State and local jurisdictions have initiated reforms, most,
are severely constrained from making major reforms by increasingly limited re-
sources,

LOGISTICS OF REISSUANCE OF SOCIAL SECURITY CARDS

Let me now discuss the logistics that would be involved in issuing, enhanced So-
cial Security cards to the almost 270 million current card holders. To be effective,
a new card would have to be issued relatively quickly to all card holders. Otherwise,
they could present earlier versions of the Social Security card and claim they had
not yet been issued a new card. The process of verifying identities and reissuing ev-
eryone a new, more secure card would be very costly—from $3 to $6 billion from

neral revenues, depending on the security features and issuance procedures. (The
E56 billion does not include the potential cost to employers.) The additional cost
of the secure feature itself (e.g., a bar code or photo) would be relatively small. How-
ever, the labor costs associated with interviewing, verifying evidence, and producing
the card would make the total reissuance cost extremely high.

Issuing new cards to everyone would also be burdensome on the public, as individ-
uals would be required to establish their identity and citizenship or lawful alien sta-
tus satisfactorily before being issued a new card.

The workload that would result from the issuance of new Social Security cards
to all card holders would primarily serve purposes other than the administration of
the Social Security program and would be a tremendous challenge for the Agency
and its employees. The volume of interviews required to reissue almost 270 million
Social Security cards in 5 or even in 10 years could not be handled in SSA’s 1,300
local offices, because it would interfere with the ability of the offices to properly
serve the people needing help with Social Security problems at a time when the
Agency is facing heavy workloads. The law provides that any changes made to the
Social Security card for purposes of work eligibility must be financed from general
revenues and not be borne by the Social Security trust funds.

SOCIAL SECURITY CARDS FOR WORK AUTHORIZATION

I would now like to discuss the role of the Social Security card as evidence of work
authorization, which is a separate issue from personal identification. As you know,
Mr. Chairman, IRCA makes it illegal for an employer to knowingly hire anyone not
legally permitted to work in the U.S. that is, aliens not authorized to work by INS.
Under IRCA, all employers are required to verify a job applicant's identity and au-
thorization to work. Any of a variety of documents apecified in the law and in
regulations can be used for this verification, which is required for all employees, re-
fitdless of citizenship or national origin. Some of these documents—such as a US.

assport—establish both employment eligibility and identity. Others—including the
Social Security card—can be used to establish work authorization, but must be ac-
companied by an identification document, such as a State driver's license.

Originally, the same type of Social Security card was issued to all SSN applicants
who requested one, whether or not they were authorized to work. Beginning in May
1982, a'legend, “NOT VALID FOR EMPLOYMENT, was placed on the Social Secu
rity cards of aliens not authorized to work to identify nonwork SSNs. This was due
to the increasing need for persons to have SSNs for nonwork purposes and concern
that such persons could use their SSN for work purposes. These non-employment-
related Social Security cards are issued to:

* Aliens in the U.S. who do not have authorization to work, but who need SSNs
for a valid nonwork purpose (such as driver's licenses in some States or bank ac-
counts): and

* Certain aliens residing outside the U.S. (for example, dependents listed on U.S.
income tax returns or individuals entitled to Social Security auxiliary or survivor's

enefits).

With this legend appearing on the card, employers were able, for the first time,
to determine whether an individual was authorized to work. Since September 14,
1992, cards with the legend “VALID FOR WORK ONLY WITH INS AUTHORIZA.
TION” have been issued to aliens lawfully in the U.S. with temporary authority to


7

TRW resulted in error rates due to incorrect or unverified Social Security numbers
of 46% and 28% respectively.

The Immigration and Naturalization Service (INS) database is equally, if not
more, flawed. Recent evidence demonstrates that the INS routinely fails to enter
records of work-eligible individuals into its computers, that the data in the comput-
ers are incomplete, and that the agency, fails to update its records with critical rel-
evant information. In fact, a March 1993 Department of Justice audit of access to
the INS database found that without “additional controls, INS’ data is vulnerable
to either accidental or intentional destruction, modification, disclosure and unau-
thorized use.” The American Civil Liberties Union (ACLU) is litigating a case in Los
Angeles where INS authorities have admitted to losing the files of 60,000 people,
which may have resulted in routine, justified denial of work authorization. In our
view, it is irresponsible to recommend implementing a system based on such mani-
festly deficient data.

ird, such a verification system will not only be unreliable, but it is nearly im-
jossible to implement effectively without requiring a unique individual identifier.
low else will individual workers prove that the social security numbers they
resent belong to them? Numbers are easily forged or stolen, as occurs with other

Gocuments currently in uge. Attomiey General Janet Reno recently expressed. con.
cern over the Commission’s ex "d recommendation since widespread counterfeit-
ing could cause such a plan ackfire.” Therefore, the system would be ineffective
unless it relies on an identifier to tie the worker to the number. Options include
a “Counterfeit resistant” identification card based on a drivers license or social secu-
rity card, or the issuance of a PIN number to every worker. Thus, despite claims
to the contrary, a worker verification system must necessarily include the creation
of a national ID card. And all of these options would still be subject to fraud.

Fourth, a verification system will also have negative con: ences on individual
privacy and civil rights. Privacy is threatened since the Social Security number is
already widely used. A national verification or ID system would have to contain sub-
stantial private identifying information. Furthermore, it would be impossible to con-
tro] who has access once the system is in place. The Heritage Foundation states that
we are already on a collision course towards Big Brother “by Tequiring that, every
American have a national identification card—or work permit—issued by a federal
bureaucracy.”

ther, such a system would cause widespread discrimination against those who

look and sound foreign. A 1990 report by the U.S. General Accounting Office indi-
cated that nearly 20% of employers nationwide have adopted discriminatory behav-
iors resulting from employer sanctions. Implementation of a national identification
card will only widen that great potential for continual status checks by employers,
police, banks, landlords, and merchants against foreign-looking and -sounding, per-
sons. The victims would be citizens and legal immigrants who work hard, pay taxes,
and play by the rules.

Last, in addition to its highly discriminatory effects and limitation on personal
freedom, a national verification system would be extremely costly. According to the
Social Security Administration, the creation of a universal “employment card” would
cost nearly $2.5 billion. This does not include the technological costs involved in
computerizing a verification system, cleaning up the database, and the costs of issu-
ing cards to every applicant and replacing lost cards.

{tis important to enforce our nation’s immigration laws and protect our borders.
However, a national identification system’s effectiveness in deterring unauthorized
employment or reducing the flow of undocumented immigration is highly doubtful.
Employer sanctions have failed to control undocumented immigration partly because
the labor market for undocumented immigrants has not changed. Employers who
“benefit” from the hiring of unauthorized workers do so by intentional violating
the employer sanctions law in order to exploit employees in violation of minimum
wage and hour laws. That problem will not be remedied by a national registry or
identity card system. Employers intent on violating the sanctions law will continue
to do so.

For these reasons, we strenuously oppose implementation of a worker verification
system.

LUCILLE RoYBAL-ALLARD,
Ep Pastor,

Ron DE Luco,

FRANK TEJEDA,

NybIA VELAZQUEZ.

Mr. Becerra. Thank you, Mr. Chairman.


46

what has been the disposition. Which ones have the U.S. attorneys
said, “Sorry, we won't go forward with them,” which ones have they
gone forward with, and what has been the penalty?

If they need more help, we'll be glad to try and persuade the ex-
ecutive branch to provide more help. And there’s no question there
are some complete misallocations in this country of where U.S. at-
torneys are. Some of the smallest States in the union have the
highest number of U.S. attorneys per capita, I think, to a decision
by members of the Committee on the Judiciary in the other body
about 30 years ago. It’s my impression they haven’t changed the
formula.

We would certainly welcome your help in that area, so we could
be helpful in getting their attention, as needed.

Mr. PULEO. We will provide that for the record.

Mr. Horn. Very good. Now, if yon could, any of you, wave a
wand and say, “This is the system I'd like to have that would solve
the problem we're talking about,” what would you recommend?

Td like to go down the line. What would INS like to do in this
area to solve the problem?

Mr. PULEO. Well, I think it’s the steps we're already taking: one,
to reduce the number of documents and reduce the confusion by
both the employee and the employer; improve our data base, the
quantity of data that we have, not necessarily the quality; and im-
prove the documents that we're issuing.

This is, as I said, the mock-up for the EAD, the employment au-
thorization document, that we’re looking at. We're also looking at
improving the so-called “green card” to incorporate some of the
state-of-the-art technology that’s ongoing.

This is our automated inspections process, which takes a biomet-
ric. You may hear from other panels about incorporating a biomet-
ric in the employment authorization. I would discount that. That
is not the way that we are proposing it. We were looking at that
more in a controlled environment, with our permanent residents
and our automated inspection process, tying this to a secure data
base, which is ours.

In fact, if the employer wants to use a PC, as an example, tied
into a modem, we are storing the photograph, fingerprint, and sig-
nature; you can recall that data. So if you simply swipe the mag-
netic stripe through a point of sale device, call up the information
that’s in our data base, we will in fact provide you with the photo-
graph of the individual that should be the same photograph that’s
on the document.

I think reducing the confusion, a secure data base behind fraud-
proof cards is the way to move it.

Mr. Horn. Mr. Hill.

Mr. HILL. The Commission’s recommendations with respect to
that system that you're asking are very clear. The one area that
we would like to see tested, to the maximum extent possible, and
to ensure flexibility, is this whole question of access by employers
to that registry.

The most promising option that we see right now, based on the
limited information we have, is the telephonic verification that
doesn’t necessarily rely on documents at all. But we recognize that
it may be necessary to have a document of some sort, and that’s


6

The Commission on Immigration Reform, the SSA and the INS must first address
the proliferation of documents, as well as the extensive forgery of documents before
basing a national registry or card on such a system,

Telephone Verification System (TVS)

Some of this afternoon's witnesses may advocate the use of an expanded Tele-
phone Verification System (TVS). The Jordan Commission, in its October report,
promoted the TVS, but only as an interim measure.

The commission reasoned that the essential problem with the TVS was that it re-
lied on the prospective employee self-identifying.

ermore, representatives of DOJ with whom my office met, conceded that
TVS still has substantial “data flow problems” and “data interface problems.”

Mr. Horn. Well, that’s an excellent overview statement. I think
you've stated a series of problems very well. Obviously, the various
congressional committees in both the Senate and the House will
need to grapple with those.

Representative Maloney.

Mrs. MALONEY. I likewise would like to congratulate you on your
statement and thank you for testifying. And I'd like ’o request from
the chairman if he would insert in the record a letter to President
Clinton, dated September 28, 1994, from Members of the Congres-
sional Hispanic Caucus, opposing a national registry system.

Mr. Horn. Without objection, so ordered.

[The letter referred to follows:]

CONGRESSIONAL HISPANIC CAUCUS,
103rd ConGREss,
September 28, 1994.
The Honorable Bill Clinton,
President of the United States,
The White House,
Washington, DC 20500

DEAR MR. PRESIDENT: We are writing to express our steadfast opposition to the
implementation of a national registry system. As you know, according to testimony
before the Senate Subcommittee on Immigration and Refugee Affairs, the U.S. Com-
mission on Immigration Reform is planning to recommend that the Administration
immediately initiate a “pilot” worker verification database program in five of the
highest immigration-impacted states. We oppose the Commission’s proposal because
we believe that such a verification system will set us irrevocably on the path to a
national ID system.

First, to characterize the Commission’s proposal as a test or pilot program is dis-
ingenuous and inaccurate. The “test” would cover the five highest immigration im:
pacted states, which are also the five most heavily populated, containing almost 80%
of the nation’s immigrants, or over 92 million people. In effect, this “test” would re-
quire the creation of a national system. The Commission suggests implementing the
registry system in some states or for some workers without regard for the high error
rate that will result and the devastating consequences that such errors will have
for individual workers. A true “test” would analyze the proposals, conduct simulated
verification checks on a large, diverse and statistically significant number of mock
applicants, evaluate the results, check the error rate, test the privacy safeguards,
determine the cost and feasibility of needed modifications and report on these find-
ings. Instead, the Commission appears to be proposing that the residents of some
of our largest states be the human “guinea pigs” by which the proposal will be eval-
uated. That constitutes implementation, not evaluation.

Second, any new system is only as reliable as the information on which it will
be based. There are serious problems with the accuracy ef the Social Security
database, which is the basis for the proposed verification system. According to a
1992 report by the Senate Subcommittee on Immigration and Refugee Affairs, over
60% of social security cards were issued without proof of the individual’s identity
or citizenship. Even if the security of the card and the database are improved, the
documents used to obtain such a card—birth and baptismal certificates, drivers li-
censes, and school and medical records—can be forged. While call-in systems are
regularly used to make credit card purchases, matching projects by Citicorp and


40

The IRS is also for the first time checking on all SSNs cited in returns and run-
ning some checks on EINs as well. The problem here is compounded, however, by
the fact that these are “name checks” and not physical or biometric checks based
on chiective identifier information, as was discussed above in relation to the Brady
checks,

Again, state of the art technology must be brought to bear to upgrade electronic
checks of identifier information so that a physical or biometric verification of iden-
tity can be made by IRS.

e state art in imaging and compression technology will make these physical
checks in the very near future. For example, preliminary discussions have been held
with respect to compressing and loading an entire state’s DMV data base onto a sin-
gle CD Rom disc. Then at point of contact or interaction, a live comparison can be
made of the information contained in the drivers license against the CD data file
and against the live “eyeball” comparison of the person standing at the counter.
Search Group and the FBI have also developed fingerprint coding techniques that
can serve similar verification functions by comparing fingerprint images.

Signature verification techniques can be employed such as measuring the pres-
sure and time required to sign one’s name. This can be compared against a live sig-
nature “read.”

‘These are just three of the techniques that might be employed to upgrade name
or number checks of a person's identity. I am quite confident that others will be de-
veloped in the coming months which will also make verification possible. Great
strides have been made in DNA sequencing technology. In the near future, sequenc-
ing will be in real time. This will make possible the generation of a unique identify-
ing number—15 or 50 or a 1,000 number long on each individual. It will not be in-
trusive. All that will be needed is a sample of hair or skin flake or spit to perform
the identification. There will be no need for identification documents as we know
them today. And yet identification will be positive and ultimately reliable.

Until that time comes, however, Congress and the Executive must provide leader-
ghip and courage to solve this mess we are in. Our country now faces the worst of
both worlds. Modern electronic and computer technology is being used by the un-
scrupulous to compromise our identification systems—to copy and counterfeit and

luplicate.

Yet we are not using the technology now at hand to upgrade our data bases and
identity documents nor protect the privacy of our citizens. The undocumented and
misdocumented still rip us off and mock our institutions and otherwise beat the sys-
tem. When will we wake up and join most other advanced societies and stop this
criminality? I submit, Mr. Chairman, we are long overdue.

I deeply appreciate the opportunity to testify before the subcommittee. I will sub-
mit for the record the documentation and citations for the legislation I have referred
to in my testimony.

Mr. Horn. Thank you very much for that very broad perspective
that you provide, having lived through and helped to recommend
or draft some of the relevant laws and regulations.

Let me start the questioning and go right down the line with dif-
ferent questions, and then Representative Maloney and I will be
sharing them in 5-minute doses, shal] we say.

Mr. Hill and Ms. Martin, I’m curious, did the Commission con-
sider a registry system or systems similar to the truck driver reg-
istry or to the Brady Act, the gun purchase one Mr. Velde men-
tioned, before recommending the creation of a new computerized,
nationwide employment registry? And if so, what were the advan-
tages or drawbacks of each, as the Commission saw them?

Mr. HILL. I'll let Dr. Martin answer that question.

Ms. MarTIN. Yes. The Commission did look at the other propos-
als for registries and the existing ones, and found the point that
Mr. Velde mentioned, that most of them are contingent upon a
valid Social Security number. And since the Social Security number
started out as particularly connected to the employment process, it
seemed that if there were, through the hiring process, a way to
validate Social Security numbers through a simple, computerized


19

the Social Security Administration were estimated to cost $122 million initially, and
$30 million per year thereafter. So the total cost of the registry over five years, ac-
cording to the Social Security Administration, would be approximately $300 million.

By way of comparison, the Urban Institute estimates that illegal aliens cost seven
states more than $2.1 billion a year. Spending $300 million over five years to save
$2 billion each year is a sound investment.

But the INS cost must be added to the SSA estimate. The Clinton Administra-
tion’s latest budget request calls for $28.3 million for verification systems pilots, al-
though this also includes other rograms. The bulk of the INS cost, however, will
be cleaning up their own data, which should be done regardless of the pilot projects
to improve worksite verification.

¢ Specification of the rights, responsibilities and impact on individual workers
and employers. In particular, the Commission recommendation for false negatives
is that no one—no one—should be fired if their employer does not get a validation
code from the registry after hiring. It is entirely possible that a new hire has merely
given their Social Security Number wrong. There is no one who has a greater incen-
tive to correct errors, whether they are at the INS or the Social Security Adminis-
tration, than a legitimate worker who has just learned from the registry that there
is a problem. Speaking as someone who pays into the Social Security system, I want
to be sure that the number I have been using is correct—and has not been mis-
appropriated by an illegal alien.

* A plan for phasing-in the system. Pilot projects should test various methods for
phasing-in improvements in worksite verification, according to the test results.

Evaluating the results of pilot programs with these criteria must include objective
measures and procedures to determine whether current problems related to fraud,
discrimination and excessive paperwork requirements for employers are effectively
overcome, without imposing undue costs on the government, employers, or employ-
ees.

The evaluation should pay particular attention to the effectiveness of the meas-
ures used to protect civil liberties and privacy.

While we on the Commission are not the computer experts, and never pretended
to be, we do recognize “Garbage In, Garbage Out”. Clearly, people who obtain real
documents through false pretenses pose a problem. This is true, even though the
Social Security Administration does a face-to-face interview and document check on
every adult who seeks a Social Security Number, since nowadays most children re-
ceive numbers shortly after birth.

Accordingly, the Commission also recommends reducing the fraudulent access to
so-called “breeder documents,” particularly birth certificates, that can be used to es-
tablish an identity in this country. We recommend these steps:

© Standardized application form for birth certificates.

Interstate and intrastate matching of birth and death records.

* Only certified copies of birth certificates issued by states should be accepted by

federal agencies

* Standard design and paperstock for all certified copies of birth certificates to
reduce counterfeiting.

« Encouraging states to computerize birth records depositories.

Commission also recommends imposition of grester penalties on those produe-
ing or selling fraudulent documents. Rico provisions to facilitate racketeering in-
vestigations should also cover conspiracy to produce and sell fraudulent documents,

The Commission’s recommendations regarding worksite verification are an impor-
tant part, but only a part, of a comprehensive approach to immigration reform
which this Commission is developing. As you know, the Commission is well along
in the next phase of its task, considering the national interest in legal immigration,
including categories, priorities, and limits,

¢ key to our work so far has been that, through intense discussions, we have
managed to arrive at a bipartisan consensus. We hope to continue that record in
a systematic evaluation of what our immigration policy should be in the 21st cen-
tury. In that effort, we appreciate this Subcommittee’s consideration of our work.

Twill be glad to answer any questions.

Mr. Horn. Thank you very much.
_ We will recess for 10 minutes. A quorum having been estab-
lished, we will begin when we come back.

(Recess.]

Mr. Horn. The committee will come to order.



14

ment when reguested does not lessen the stigma and discrimination that will be suf-
fered by these individuals.

Moreover, this Committee is troubled by the likelihood that the proposed com-

uter registry will cause further intrusions into individual privacy. A national reg-
ty would pose a substantial threat to the individual privacy of all U.S. residents
in that it would be widely accessible to private entities, thus substantially increas-
ing the risk of unauthorized disclosure of personal information. In the likely event
that a counterfeit-resistent identity card is created, it could quickly take on the at-
tributes of a national ID card, which could easily become the country’s sole identifier
for a broad range of purposes. A requirement that every American possess a single
type of identification document, issued by a federal bureaucracy, brings this country
ever closer to the “Big Brother” society that has always been antithetical to the tra-
ditions upon which this nation was founded.

We also question the fundamental proposition that the computerized registry will
reduce the “employment magnet” and thus reduce illegal immigration. We concur
with those groups, including the Congressional Hispanic Caucus, who doubt that a
computerized registry system will have a significant impact upon unauthorized em-
ployment or illegal immigration. Employers who have ignored the employer sanc-
tions provisions of the law will ignore the registry and will continue to employ, at
substandard wages and working conditions, undocumented workers seeking a better
life for themselves and their families in the United States. Rather than creating a
computerized registry, this Committee believes that resources and attention should
be focused on the enforcement of existing labor laws and the creation of inter-
national economic initiatives through a foreign policy that will reduce the underly-
ing causes of unauthorized migration to the United States.

‘e commend the Commission for inclusion of both recommendations in its report
to Congress and look forward to greater emphasis on these areas as the debate on
immigration policy moves forward.

»8 Committee expressed its concerns regarding a national identifier in the form
of an identity card, social security card or computer registry, in 1989 when it exam-
ined findings of discrimination resulting from the employer sanctions provisions of
the Immigration Reform and Control Act of 1986. We realfirm our earlier conclusion
that a national identifier is an ill-advised response to the issue of unauthorized im-
migration.

jould you ire additional information with respect to our position on this pro-
posal, we Srould be pleased to meet with you to discuss this matter further at your
convenience.

Thank you for your attention.
Very truly yours,

FRANCES C. BERGER,
Chair.

Mr. Horn. Thank you.

Let me just state the ground rules before the first panel comes
forward.

When the witnesses come forward, we will automatically enter
your full statement in the record, and we would very much appre-
ciate it, if you would summarize your statement in 5 minutes. You
will see a green light for 4 minutes. It will go to yellow from 4 to
5. We would appreciate your stopping at the end of that, and then
we can pick up in questions the parts you might not have had a
chance to mention. We are fairly liberal, between the two of us, on
making sure we get out of each witness all that you have to tell

S.

The other practice of the Committee on Government Reform and
Oversight is to swear in witnesses. So if the first panel will come
forward, we will swear you in and begin the testimony. We will
take a break after the first 5-minute testimony is over, so we can
get over to vote and then come back. We apologize. We think there
are only two more votes today.

We have Mr. Hill, Ms. Martin, Mr. Puleo, Mr. Nahan, Mr. Ep-
stein, Commissioner Chater, and Mr. Velde. There is a sign there
for each of you.


3

question becomes: How do you deal with the whole issue of self-at-
testation?

In other words, when you come before an employer, prospective
employer, and say to that employer that you are here seeking
work, the employer now has to decide if you are eligible to seek the
work. Perhaps you may not be a lawful resident alien. And it’s up
to the employer somehow to determine if that person is going to
present authentic identification.

So the question becomes: Do you rely on that prospective employ-
ee’s word that the person on that ID card is the person before you?
The whole issue of self-attestation becomes a very grave issue.

There are some other issues, more in terms of just the whole use
of computers and this technology that we have before us and what
the implications are. In 1990, the GAO issued a report called “Com-
puters and Privacy: How the Government Obtains, Verifies, Uses,
and Protects Personal Data.” That report found that of the 916
largest computerized systems containing personal information, 292
were in noncompliance with the Privacy Act.

The report further found that 56 percent of the 910 largest sys-
tems in Federal agencies can be accessed by private organizations,
such as health care providers, et cetera. The GAO report shows
that we don’t yet have the type of security that we need in our data

ases.

Let me turn now, finally, to the issue of the cost of a verification
system or an ID card. I know that we have individuals here, the

commissioner from the Social Security Administration, who can
clearly testify, eloquently testify about these issues. But my under-
standing is that just to reissue our current Social Security cards
that we have out there for the Americans, the 260 million—or per-
haps a few less—260 million Americans would cost. somewhere be-
tween $3 billion to $6 billion.

Obviously, if you wish to put a magnetic strip, some form of
photo, or fingerprints on this type of card, that would drive up the
cost considerably. In fact, apparently we are told that to switch
from a paper card to a polyester or plastic card would probably in-
crease the cost tenfold.

So you have a situation where even if you do go to a plastic card
that is more secure, with some type of identifier like fingerprints,
you're going to have enormous costs, and on top of that you’re going
to have to constantly change over that card. If someone happens
to change a name because of marriage, for example, you now have
to reissue that card again.

So on top of all those different concerns, I think that we have to
make sure that what we are doing is trying to understand and an-
swer some of the baseline questions that arise whenever we talk
about going toward some system where everyone is obligated to
provide identification or some group is obligated to provide identi-
fication.

Two final points, if I may, Mr. Chairman: Let’s keep in mind that
right now we have about 44 different valid versions of the Social
Security card. We also have a system in this Nation where each
State authorizes birth certificates, which may differ from any other
State. And we have about 7,000 vital statistics offices which issue
these types of birth certificates.


69

© Productivity has increased. State officials reported they handled a 76 percent
increase in cases from June 1989 to August 1994 with only about a 10 percent. in-
crease in the staff assigned to this effort.

« The number of errors has decreased, which has been accompanied by related
cost savings. In fiscal year 1988, 1 year before system implementation, the Aid To
Families With Dependent Children program hed a reported 5.5 percent error rate
of ineligible recipients and overpayments. One year after implementation, this re-
ported error rate had declined to 2.7 percent, resulting in over a $10 million reduc-
tion in inappropriate expenditures.

The capability to identify fraud has increased. State officials have identified
over $5 million in attempted client fraud.

ISSUES TO BE CONSIDERED FOR IMPLEMENTING SYSTEMS THAT MEET PROGRAM NEEDS
AND ARE COST-EFFECTIVE

One of the most important considerations for any system is that it meets agency
objectives for service to the public. In working toward this goal, agencies need to
(1) ensure that all elements of the system support the objective and (2) compare
costs against the overall objectives.

Modern technology, such as tamper-resistant cards and telephone verification sys-
tems, can help prevent unauthorized persons from obtaining work or other benefits.
However, regardless of the time and money spent to make these techniques fool-
proof, they will be ineffective unless all other aspects of the program are also reli-
able. For example, the telephone verification system will not be effective unless its
related database is reasonably complete and accurate. Further, tamper-resistant
cards will not be effective unless accompanying controls are in place to prevent the
use of stolen or duplicated authentic cards.

A second key issue to consider is the cost to benefit ratio of a given system. No
system can completely prevent fraud or abuse. Thus, it is important to assess the
overall risk and determine how much protection is needed to meet agency objectives.
For example, on-line employer verification of worker eligibility may be too costly to
implement on a nationwide basis. Depending on agency goals, implementing such
a system in only those states with high immigration statistics may be sufficient.

inally, privacy issues need to be considered when selecting technology. While in-
tegrated or shared databases can provide valuable information, unauthorized use of
this information would inappropriately infringe on the privacy of individuals.

Mr. Chairman, this concludes the prepared statement. We would be pleased to an-
swer any questions that you, or other members of the Subcommittee may have at
this time.

Mr. Horn. Thank you very much. Let me ask—you were here
when Mr. Velde testified, I believe, advocating utilization of the
system that is already in place, which seems to have a better
record of documents that actually relate to the person whose name
is on the document, as opposed to Social Security and U.S. pass-
ports, where there is usually no face-to-face approach in trying to
verify documents before issuing a new document.

Has the General Accounting Office any response on that particu-
lar approach as a way to solve this problem?

Mr. REILLY. Well, the use of State motor vehicle records is one
of the nine data bases that Connecticut uses.

Mr. Horn, I noticed that.

Mr. REILLY. So, to the extent that you use more than a single
data base, you have a lot better chance of determining whether the
person in front of you is what the person purports to be. I think
that’s true whether we're talking about credit card systems, or
identification systems, welfare systems, whatever they may be. One
single system is very hard, by itself, to really ferret out all the
problems.

estimated expenditure reduction was calculated by applying the reduced error rate to
expenditures.

«
she 199)


24

CONCLUSION

We believe that the initiatives outlined to you today represent important elements
in a program to combat the problem of fraudulent documents on a variety of fronts.
The steps we are taking will also considerably assist employers in complying with
the employer sanctions provisions of our immigration laws, These advanors will en-
able the federal government to reduce the availability or undetected use of counter-
feit documents and make the employment authorization verification process simpler
and more secure.

Thank you for this opportunity to share with you INS achievements and plans in
this area. I will be pleased to answer any questions.

RESPONSE TO WRITTEN QUESTIONS. Svayrred BY Hon. STEPHEN HORN TO JAMES
7 LEO.

Question 1. Since the implementation of the Immigration Reform and Control Act
of 1886, how many cases of immigration fraud have been referred to the U.S. Attor-
ney’s Office; how many of those have been or will be prosecuted; and what are the
results (conviction, acquittal, or other) of the completed prosecutions?

Answer. The Immigration and Naturalization Service (INS) does not currently
track the number of immigration fraud cases presented to the United States Attor-
ney’s Office for prosecution. However, an analysis of the Immigration Prosecution
Report (G~105) revealed that from Fiscal Year 1990 through February 1995, 3,147
defendants were convicted of immigration fraud related offenses.

A review of the Performance Analysis System (G-23 report) reveals that from Fis-
cal Year 1990 through Fiscal Year 1994 INS Investigations completed over 4,200
criminal investigations targeting immigration document fraud facilitators and/or or-

anizations with an income in excess of $10,000 per year from the illegal activity.

t least 1,076 of these cases were developed from leads generated by employer sanc-
tions investigations. The 4,200 cases resulted in the criminal conviction of over
1,130 defendants for immigration document fraud activity.

‘The Executive Office for United States Attorneys has provided the enclosed chart
with figures—listed by Fiscal Year—of the immigration-related criminal fraud case
disposition totals. The totals include immigration cases prosecuted under the follow-
ing fraud statutes: 8 U.S.C. § 1325, 18 U.S.C. § 1001, and 18 U.S.C. § 1546.

luestion 2, What were the dollar amounts requested by INS/DOJ, the amounts
supported in the President’s budget, and the amounts appropriated by Congress in
Fiscal Years 1995 and 1996, for (1) the INS’ total budget appropriation, and (2) the
portions for worksite enforcement and employer sanctions?

Answer. For Fiscal Year 1995 (FY 95) the President’s budget requested $1.8 bil-
lion for the INS, of which $33 million was requested for worksite enforcement en-
hancement. In FY 95, Congress appropriated $2 billion for the INS, of which $6
million was for worksite enforcement enhancement.

For Fiscal Year 1996 (FY 96), the President’s budget requested $2.6 billion for the
INS. The total request for INS worksite enforcement efforts (base funding plus en-
hancement) in 96 is estimated to be $149.9 million, of which $79.5 million is
the requested enhancement. Additionally, a $2.5 million enhancement is requested
for the Executive Office for Immigration Review and the Executive Office for United
States Attorneys for their worksite enforcement efforts. Thus, the Department's
total requested enhancement for worksite enforcement efforts is $82 million for FY
96.

Executive Office for United States Attorneys—Immigration-Related Criminal Fraud Case Disposition Totals

0b Ob. ee
re ce hh gh a Ge Gee RL at an

Plea. Plea: dict

Det.
3660 347 8 7 5 3 2 3 32
S44 492 10 7 8 1 0 40 2
462 403 8 16 16 2 2 43 35
532 485 B 2 7 6 5 43 29
616 576 6 6 6 0 0 45 40
397-362 13 uy 10 3 3 a 2
467 420 2 3 16 6 5 135 92



10

“Estimates on the percentage of undocumented workers in the U.S. labor force range
from 2 percent to as high as 10 percent.”

There is no doubt that the illegal aliens who are employed in the garment firms
of Los Angeles, in the restaurants of the District of Columbia, or in the automobile
factories of Detroit are hard working. Often they seek not only’a better life for them-
selves, but also for those they have left behind in their native lands—families and
relatives to whom they frequently send funds.‘ But as a matter of American na-
tional policy, citizens and lawful residents should not be left unemployed because
the governments from which these illegal aliens flee are not meeting the economic
needs or facing the population problems of their own people.

This Nation should be particularly concerned with the distressing working condi-
tions in the low-skill, low-wage industries in which illegal aliens are employed and
with the resultant denial of job experiences for our own citizens. It is a serious prob-
Jem when entry level job experiences are denied to inner-city youth because these
jobs are increasingly occupied by illegal aliens subject to the exploitation and fear
‘created by unscrupulous employers and sometimes connived in by labor unions.
Some have argued that Americans will not fill low-status, low-wage jobs and there-
fore illegal aliens are necessary if the work is to be done. This is simply untrue.
Such “we need them and they are happy here” arguments were last heard to justify
plantation slavery before the Civil War. The fact is that in each occupational cat-
egory a majority of the positions are filled by American citizens. If workers are truly
needed to perform specific seasonal tasks, then guest worker programs such as
those utilized in various European countries might be instituted. Under such pro-
grams there could at least be a regularized procedure to assure the entry of needed
workers to perform specific types of jobs (but not limited to a specifi employer).
Such a procedure would also ensure full payments and fringes, health clearance,
and other accepted American practices too often neglected as some employers vic-
timize the illegal alien as well as the broader public interest. It is clear that the
problem of illegal immigration is a political as well as a human and a legal issue.

‘hat neither the Congress nor the President has faced these issues is tragic.

‘The Border Patrol has a difficult and dangerous task. It is understaffed and its
members are underpaid. As one careful student of the subject has observed
“ the legal immigration system of the United States has been rendered a
mockery... .”?

There is big money and individual misery in the smuggling of illegal aliens across
the American borders. Because our borders are largely unpatrolled and most illegal
entrants can melt into our society, we are an attractive target, especially for those
who come from Mexico where the government has failed to address the needs of its
own people through either a sound economic or population policy. It is hoped that
some of the billions of dollars now available within Mexico as a result of the devel-
opment of its petroleum resources will go toward the development of labor-intensive
food processing and textile industries in the northern states of that nation. Cer-
tainly the American Government has a stake in also providing appropriate assist-
ance to encourage such a development. Increasingly unemployed American workers
should not be the only form of foreign aid available to Mexico.

For those who seek to count legal aliens to increase their political power, per-
haps it would be wise to recall Mathews v. Diaz, 426 U.S. at 82, in which the Court

3 The White House, A Summary Report of The Vice President's Task Force on Youth Employ-
ment (1980), p. 19. ;

“In the cage of Mexico, it is estimated that the return of American dollars by illegal aliens
in the United States is the largest dollar earner for Mexico—ahead of the dollars gained from
American tourism. Wayne A. Cornelius, “Illegal Mexican immigration to the United States: a
Summary of Recent Research Findings and Policy Implications,” p. 14.

©The findings of the 1979 National Longitudinal Survey (NLS) of Youth Labor Market Experi-
ence refute this myth: “Substantial numbers of youth are willing to work at less than the mini-
mum wage. This extensive longitudinal study found that the youth unemployment rate (38.8%
for black youth and 16.6% for white youth) was 37% higher than had been shown by the Cur-
rent Population Survey monthly sample.” The New York ‘Times, Feb. 29, 1980, pp. Al and Al4.

“Professor Brigge has commented that, “No US, worker ean compete with an illegal alien
when the competion depends upon who will work for the lowest pay and longest hours and_ac-
cept the most arbitrary working conditions. It is self-serving for employers to hire illegal alien
and claim simultaneously that no citizen workers can be found to do the ame work. In the local
Jabor markets where illegal aliens are resent, all low-income workers are hurt. Anyone seriously
concerned with the working poor of the nation must include an end to illegal immigration as

tof any national program of improved economic opportunities.” (emphasis gupplied) Vernon
Mt brigge- Jr. “The Impact of the Undocumented Worker on the Labor Market,” in The Problem
of the Undocumented Worker, p. 34.

TIbid., p. 32.



29

record maintenance, inclu its use as evidence of authorization to work. Society’s
increasing use of computerized data has led to suggestions to use the SSN and the
card as a personal identifier. The card itself, however, is still simply a paper record
with a name and number on it. . . |

Prior to 1971, all SSNs were issued based solely on information alleged by an in-
dividual. Because of the expanding use of the card for other purposes, there was
concern about the integrity of the card. Beginning in 1971, certain categories of ap-
plicants were required to provide documentary evidence of age, identity, and alien
status. This made it more difficult to obtain a card on the basis of a false identity.
However, the card was still no more than a reminder of the number assigned to the
individual named on the card. Because of our concern that individuals who had been
assigned SSNs for purposes other than work might use the card to obtain unauthor-
ized employment, in July 1974, we began to annotate our records to reflect the fact
that an alien had been issued ‘a nonwork SSN. This allowed us to identify, and re-

ort to the Immigration and Naturalization Service (INS), instances in which Social
Security earnings were reported on nonwork SSNs.

Several years later, the integrity of the SSN process was further improved. Since
May 15, 1978, all applicants have been required to Provide documentary evidence
of age, identity, and U.S. citizenship or alien status. Generally, to obtain an original
Social Security card, an applicant must submit at least two forms of acceptable evi-
dence, such as a birth certificate and driver's license. Aliens must submit appro-
priate INS documents to establish lawful status,

Any alien other than one admitted for permanent residence receives a card indi-
cating whether he or she is authorized to work. To obtain an unrestricted Social Se-
curity ard, they must provide an alien registration receipt card displaying a photo-
graph. This document is issued to aliens by INS.

Applicants for an original SSN age 18 or over are required to have a personal
interview. During the interview the applicant is asked for prior names and sur-
names and the reasons for never before needing an SSN. For those who allege hav-
ing been born in the U.S., SSA performs additional verification pris to the issuance
of an original SSN because most people born in the U.S. have ‘n issued an SSN
by the time they have reached age 18. For instance, SSA verifies the existence of
a birth certificate at the State Bureau of Vital Statistics for all applicants for origi-
nal cards who are over 18, and initiates a search for a death certificate when there
is reason to believe the applicant may be assuming a false identity.

ENUMERATION AT BIRTH INITIATIVE

The “Enumeration at Birth” (EAB) program was established in 1989 as another
means of improving the SSN process. It is a valuable tool ir. preventing fraudulent
acquisition of an SSN. This program allows parents in the 49 participating States
(plus New York City, the District of Columbia, and Puerto Rico) to indicate on the
birth certificate information form whether they want an SSN issued to their new-
born child. States provide SSA with birth record information about newborns whose
parents want a Social Security card for their child, and SSA then assigns an SSN
and issues a card. Approximately one-half of the original Social Security cards is-
sued in fiscal year 1904 were processed through EAB. With the addition of the State
of California’s participation in January 1994, representing approximately 15 percent
of the national births, we expect a significant increase for fiscal year 1995. This
process greatly reduces the potential for someone to use another person’s birth cer-
tificate to obtain a Social Security card. For example, individuals who present the
birth certificate of a child enumerated under EAB would not be issued an SSN,
since our records would indicate that an SSN had already been issued to the child
named on the birth certificate. As EAB expands, there will be fewer children with-
out SSNs whose birth certificates could be used to obtain an SSN for another per-
son,

Federal income tax law requires that persons age 1 or older claimed as depend-
ents for Federal tax deduction purposes have an SSN. By 1996, this requirement
will apply to all claimed dependents. This has created a strong incentive for individ-
uals to obtain an SSN for their children and also reduces the potential for someone
else’s birth certificate to be used.

We must remember that, even with these improvements to strengthen the SSN
issuance process, the Social Security card is still just a record of the SSN issued
and not an identity document.

GENERAL ACCOUNTING OFFICE (GAO) ANALYSIS OF ENHANCED SOCIAL SECURITY CARD

From time to time, it has been suggested that the Social Security card could be
an effective proof of identity if it were enhanced. Some have proposed such features


98

such as chip cards are under development to further enhance security. In evaluating
past and future technologies, of course, the cost of a technology and the acceptable
time frame for determining the integrity of the card are critical considerations.

Tam here to try to answer any further questions you may have.

(Whereupon, at 6:15 p.m., the subcommittee was adjourned.]

ie)


gi

do you want to put it? I still think one card would be nice, and I
think it would be a savings to the government if you had all your
benefits on one card. And the one that you give out for immigra-
tion, all you have to do is hand this card to the employer. You have
the ability now, you can plug the card into a point of sale terminal,
and it comes back and says go or no go.

That same card can be used to secure the information, because
you can set it up where you cannot get into that computer unless
you plug your card in. That’s going to tell you who is on that com-
puter, what period of time. And if you want to set it up, there are
all kinds of audit procedures on a computer. You can tell exactly
what key strokes the guy made. So security is there. It’s just, do
you want to implement it?

Mr. Horn. One of the problems you face when you're trying to
check for illegal, undocumented aliens is, if families are hiring one
or two people, if small businesses are hiring one or two people, the
expense of getting one of those machines to check the card is a lit-
tle much. So you’re poing to have to resort either to an 800 number
or something like that, where there is a convenient way to check
the card.

Is that possible with what you're talking about, that somebody
on the other end can punch the right numbers and check it?

Mr. MELTZER. One of my favorite sayings is: Remember, security
is not a convenience; it’s an inconvenience. The more security you
have, the more inconvenience you have. This could be set up prob-
ably where there could be a Social Security office, various govern-
mental agencies around the city. When you finally make your selec-
tion on this individual is the time you're going to want to authen-
ticate this, not when you're going through the approval process or
selection process. And it may have to come to the point where
you're going to have to say, “I’m going to hire you. Let’s go down
to ie office, plug your card in, and this will say yea or nay, if you
qualify.’

ain, it’s an inconvenience, but sometimes, if you want certain
results, you have to put up with inconveniences. We work strictly
in a secure environment in our plant. We manufacture credit cards,
yu know. When you have a $100 bill stolen from you, how much
ave you lost? $100, not a penny more. You can’t get penny more
on the street. But credit cards, in essence, they are printing plates
for money, so we really worry about it.

We have to do backgrounds on all of our employees, and we find
a real problem in trying to get information, because we don’t know
who we're hiring. We run fingerprints, but, again, it takes 8, 10,
12 weeks for those to come back. Meanwhile, you put the guy in
the cash vault. If he’s not who he says he is or his intents are
wrong, we're out of business. So these are problems.

When immigration regulations come into play, we take a look at
the individual. He handed me a document. I was in law enforce-
ment for 23 years. I look at a document, can I tell if it’s counterfeit
or not? I used to be able to, no longer, not with the quality out
there.

So how does John Doe, average employer, get over this? You
know what, ignorance is no defense of the law? So he’s in trouble
if he makes the wrong call.


11

noted that “Congress has no constitutional duty to provide all aliens with the wel-
fare benefits provided to citizens. . . .”

Residents from my own State of California certainly stand to profit from counting
illegal aliens and thus gaining a few more seats in the House of Representatives.
But should foreign citizens—many of whom are transient and subject to deporta,
tion—be the basis of our representation process? Is it fair to the legitimate political
interests of citizens in the North and the East (where there are probably proportion-
ally less illegal aliens than in the Southwest) not to have their votes counted effec-
tively in the formulation of national policy through that representative process sim-
ply because some States happened to have an enhanced apportionment as a result
of the substantial presence of illegal aliens?

On August 4, 1977, the Carter administration ro sed a package of legislative
proposals to reform our immigration laws. One of the key recommendations was the
call for employer sanctions to make illegal the hiring of so-called undocumented
workers. Various ethnic communities quite properly expressed concern that employ-
ers might be reluctant to hire those with a shade of skin other than white for fear
that they were undocumented workers and illegal aliens. In brief, the administra-
tion left out the essential element which is a key to a fair employer sanctions policy
and that is what some have described as a “secure” or “counterfeit-proof” social se-
curity card.® I agree with that criticism. If we are to deal with reality, and not find
ourselves still discussing this matter a decade from now while millions of American
citizens continue to be denied job opportunities, then the establishment of such a
secure and counterfeit-proof social security card for any who wish to be employed
must be a first order of business on the national legislative agenda.

With this exception, I have supported the recommendations for due process which
we have made in the attached report—although at times I have felt that some of
our proposals, if enacted, should be best described as “the Immigration Attorneys
Relief Act of 1980.”

STEPHEN Horn.

Mr. Horn. Representative Maloney.

Mrs. MALONEY. Thank you, Mr. Chairman, and thank you for
calling this hearing on the integrity of Government documents.

This hearing potentially has a very broad scope, which includes
the impact of advancing technology on the availability of informa-
tion to both the Federal Government and the private sector, the
prospects for developing some form of a national identification card,
controls on illegal immigration, and the general prevention of

‘aud.

*Gerda Bikales, program associate for Population/Immigration, National Parks & Conserva-
tion Association, has made an effective case for such a card in “The Case for a Secure Social
Security Card” (September 1978). 18 pp. ‘ailable from National Parks & Conservation Associa-
tion, 1701 13th Street, N.W., Washington, D.C. 20009. She notes that, “The Social Security card
and the driver’s license enjoy primary credibility as general purpose ‘identification. . . .” (p. 9)
“Forty-four States now affix a  Ghotoeraph of the driver on the license adding to the security
of the document. . . .” (p. 10) Observing that 41 State jurisdictions now issue “impressive and
offical looking identification cards to non-drivers.” Bikales adds that, “The dreaded I.D. has been
brought in through the back door, by popular request!” (p. 11) She observes that “it is almost
‘inconceivable how anyone could be damaged by revealing [bona fide legal residency in the Unit-
ed States]; on the contrary, it is universally acknowledged to be a highly advantageous quality,
one that many millions all over the world are desperately trying to take on as their own.” (p.
14) She favors “an upgraded Social Security card” as “the least drastic alternative” (p. 14) and
recalls that in July 1973, the Report (Records, Computers and the Rights of Citizens} of the
(HEW] Secretary's Advisory ‘Committee on Automatic Personal Data Systems “provide further
assurance that Social Security numbers were legislatively intended by the Congress ‘to be avail-
able for use in preventing aliens from working illegally and public assistance beneficiaries from
receiving duplicate or excet Ibid., p. 121.

‘Another strong advocate i n system which would apply to all workers” is Sec-
retary of Labor Ray Marshall. He believes that “a noncounterfeitable Social Security card could
be issued to all workers changing jobs and to all newly hired persons, and that could be done
for under $200 million. . . .” Hat Bernstein, “Illegal Aliens Cost U.S. Jobe—Marshall,” an
interview with Secretary of Labor F. Ray Marshall, Angeles Times, Dec. 2, 1978,
Considering that The United States Budget in Brief—Final Year 1981 indicates (p. 52) that “un-
employment recipients are estimated to average 2.9 million per week in 1980 and 3.4 ion

t week in 1981” with outlays for gunemployment compensation estimated to increase $3.2 bil-
lion “from $15.6 billion in 1980 to $18.8 billion in 1981,” a $200 million investment to open uy
perhaps millions of jobs for citizens and permanent residents is a very cheap investment indeed.



97

suing VISA cards to help develop the security features that will enable these issuing
institutions protect the security of their cards, ;
Having discussed with Subcommittee staff how I might be helpful to you, I will
briefly discuss the general nature of these two categories of security protection: (1)
the security features on cards themselves and (2) the authorization network. As I
told your staff, I cannot discuss some of the details of these systems in a public
forum. Attached to my statement are: (1) a reproduction of a ‘ypical VISA credit
card, and (2) a diagram of the authorization system used to authorize a merchant
to accept a VISA card presented az payment. A diagram of the settlement system
used to make Rayment from the cardholder's bank to the merchant’s bank also is
a

attached to outline another function of the VISA telecommunications and data proc-
essing network.

SECURITY MEASURES ON THE CARD ITSELF

Looking at the reproduction of a typical VISA credit card, the security measures
on the card include the following:

1. There is a four digit number printed just above the embossed account number
that must match the first four embossed numbers on the card.

a ‘The characters and letters embossed on the card are clear and uniform in size
and spacing.

'3. There ts special “Flying V" embossed security character that appears with ei-
ther the letter “C,” “P,” or “B” on the same line with the valid dates,

4. There is micro printing around the VISA logo. It is made up of the first four
digits of the account number and an alpha designation.

5. A dove hologram appears to fly when tilted back and forth.

6. While not shown on the reproduction of a card, the Signature Panel on the re-
verse side bears the repeated word “VISA” in blue at a 45-degree angle, and this
will fade if erasure is attempted.

7, Also not shown on the reproduction is an ultraviolet dove on the face of the
card visible by use of a “black light.” .

5, Finally, some VISA issuers are putting digitized photos of cardholders on their
cards,

SECURITY PROVIDED BY THE AUTHORIZATION SYSTEM

Turning to the authorization system, in the bankcard industry, banks that issue
credit cards to their customers are known as “igsuers.” Banks that collect funds on
behalf of merchants for sales made on credit cards are known as “acquirers.” Follow-
ing the steps in the authorization system:

1. A bank issues a card to the cardholder;

__ 2; The cardholder presents the card to a merchant as payment for a good or serv-

ice;

3. After the merchant “swipes” the card through a point-of-sale terminal that
automatically reads information on the card’s magnetic stripe and the merchant en-
ters the amount of the proposed purchase using the terminal's keypad, the terminal
automatically transmits an encrypted authorization request to the merchant's

irer;
. The acquirer routes the enc d electronic authorization request to Visa over
the BASE I network; "Pte =

5. Visa automatically routes the request to the card issuing bank;

6. Upon receiving the message, the issuer electronically checks the cardholder's
account;

7. If the card has not been reported lost or stolen and the account is in good
standing with the cardholder having sufficient unused credit in his or her line to
cover the charge, the issuer sends an “authorization code” number back to Visa over
the BASE I network;

8. Visa adds a “transaction code” number to the authorization message and routes
it back to the merchant's acquirer; and

9. The acquirer sends the authorization code to the merchant’s point of sale termi-

nal.

When this electronic authorization system is used, Visa’s objective is to take no
longer than 2.3 seconds to process the authorization request and complete delivery
f the authorization code back to the merchant.

CONCLUSION

Two general categories of security measures are used to protect the integrity of
VISA cards: features on the cards themselves and a telecommunications and data
processing network for virtually immediate card authorization. New technologies


65

valid versions of that, as they noted, and they noted also it will cost
$3 billion to $6 billion to replace them, and that’s primarily labor
cost, not card stock cost. No matter how expensive the card is, the
labor costs are what’s going to cost all the money in that approach.

Another problem is that, while tamper-resistant cards can help
improve operations, these cards alone will not ensure the integrity
of employer information. People will still be able to obtain cards by
using false birth certificates, as has been stressed here today, driv-
ers’ licenses, and green cards. Unless biometric identifiers are used,
individuals will continue to be able to use cards that belong to oth-
ers.

In our prepared statement we talked about the telephone system,
and INS has gone into that in great detail, so I think that there’s
very little for us to say except that this kind of verification system
can be useful, but it is no better than the data upon which it relies.
The extent to which INS can use this verification system to deter-
mine eligibility will depend on the extent to which data in the pri-
mary data base is accurate, complete, or current.

INS has recognized that its data bases need to be improved and
is initiating several actions to do so. We have submitted many re-
ports on the problems with INS data bases. For example, it plans
to interface several of its systems to allow a single point of data
entry and reduce keystroke mistakes. They have a number of stove-
pipe systems. What they are saying is, they are going to have a sin-
gle, consolidated system. That’s clearly a step forward.

However, even if the INS data bases were complete and accurate,
three additional problems would hinder the proper identification of
illegal aliens: First, since the system is voluntary, some employers
may choose not to verify their newly hired employee. Second, if em-
ployees inappropriately say they are U.S. citizens, the employer
would have no reason to contact INS, since U.S. citizens are not
included in the data base. And finally, illegal aliens may not be
identified if they use borrowed, stolen, or forged cards of legal
aliens.

Another issue, an overall technological issue that should be con-
sidered with any telephone verification, is the security and integ-
rity of information that is transmitted over telephone lines. De-
pending upon the level of security desired, encryption and message
authentication may be required.

Encryption is a mathematical process that transforms plain data
text into ciphertext. Because this ciphertext is meaningless to an
unauthorized individual, it provides confidentiality and security.
One method that provides message authentication is the use of
electronic signature techniques which help ensure that the data re-
ceived are identical to the data that are transmitted.

The Connecticut case study is a successful use of technology by
a State that has spent 4 years and about $27 million to interface
with nine data bases in a totally automated system. This new sys-
tem allows State employees to quickly determine an applicant’s eli-
gibility for three Federal programs and several State programs.
The system has also provided greater customer service because ap-
plicants need only visit one office to be considered for benefits for
all programs.


71

such things as prescriptions, whether or not they are appropriate
for the people who are purporting to get the prescriptions.

Most States are going into what is known as a prospective drug
utilization review system, which is intended to protect the people’s
health so they don’t take the wrong drugs, and also intended to
prevent fraud and abuse of the system.

Mr. Horn. Mr. Reilly, has GAO had an opportunity to look at the
various fees that are being proposed by the Immigration and Natu-
ralization Service and possibly the fees that might or might not be
levied by the Social Security Administration for their new cards?

Mr. REILLY. I don’t think we have looked at it at all, sir.

Mr. Horn. You might want to look at it. Why don’t you give us
your estimate as to—is there appropriate accounting? Thappen to
personally agree that they ought to include total transaction costs,
try to pay some of the bills around here, as long as we have a $200
billion deficit. But I’d just like to know if they are on realistic
ground, in terms of their cost base.

Mr. REILLY. We would be happy to.

Mr. Horn. Now, the Jordan Commission suggested the use of a
personal identification number, a PIN, that a lot of us are used to
on various credit cards and all the rest. Does GAO have any feeling
that the PIN’s help validate the process, or is biometric identifica-
tion technology the only sure answer?

Mr. REILLY. Chris, do you want to answer?

Mr. Horn. Mr. Martin.

Mr. MartTIN. We talk in terms of electronic signatures, and I
think it’s important that I define that term. It is used by a lot of
people who say, “I have electronic signatures,” and don’t. GAO has
issued the criteria that we use in assessing systems or electronic
signature systems in financial management and procurement appli-
cations. That authority is granted to us under Title XXXI of the
United States Code.

In December 1991, we issued a Comptroller General decision (71
Comp. Gen. 109), and we have also issued several reports that out-
line that criteria. The three criteria we use are that a signature,
whether it’s handwritten, electronic, or otherwise, auto-pen—you
can go through any number of systems—has to meet the following
three criteria: One, it has to be unique to the signer; two, it has
to be under the signer’s sole control; three, it has to be capable of
being verified.

In addition, to evidence the signer’s intent, the signature has to
be linked to the data in such a manner that, if the data is changed,
the signature is invalidated. This is consistent with the way that
we view a paper document. It’s no different, the criteria for elec-
tronic. We aren’t asserting anything for electronic signature that is
different than a paper document.

GAO has sanctioned the operation of two electronic signature
systems and is monitoring the development of two others, at the re-
quest of the agencies. We have not reviewed systems the private
sector is using. Probably one that you are familiar with, that you

can see on TV, is that some delivery systems come up and have you
sign a board.
e haven't reviewed those, but we have reviewed technology

that is very similar to that. That is not what we would consider


16

These cards could easily pass a visual check, particularly by em-
ployers who are not trained to spot counterfeits.

The Commission recommendation is that we develop and imple-
ment a better system for work site verification. We recommend im-
mediate testing of the most promising option: a computerized reg-
istry based on the Social Security number.

For decades, all workers have been required to provide employers
with their Social Security number. Depending on the results of
pilot projects that are now being designed, the cumbersome I-9
process, with its dozens of documents and blizzard of paper, could
be replaced by a single electronic step to validate information every
worker must already provide.

While there are many ways to test that system, the key is that
electronic validation does not necessarily depend on documents at
all, so it will not be as vulnerable to fraud as the I-9. Because all
workers must present the same information to be validated, em-
ployers will not be as likely to discriminate, even inadvertently.
The only thing to ask a prospective employee would be, “What is
your Social Security number? and everyone already provides that
information now. The government already has the data it needs on
the Social Security and INS data bases. There needs to be improve-
ment, of course, particularly at the INS, but cleaning up those data
bases is something that we should be doing already.

This Commission expects to have meaningful results from the
initial phases of pilot testing of the electronic verification system
by 1997. We will incorporate these results into our final report to

longress so that we can make an informed recommendation on
whether that system should be implemented nationwide, with par-
ticular attention to civil liberties and privacy concerns.

While we on the Commission are certainly not computer systems
experts and never pretended to be, we do recognize “garbage in,

arbage out.” Clearly, People who obtain real documents through
false pretenses pose a problem. This is true, even though the Social
Security Administration does a face-to-face interview and document
check on every adult who seeks a Social Security number, since
nowadays most children receive numbers shortly after birth.

Accordingly, we made recommendations for reducing fraudulent
access to the so-called “breeder documents,” particularly birth cer-
tificates that can be used to establish an identity in this country.

We recommend certain basic steps: standardized application
forms for birth certificates, interstate and intrastate matching of
birth and death records, Federal agencies’ acceptance of only cer-
tified copies of birth certificates issued by States, standard design
and paper stock for all certified copies of birth certificates to reduce
counterfeiting, and computerization of State birth records deposi-
tories.

The Commission also recommends imposition of greater penalties
on those producing or selling fraudulent documents. RICO provi-
sions to facilitate racketeering investigations should also cover con-
spiracy to produce and sell fraudulent documents.

Let me add a tentative note about costs associated with our pro-
posals for a verification system. The Social Security Administration
made preliminary estimates for the Commission of its cost of a tele-
phone verification program to validate Social Security numbers: $4


21

cause they cannot be backed up by INS records. This, in turn, will
give employers greater assurance that the employees hired and
verified are truly authorized to work.
INS is expanding the TVS pilot program to 200 employers, pri-
marily in industries that tend to attract illegal workers. TVS ex-
ansion will also involve increased safeguards to ensure that it can
Be implemented without discrimination or infringements on pri-

vacy.

TVS is strictly limited to noncitizens in the INS data bases.
Therefore, we are working with the Social Security Administration
to develop a test of a two-step process to verify all persons hired.
Under this system, employers would query the Social Security Ad-
ministration data base to verify Social Security numbers and check
the citizenship and alien status coding of all persons hired. If the
employee was an alien at the time he or she applied for a Social
Security card, the employer would query the INS data base to ver-
ify employment eligibility.

We are developing a new, tamper-resistant version of the current
employment ‘authorization document, with a number of credit card-
like security features. We are also centralizing card production in
order to lower production costs, speed service to the public, and im-
prove employers’ ability to authenticate legitimate documents.

Finally, reducing the number of documents will reduce the oppor-
tunity for fraud and make verification simpler for employers.
Therefore, within the next 30 days, INS will propose a regulation
to reduce the number of acceptable documents from 29 to 16, and
the administration will propose legislation further reducing the
number of acceptable documents.

The INS Forensic Document Lab presently houses the largest
U.S. reference collection of known and counterfeit international
travel, immigration, and vital statistics documents. I would offer
that any member of the committee who has not or even has visited
our Forensic Document Lab to visit it anew. I think you will be
quite pleased with the Forensic Document Lab.

The FDL has led the way in identification of counterfeiters and
vendors of fraudulent documents by identifying their fingerprints
on the documents which have been purchased through undercover
operations and by linking those fingerprints to documents sold in
various parts of the United States and overseas. By providing ex-
pert testimony in the major counterfeit cases, the FDI, experts

ave strengthened our cases to an unprecedented degree, resulting
in a conviction rate of major counterfeiters of more than °7 per-
cent.

The initiatives that I have outlined represent important elemeris
in a program to combat the problem of fraudulent documents
These steps will also considerably assist cmployers in complying
with the employer sanctions provisions of our immigration law.

I would be pleased to answer any questions you may have.
Thank you.

[The prepared statement of Mr. Puleo follows:]

PREPARED STATEMENT OF JAMES A. PULEO, EX#CUTIVE ASSOCIATE COMMISSION sh
FOR PROGRAMS, IMMIGRATION AND NATURALIZATION SERVICE

Thank you for inviting me here today to discuss the issue of document fraud. Im-
proving the quality, integrity and reliability of government issued documenis is crit-


50

nent residents and the employment authorization card for those
persons here in the United States that we allow to work.

ly way we can improve the delivery of that system to make the
employer sanctions provisions of the ‘Tmmigration Act work better
is where we, INS, are going.

Mr. HILL. Congressman Flanagan, I share your concerns about
this being a very complicated issue. However, if you accept the
proposition that we have a serious problem with itegal immigra-
tion in the United States—by conservative estimates approximately
4 million people in the country now illegally, approximately
300,000 added to that every year, 150,000 of which are not crossing
the borders but actually coming here as visa overstayers, with le-
gitimate, legal visas, and just simply overstaying, primarily be-
cause they find work in the United States.

If you accept that the principal magnet drawing people here ille-
gally is jobs, then you have no alternative but to fight the problem
primarily at the work site.

We looked at these issues very carefully. We are very concerned
about a national ID card. We are not recommending that a card be
developed that can be demanded randomly for any purpose other
than the verification of employment or benefits eligibility in the
United States. But the system has to be made to work. The one
that we have now, the I-9 process, does not do what it was in-
tended to do, and we need to fix it.

Mr. FLANAGAN. If I may interrupt right here. This is the “big
brotherism,” if I may invoke an emotional phrase into this, that
was utilized since the development of the Social Security number,
and having a national ID card. Now we're saying, “Well, we'll have
a national ID card, but we'll only use it for this purpose.” Well, you
know, next year it will be this purpose and something else, and it
won't be very long till it’s, “Papers, please. Papers, please.”

This is my concern, and I think it’s a genuine one. It’s one I have
to explain in my district. You know, Americans are fiercely inde-
pendent people, and having to demonstrate that you're a citizen to
control the immigration problem is going to be a hard sell, and I
think ought to be a hard sell. And I’m having trouble getting
through this.

Mr. HILL. It is a difficult problem, but I don’t believe that it’s be-
yond our ability to address it through the law and through the
goodwill of the people who administer that law. And I think that
it is a serious problem that can be addressed and needs to be ad-
dressed, but there have to be proper safeguards instituted into the
system.

Mr. VELDE. Congressman, I'll take a little different view. The
United States is not nearly as far along as most other industri-
alized nations in having national identification systems. Just exam-
ine the American passport and the program that has been author-
ized now for several years, where the passport of eight other coun-
tries is recognized by the United States, so that an entry visa is
not needed to come into the United States.

Not so with the U.S. passport. There have been estimates that
as many as 20 percent of U.S. passports are issued fraudulently.
The reason is, it’s a paper transaction. There are no ways of inde-
pendently verifying the identity of the applicant.


95

The Association for Vital Records and Health Statistics (AVRHS) is concerned
with the increasing fraudulent use of vital records. The AVRHS has approached the
Secret Service about the feasibility of convening an ad hoc group state and federal
agencies to examine what should be done to combat the problem of false identifica-
tion. The Secret Service plans to set up a meeting to discuss the counterfeiting of
vital records documents. This could be an excellent forum to discuss-new formats
of vital record documents which allow the states to maintain their individual iden-
tity, but at the same time place common features in these documents so they are
more easily recognized,

Mr. Horn. You mentioned two fingerprinting systems. The acro-
nym AFIS is one, and AFIRM is the other. They appear to be effec-
tive and accurate. Can you comment on the new, supposedly more
advanced system being developed by the FBI that allegedly won’t
be able to talk to either AFIS or AFIRM, and aren’t these two ex-
isting systems unable to do Brady background checks for gun pur-
chases?

Mr. Rasor. Sir, I’m not familiar with that. The best answer to
that would come from the FBI.

Mr. Horn. OK. Staff will ask them.

Is the Secret Service assisting State, local, and Federal agencies
to link their data bases in pursuit of counterfeit and false identi-
fication problems, and is a network of State drivers’ licenses with
INS and SSA data bases, for employment purposes, feasible in your
estimation?

Mr. Rasor. On the first question, yes, the Secret Service works
closely with the State agencies in encouraging the linking and ac-
tual use of the linking of the AFIS systems throughout the United
States. We have found that a very beneficial process in our inves-
tigative responsibilities.

In relation to the other question relative to the INS data base
and the Social Security data base—is that what you were talking
about?

Mr. Horn. Yes. Right.

Mr. Rasor. Being on the outside of that issue, I don’t know the
practicalities of it. I can tell you, in theory, that we would support
the theory of the data bases within the Federal Government being
able to talk to one another for two reasons, really: the responsibil-
ity that the program agencies would have in maintaining their sys-
tem and protecting the fraudulent attacks on those systems as we
see them occurring.

Mr. Horn. Is there a coordinating agency within the government,
let’s say in OMB somewhere, that looks at these data bases when
they are proposed by departments and sees if there is some inter-
chang: ability and compatibility and all the rest, or how does that
work? You just pick the best system you think helps your needs,
and off you go, if you can get it through GSA and Congress?

Mr. Rasor, Again, I wouldn't be your best witness on that. I real-
ly don’t know the answer to that.

Mr. Horn. Let’s ask staff to check on that one also.

Dr. Eaton, you're familiar with a lot of national identification
systems in European countries. How do these systems work, and
do they affect privacy more so than the present systems affect
American privacy?

Mr. EaTON. Well, in many European countries, the government
has appointed a privacy ombudsman to which an individual can


33

by mail on magnetic tape and the results returned to the requestors in about 4
weeks, this system does not allow for immediate SSN verification. Thus, it may not
eflectively serve an employer's employment eligibility verification needs. ;

IRCA required the Secretary of Health and Human Services to study the feasibil-
ity, costs, and privacy considerations of an SSN validation system for employers.
From January 1987 through September 1988, SSA tested a telephone system under
which employers in 3 Texas cities requested SSN validations orally and received
oral responses from SSA employees who had online access to SSA data bases. The
test allowed employers to use existing telephone lines and equipment to request
SSN validation of prospective employees from SSA and receive an immediate re-
sponse, This is similar to an employer's calling the 800-number today, except that
the test provided for a special stalf dedicated to this specific function.

The test results indicated that, although technically feasible, the effectiveness of
an SSN validation system in helping employers prevent aliens not authorized to
work in this country from gaining employment would be limited, because there is
no way to be sure that the job applicant presenting a valid Social Security card is
the person to whom it was issued.

EMPLOYMENT ELIGIBILITY VERIFICATION PILOT PROJECTS

The Commission on Immigration Reform’s interim report to Congress in Septem-
ber 1994 proposed a computer registry based on SSA and INS data which employers
could check to determine if a new employee is eligible to work. The Commission rec-
ommended that the President immediately pilot the registry in the five States with
the highest levels of illegal immigration and several other States.

Our SSN data base is highly accurate and is updated overnight. Since the data
base was established to carry out Social Security functions, such as to facilitate
wage reporting, the data base and its supporting ‘systems are not designed to sup:
port work eligibility verification, although they contain information that is useful for
that activity. Because of this, we need new programming to support verification of
work eligibility and to make the verification process more convenient for employers.

The Administrtion believes that worksite enforcement of immigration laws is a
necessary and effective means of controlling illegal immigration and promoting fair
competition among employers and workers in the United States. The
Administation’s FY 1996 bu« jet proposal includes substantial new resources to pur-
sue this goal. As a part of this effort, the Administration is seeking to enhance effec-
tive verification of a new employee's authorization to work in the United States.

‘A major concern, present when Social Security started and still present today as
we pursue this effort, is how best to protect people’s privacy. In this age of comput-
ers and automated data banks, we must not forget the threat to personal privacy
that can be posed by unauthorized access to information in government records; ac-
cordingly, we are looking at several possible measures, such as password require-
ments, privacy agreements with employers, and other security procedures. An Ad-
ministration interagency group is also reviewing the privacy and civil rights con-
cerns that may arise as we proceed.

On February 7, 1995, President Clinton announced several major immigration re-
form initiatives, including expanded worksite enforcement. To improve such enforce-
ment, the President also anounced several pilot projects to verify employment eligi.
bility for newly hired employees, as recomended by the Commission of Tmmigration
Reform. The President has directed SSA and INS to develop pilot projects in re-

nse to some of the isses raised in the Commission's report and to test the fea-
sibility of matching SSA and INS records in the future.

One of the pilot projects is a two-step process using SSA and INS data bases. Cur-
rent plans call for a number of selected volunteer employers to request verification
of employment eligi lity by submitting to SSA a newly-hired employee’s SSN,
name, and a date of birth. SSA would match that information against its data base
and would also cneck for citizenship/alien status coding. If SSA records indicated
that the {employee was an alion at the time he or she applied for an SSN card, SSA
would advise the employer to verify with INS, using the employee's alien identifica-
tion number, that the employee was authorized to work. We estimate that this pilot
will be operational on a small scale by the end of 1995 or early 1996 in one or more
geographical areas with high levels of illegal imigration. We expect to expand the
pilot to more employers in 1996 and perhaps 1997.

CONCLUSION

In conclusion, Mr. Chairman, the Social Security card was originally intended to
be nothing more than a means of recording the Social Security number. Its use for
other purposes has provided the incentive to improve the quality of the isssuance



17

million over the first 2 years for design and development; annual
cost of $32 million for maintenance and operation. Resolution of
discrepancies referred to the Social Security Administration were
estimated to cost $122 million initially and $30 million per year
thereafter.

So the total cost of the registry over 5 years, according to the So-
cial Security Administration, would be approximately $300 million,
By way of comparison, the Urban Institute estimated that illegal
afens cost seven States alone more than $2.1 billion a year. Other
scholars have put the costs associated with illegal immigration
much higher. Spending $300 million over 5 years to save $2 billion
or more each year is a sound investment.

One final point I would like to make: The key to our work at the
Commission on Immigration Reform so far has been that through
intense discussions and studies we have managed to arrive at a bi-
partisan consensus. We hope to continue that record.

I would be glad to answer any questions.

(The prepared statement of Mr. Hill follows:]

PREPARED STATEMENT OF ROBERT CHARLES HILL, MEMBER, U.S. COMMISSION ON
IMMIGRATION REFORM

Mr. Chairman and Members of the Subcommittee, on behalf of Professor Barbara
Jordan, our Chair, and my fellow members of the U.S. Commission on Immigration
Reform, I want to thank ye for this opportunity to testify.

In our first report to Congress last Tall, entitled US. mmigration Policy: Restor-
ing Credibility, we sought to recommend a comprehensive strategy to control illegal
immigration. Growing frustration about it undermines our first commitment to legal
immigration in the national interest.

We simply must develop a better system for verifying work authorization. Reduc-
ing the employment magnet is the linchpin of a comprehensive strategy to reduce
illegal immigration. Megal aliens are here for jobs. ‘Phat is the attraction. So the
only effective way to deter illegal immigration must include the worksite. The reli-
ability of government information is critical to this effort.

The system we have now, the I-9 process, is doubly-flawed. It does not do what
it was supposed to do, namely deter the employment of illegal aliens. What it does
do, we do not want—namely, burden businesses with paperwork, while creating
abundant opportunities for fraud and forgeries. It may even provide an excuse for,
if it does not actually provoke, discrimination against workers who happen to look
or sound foreign.

At the root of these problems is the proliferation of counterfeit documents. During
our investigations, the Commission learned that illegal aliens can now purchase
counterfeit drivers licenses and social security cards for $25. A green card is slightly
more expensive. Moreover, we also learned that counterfeits of any document—even
the most tamper-resistant—would soon be on the black market. These cards could
easily pass a visual check, particularly by employers who are not trained to spot
counterfeits.

Honest employers are caught between the proverbial rock and a hard place. Be-
cause the system is based on documenta, employers are placed in a position of mak-
ing judgments many do not feel qualified to make.

lentifying forgeries is difficult, even for trained professionals. If an employer ac-
cepts false documents presented by an unauthorized worker, that employer is vul-
nerable to employer sanctions for having hired someone under false pretenses, re-
gardless of the fact that they may well have been fooled themselves. Yet if an em-
ployer chooses to doubt particular documents, and asks for more from some workers
and not from others, that is discrimination.
__The Commission believes that the way to develop a better system of worksite ver-
ification is to immediately test the most promising option. Alter examining a wide
range of alternatives, the Commission concluded that the most promising option for
secure, non-discriminatory verification is a computerized registry based on the So-
cial Security Number.
_For decades, all workers have been required to provide employers with their So-
cial Security Number. Depending on the results of pilot projects ‘that are now being
designed, the cumbersome I-9 process, with its dozens of documents and blizzard of


61

collusion within the Immigration Service, you can’t forge the data
base that’s behind it.

Even if we go to this card here, which I understand costs about
$100 million, if you’re going to try to reproduce it, it’s only as good
as if you want to use the security features, but the data base be-
hind it makes it even less susceptible to fraud. And that’s what
we're looking at.

The EAD, for example, is less costly, but the data base behind
it—and you probably may be able to forge it, if you're willing to pay
the money—but the data base behind it makes it more attractive
to us.

If I may, I did think of one question: These documents here are
fee-based, so that if the person wants these documents, they have
to pay a fee. So there’s not a cost to the Immigration Service. The
fee is supposed to cover the transaction of producing the docu-
ments. We have multiple sources of funding, just as Social Security
does. In fact, I think we have six fee accounts, including our sala-
ries and expense account. So these documents are fee-funded.

Mr. Horn. Before I yield to the gentleman from Illinois, let me
follow up on that. As I recall, when I talked to the Commissioner
about a year ago, you were exploring a number of systems. Is this
essentially what you have settled on now?

Mr. PULEO. System of documents?

Mr. Horn. Right.

Mr. PULEO. Yes. We're settling on this as the employment au-
thorization document itself and looking to use the same platform
to produce the more secure green card and border crossing card.

Mr. Horn. How would you judge the fees to be? Have you
thought about what you're going to set that fee at, and does it in-
clude the personnel costs involved in evaluation to grant that card?

Mr. PULEO. It’s supposed to cover the entire adjudication process,
which is the receipt of the document, the feeing of it—the
Teapplication, excuse me—the feeing of it, the adjudications of it,
and the production of the card. Right now, preliminarily, these doc-
uments are not that expensive. We believe that they are still with-
in the acceptable realm of the fee.

Mr. Horn. Are we talking $10? What are we talking about?

Mr. PuLeo. I think they are less than $10. Permanent resident,
this one is around $5, I believe, or $8. And then we're going down
to about $2 or $3 for the other ones. We are supposed to do fee
studies every year. For example, just inflation raises our fee. Every
time there is a pay raise, it raises our fee because of the pay raises
to the employees. It’s a nominal change; sometimes, at most, it just
goes up $5 a year, or $5 every time we impose a new fee.

But as we go to this, we are doing a fee study for all our fees
right now. We have an independent agency coming in and doing a
fee analysis for it. They will incorporate these platforms and docu-
ments in that fee study.

Mr. Horn. OK. The gentleman from Illinois, Mr. Flanagan.
ti Mr. FLANAGAN. Thank you, Mr. Chairman. I have just one ques-

‘ion.

Notwithstanding our previous discussion, uncomfortable for us
all though it was, Mr. Hill, I have just one question for you: Agree-
ing with you that, effective work site management is an effective


4

It’s important that we understand that whether we go to a sys-
tem where we're talking about just a registry that may not affect
everyone immediately, what we will ultimately end up with is a
system where everyone will have to uniformly be checked, so we
don’t violate privacy, we don’t violate equal protection laws, and
what we do have is a system where the information is accurate.

So, Mr. Chairman, I just pose those questions. Hopefully, some
of the witnesses after me will have a chance to address some of
those concerns that I’ve raised, and I hope that this committee is
able to glean additional information that will be helpful in under-
standing the issue better.

[The prepared statement of Hon. Xavier Becerra follows:]

PREPARED STATEMENT OF HON. XAVIER BECERRA, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF CALIFORNIA

Grateful for the opportunity to address the Subcommittee on the very important.
subject of the integrity of documents issued by the government for the purpose of
providing services or work-authorization.

As we consider proposals to produce tamper-resistant documents or a national
registry, we must consider whether the policy which we adopt poses risks to our pri-
vacy, whether the system we implement is based on clean and accurate data and
whether the cost is prohibitive.

ACCURACY OF DATA

Some of the witnesses which you will hear today may argue that a national reg-
istry or national ID card will be as convenient and accurate as an ATM machine
and PIN code, or a credit card.

However, Shirley Chater the SSA Commissioner who will be testifying today
stated on March 3, at an Immigrations subcommittee hearing “It is not feasible
to use the current Social Security card for the purpose of establishing that the
person in possession of the card is the person to whom it was issued.

A 1991 Hearing before the Subcommittee on Social Security, of Ways and Means,
revealed that data matches by Citicorp and TRW resulted in error rates of 46 per-
cent and 28 percent respectively, due to incorrect data.

Furthermore, according to a recent New York Times series, the INS runs
more than a half-dozen “outdated computer systems which cannot communicate
with each other.”

According to a recent New York Times series “files get lost . . . and cases

ct improperly entered at the INS.”

A Banking Committee subcommittee hearing in October of 1993 revealed that one
million consumers use credit correction or credit restoration services. The American
Council on Credit Reporting Accuracy stated:

The vast proliferation of credit correction and restoration services is a reflec-
tion of the poor performance of the credit bureaus that continuously report erro-
neous and misleading information.

ACCESS AND PRIVACY IMPLICATIONS OF A NATIONAL REGISTRY

A national registry or a national identification card would have to comply with
current law, such as the Privacy Act of 1974, and the Computer Security Act of
1987, designed to ensure against unauthorized use and misuse of information.

However, reports and audits by the GAO and the Department of Justice have es-
tablished that there are serious problems with the quality and availability of data.

According to the Jordan Commission EVERYONE, citizen and non-citizen, would
have to “present the same information to be validated.”

During testimony offered at a March 3rd hearing of the Judiciary Committee’s
Subcommittee on Immigration and Claims, Robert Rasor, of the Secret Service, who
wil be testifying today expressed his skepticism about the need to use a central

latabase,

In 1990 the GAO issues a report Computers and Privacy—How the Government
Obtains, Verifies, Uses, and Protects Personal Data.

The report found that of the 910 largest computerized systems containing per-
sonal information, 292 were in non-compliance with the Privacy Act.


93

ing at this technological problem that deals with the issue of na-
tional security.

We are living in a period where fanatics are targeting this coun-
try—and the World Trade Center was just one example. There are
technologies out there that are far more dangerous than explosives;
namely, biological warfare. For its use you don’t have to have a
high degree oft technological sophistication. If you have the material
to spread disease, you can go to a paint shop and get one of these
dispensers that sprays paint, and go and drive 10 miles from a
military base and create havoc.

So the capacity to use ways and means not only to control our-
selves internally, but gradually, because of the cooperation among
Most nations with passports, we have the capacity to make it ex-
tremely difficult for professional terrorists to travel around the
world as freely as they now do. They may be able to do it once, but
once they are identified, if airplanes just are able to get the digital
readings of the fingerprints of their passengers, we have a control
mechanism that will greatly increase the capacity of the Secret
Service to be effective.

Mrs. MALONEY, Thank you very much.

Mr. Horn. Thank you.

Let me ask a few questions here. Some we will submit in writing,
but let’s round this out. Let me go back to the basics. You’ve men-
tioned it. What is the data encryption standard, or DES? Is it in
common use today? Is it becoming obsolete, or is it already obso-
lete? What’s the fast reaction to that one?

Mr. Meltzer.

Mr. MELTZER. Well, 1 know DES is in effect today. It’s in effect
in many things. As far as it becoming obsolete, I'm not a
eryptologist. I don’t think I can answer that. I think that’s an an-
swer that, one phone call to NSA and they can tell you about it.

Mr. Horn. How about it, Mr. Rasor?

Mr. Rasor. That’s over my head, sir.

Mr. Horn. Mr. Eaton.

Mr. EaTon. Same here.

Mr. Horn. All right. If we get into the groove of relying on the
cutting edge of technology to guard against fraud in government
documents, is it likely we will have to reissue the tamper-resistant
documents in ever more sophisticated burgeons every few years?

Mr. MELTzER. If you pick the right technology, it’s upgradable,
as I mentioned about the smart. card,

Mr. Horn. And you think that’s the basic technology that needs
to be picked.

Mr. EATON. Well, I'd like to say something else. We are now
using a technology that is, in many areas, over 100 years old.

Mr. Horn. You mean fingerprint or——

Mr. EATON. With what is going on now, there will be improve-
ments, but I think much of it is upgradable. And the fact that we
are still using this very primitive technology—when my children
went to college, I decided they needed a birth certificate. So I called
Detroit, where two of them were born, they said, “Send us $2, the
name of the hospital where they were born, and their birth dates.”
I got their birth certificates. You could have gotten their birth cer-
tificates, too. And that’s still the way you can do it.


38

data bases on illegal and criminal illegal aliens with state criminal justice agencies
for enforcement of federal and state criminal laws. Why not make the same informa-
tion available to DMVs?

These persons should not be allowed to drive as well. They should not be able to
buy or make phoney IDs and other documents to rip us off and rob and steal and
traffic in illicit drugs.

Then employers could begin to rely on drivers licenses as a means of positive iden-
tification for job applicants, There would be little if any need for the other 28 docu-
ments authorized by the INS for applicants to present to the employer. This amaz-
ing array makes it virtually impossible for the responsible employer to comprehend
and sort out and make an informed judgement that the person applying is the per-
gon indicated on the supporting docimentation. Why not concentrate on the drivers
license?

EXCHANGE OF CRIMINAL HISTORY INFORMATION

In 1969 my former agency, LEAA, sponsored a demonstration effort in which a
group of six state criminal identification Froups came together to form a consortium
called Project Search. It was charged with the task of developing a standard format
for the criminal history record, or rap sheet, and then demonstrating the interstate
exchange of background information. At the same time, task forces were formed to
examine the questions of protection of privacy of individuals who were the subjects
of the records and to insure the security of the computer systems.

Today, some 25 years later, the consortium has become a non-profit organization
that includes all 50 states and federal representatives. Model state laws were for-
mulated and are now in place in all the states, although they are far from uniform.
Most repositories are automated, although millions of files are still to be converted.

In 1973 Congress authorized LEAA to issue regulations to govern the interstate
exchange of the records. This was to be an interim provision to be replaced by more
comprehensive legislation. In 1976, as Administrator, 1 issued the regulations. They
are still in effect today and seem to be working reasonably well. But they are only
as fed as the underlying law, and do not contain a statement of national policy
and priorities that should govern the exchange of rap sheet informativn.

In 1979, the FBI was authorized to begin a pilot project for “Triple 1”, the Inter-
state Identification Network, as part of its National Crime Information Center, for
the on-line exchange of rap sheet information utilizing a “pointer” or summary sys-
tem first developed in 1970 by Search Group.

BRADY GUN PURCHASER BACKGROUND CHECKS

In 1988, this authority was made permanent by the McCullom-Dole amendment
on that year’s crime bill, which authorized the FBI and triple I to establish a na-
tional instant system for checking the bona fides of prospective gun buyers. This
provision was incorporated into the 1993 Brady Act and the states were given five
years to set up the instant system. Meanwhile a national five day waiting period
was instituted in those states what were not in compliance.

Today, 26 states have their own instant systems or longer waiting periods or state
licensing laws. Another nine states must come into compliance before the five day
waiting period is sunsetted.

The Brady Act places an affirmative mandate on chief law enforcement officers
of local jurisdictions to perform background checks. In five states, led by Virginia,
the state police perform the checks for dealers who are “on line” in dial up networks.

Under the 1968 Gun Control Act, eight categories of persons are prohibited from
buying firearms, including convicted felons, illegal aliens and persons under 21 for
a handgun and 18 for a longgun.

Unfortunately, the Brady check is a “name” check only, except for gun dealers,
who must submit finge! rint cards. The name check is only £° as the driver's li-
conse or “commercial” identification presented by the would be gun buyer, Without
a physical or biometric verification of identity, as is contemplated in Section 609 L
of the Crime Control Act of 1984, the Brady check is only as good as the paper that
is presented to the dealer. The dealer should be able to determine if the drivers li-
cense is valid—that is not counterfeit, altered or expired and that the person stand-
ing there is the person to whom the license is issued.

hs a general rule, state and federal(FBI) criminal history repositories do not
charge for law enforcement requests for rap sheet information. However, for non-
Jaw enforcement inquiries such as employment checks various charges are made
which range from a few to as much as $30. Non-law enforcement uses of criminal
information systems now exceed law enforcement checks. Brady checks fall some-
where in between.



41

system, that that then would provide the security to that number
which could make these other registries work.

So we consider this to be a precondition of a number of other ef-
forts. But basically because people use the Social Security number
now when they obtain jobs, in order to have their Social Security
earnings counted, that therefore seemed to be the best place to deal
with the security issues up front.

Mr. Horn. Commissioner, as I understand it, the card simply
shows possibly that the person holding the card has that number
and that name. It doesn’t really prove, conclusively, I gather, that
the person is not an illegal alien, is not a felon, because they might
well have doctored all their identification. But I take it, with your
new systems you are checking birth certificates, which also can be
fraudulent.

I just wondered what you thought of the Commission’s rec-
ommendations and their comments about the Social Security sys-
tem. Are you as confident as, perhaps, they are?

Ms. CHATER. It is true that the number and the name must
match, and that’s really all you can tell when a card is presented.
I think we base the confidence in the system on the innovations
that have been made to the card, making it counterfeit-resistant,
while knowing that it can’t be totally counterfeit-proof.

But as a result of our enumeration at birth project, for example,
as time goes on, we would know that the person to whom the card
was given was indeed a newborn infant. And over time that would
be the way the cards were given, and we would know if anybod,
came forward and asked for verification of a number that had al-
ready been assigned to someone else.

Mr. Horn. If we had a single registry approach, relying primaril
on Social Security, would the most sensible way be to start with
those most recently issued and work our way back, in terms of base
documents, be it a birth certificate, or whatever, that we could
check against?

Ms. CHATER. Well, obviously, it is to our advantage, I think, to
start somewhere, as long as we understand that because there are
46 styles of Social Security cards in the hands of the 270 million
people who are currently active cardholders, there are always op-
portunities for someone to come forward with someone else’s num-
ber or, indeed, the number of someone, perhaps, who has passed
away, or through some other fraudulent method.

Mr. Horn. But isn’t it true that most of our illegal immigrations
occurred in the last two decades? So if we started with the new
cards, the new checking by Social Security personnel, of having to
verify birth certificates, some training, I gather from your testi-
mony, would be needed to know the difference between likely
fraudulent documents.

Ms. CHATER. Yes.

Mr. Horn. Wouldn’t it make sense to start with the most recent,
work our way back, replace those cards with one that we had a lit-
tle more confidence in, in which not only were the number and
name related, but the person behind it really was the person so
named in a birth certificate somewhere in the United States, or a
legal immigrant?

Ms, CHATER. Yes. You are right.