U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

31–575 2007

HEARING ON IMPACTS OF BORDER SECURITY AND 

IMMIGRATION ON WAYS AND MEANS PROGRAMS 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

SECOND SESSION 

JULY 26, 2006 

Serial No. 109–76 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

CHRIS CHOCOLA, Indiana 

DEVIN NUNES, California 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisory of July 19, 2006 announcing the hearing ............................................... 2 

WITNESSES 

Horn, Hon. Wade F., U.S. Department of Health and Human Services ............. 7 

Myers, Hon. Julie L., U.S. Department of Homeland Security ........................... 10 

Everson, Hon. Mark W., Internal Revenue Service .............................................. 16 

Barnhart, Hon. Jo Anne B., Social Security Administration ............................... 21 

Gustafson, Thomas A., U.S. Department of Health and Human Services ......... 27 

Fix, Michael, Migration Policy Institute ................................................................ 72 

Camarota, Steven A., Center for Immigration Studies ........................................ 80 

SUBMISSIONS FOR THE RECORD 

Carter, Hon. John R., a Representative in Congress from the State of Texas, 

statement .............................................................................................................. 99 

U.S. Citizenship and Immigration Services, U.S. Department of Homeland 

Security, statement .............................................................................................. 100 

(1) 

HEARING ON IMPACTS OF 

BORDER SECURITY AND IMMIGRATION ON 

WAYS AND MEANS PROGRAMS 

WEDNESDAY, JULY 26, 2006 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, DC. 

The Committee met, pursuant to notice, at 2:00 p.m., in room 

1100, Longworth House Office Building, Hon. Bill Thomas (Chairman of the Committee) presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 

July 19, 2006 

FC–25 

Thomas Announces Hearing on 

Impacts of Border Security and 

Immigration on Ways and Means Programs 

Congressman Bill Thomas (R–CA), Chairman of the Committee on Ways and 

Means, today announced that the Committee will hold a hearing to review the impact of current and proposed border security and immigration policies on programs 

in the Committee’s jurisdiction. The hearing will take place on Wednesday, 

July 26, 2006, in the main Committee hearing room, 1100 Longworth House 

Office Building, beginning at 2:00 p.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

Immigrants to the United States are an essential part of the fabric of our nation. 

They contribute to our economy and participate in our society in countless ways as 

they work, pay taxes, raise their families, and utilize many of the same public services and benefits that are available to all Americans. 

However, lax border security and inadequate enforcement of immigration laws 

has contributed to a substantial increase in illegal immigration. Since the last major 

immigration reform legislation was enacted twenty years ago—the Immigration Reform and Control Act of 1986 (P.L. 99–603)—the estimated number of illegal immigrants in the United States has nearly quadrupled, from 3.2 million in 1986 to 12 

million in 2006. Illegal immigration and proposals to address it affect our Nation’s 

benefit programs, health care costs, and tax system. 

Under current law, immigrants living in the United States are required to pay 

taxes; however, illegal immigrants may not obtain benefits from many entitlement 

programs or utilize certain tax advantages. For non-citizens living legally in the 

United States, access to many benefits is restricted, based on their immigration status. Therefore, legislative proposals that would legalize certain illegal immigrants 

or increase legal immigration would result in increased spending for Social Security, 

Medicare, other benefit programs, and for refundable tax credits, including the 

Earned Income Tax Credit. These legislative proposals would also increase revenue 

from taxes paid by new immigrants who start working in the United States or 

newly-legalized immigrants who want to come into compliance with the law. 

The lure of employment opportunities in the United States has long been acknowledged as a significant incentive for immigration. Enforcing the law prohibiting 

employers from knowingly hiring illegal workers is essential to securing our borders. 

Many Federal agencies play a role in identifying unauthorized work or penalizing 

employers who hire illegal immigrants, including the Social Security Administration 

(SSA) and the Internal Revenue Service. Some legislative proposals would require 

employers to check the SSA and the U.S. Department of Homeland Security databases to verify employees’ identifying information and employment eligibility, and 

would expand data sharing between agencies to improve enforcement of immigration laws. Although these proposals would assist in bolstering workplace enforcement if enacted, they would also place administrative burdens on employers and the 

3 

SSA. In addition, these proposals affect the privacy of tax information and could discourage voluntary tax law compliance. 

In announcing the hearing, Chairman Thomas said, ‘‘Our first priority is to secure 

our borders and enforce our laws. Next, we must carefully consider how proposals 

to modify immigration policy, including those that would legalize millions of illegal 

immigrants, would affect Social Security and other benefit programs, our health 

care system and tax revenues. The actions we take today will have a profound impact on America’s economy and society, and we must take the time to do it right. 

We need a comprehensive, long-term solution that recognizes the important role immigrants play in our society and economy, while ensuring there is respect for the 

rule of law.’’ 

FOCUS OF THE HEARING: 

This hearing will focus on the effect of immigration and border security-related 

proposals on the costs and administration of certain entitlement programs within 

the jurisdiction of the Committee on Ways and Means (including Social Security, 

Supplemental Security Income, Medicare, Temporary Assistance for Needy Families), and the effect on tax revenues and compliance. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘109th Congress’’ from the menu entitled, 

‘‘Hearing Archives’’ (http://waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing for which you would like to submit, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, completing all informational forms and clicking ‘‘submit’’ on the 

final page, an email will be sent to the address which you supply confirming your 

interest in providing a submission for the record. You MUST REPLY to the email 

and ATTACH your submission as a Word or WordPerfect document, in compliance 

with the formatting requirements listed below, by close of business Wednesday, August 9, 2006. Finally, please note that due to the change in House mail policy, the 

U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225– 

1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons, and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

4 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

Chairman THOMAS. Good morning. Actually, it tells you where 

I’ve been and what I’ve been doing. Good afternoon. 

Time flies when you’re having fun. I apologize for starting the 

hearing just a few minutes late, but the subject matter, I think, is 

important because the Committee will examine the impact of immigration on programs in this Committee’s jurisdiction. This hearing 

is part of a broader effort to enact meaningful immigration reform 

that clearly begins at our borders. 

The House and the Senate approved very different immigration 

bills in recent months. Both bills contain an important issue in the 

Committee’s jurisdiction, namely, the system by which employers 

would verify the employment eligibility of their employees. The 

Senate bill also includes other provisions within the jurisdiction of 

this Committee. 

Today what we’re going to try to do is to begin with a broad look 

at the effect of illegal immigration and its impact on our Committee jurisdiction to focus on modifying whatever proposals we 

deal with, to be able to maximize those agencies and Departments 

that are going to need to administer whatever it is that the House 

and the Senate finally agree to do. 

The last time, and some folks weren’t here, the last time Congress addressed immigration reform was in the eighties, and it was 

clear that, because of what I believed to be fundamental flaws in 

the legislation, ultimately that effort did not stem the tide of illegal 

immigration, and produced, I believe, certain adverse effects that, 

through experience, we don’t want to repeat. 

Clearly there were unanticipated consequences at time. What 

we’re going to try to do through these and other hearings is to minimize the chance of that occurring. So, here we are again considering how to reform our laws, and how to better enforce our borders, and at the same time, insure our economy. This, I assume, 

is a point that people will not argue, that our economy has a sufficient workforce to maintain the country’s economic growth. 

It goes without saying that this country was built by immigrants, 

with enormous contributions from Native Americans. Today, still, 

immigrants are a critical part of our Nation’s history and our economy, and, frankly, I would say they are an important part of our 

psyche, in terms of a land of opportunity. 

Part of the problem, though, is that a Nation State can’t really 

be a Nation State if it cannot provide external security and internal order. The internal order starts at the border. Our inability to 

enforce the security of our own laws has contributed to a significant increase in illegal immigration. The amount of that increase 

is, in large part, in question, and it’s obvious, overwhelmingly, illegal immigrants come here because they want to work. 

Ultimately, in dealing with Mexico, for example, the solution is 

to create an economic environment in Mexico, so that the citizens 

5 

of that country come here to visit because they want to, not because they have to. Some of them even pay taxes. Some of them 

are, frankly, exploited. Frankly, some of them exploit America’s 

public programs. One of the things we want to examine is try to 

get facts out of an awful lot of myth that exists in terms of who 

uses resources and to what extent. 

All of these are issues that should be examined. We obviously 

have to strike some kind of a balance that understands the role of 

immigrants. It will go so far as to examine the current laws in 

which immigrants are legally admitted, as well as dealing with 

issues trying to address illegal immigration. 

Respect for the law is extremely important, but good stewardship 

of public benefit programs is as important, as well. This general 

hearing is hopefully going to produce either some additional Subcommittee hearings or more focused hearings on the part of the full 

Committee in the direction of those areas of jurisdiction of the Subcommittees that would allow us to shed some light. 

With that, I recognize the gentleman from New York, Mr. Rangel, for any opening statement he may wish to make. 

Mr. RANGEL. Thank you, Mr. Chairman. 

First of all, when you talked about the contributions of immigrants and Native Americans, you excluded the slaves, which, in 

some of our opinions, without that free labor, the economy—the 

country and the economy could not have survived. I know—— 

Chairman THOMAS. Chairman. Yield? 

Mr. RANGEL. Yes? 

Chairman THOMAS. He’s absolutely correct, and the Chair appreciates the correction. 

Mr. RANGEL. Thank you. When I heard that we were going to 

join the rest of the House Committees to talk about border security, 

I could not think that you could have been as creative as you are 

now. 

So, with this distinguished panel, may not have much to do with 

the political issue of border security, but it will be helpful for us 

to determine the impact of the various bills that are being debated 

in the House and the Senate. One bill, of course, will just build a 

fence, and the sum concept is just to have low-cost labor to come 

in, in order to help out the recreational, and the entertainment, 

and the agriculture Committees, and, I guess, others. Others is a 

combination of both. 

So, I guess we will find out from each of you what would the economic impact be on the programs under your jurisdiction. Mr. 

Everson, I am concerned with how we’re going to tax whichever 

group of people are allowed to become legal, and also concerned as 

to whether or not immigration policy, as it exists today, whether 

or not is there’s any investigation of those people that hire illegals 

on a large scale. 

I have the impression that we are really inviting people to come 

into the United States by giving them jobs. Know where they work 

and what they do, and we know how essential that service is. 

Knowing how sharp the Internal Revenue Service (IRS) is in trying 

to get illegals to pay taxes, I’d be interested to know what effort, 

if any, is ever made to determine from employers whether or not 

the employees are illegal, or should they be paying taxes, and then 

6 

what would happen if they did come in under one of the programs, 

whether we could get some taxes from them if they had this quasilegal position. 

So, this is going to be very, very interesting, and I thank the 

Chair for his imagination. I was really prepared to deal with terrorists crossing the borders, but this may be more substantive, 

even though it won’t have anything to do with border security, to 

find out just where the Administration is on all of this, and what 

the impact is going to be, and, perhaps, get some of your recommendations and suggestions as to which one of the programs 

you might think would be best for America as you see it. I yield 

back the balance of my time, Chairman Thomas. 

Chairman THOMAS. Thank you, gentleman. I do want to remind 

my colleague from New York that, although these hearings 

shouldn’t be used for personal reasons, the Chairman voted ‘‘No’’ 

on the House bill, and I believe the structure of the Senate bill is 

not implementable the way it’s structured. If we are honestly going 

to address the issue, I think we have to examine the contents of 

the House bill and the Senate bill to make sure that when we act 

we act in a way that we can actually address the problem, instead 

of some kind of a political response to a very real human and economic problem. 

I just want to put it on that basis, because it was very difficult, 

as you might imagine, for the Chairman of the Committee on Ways 

and Means to vote ‘‘No’’ on the House proposal. So, I understand, 

and I don’t mean this in a totally pejorative sense, a degree of cynicism on the part of folks in terms of what we’re doing. As far as 

I’m personally concerned, I’m looking for answers, and this hearing 

is structured, and I think other hearings may need to be structured 

if we can’t get some answers out of this hearing, to be able to move 

forward in trying to resolve this issue, since so much of the impact 

of the question does hit the jurisdiction of this Committee. 

Gentleman from New York. 

Mr. RANGEL. I think you may have answered it, but I think 

you’re joining with me in saying that this panel could help clarify, 

for members that are here, as to which one of the pending bills or 

concepts would be best for the country, after we hear their answers. 

Chairman THOMAS. My goal, primarily, would not be to try to 

pick between pieces of legislation, one of which I expressed in a 

vote that I thought was flawed, and, I’ve just indicated verbally to 

you, the other one probably doesn’t work, either. 

I want to hear from the people who are responsible for implementing programs about the impact of illegal immigration on those 

programs, what they might have as a response to dealing with 

some of those issues, but also beginning to address the more fundamental conflict that we have in this system, where we’re to a very 

great degree schizophrenic, as the gentleman from New York indicated, in which we say we’re not supposed to hire illegals, but, 

frankly, as the President said over and over again, especially in 

certain industries, we can’t function without illegals, and I think 

that’s schizophrenic. 

I think we have to be honest in addressing what options we have 

in front of us that are real, that will assist us in moving forward 

7 

in as humanitarian way as possible in resolving the fact that the 

United States does not have control of its borders. 

Mr. RANGEL. Thank you. 

Chairman THOMAS. Thank you. I want to thank the panel for 

being here, and I hope that additional response, if you weren’t 

quite clear on what we wanted to do, was to begin a process, which, 

as I said, may require additional hearings, and, in large part, relying on what you have to say, may indicate where we have to go. 

The first member, and I’ll just go from our left to your right, 

Hon. Wade F. Horn, Assistant Secretary for Children and Families, 

U.S. Department of Health and Human Services; Hon. Julie Myers, 

Assistant Secretary for U.S. Immigration and Customs Enforcement (ICE), U.S. Department of Homeland Security (DHS); Hon. 

Mark W. Everson, Commissioner, IRS; the Hon. Jo Anne Barnhart, 

Commissioner, Social Security Administration (SSA); and my friend 

Tom Gustafson, Deputy Director, Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services. 

We will have a second panel following this panel. Your testimony 

has been submitted and made a part of the record, and you may 

address us in any way you see fit in the time that you have. We’ll 

start with you, Mr. Horn, and then we’ll just move across the 

panel. 

STATEMENT OF THE HONORABLE WADE F. HORN, ASSISTANT 

SECRETARY FOR CHILDREN AND FAMILIES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Mr. HORN. Thank you, Mr. Chairman. Mr. Chairman, Mr. Rangel, and Members of the Committee, I am very pleased to appear 

before you today to discuss benefits to immigrants under the Temporary Assistance for Needy Families (TANF) program. The TANF program, as you know, is a $16.5 billion block grant 

program designed to provide temporary assistance to those in need 

and to help move recipients to work. 

Eligibility of immigrants for TANF is restricted by broader provisions in the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) that cover the eligibility of non-citizens 

for a public benefit. Under the statute, eligibility for Federal TANF 

welfare benefits is limited to a select group of legal immigrants. 

These qualified immigrants consist of lawful, permanent residents, asylees, refugees, aliens paroled into the United States for 

at least 1 year, aliens whose deportations are being withheld, 

aliens granted conditional entry, Cuban and Haitian entrants, and 

aliens who, or whose children or parents, have been battered or 

subjected to extreme cruelty in the United States by a member of 

their household. Victims of severe forms of trafficking and certain 

family members also are eligible to the same extent as refugees. 

States must verify that the applicant or recipient of a Federal 

TANF welfare benefit has the necessary qualified immigration status to ensure eligibility for the benefit. Moreover, under PRWORA, 

most legal immigrants entering the country on or after August 22, 

1996 are barred for their first 5 years as a qualified alien from receiving any Federal TANF means-tested welfare benefit. 

Legal immigrants who are eligible to receive Federal TANF assistance under these statutory provisions comprise a very small 

8 

portion of the TANF population. Our most recent data, for fiscal 

year 2004, show that eligible, qualified immigrants make up only 

about 2.1 percent of the total recipient population of 4.8 million individuals. 

For lawful, permanent residents who immigrated through a family member or through employment with a close relative, the sponsor must sign a legally enforceable Affidavit of Support. If the 

sponsored lawful permanent resident applies for a Federal TANF 

welfare benefit after expiration of the five-year bar, the State must 

consider or deem the income and resources of the sponsor and 

sponsor’s spouse as available to the lawful permanent resident 

when determining eligibility for the payment of the benefit. 

Under most circumstances, this requirement would result in a 

determination of ineligibility for TANF benefits. Moreover, in signing the Affidavit, the sponsor agrees to assume liability for the 

non-reimbursed cost of any Federal TANF welfare benefit that the 

sponsor or lawful permanent resident actually receives. 

States can assist aliens who are not lawfully present in the 

United States in two very limited ways. First, States may use their 

Federal or State funds to help with the cost of providing any noncitizen with an emergency non-cash benefit necessary for the protection of life or safety. Second, States may use their own State 

funds to provide a particular welfare benefit, but only if the State 

has enacted a law after August 22, 1996 that allows for such eligibility. To my knowledge, no State has passed such a law. 

However, certain parents of children born in the United States, 

including both legal immigrants who have not satisfied their fiveyear waiting period and undocumented aliens, can and do apply for 

TANF assistance on behalf of their U.S. citizen children. In fiscal 

year 2004, a national total of 426,098 families were classified as 

child-only assistance cases for the parent in the household, meaning that only the needy child and not the parent, received assistance. About 35.6 percent of these cases included parents of unknown citizenship or alien status. Given that the parent or other 

caretaker relative is neither an applicant nor a recipient, the State 

is not required to verify his or her citizenship or immigration status. 

Of course, States may use their own funds to provide State-funded TANF assistance to an immigrant family who is subject to the 

five-year bar. So, for example, if a legal immigrant subject to this 

bar gave birth in the United States, then the State could provide 

assistance to the U.S. citizen child using Federal TANF funds, and 

provide the mother’s share of assistance using State funds. 

I hope my testimony helps to clarify the treatment of immigrants 

and undocumented aliens under the TANF program, and I look forward to your questions. 

[The prepared statement of Mr. Horn follows:] 

Statement of The Honorable Wade F. Horn, Assistant Secretary for 

Children and Families, U.S. Department of Health and Human Services 

Mr. Chairman, Mr. Rangel, and members of the Committee, I am pleased to appear before you today to discuss the policy regarding provision of benefits to immigrants under the Temporary Assistance for Needy Families (TANF) program. 

The TANF program is a $16.5 billion block grant program to provide temporary 

assistance to those in need and to help move recipients to work. Since the enactVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
9 

ment of the original welfare reform law in 1996, welfare rolls for families have declined by 57 percent. The most recent caseload numbers show that 1,870,039 families remain on the TANF rolls. In fact, there are fewer families on welfare than at 

any time since 1969. 

It is worth noting that the immigrant eligibility restrictions are not part of the 

TANF law or unique to the TANF program. Rather, the restrictions are free-standing provisions that cover the eligibility of non-citizens for a public benefit, and were 

originally enacted via title IV of the Personal Responsibility and Work Opportunity 

Reconciliation Act of 1996 (PRWORA) and subsequent amendments. The statutory 

provisions for the TANF program simply refer to these ‘‘special rules relating to the 

treatment of certain aliens.’’ 

Currently the statute limits eligibility for Federal TANF welfare benefits to a select group of legal immigrants. These ‘‘qualified’’ immigrants consist of: lawful permanent residents, asylees, refugees, aliens paroled into the United States for at 

least one year, aliens whose deportations are being withheld, aliens granted conditional entry, Cuban/Haitian entrants, and aliens who (or whose children or parents) 

have been battered or subjected to extreme cruelty in the U.S. by a member of their 

household. Victims of severe forms of trafficking and certain family members also 

are eligible to the same extent as refugees. Thus, the law does not permit States 

to provide Federal TANF assistance to all non-citizens, even if the non-citizen otherwise meets the State’s TANF program eligibility requirements. States must verify 

that the applicant or recipient of a Federal TANF welfare benefit has the necessary 

qualified immigration status to ensure eligibility for the benefit. 

Under PRWORA, however, most legal immigrants entering the country on or after 

August 22, 1996 are barred for their first five years as a ‘‘qualified’’ alien from receiving any Federal TANF means-tested welfare benefit. The following qualified 

aliens are exempt from the 5-year bar: refugees, asylees, an alien whose deportation 

is being withheld, Cuban/Haitian entrants, Amerasians, and veterans, members of 

the military on active duty, and their spouses and unmarried dependent children. 

Legal immigrants who are eligible to receive Federal TANF assistance under 

these statutory provisions comprise a very small portion of the TANF population. 

Our most recent data, for FY 2004, show that eligible ‘‘qualified’’ immigrants make 

up about 2.1 percent (100,800) of the total recipient population of approximately 4.8 

million individuals. 

Moreover, for lawful permanent residents who immigrated through a family member or through employment with a close relative or for a firm in which the relative 

owns at least 5 percent, the sponsor must sign a legally enforceable Affidavit of Support. If the sponsored lawful permanent resident applies to receive a Federal meanstested TANF welfare benefit after expiration of the 5-year bar, then the State must 

consider, or ‘‘deem’’ the income and resources of the sponsor and sponsor’s spouse 

available to the lawful permanent resident when determining eligibility for and payment of the benefit. This deeming requirement lasts until the sponsored immigrant 

becomes a citizen or has 10 years (40 qualifying quarters) of work covered by the 

Social Security Administration. Under most circumstances this requirement would 

result in a determination of ineligibility for TANF benefits. 

In signing the Affidavit, the sponsor agrees to assume liability for the non-reimbursed cost of any Federal means-tested TANF welfare benefit that the sponsored 

lawful permanent resident actually receives. In some situations, the family may still 

be eligible to receive a TANF benefit. This is because each State may formulate its 

own methodology, including any applicable disregards, for determining the amount 

of income and resources of the sponsor and the sponsor’s spouse to deem to the 

sponsored lawful permanent resident. Thus, if the sponsored individual receives a 

Federal means-tested TANF welfare benefit, the TANF agency may seek reimbursement from the sponsor by following the procedural requirements given in the Department of Homeland Security, U.S. Citizenship and Immigration Services’ regulations. 

States can assist aliens who are not lawfully present in the U.S. (undocumented 

aliens) in two very limited ways. First, States may use their Federal or State funds 

to help with the cost of providing any non-citizen with an emergency non-cash benefit necessary for the protection of life or safety. Examples of non-cash benefits include soup kitchens, shelters for the homeless and victims of domestic violence, child 

protective services, and crisis counseling. Second, States may use their own State 

funds to provide a particular welfare benefit only if the State has enacted a law 

after August 22, 1996 that allows for such eligibility. To my knowledge, no State 

has passed such a law. 

However, certain parents of children born in the U.S., including both legal immigrants who have not satisfied their five-year waiting period and undocumented 

aliens, can and do apply for TANF assistance on behalf of their U.S. citizen chilVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
10 

dren. Because the child is a U.S. citizen, the child may receive Federal TANF benefits to the same extent as any other U.S. citizen. In fiscal year 2004, a national total 

of 426,098 families were classified as child-only assistance cases with a parent in 

the household, meaning that only the needy child, and not the parent, received assistance. About 152,000 or 35.6% of these cases included parents of unknown citizenship or alien status. The parents or caretakers of these children may be legal 

but unqualified immigrants, qualified immigrants subject to the 5-year bar on receipt of Federal TANF assistance, or undocumented aliens. Because the parent or 

other caretaker relative is neither an applicant nor a recipient, the State is not required to verify his/her citizenship or immigration status. 

Of course, states may use their own funds to provide State-funded TANF assistance to an immigrant family member who is subject to the 5-year bar. So, for example, if a legal immigrant subject to this bar gave birth in the United States, then 

the State could provide assistance for the U.S. citizen child using Federal TANF 

funds and provide the mother’s share of assistance using State funds. 

In closing, I appreciate the committee’s interest in this topic. I hope my testimony 

clarified the treatment of legal immigrants and undocumented aliens under the 

TANF program. I would be happy to answer any questions. 

f 

Mr. MCCRERY. Thank you, Mr. Horn. Ms. Myers. 

STATEMENT OF THE HONORABLE JULIE MYERS, ASSISTANT 

SECRETARY, U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY 

Ms. MYERS. Thank you. Ranking Member Rangel, Members of 

the Committee, I appreciate the opportunity to discuss with you 

what ICE is doing to enhance worksite enforcement. 

As we’re all well aware, the magnet of employment fuels illegal 

immigration. Accordingly, worksite enforcement is a top priority for 

the Department and the Administration. With this in mind, the 

Administration has proposed a comprehensive overhaul of the employment verification and employer sanctions program in the Immigration and Nationality Act (INA) (P.L. 82–414) as part of the 

President’s call for comprehensive immigration reform. 

Already, as the enforcement arm in this area, we are attempting 

to apply a key lesson learned from the 1986 bill. The enactment of 

the Immigration Reform and Control Act (IRCA) (P.L. 99–603) 

placed the focus of enforcement on administrative employer sanctions. As a result, employer audits typically resulted in serving 

businesses with a Notice of Intent to Fine. Egregious violators of 

the law viewed the resulting, low and often mitigating fines as simply a cost of doing business, and therefore the system did not serve 

as a true, economic inducement for them to change their business 

model. Today, however, ICE has begun to change the culture of illegal employment by pursing the most egregious employers of illegal workers. We’re educating the private sector to institute best 

hiring practices and garnering its support in identifying systemic 

vulnerabilities. Of course, a large part of our effort continues to 

focus on preventing access to critical infrastructure sectors to prevent terrorism. 

Just to be clear, we’re finding that most employers want to do 

the right thing. Sometimes they just need more assistance or more 

help on how to follow the rules. With this in mind, we have stepped 

up our efforts to educate employers about best hiring practices. 

In fact, just this morning, we launched a new, voluntary program 

aimed at strengthening overall hiring practices in the workplace. 

11 

This program is called the ICE Mutual Agreement between Government and Employers (IMAGE), and this emphasizes enhanced 

employer compliance through corporate due diligence, training, and 

sharing of best practices. 

This program provides employers ways to prevent immigration 

violations. It also answers the need or the call that we’ve heard for 

clear standards of good conduct for employers by asking them to 

take certain reasonable steps, including reviewing employee documents, using the electronic verification system, and retaining all 

documents relevant to their employee’s eligibility to work. ICE has 

also provided additional training and tools on its website to help 

all employers avoid violations. 

As I mentioned, part of our approach also includes supporting 

felony charges, and not just the traditional misdemeanor worksite 

violations under section 274(a) of the INA. Let me give you some 

examples of what I mean by that. 

In April 2006, ICE conducted the largest such worksite enforcement operation ever undertaken. This case involved IFCO Systems. 

In that case, we executed nine Federal arrest warrants, eleven 

search warrants, and forty-one consent search warrants at IFCO 

worksite locations throughout the United States. In addition, ICE 

agents apprehended over 1,100 unauthorized workers, and charged 

nine employees at IFCO with conspiracy to transport, and harbor 

unlawfully, illegal aliens for financial gain. 

In another recent worksite case investigation in Baltimore, Maryland, owners of three restaurants, who were really abusing illegal 

aliens, treating them poorly and harboring them in an apartment 

above their house, pled guilty to conspiracy to commit alien harboring and conspiracy to gain in monetary transactions with criminally derived property. At the end of the day, they forfeited over 

a million dollars. 

Now under the old Immigration and Naturalization Service ways, 

they would have been fined approximately $4,000 to $30,000, and 

that’s even before the fines were mitigated. We believe that charging criminally these most egregious employers who hire undocumented aliens will create the kind of deterrence that previous enforcement efforts did not generate. We are also identifying and 

seizing the assets that employers derive from knowingly employing 

illegal workers, in order to remove the financial incentive to hire 

unauthorized workers and to pay them substandard wages. 

We are also working with the Department of Justice and other 

agencies, including the SSA, to crack down on the widespread use 

and acceptance of fraudulent identification documents. To that end, 

we’ve launched, throughout the country, taskforces, document and 

benefit fraud taskforces, that really target these efforts. 

What more do we need? We need several things. First, we need 

more regulated access to Social Security no-match data; second, a 

new and improved process for issuing civil fines; and third, more 

resources, as requested in the President’s 2007 budget. 

We’re working diligently to partner with industry and to solve 

this problem, and I look forward to answering your questions on 

this important issue. Thank you. 

[The prepared statement of Ms. Myers follows:] 

12 

Statement of The Honorable Julie L. Myers, Assistant Secretary, U.S. 

Immigration and Customs Enforcement, U.S. Department of Homeland 

Security 

CHAIRMAN THOMAS, RANKING MEMBER RANGEL AND MEMBERS OF 

THIS COMMITTEE, it is an honor for me to testify before you today on what the 

Department of Homeland Security and U.S. Immigration and Customs Enforcement 

(ICE) are doing to enhance worksite enforcement of immigration laws. 

INTRODUCTION 

Worksite enforcement is a top priority for the Department and the Administration. In a recent speech before the U.S. Chamber of Commerce, the President said, 

‘‘A comprehensive reform bill must hold employers to account for the workers they 

hire. It is against the law to hire someone who is in the country illegally. Those 

are the laws of the United States of America, and they must be upheld.’’ While the 

border attracts substantial attention, we must expand our focus if we are going to 

bring illegal immigration under control. A comprehensive solution is necessary because illegal immigrants are living and working throughout the nation, in every 

state and in many different industries. With this in mind, the Administration has 

proposed a comprehensive overhaul of the employment verification and employer 

sanctions program in the Immigration and Nationality Act as part of the President’s 

call for comprehensive immigration reform. With its extensive authorities and experienced investigators, ICE is qualified to carry out this comprehensive reform and 

is already achieving great success in the investigation and prosecution of employers 

engaged in the hiring of illegal aliens. 

Among the DHS law enforcement agencies, ICE has the most expansive investigative authority and the largest force of investigators. Our mission is to protect our 

Nation and the American people by targeting the people, money and materials that 

support terrorist and criminal activities. The men and women of ICE accomplish 

this by investigating and enforcing the nation’s immigration and customs laws. 

Working throughout the nation’s interior, together with our DHS and other federal 

counterparts and with the assistance of state and local law enforcement entities, 

ICE has begun to change the culture of illegal employment across the country by 

pursuing the most egregious employers of illegal workers. ICE is educating the private sector to institute best hiring practices and garnering its support in identifying 

systemic vulnerabilities that may be exploited to undermine immigration and border 

controls. A large part of our worksite enforcement efforts focuses on preventing access to critical infrastructure sectors and sites to prevent terrorism and to apprehend those individuals who aim to do us harm. 

In short, our agents and investigators are enforcing the immigration laws of this 

country on a daily basis. However, if we do not make greater strides in this area, 

immigrants will continue to risk their lives for the prospect of a well-paying job in 

this country, often by turning to smugglers who exploit and force them to live in 

the shadows once they arrive. 

LESSONS FROM THE 1986 IRCA 

ICE knows the shortcomings of the IRCA and I believe it will be beneficial to provide a quick historical review of worksite enforcement under this Act. 

To varying degrees and during specific time periods, the immigration investigators focused on worksite violations by devoting a large percentage of its investigative 

resources to enforce the administrative employer sanctions provisions of IRCA. The 

resulting labor-intensive inspections and audits of employment eligibility documents 

only resulted in serving businesses with a Notice of Intent to Fine (NIF) or a compliance notice. Issuing monetary fines that were routinely mitigated or ignored had little to no deterrent effect. Not only were the results far from effective, the process 

involved endless attorney and agent hours in discovery and litigation to adjudicate 

and resolve cases. Egregious violators of the law viewed the fines as just a ‘‘cost of 

doing business’’ and therefore the system did not serve as a true economic inducement for them to change their business model. 

Moreover, while IRCA required employers to review identity documents demonstrating employment eligibility, its compliance standard rendered that requirement meaningless and essentially sheltered employers who had hired unauthorized 

aliens. Under the 1986 law, an employer could comply with the eligibility 

verification process so long as the document evidencing the employee’s authorization 

to work reasonably appeared to be genuine. Employers were not required to verify 

the validity of a document and were not required to maintain a copy of the documents that they reviewed. The ability of the employer to rely on the facial validity 

of a single document and the lack of any available evidence regarding the document 

routinely prevented the government from proving that the employer knew the emVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
13 

ployee was not authorized to work. Thus, the law should reasonably require the employer to review and retain copies of relevant documents and information obtained 

during the verification process, as well as during the subsequent employment of a 

worker. It should also not allow unscrupulous employers to be ‘‘willfully blind’’ to 

highly questionable documents or other facts indicative of unauthorized status. 

Another detrimental result of the documentation compliance standard established 

under IRCA was an explosive growth in an increasingly profitable false document 

industry catering to undocumented workers seeking employment. 

A NEW APPROACH TO WORKSITE ENFORCEMENT 

ICE’s current worksite enforcement strategy is a comprehensive layered approach 

that focuses on how illegal aliens get to our country, the ways in which they obtain 

identity documents allowing them to become employed, and the employers who 

knowingly hire them. 

The ICE worksite enforcement program is just one component of the Department’s 

overall Interior Enforcement Strategy and is a critical part of the Secure Border Initiative. A thorough and comprehensive worksite enforcement program is paramount 

to DHS’s goal of changing the culture of illegal employment in the United States. 

To that end, the Administration has outlined a proposal that would give DHS the 

tools it needs to effectively enforce employment immigration laws. 

Worksite enforcement incorporates a multitude of investigations and crimes, as illustrated below. Using this approach, ICE worksite investigations now support felony charges and not just the traditional misdemeanor worksite violations under Section 274A of the Immigration and Nationality Act. Let me give you some examples 

to explain what I mean. 

Of course, a key component of our worksite enforcement efforts targets the businesses and industries that deliberately profit from the wholesale employment of illegal aliens. In April of 2006, ICE conducted the largest such worksite enforcement 

operation ever undertaken. This case involved IFCO Systems, a Houston-based company. ICE agents executed 9 federal arrest warrants, 11 search warrants, and 41 

consent searches at IFCO worksite locations throughout the United States. In addition, ICE agents apprehended 1,187 unauthorized workers at IFCO worksites. This 

coordinated enforcement operation also involved investigative agents and officers 

from the Department of Labor, Social Security Administration, the Internal Revenue 

Service, and the New York State Police. The criminal defendants have been charged 

with conspiracy to transport and harbor unlawful aliens for financial gain (8 U.S.C. 

Section 1324 and 18 U.S.C. Section 371), as well as fraud and misuse of immigration documents (18 U.S.C. 1546). 

In a recent worksite enforcement investigation in Baltimore, Maryland, owners of 

three restaurants pled guilty to conspiracy to commit alien harboring and conspiracy 

to engage in monetary transactions with criminally derived property; a fourth owner 

pleaded guilty to employment of illegal aliens. The defendants also agreed to forfeit 

to the United States approximately $1.1 million in assets. Historically, agents were 

tasked with carrying out worksite enforcement investigations by utilizing administrative tools. In similar criminal investigations, agents typically would have conducted a Form I–9 inspection to determine whether the employer was in compliance 

with IRCA. If investigators identified unauthorized workers in the course of the inspection, an enforcement operation would often follow. Upon apprehension, the 

workers’ statements would serve as evidence of possible ‘‘knowingly hired’’ violations. Under this old way of doing business, the fine imposed on the owners of the 

restaurants would have ranged from approximately $4,000 to $33,000 before mitigation. 

Worksite enforcement includes critical infrastructure protection. Just last month, 

an ICE investigation apprehended 55 illegal aliens working at a construction site 

at Dulles International Airport. Effective homeland security requires verifying the 

identity of not just the passengers that board the planes, but also the employees 

that work at the airports. 

Worksite enforcement combats alien smuggling. In the last few months, we have 

made arrests at employment agencies that served as conduits between the criminal 

organizations that smuggle illegal aliens into this country and the employers that 

willfully employ them. 

Worksite enforcement also combats human trafficking. As the result of worksite 

enforcement actions, ICE has dismantled forced labor and prostitution rings, be it 

Peruvian aliens in New York or Chinese aliens in Maryland. The common threads 

are the greed of criminal organizations and the desire of aliens to come here to 

work. Human trafficking cases represent the most egregious forms of exploitation, 

as aliens are forced to work and live for years in inhumane conditions to pay off 

the debt they incur for being smuggled into the country. 

14 

Worksite enforcement involves financial crimes, commercial fraud, export violations, and trafficking in counterfeit goods. ICE enforcement efforts use our legacy 

authorities to fully investigate these offenses that involve the employment of illegal 

aliens to promote and further these other crimes. As an example, earlier this month 

ICE agents in Florida arrested two individuals pursuant to an indictment charging 

them with operating an illegal money service business in violation of Title 18, 

United States Code, Section 1960. This investigation discovered that local construction companies were utilizing an illegal money service business to pay illegal aliens 

for construction work. 

By careful coordination of its detention and removal resources and its investigative operations, ICE is able to target the organizations unlawfully employing illegal 

workers, as well as detain and expeditiously remove the illegal workers encountered. For example, in a recent case in Buffalo, New York, involving a landscape 

nursery, 34 illegal workers were apprehended, detained and voluntarily repatriated 

to Mexico within 24 hours. 

This sends a strong message to both the illegal workers here and to foreign nationals in their home countries that they will not be able to just move from job to 

job in the United States once ICE shuts down their employer. Rather, they will be 

detained and promptly deported. 

Another recent example of our worksite efforts occurred in May of 2006, when 85 

unauthorized workers employed by Robert Pratt and other sub-contractors for Fischer Homes, Inc., were arrested as part of another ICE-led joint federal, state and 

local investigation. In this case the targets of the investigation knowingly harbored, 

transported and employed undocumented aliens. Five supervisors were arrested and 

charged with harboring illegal aliens. (8 U.S.C. Section 1324). 

What impact will this have? Criminally charging employers who hire undocumented aliens will create the kind of deterrence that previous enforcement efforts 

did not generate. We are also identifying and seizing the assets that employers derive from knowingly employing illegal workers, in order to remove the financial incentive to hire unauthorized workers and to pay them substandard wages. 

To be clear, the magnet of employment is fueling illegal immigration, but the vast 

majority of employers do their best to comply with the law. With this in mind, ICE 

has developed a voluntary corporate outreach program aimed at strengthening overall hiring practices in the workplace. This outreach program will emphasize enhanced employer compliance through corporate due diligence, training and sharing 

of best practices. This program provides employers ways to prevent immigration violations in their and work toward changing the culture of tolerance for those who 

employ illegal workers. The program will answer the need for clear and reasonable 

standards of good conduct for employers by asking them to take certain reasonable 

steps, including reviewing employee documents, using the electronic verification system and retaining all documents relevant to their employees’ eligibility to work. Employers who are shown to have hired a significant number of unlawful aliens in a 

year, notwithstanding these tools to verify employee eligibility, should be presumed 

to have knowingly hired these individuals. We also need to ensure that employers 

cannot use contract arrangements to separate themselves from complicity in the illegal hiring of their contractors, which can be accomplished through a tightening of 

the rules. ICE has provided additional training and tools on its website to help employers avoid violations. 

Just as a chain is only as strong as its weakest link, the employment process cannot permit the widespread use and acceptance of fraudulent identification documents. Accordingly, in April 2006, Deputy Attorney General Paul McNulty and I announced the creation of ICE-led Document and Benefit Fraud (DBF) Task Forces 

in 11 major metropolitan areas. These task forces focus on the illegal benefit and 

fraudulent document trade that caters to aliens seeking illegal employment. The 

DBF Task Forces are built on strong partnerships with entities such as U.S. Citizenship and Immigration Services, the Social Security Administration, the U.S. 

Postal Inspection Service and the Departments of State, Justice and Labor. The 

Task Forces identify, investigate and dismantle organizations that supply identity 

documents that enable illegal aliens, terrorists and other criminals to integrate into 

our society undetected and obtain employment or other immigration benefits. 

The House and Senate have both passed immigration legislation this Congress 

that include provisions authorizing a mandatory electronic employment eligibility 

verification system (EEVS) for all seven million U.S. employers. An Employment 

Verification Program managed by U.S. Citizenship and Immigration Services that 

includes all U.S. employers, monitoring and compliance functions, and a fraud referral process, can help deter and detect fraud by both employers and employees. As 

currently envisioned, EEVS will include robust systems monitoring and compliance 

functions that will help detect and deter the use of fraudulent documents, imposter 

15 

fraud, and incorrect usage of the system by employers (intentionally and unintentionally). EEVS also will promote compliance with correct program procedures. 

USCIS will forward enforcement leads to ICE, and the monitoring unit will scrutinize individual employers’ use of the system. It also will conduct trend analysis to 

detect potential fraud. Findings that are not likely to lead to enforcement action 

(e.g., the user has not completed training) will be referred to compliance officers for 

follow-up. Findings concerning potential fraud (e.g., Social Security numbers being 

run multiple times and employers not indicating what action they took after receiving a final non-confirmation) will be referred to ICE worksite enforcement investigators. It is essential that DHS have the authority to use information arising from 

the Employment Verification Program to enforce our Nation’s laws, including deterring and prosecuting fraud, and identifying and removing criminal aliens and other 

threats to public safety or national security. 

NEW TOOLS 

ICE has made substantial improvements in the way we investigate and enforce 

worksites. 

DHS supports several of the additional tools contained in pending legislation, and 

we look forward to working with Congress as it considers comprehensive immigration reform, including proposals to enhance worksite enforcement. 

NO-MATCH 

The Administration has sought the authority to have additional access to Social 

Security Administration no-match data to improve immigration enforcement. Greater access to no-match data would provide important direction to ICE investigators 

to target their enforcement actions toward those employers who have a disproportionate number of these no-matches, who have reported earnings for multiple employees on the same number and who are therefore more likely to be engaging in 

unlawful behavior. 

Additionally, provisions in current legislative proposals regarding document retention by employers, including evidence of actions taken by employers to resolve employment eligibility issues (e.g., SSA no-match letters), are crucial to worksite enforcement criminal prosecutions. Asking employers to retain documents for at least 

as long as the statute of limitations for these crimes is simply common sense. 

PROPOSED MODEL OF FINES AND PENALTIES 

Although criminal prosecution of egregious violators is our primary objective in 

worksite cases, a need exists for a new and improved process of issuing fines and 

penalties that carry a significant deterrent effect and that are not regarded as a 

mere cost of doing business. Only with a strong compliance program, combined with 

issuance of meaningful penalties, will the United States have an effective worksite 

enforcement program. 

The Administration has proposed a streamlined administrative fines and penalties 

process that gives the DHS Secretary the authority to administer and adjudicate 

fines and penalties. We would further purpose a penalty scheme that is based on 

clear rules for issuance, mitigation, and collection of penalties. 

As I have outlined in my testimony, ICE has made great strides in its worksite 

enforcement program and its efforts are part of a comprehensive strategy that focuses on several different layers of the problem simultaneously, including smuggling, document and benefit fraud, and illegal employment. 

ICE agents are working tirelessly to attack the egregious unlawful employment 

of undocumented aliens that subverts the rule of law. We are working more intelligently and more efficiently to ensure the integrity of our immigration system. 

Our responsibility at ICE is to do everything we can to enforce our laws, but enforcement alone will not solve the problem. Accordingly, the President has called on 

Congress to pass comprehensive immigration reform that accomplishes three objectives: strengthening border security, ensuring a comprehensive interior enforcement 

strategy that includes worksite enforcement, and establishing a temporary worker 

program. Achieving these objectives will dramatically improve the security of our infrastructure and reduce the employment magnet that draws illegal workers across 

the border, while eliminating the problems created by the 1986 law. 

ICE is dedicated and committed to this mission. We look forward to working with 

this Committee in our efforts to secure our national interests. I hope my remarks 

today have been helpful and informative. I thank you for inviting me and I will be 

glad to answer any questions you may have at this time. 

f 

16 

Mr. MCCRERY. Thank you, Ms. Myers. Mr. Everson. 

STATEMENT OF THE HONORABLE MARK W. EVERSON, 

COMMISSIONER, INTERNAL REVENUE SERVICE 

Mr. EVERSON. Chairman McCrery, Ranking Member Rangel, 

and Members of the Committee, I appreciate the opportunity to appear before you today to discuss the impact of immigration issues 

on tax administration. 

Let me first say that comprehensive immigration reform is a national priority. I say that as a former deputy commissioner of the 

Immigration and Naturalization Service. I understand firsthand 

the importance of a system of immigration that functions effectively. In fact, I oversaw the implantation of the Immigration Reform and Control Act. This included both the amnesty and the enforcement elements of that law. 

As commissioner of Internal Revenue, I am also sensitive to the 

interaction between the immigration system and the tax system. At 

the IRS, our job is to make sure that everyone who earns income 

within our borders pays the proper amount of taxes, whether that 

income is legally obtained, and whether the individual is working 

here legally. If someone is working without authorization in this 

country, he or she is not absolved of tax liability. 

The Subcommittees on Oversight and Social Security have held 

two hearings over the past 3 years on issues associated with Individual Tax Identification Numbers (ITINs) and the mismatch of 

SSNs and W–2 information. At those hearings, I testified about our 

Individual Taxpayer Identification Number (ITIN) program. 

Last year, over 2.5 million tax returns were filed that included 

an ITIN for at least one person listed on the return. To date, in 

calendar year 2006, we have received 1.6 million new applications 

for ITINs. That’s up 25 percent from this time a year ago. The IRS 

estimates that for tax periods 1996 to 2003 that the income tax liability for ITIN filers totaled approximately $50 billion. 

Of the 231,000,000 W–2s filed in Tax Year 2004 file, approximately 223,000,000 had matching names and SSNs. After analysis, 

there were about 7.9 million W–2s with no valid name and SSN 

match. 

There are two interesting aspects to the data mismatches. The 

first is geographical. Over 50 percent of the mismatches are found 

in four States: California, Texas, Florida, and Illinois. California 

has by far the greatest number of mismatches, totaling 2.3 million 

or approximately 29 percent of the mismatch total. The second is 

economic. Based on IRS’ own analysis, about 75 percent of all mismatched W–2s report wages of less than $10,000. 

Concerning employers, the SSA had no enforcement power and 

cannot impose penalties on employers for failure to correct SSN 

mismatches. The IRS, however, does have enforcement power, and 

can assess penalties. Under Section 6721, we may impose a $50 

penalty on an employer for each W–2 or Form 1099 that omits or 

includes an inaccurate SSN, unless the filer shows reasonable 

cause for the omission or inaccuracy. 

From a tax compliance perspective, violations of these provisions 

are generally identified as part of an overall employment tax examination. We would not ordinarily institute an examination against 

17 

an employer solely on the basis that he or she had reported a high 

number of mismatches. This is a function of both resources and the 

fact that the employer can easily demonstrate that he or she has 

performed the due diligence required under the law. 

Turning to the pending immigration legislation, we are well 

aware that both the Senate and House have adopted bills that take 

different approaches to addressing this issue. It is neither my role, 

nor my desire, to express a preference for either version. I merely 

wish to offer some observations concerning tax administration. 

The one common approach in both the House and Senate immigration bills is the requirement that employers verify the work eligibility of potential employees with DHS from information provided 

by the SSA. The Senate bill amends section 6103 of the Internal 

Revenue Code, relating to the privacy of taxpayer information, and 

requires SSA to send to DHS the identities of employers who, 

among other things, have a significant number of SSN mismatches. 

The Senate bill also allows aliens unlawfully present in the 

United States to adjust their status to legal, permanent resident 

status, if they meet certain criteria. These include demonstrating 

payment of any liability for Federal taxes owed during the required 

pre- and post-enactment periods of employment. The IRS is mandated to cooperate with aliens by providing documentation to establish the payment of all Federal taxes required. 

We are continuing to study the provisions of the Senate bill but, 

based on what we have examined so far, we do have some concerns. 

However, I am confident that as we progress toward the goal of 

comprehensive immigration reform, we can iron out these potential 

issues. Thank you. 

[The prepared statement of Mr. Everson follows:] 

Statement of The Honorable Mark W. Everson, Commissioner, 

Internal Revenue Service 

Introduction 

Chairman Thomas, Ranking Member Rangel, and Members of the Committee, I 

appreciate the opportunity to appear before you this afternoon to discuss the impact 

of immigration issues on tax administration. 

I would like to do three things this afternoon. First, I wish to try to frame the 

issues, at least from an IRS perspective. Second, I want to discuss in more detail 

how the IRS handles the mismatching of Social Security Numbers (SSN). And, 

third, I want to offer some comments on the pending legislation from the perspective 

of tax administration. 

Framing the Issues 

Perhaps the most difficult part of these issues is framing them properly and understanding fully the different, yet sometimes complementary, roles performed by 

the Social Security Administration (SSA), the U.S. Department of Homeland Security (DHS), and the Internal Revenue Service (IRS). 

We at the IRS support and appreciate the jobs being done at SSA in maintaining 

and protecting the Social Security Trust Funds and at DHS in enforcing our immigration laws, but our function is tax administration. Our job is to make sure that 

everyone who earns income within our borders pays the proper amount of taxes, 

whether that income is legally obtained and whether the individual is working here 

legally If someone is working without authorization in this country, he/she is not 

absolved of tax liability. Instead of an SSN to file a tax return, that person frequently uses an Individual Taxpayer Identification Number (ITIN). 

An ITIN is a tax processing number issued by the IRS. It is a nine-digit number 

that always begins with the number 9 and has a 7 or 8 in the fourth digit, e.g. 9XX– 

7X–XXXX. 

18 

IRS issues ITINs to foreign individuals who are required to have a U.S. taxpayer 

identification number but who do not have, and are not eligible for an SSN. ITINs 

are issued regardless of immigration status because non-citizens may have U.S. tax 

return and payment responsibilities under the Internal Revenue Code. 

The Oversight and Social Security Subcommittees have held two hearings over 

the past three years on issues associated with ITINs and the mismatch of SSNs on 

W–2s. At those hearings, I talked about our ITIN program. It is important to understand that the ITIN program is bringing taxpayers into the system. Last year over 

2.5 million tax returns were filed that included an ITIN for at least one person listed on the return. In calendar year 2006, so far we have received 1.6 million new 

applications for ITINs, up 25 percent from this time last year. Since 2004, to obtain 

an ITIN most applicants must attach a tax return to establish a return filing requirement. 

We estimate that for tax periods 1996 to 2003 that the income tax liability for ITIN filers totaled almost $50 billion. 

Comprehensive immigration reform—including border security, interior enforcement, and a temporary worker program—is a top Administration priority. The Administration believes that worksite enforcement is critical to the success of immigration reform. Further, as immigration laws are enforced, the Administration believes 

that comprehensive immigration reform also requires us to improve those laws by 

creating a temporary worker program that rejects amnesty, relieves pressure on the 

border, and provides a legal means to match willing foreign workers with willing 

American employers to fill jobs Americans are not doing. 

As the Commissioner of the IRS, it is not my role to advocate public policy 

changes. However, as a former Deputy Commissioner at Immigration and Naturalization Service, I am sensitive to the need for a system of immigration that functions effectively and I am particularly sensitive to the interaction between the immigration system and the tax system. I recognize that comprehensive immigration reform can have positive impacts on tax administration. For example, the creation of 

a temporary worker program will likely result in additional taxpayers entering the 

system. 

IRS’s Role in the Mismatch Program 

Each year, employers send their W–2s and W–3s to the SSA by February 28 (or 

March 31 if filed electronically). SSA processes the forms and then attempts to reconcile any mismatches. They then send the information to the IRS on a weekly 

basis. IRS culls out any unusable records as well as any W–2s that are not related 

to the current tax year. For Tax Year (TY) 2004, the resulting IRS file contained 

more than 231 million W–2s from the SSA. 

This represents a decline of approximately 6.5 percent from the corresponding file 

for TY 2000. We are considering this and other employment-related trends as part 

of our ongoing study of the standards used to distinguish between employees and 

independent contractors. The decline in the number of W–2s has been accompanied 

by a corresponding decline in the number of mismatches that could not be reconciled. 

Of the 231 million W–2s in IRS’s TY 2004 file, approximately 223 million had 

matching names and SSNs. Some of these matches resulted from SSA’s successful 

use of techniques for resolving mismatches. For the balance of approximately 8 million TY 2004 W–2s for which there was no valid match, IRS used several additional 

methods to match the numbers. We were able to match approximately 60,000 more 

names with SSNs, leaving about 7.9 million W–2s where there is no valid name and 

SSN match. 

To help correct SSN mismatches, the SSA sends letters to employers, employees 

and self-employed individuals asking that they take steps to match the names with 

the SSNs. These letters go only to certain employers. First, letters are sent to employers who submit a wage report containing more than 10 Forms W–2 that SSA 

cannot process. In addition, employers who file more than 2200 W–2’s, more than 

one-half of one percent (1/2 percent) of which represents mismatched forms, also receive the letters. In TY 03, the SSA sent over 121,000 such letters to employers, 

inquiring about 7.2 million invalid W–2s. There is no letter sent to the employers 

for the other 0.7 million mismatches 

There are two interesting aspects to the data on mismatches. The first is geographical. Over 50 percent of the mismatches are found in four states, California, 

Texas, Florida and Illinois. California has by far the greatest number of mismatches 

totaling nearly 2.3 million, or approximately 29 percent of the mismatch total. 

The second is economic. Based on IRS’ own analysis, about 75 percent of all mismatched W–2s report wages of less than $10,000. If we focus only on those mismatched W–2s with no withholding, the percentage increases to 90 percent. Only 

19 

about 2 percent of all W–2s with invalid SSNs report wages greater than $30,000. 

In fact, the average wage for all mismatches is only about $7,000 annually. Bear 

in mind, that many employees receive more than one W–2 in a tax year, so these 

numbers may not reflect an individual’s gross income. 

From a tax administration perspective, we know that for TY 2004 there were approximately $53 billion in wages reported on W–2s with invalid SSNs, with about 

a quarter of that amount, or $13.3 billion, on W–2s with no withholding. About 56 

percent of the $53 billion came from W–2s reporting wages between $10,000 and 

$30,000. 

On the high end, only about 1 percent of the wages ($0.5B) were reported on mismatched W–2s showing wages in excess of $100,000. Thus, this analysis shows that 

the worker population causing W–2 mismatches represents the lowest wage earners 

who likely have little or no tax liability. 

Legal Requirements for Employers 

It is important to point out that SSA has no enforcement power and cannot impose penalties on employers for failure to correct SSN mismatches. IRS, however, 

does have enforcement power and can assess penalties. Therefore, it might be helpful if I walk you through our current legal authority. 

Under section 6041 and 6011 of the Internal Revenue Code (IRC) employers and 

other payors must include correct SSNs or Taxpayer Identification Numbers (TINs) 

on form W–2 reporting wages or salaries paid to employees. 

Under section 6721, we may impose a $50 penalty on an employer for each W– 

2 or 1099 that omits or includes an inaccurate SSN/TIN unless the filer (employer, 

other payor, etc.) shows reasonable cause for the omission or inaccuracy. The maximum penalty for any employer or payor in a calendar year is $250,000. If the violation is deemed to be willful, the fine is the greater of $100 or 10 percent of the unreported amount per violation, with no maximum. 

From a tax compliance perspective, violations of these provisions are generally 

identified as part of an overall employment tax examination. We would not ordinarily initiate an examination against an employer solely on the basis that he/she 

had reported a high number of mismatches. This is a function of both resources, and 

the fact that the employer can easily demonstrate that he/she has performed the 

due diligence required under the law. 

Specifically, Section 6109 places the burden on the employee or the payee to provide the employer or payor with an accurate SSN or TIN. This is an important distinction because the employer can have any penalty imposed for failing to include 

an accurate SSN or TIN on the return abated, if the employer made an initial and, 

if necessary, annual request that the payee provide an accurate SSN/TIN. He can 

also have the penalty abated if he establishes that due diligence was otherwise 

used, such as by obtaining a statement from the employee under penalties of perjury that the SSN or TIN is accurate. 

As you can see, what is important here is that the employer or payor makes a 

request, or repeats a request, for an accurate SSN or TIN. If the employer does, he/ 

she has performed due diligence and has reasonable cause to believe the SSN or 

TIN is correct. Because the reasonable cause and due diligence standard in section 

6724 is relatively easy for employers to meet, it has been virtually impossible to sustain a penalty assessed against an employer under section 6721. 

When I testified last February before your Oversight and Social Security Subcommittees, there were some questions as to whether we were utilizing our enforcement authority. I indicated then that we had surveyed nearly 300 companies with 

high mismatch rates. I also indicated that we intended to look more carefully at 48 

of those companies that failed to respond to that survey. 

We have now begun those investigations and I can tell you that what we have 

found thus far is consistent with what we found from our survey. The companies 

tend to be from three industries: Agriculture, janitorial and temporary workers. The 

employees are low wage earners, and we have found no other employment tax violations in 90 percent of the companies we have examined. From a tax administration 

standpoint, these companies do not constitute a target rich environment. 

Pending Legislation 

We are well aware that both the Senate and House have adopted bills that take 

different approaches to addressing the immigration issue. It is neither my role nor 

my desire to express a preference for either version. I merely wish to offer some observations and concerns about how each of the bills would affect tax administration. 

Having a strong immigration policy that includes border security, interior enforcement, and a temporary worker program is critical to our future. 

20 

As I indicated earlier, many illegal aliens, utilizing ITINs, have been reporting tax liability to the tune of almost $50 billion from 1996 to 2003. In TY 2004, we had 

2.5 million ITINs filed with nearly $5 billion in tax liability. That is why comprehensive reform is so necessary. It will allow these taxpayers as well as others 

who are not currently filing to become a more active part of our economic system. 

Failure to enact comprehensive reform could have negative consequences for tax administration if procedures are imposed on employers and employees that have the 

effect of driving certain economic activities ‘‘underground.’’ 

The one common approach in both the House and Senate immigration bills is the 

requirement that employers verify the work eligibility of potential employees with 

DHS from information provided by the Social Security Administration. The Senate 

version of the bill does this by requiring DHS to create a verification system with 

the cooperation of SSA. The House bill essentially takes the discretionary process 

that is already in place under the Basic Pilot Program, which is administered by 

DHS with the help of SSA, and makes it mandatory. 

The Senate bill goes much further. It amends Section 6103 of the Internal Revenue Code relating to the privacy of taxpayer information and requires SSA to send 

to DHS the identities of employers who, among other things, have a significant 

number of employee/SSN mismatches. The bill restricts disclosure only for the purposes of establishing and enforcing participation in the system and complying with 

various laws. 

The Senate bill, under what it calls the ‘‘Earned Adjustment’’ program, also allows 

aliens unlawfully present in the U.S. to adjust their status to legal permanent resident status if they meet certain criteria, including continuous residence in the U.S. 

during the previous 5 years, employment in 3 of those 5 years, and employment for 

at least the next 6 years. It appears that, the Earned Adjustment applicants would 

not be allowed to adjust status until they had demonstrated ‘‘the payment’’ of any 

liability for Federal taxes owed during the required pre- and post-enactment periods 

of employment. The IRS is mandated to cooperate with aliens by providing documentation ‘‘to establish the payment of all [Federal] taxes required’’. 

We are continuing to study the provisions of the Senate bill, but based on what 

we see thus far, we do have some concerns. For example, to the extent that applicants for earned adjustment will make requests for prior tax payments from IRS, 

that will require IRS to divert resources from current functions. 

In addition, is important to consider that while we can, upon request, currently 

provide any taxpayer, including those who have filed using ITINs, a transcript of 

their tax return records, we do not verify the accuracy of their tax returns or the 

information the taxpayer has submitted. Accordingly, we are not now equipped to 

provide any taxpayer, including aliens, with documentation to establish payment of 

all Federal taxes. 

In addition, if the alien has filed using multiple SSNs that were not assigned to 

him and later with an ITIN, it is possible that a single alien could request multiple 

transcripts. From a disclosure perspective, we would be reluctant to provide a single 

taxpayer with multiple taxpayer records upon request. 

We have other administrative concerns with provisions of the Senate bill, but we 

are confident that as we progress toward the goal of comprehensive reform that we 

can iron those out. 

Conclusions 

We appreciate Mr. Chairman, the tough policy choices that you and other Members of Congress must make on the tough issue of immigration, and we realize that 

tax administration may be a small factor in those policy considerations. 

As the agency responsible for collecting and administering the more than $2 trillion that we use to fund the government, we will play whatever role Congress deems 

appropriate. 

We urge, however, that any change in the current tax system encourage the type 

of behavior that we desire from both employees and employers. We are collecting 

some taxes in these areas and with comprehensive reform we hope we can collect 

even more. 

Similarly, imposing requirements that the IRS verify the accuracy of tax payments by aliens would challenge our ability to maintain our current level of service 

and enforcement. 

Thank you for inviting me to testify this morning. I will be happy to take any 

questions you may have. 

f 

Mr. MCCRERY. Thank you, Commissioner Everson. 

21 

Commissioner Barnhart. If you could, turn your microphone on. 

STATEMENT OF THE HONORABLE JO ANNE B. BARNHART, 

COMMISSIONER, SOCIAL SECURITY ADMINISTRATION 

Ms. BARNHART. Mr. Chairman and Members of the Committee, 

the President has proposed a comprehensive approach to immigration reform that addresses the need to secure our borders, enforce 

worksite employment practices, and address the economic issues of 

immigration. This approach calls for the creation of a true, temporary-worker program that allows individuals to achieve legal status by paying their taxes, learning English, and gaining employment in our society. 

Within this context, I appreciate your invitation to appear before 

you to discuss how and when we assign SSNs and issue Social Security cards to non-citizens, as well as issues relating to benefit eligibility for non-citizens. My written testimony describes in some 

detail our current responsibilities and activities to safeguard the 

integrity of the Social Security system, including the work we perform with the DHS and the IRS. 

Currently, as required by the Illegal Immigration Reform and 

Immigrant Responsibility Act of 1996, we provide DHS extensive 

information about every non-work SSN where earnings were reported. Non-work SSNs are issued to individuals who are not authorized to work in the United States but who have a valid reason 

for obtaining a SSN. These cards include the legend, ‘‘Not Valid for 

Employment.’’ 

Social Security is also an integral part of the DHS Basic Pilot 

program, which allows employers to verify both the SSNs and 

work-authorization status of persons they hire. Of course, we continue to provide SSN verification services to employers, including 

our web-based SSN Verification System (SSNVS). 

Currently we have the authority to use information from W–2s 

only for the purposes of determining eligibility for and the amount 

of Social Security benefits. The Administration supports allowing 

disclosure of this data in the interests of national security and for 

law-enforcement purposes. 

At SSA, we have a proven performance record, and can and will 

do what we are called upon to do. This year alone, we will process 

over 6.7 million claims for benefits, process almost 245,000 Medicare Part D subsidy applications, make decisions on over 575,000 

hearings, issue 18,000,000 new and replacement cards, process 

265,000,000 earnings records for workers’ earnings, handle approximately 59,000,000 transactions through our 800 number, serve 

42,000,000 visitors at our field offices, and process millions of actions to keep beneficiary and recipient records current and accurate, as well as conducting 1.6 million continuing disability reviews, and over 1,000,000 non-disability Supplemental Security Income re-determinations. 

I have worked closely with the Social Security and Subcommittee 

on Human Resources in our efforts to improve service, most notably through the Disability Service Improvement initiative, and related improvements to the disability process. I know that the Committee is well aware of the challenges we face at SSA. 

22 

The President’s budget for FY 2007 proposed an increase in 

SSA’s administrative budget of 4.2 percent over the enacted level 

for this year. House and Senate appropriators have proposed reductions of $200,000,000 to $400,000,000 in the President’s budget request for SSA administrative costs. From my perspective as Commissioner, I am concerned that these reductions will jeopardize our 

ability to improve service and eliminate backlogs, even without new 

responsibilities. 

Before I close, let me say, again, SSA is ready, willing, and able 

to do its part to provide support for DHS and its immigration enforcement activities. The men and women of Social Security are 

dedicated, hard-working, and productive public servants who will 

do everything they can to carry out SSA’s responsibilities, whatever 

they may be. 

I want to publicly thank this Committee for your support for SSA 

and its programs over the years. I look forward to continuing to 

work with you as we serve the American people. 

[The prepared statement of Ms. Barnhart follows:] 

Statement of The Honorable Jo Anne B. Barnhart, Commissioner, 

Social Security Administration 

Mr. Chairman and Members of the Committee: 

The President has proposed a comprehensive approach to immigration reform that 

addresses the need to secure our borders, enforce worksite employment practices, 

and address the economic issues of immigration. This approach calls for the creation 

of a true temporary worker program that allows individuals to achieve legal status 

by paying their taxes, learning English and gaining employment in our society. 

Within this context I appreciate your invitation to appear before you to discuss 

how and when we assign Social Security numbers and issue Social Security cards 

to non-citizens, as well as issues relating to benefit eligibility for non-citizens. In my 

testimony today, I will describe SSA’s current responsibilities and activities to safeguard the integrity of the Social Security system, including our work with Department of Homeland Security (DHS) and the Internal Revenue Service (IRS). 

Currently, as required by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, we provide DHS extensive information about every ‘‘nonwork 

SSN’’ where earnings were reported. ‘‘Nonwork SSNs’’ are issued to individuals who 

are not authorized to work in the U.S. but have a valid reason for obtaining an SSN. 

These cards include the legend, ‘‘Not Valid for Employment’’. 

SSA is also an integral part of the DHS Basic Pilot program which allows employers to verify both the Social Security numbers and work authorization status of persons they hire. Of course, SSA continues to provide SSN verification services to employers, including our web-based Social Security Number Verification System 

(SSNVS) 

SSA currently has the authority to use information from Forms W–2 only for the 

purpose of determining eligibility for and the amount of Social Security benefits. 

The Administration supports allowing disclosure of this data in the interests of national security and for law enforcement purposes. 

At SSA, we have a proven performance record and can and will do what we are 

called upon to do. But I would be remiss if I did not mention that, as this Committee well knows, every new responsibility we are given, without adequate funding, 

will affect our ability to provide our core mission service to the American public. 

This year alone, we will process over 6.7 million claims for benefits; process almost 245,000 Medicare Part D low income subsidy applications; make decisions on 

over 575,000 hearings; issue 18 million new and replacement Social Security cards; 

process 265 million earnings items for workers’ earnings records; handle approximately 59 million transactions through SSA’s 800-number; serve 42 million visitors 

to our field offices; process millions of actions to keep beneficiary and recipient 

records current and accurate; and conduct 1.6 million continuing disability reviews 

(CDR’s) and over 1 million non-disability Supplemental Security Income (SSI) re-determinations. 

I have worked closely with the Social Security and Human Resources subcommittees in our efforts to improve service, most notably through the Disability Service 

23 

Improvement initiative and related improvements to the disability process. I know 

that this Committee is well aware of the challenges we face. 

From my perspective as Commissioner of Social Security, I am concerned that reductions of $200–$400 million in the President’s budget request for SSA administrative costs that have been proposed by the House and Senate appropriators would 

jeopardize our ability to improve service and eliminate backlogs, even without new 

responsibilities. I might note that the President’s budget for FY 2007, and for the 

past few years, included modest increases in SSA’s administrative budget. 

ENUMERATION AND BENEFITS FOR NON-CITIZENS 

Enumeration of Non-Citizens 

Under current law, Social Security numbers can be issued to non-citizens when 

they are lawfully admitted to the United States for permanent residence, if they are 

otherwise authorized to work in the United States, or, under limited circumstances, 

where an individual is not authorized to work, but has a valid need for an SSN. 

The vast majority of original Social Security cards are issued to United States citizens, or to permanent resident non-citizens. Since these individuals are authorized 

to work without restriction in the United States, these cards show only the name 

and SSN of the individual and can be used as evidence of authorization to work in 

the U.S. 

However, cards issued to non-citizens who are not authorized to work (at the time 

of application for a Social Security number) or who are only temporarily authorized 

to work bear one of two legends describing work authorization status at the time 

the card was issued: ‘‘Not Valid for Employment’’ or ‘‘Valid for Work only with DHS 

Authorization’’. 

‘‘Not Valid for Employment’’ 

Initially, SSA issued the same type of Social Security card to everyone, whether 

or not the individuals were authorized to work. In 1974, SSA began assigning SSNs 

for non-work purposes, but the cards were not specifically annotated. Beginning in 

May 1982, SSA started issuing cards printed with the legend ‘‘Not Valid for Employment,’’ often referred to as nonwork SSNs,’’ to non-citizens not authorized to work. 

This was due to the increasing need for individuals to have SSNs for nonwork purposes (e.g., to receive payment of a government benefit, to open a bank account, or 

to get a drivers license) and concerns that such individuals might use the SSN for 

unauthorized work. With this restrictive legend appearing on a card, employers 

were able for the first time, to determine whether the individual to whom the card 

was issued was authorized to work. Of course then as now, an employer could not 

rely on the Social Security card alone to establish that the person presenting the 

card was the person to whom the SSN was assigned. The Social Security card is 

not, and never has been, an identity document, which is why it must be presented 

in conjunction with an identity document to prove work authorization under immigration law. 

In October 2003, I significantly tightened the rules for issuing nonwork SSNs. No 

longer do we issue SSNs to non-citizens just so they can obtain a driver’s license. 

Instead, SSA only issues such an SSN when 1)a Federal statute or regulation requires an SSN to receive a particular benefit or service to which an alien has otherwise established entitlement; or 2) a State or local law requires an SSN to get public 

assistance benefits to which the legal alien without work authorization has otherwise established entitlement and for which all other requirements have been met. 

This action reduced the number of ‘‘nonwork SSNs’’ we issue each year from 72,000 

to 15,000. 

‘‘Valid for Work Only with DHS Authorization’’ 

Beginning in September 1992, SSA began issuing cards with the legend ‘‘Valid for 

Work Only with INS Authorization’’ to non-citizens lawfully in the United States 

with temporary authorization to work. This legend has been changed to ‘‘Valid for 

Work Only with DHS Authorization’’ to reflect the change from ‘‘INS’’ (the Immigration and Naturalization Service) to ‘‘DHS.’’ In these cases, employers must examine 

other acceptable documentation for the employment eligibility verification process 

(Form I–9), normally the non-citizen’s DHS documentation. 

In Fiscal Year (FY) 2005, SSA issued approximately 5.4 million original cards. Of 

these, 4.3 million were issued to U. S. citizens. Approximately 1.1 million cards were 

issued to non-citizens with temporary or permanent work authorization and fewer 

than 15,000 cards were issued to aliens not allowed to work. 

24 

Social Security Benefits for Non-Citizens 

As you know, current law explicitly prohibits the payment of benefits to individuals in the United States who are not lawfully present here. A non-citizen who is 

outside the United States can be paid benefits only if he or she meets the applicable 

statutory requirements. 

Impact of the Social Security Protection Act of 2004 (SSPA) 

Under SSPA, Social Security benefits are not payable on the record of a non-citizen worker unless the worker was authorized to work in the United States when 

the worker was issued a Social Security number, or any time thereafter. (This 

change became effective with regard to workers who were issued an SSN on or after 

January 1, 2004.) Consequently, a non-citizen worker must meet this requirement 

to become eligible for benefits, or for the worker’s family members to become eligible 

for benefits as dependents or survivors of the worker. 

Nonpayment Provisions 

The alien nonpayment provision (section 202(t) of the Act) provides for nonpayment of benefits to aliens who are absent from the United States for more than 

6 consecutive calendar months, unless they meet one of several exceptions in the 

law that permit payment to continue. The primary exception is that the alien beneficiary is a citizen of a country which has a social insurance system of general application and which pays benefits to eligible United States citizens while they are outside that country. 

Benefits that have been stopped because the beneficiary is outside the United 

States will resume when the beneficiary has returned to the United States and has 

remained here in lawful presence status for one full calendar month and will continue until the beneficiary is absent from the United States for longer than six consecutive calendar months. 

In addition, in many cases, aliens entitled to dependents’ or survivors’ benefits 

must also meet a U.S. residence requirement to be paid outside the United States. 

The dependent or survivor beneficiary must have resided in the United States for 

five years, during which time the family relationship on which benefits are based 

must have existed. This five year residence requirement can be removed for dependents or survivors who are citizens or residents of a country with whom the United 

States has a totalization agreement. 

Other Events That Result in Nonpayment of Benefits to Non-citizens 

The Social Security Act prohibits the payment of Social Security benefits to alien 

workers (and their dependents or survivors, in certain cases) who are removed from 

the United States under specific provisions of the Immigration and Nationality Act. 

Crediting Unauthorized Work Towards Social Security Benefits 

There have been a number of proposals to eliminate Social Security credit for 

earnings that are posted to a noncitizen’s record during periods when the person 

is not authorized to work. You may recall that when the SSPA was enacted, consideration was given to a similar proposal, which ultimately was not included in the 

law. 

We understand the rationale behind this proposal. However, to administer such 

a change, we would have to know exactly which periods in the past a person was 

authorized to work and not authorized to work. We defer to DHS on the specifics 

of availability of data, but we understand that DHS does not have the data readily 

available at this time to reconcile earnings and work status. 

‘‘HARDENING’’ THE SOCIAL SECURITY CARD 

As you are aware, the expertise of counterfeiters and the wide availability of 

state-of-the-art technology make it increasingly difficult to develop and maintain a 

Social Security card that cannot be counterfeited, despite best efforts to guard 

against such incidents. Therefore, SSA will continue to evaluate new technology as 

it becomes available to determine if additional features should be included. 

As provided in the IRTPA, we, in consultation with the Secretary of Homeland 

Security formed an interagency task force to establish requirements for improving 

the security of Social Security cards and numbers. Because current law requires the 

card to be printed on banknote paper, the taskforce was limited to consideration of 

improvements to this type of card. In addition to representatives from SSA and 

DHS, the task force included representation from the Federal Bureau of Investigation, the Department of State and the Government Printing Office. I share Congress’ concern about the security of the Social Security card and am committed to 

doing what I can to make improvements in this regard. The taskforce has completed 

its work and I provided this Committee with a report a few days ago on how its 

25 

recommendations can be implemented. We have decided to delay moving forward 

with the production of the improved Social Security card pending resolution of the 

immigration reform debate because the final law may include provisions that affect 

the Social Security card. 

Although not proposed by the Administration, creating a different kind of Social 

Security card has been suggested by some members of Congress. The immigration 

and welfare reform legislation passed in 1996 required us both to conduct a study 

and to develop a report on different methods for improving the Social Security card 

process, including prototypes of several kinds of new cards. This report, ‘‘Options for 

Enhancing the Social Security Card,’’ was issued in 1997. 

We know from the 1997 effort that should SSA be required by Congress to replace 

all SSN cards the main costs associated with replacing the current SSN card are 

those associated with reinterviewing individuals and reverifying documents, while 

the additional costs of the card itself—even with additional security features—are 

minimal. Thus, the feasibility of a ‘‘hard’’ card depends on who would receive it over 

what period of time. 

The most important factor affecting the total cost is the requirement to verify the 

identity of the person applying for the card and, in the case of non-citizens, determining the immigration status and work authorization. Other factors must be taken 

into account as well. For example, the cost of equipment that might be needed in 

SSA field offices to work with the new cards and the cost to SSA to notify number 

holders who might need to obtain a new SSN card would have an impact on total 

outlays. 

Currently, most original SSNs (and cards) for United States born individuals are 

issued through the Enumeration at Birth (EAB) process in which parents apply for 

their child’s SSN at the hospital as part of the birth registration. The vast majority 

of replacement SSN cards, and a relatively small number of original SSN cards for 

U.S. born individuals, are issued by SSA field offices where evidence is reviewed 

and verified. The majority of original SSN cards issued through SSA field offices are 

for individuals who recently arrived in the United States and whose immigration 

status permits assignment of an SSN. 

Last year, we estimated that a card with enhanced security features would cost 

approximately $25.00 per card, not including the start-up investments associated 

with the purchase of equipment needed to produce and issue this type of card. According to estimates made last year, reissuance of all new cards for the 240 million 

cardholders over age 14 would cost approximately $9.5 billion. We know that, since 

we made that estimate, the cost of issuing SSN cards has increased by approximately $3.00 per card due to new requirements for additional verification of evidence, so we anticipate an increase in the total cost estimate when we update our 

figures to reflect current dollar costs. I hasten to add that the Administration is not 

seeking to replace all cards. The number of workers who would have to obtain a 

new card varies from proposal to proposal. 

Currently, each year staff of the agency devotes approximately 3,300 work years 

of effort to the SSN card issuance process. Because of the need to interview everyone receiving a new card, and examine original documents, last year’s estimate indicates that we would need an additional 67,000 work years to issue everyone a new 

card. This would require hiring approximately 34,000 new employees if we were required to complete the work within two years and 14,000 new employees to complete 

the work in five years. As noted, this estimate assumes replacing cards for 240 million individuals, which the Administration has not proposed. An approach that 

would mandate new tamper resistant cards to be issued only during the normal 

course of initial issuance and reissuance would involve significantly less additional 

costs. For a phased approach that limited new cards to only the approximately 30 

million people who change jobs at least once during a year and the additional five 

million young people reaching age 14, the cost would be approximately $1.5 billion 

per year, using last years cost numbers. 

SSA HELPS IDENTIFY UNAUTHORIZED WORKERS 

SSN Verification Services 

Over the years, we have worked to offer employers alternative methods to verify 

SSNs. One of those methods is the Employee Verification Service (EVS). EVS is a 

free, convenient way for employers to verify employee SSNs. It provides employers 

with several options depending on the number of SSNs to be verified. For up to five 

SSNs, employers can call SSA’s toll-free number for employers (1–800–772–6270) 

weekdays from 7:00 a.m. to 7:00 p.m. Eastern Standard Time. Employers may also 

use this number to get answers to any questions they may have about EVS or to 

request assistance. In FY 2005, SSA responded to nearly 1.5 million calls. 

26 

Employers also have the option to submit a paper listing to the local Social Security office to verify up to 50 names and SSNs. In addition, employers may use a 

simple registration process to verify requests of more than 50 names and SSNs or 

for any number of requests submitted on magnetic media. Currently, almost 17,000 

employers are registered for this verification service. 

To further increase the ease and convenience of verifying employee SSNs, we developed the Social Security Number Verification Service (SSNVS). After obtaining 

a PIN and password in a simple registration process, employers can use the internet 

to get immediate verification of the accuracy of employees’ names and SSNs. This 

service was expanded to all employers in June 2005. 

I announced the nationwide rollout last year at the SSA sponsored National Payroll Reporting Forum, and we continue to promote SSNVS. For example, an article 

on SSNVS appeared in the SSA/IRS Reporter that is sent to over 6.6 million employers. It was also featured in the SSA wage reporting email newsletter, W2News. 

We have also highlighted SSNVS in our many speaking engagements before the employer community. There is a special section on SSA’s website for employers that 

highlights and explains the use of SSNVS. This site recently ranked third in the 

American Customer Satisfaction Index survey, which asks users to rate the content, 

usefulness and functionality of applications on both public and private sector sites. 

Through SSNVS, we processed over 17 million verifications for 21,000 employers in 

the first six months of 2006. 

Basic Pilot 

As I mentioned earlier, employers in all 50 states may participate in the Basic 

Pilot program, an ongoing voluntary program in which SSA supports the Department of Homeland Security (DHS) in assisting employers confirming employment 

eligibility for newly hired employees. Participating employers register with DHS to 

use the DHS’ automated system to verify an employee’s SSN and work authorization status. The information the employer submits to DHS is sent to SSA to verify 

that the Social Security number, name, and date of birth submitted match information in SSA records. SSA will also confirm U.S. citizenship, thereby confirming work 

authorization; DHS confirms current work authorization for non-citizens. DHS will 

notify the employer of the employee’s current work authorization status. In December 2004, the Basic Pilot was expanded to all 50 states. As of July 17, 2006, DHS 

and SSA had signed agreements with over 10,000 employers, representing about 

36,000 employer sites. For FY 2005, SSA received approximately 100,000 Basic Pilot 

queries each month. So far, for FY 2006, SSA is receiving an average of 150,000 

Basic Pilot requests a month. In June 2006, we received over 182,000 queries. 

In 2005, through the EVS, SSNVS, and Basic Pilot programs, we estimate we provided a total of 67 million employer verifications, up from 62 million in 2004. 

Earnings Suspense File (ESF) 

The Earning Suspense File is an electronic holding file for W–2s (wage items) that 

cannot be matched to the earnings records of individual workers. It does not represent nonpayment of Social Security payroll taxes, nor is it a repository for actual 

wages. 

There are approximately 255 million wage items in the ESF through Tax Year 

(TY) 2003, the last year for which data is available. This represents about $519.6 

billion in wages. That sounds like a large number, but during that period, we have 

successfully recorded $73.8 trillion in wages, or more than 99 percent of the total. 

SSA does not have data on the number of wage items in the ESF that are attributable to unauthorized work by non-citizens. SSA’s source of information about 

earnings is the Form W–2, and there is no citizenship or immigration status information on that document. While some percentage of name and SSN mismatches are 

attributable to fraud by unauthorized workers, such mismatches also can occur for 

a variety of other reasons, including typographical errors, unreported name changes 

and incomplete or blank SSNs. 

No-Match Letters 

As you know, SSA processes wages reported by employers on Forms W–2. We 

pass this information on to the Internal Revenue Service for income tax purposes, 

and we record the earnings to each worker’s account so that they are considered in 

determining eligibility for benefits and the level of benefits to be paid. 

We send ‘‘no match’’ letters to employers who submit more than 10 wage items 

when more than 0.5 percent of the items in a wage report consist of an SSN and 

name combination that does not match our records. The employer ‘no match’ letters 

include a list of up to 500 SSNs submitted by the employer in wage items that SSA 

could not post to a worker’s record. In 2005, we sent approximately 127,000 emVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00030 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
27 

ployer ‘no match’ letters, which covered 7.3 million mismatched records. For privacy 

reasons, the letter lists only the SSNs, not the name/SSN combination. 

The only source of information that SSA receives about a taxpayer’s employer and 

earnings is tax return information on the Form W–2. We receive and process this 

information as an agent for the Internal Revenue Service. Use of and disclosure of 

tax return information is governed by section 6103 of the Internal Revenue Code. 

SSA currently has the authority to use this information only for the purpose of determining eligibility for and the amount of social security benefits. The Administration supports allowing disclosure of this data in the interest of national security and 

law enforcement purposes. 

CONCLUSION 

Before I close, let me say again, that SSA strongly supports the President’s comprehensive immigration reform approach and is ready, willing, and able to do its 

part to provide support for DHS in its immigration enforcement activities. The men 

and women of Social Security are dedicated, hardworking, and productive public 

servants who will do everything they can to carry out SSA’s responsibilities, whatever they may be. 

I want to publicly thank this Committee for your support for SSA and its programs over the years. I look forward to continuing to work with you as we serve 

the American people. 

Thank you again for the opportunity to appear before you today. I look forward 

to working with you, and will be happy to answer any questions you may have. 

f 

Mr. MCCRERY. Thank you, Commissioner. Dr. Gustafson. 

STATEMENT OF THOMAS A. GUSTAFSON, PH.D., DEPUTY DIRECTOR, CENTERS FOR MEDICARE AND MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Mr. GUSTAFSON. Chairman McCrery, Representative Rangel, 

thank you for inviting me to speak with you about the Centers for 

Medicare and Medicaid Services’ effort to assist hospitals and other 

providers that provide healthcare to the uninsured, particularly to 

undocumented immigrants. I am going to concentrate on two provisions that are of particular interest in this area. 

The first is the Emergency Medical Treatment and Labor Act 

(EMTALA) (P.L. 99–272), which requires hospitals to address any 

person seeking emergency care, regardless of the payment method 

or citizenship status of the individual. The Second is Section 1011 

of the Medicare Modernization Act (MMA) (P.L 108–173), which 

provides a million dollars over 4 years to help hospitals and other 

providers with the burden for caring for undocumented immigrants. 

EMTALA was designed to insure that people who request treatment for emergency medical conditions will receive appropriate 

screening and emergency treatment, regardless of their ability to 

pay. The law creates obligations for hospitals in connection with individuals making these requests. These obligations do not vary by 

whether the individual is a citizen. 

CMS’s regulations implementing EMTALA require that hospitals 

with dedicated emergency departments provide an appropriate 

medical screening examination to any person who comes to the hospital emergency department and requests treatment or examination of a medical condition. The same requirement relates to any 

person who presents on hospital property, even in areas other than 

the emergency room, requesting evaluation or treatment of an 

emergency medical condition. If the examination reveals an emerVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 E:\HR\OC\31575.XXX 31575
28 

gency medical condition, the hospital must also provide either necessary stabilizing treatment or arrange for an appropriate transfer 

to another medical facility. 

EMTALA applies to all Medicare participating hospitals with 

dedicated emergency departments, and applies to all individuals 

who present requesting examination or treatment of a medical condition, not just those who receive Medicare benefits. Hospitals with 

specialized capabilities also have a responsibility under EMTALA 

to accept appropriate transfers, regardless of whether the hospital 

has a dedicated emergency department. 

A hospital that violates EMTALA may have its ability to participate in Medicare terminated and may be subject to civil money 

penalties of up to $50,000 per violation. The law also provides a 

private right of action against a hospital that violates EMTALA. 

Hospitals are also required to maintain lists of physicians who 

are on-call for duty after the initial examination to provide necessary stabilizing treatment. Hospitals have discretion to develop 

their on-call lists in a way that best meets the needs of their patients requiring services required by EMTALA. Under CMS’s regulations, EMTALA does not apply after an individual has been admitted for in-patient hospital services. 

In order to provide a detailed review of how EMTALA is implemented, the MMA required us to establish a technical advisory 

group (TAG), which has already met four times, and which has a 

very active set of Subcommittees, is taking a detailed look at 

EMTALA policies and procedures, including both CMS’s regulations and the interpretive guidance outlining hospitals’ responsibilities. 

This TAG includes hospital, physician, and patient representatives, and I sit on it as the CMS’s senior representative. Its report 

is expected in October of 2008. 

Turning now to Section 1011, this provision—under this provi- sion, Congress provided a total of $1 billion, $250,000,000 a year, 

over 4 years, to help hospitals and certain other providers cover 

their otherwise unreimbursed costs of providing emergency services 

for undocumented immigrants, which could include some of the 

costs resulting from the EMTALA provisions I just spoke of. 

Payments are made directly to eligible providers, which include 

hospitals, qualifying physicians, and ambulance providers. The 

Centers for Medicare and Medicaid Services (CMS) established 

guidelines for determining who is eligible for these benefits, and 

providers are responsible for making these determinations. 

Section 1011 provides funds for 2005 through 2008. Each year, 

two-thirds of the $250,000,000 allocated, or $167,000,000 is allocated across the States, based on their relative percentages of undocumented immigrants. All 50 States and the District of Columbia 

are eligible for this pot of money. 

The remaining $83,000,000 is allocated to those six States that 

have the highest number of undocumented apprehensions in each 

fiscal year. The payments are made to the extent that the care was 

not otherwise paid for. Thus, if an individual has Medicaid, for instance, the payments would be taken into account in making the 

Section 1011 payments. In fiscal year 2005, CMS made payments 

in excess of $58,000,000 to providers under this section. Since apVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 E:\HR\OC\31575.XXX 31575
29 

proximately $192,000,000 allocated in FY 2005 was not paid, CMS 

rolled these excess funds over to be used into FY 2006. 

This concludes my remarks, and I’ll be happy to answer any 

questions that you may have. 

[The prepared statement of Mr. Gustafson follows:] 

Statement of Thomas A. Gustafson, Ph.D., Deputy Director, Centers for 

Medicare and Medicaid Services, U.S. Department of Health and Human 

Services 

Chairman Thomas, Rep. Rangel, thank you for inviting me to speak with you 

about the Centers for Medicare & Medicaid Services’ (CMS) efforts to assist hospitals that provide health care to the uninsured, particularly undocumented immigrants. Use of medical services by undocumented immigrants has been a long-standing issue for hospitals, especially those located along the U.S.-Mexican border. Federal law requires hospitals to medically screen and provide stabilizing treatment or 

an appropriate transfer to any person seeking emergency care, regardless of payment method or citizenship status. This obligation has added to the level of uncompensated care provided by hospitals, prompting Congress to include a provision in 

the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 

(MMA) to help certain hospitals recover some of their costs for providing this care 

to undocumented immigrants. In addition to providing the funding appropriated by 

the MMA, CMS recently issued guidance to the States as part of the implementation of the Deficit Reduction Act of 2005 (DRA), which requires Medicaid applicants 

who declare they are citizens to document their citizenship. 

Federal Reimbursement of Emergency Health Services Furnished to Undocumented Immigrants 

Under Section 1011 of the MMA, Congress appropriated a total of $1 billion to 

help hospitals and certain other providers cover their otherwise un-reimbursed costs 

of providing emergency services required under the 1986 Emergency Medical Treatment and Labor Act (EMTALA) to undocumented immigrants. Generally, under 

EMTALA, hospitals with emergency departments that participate in Medicare must 

medically screen all individuals who present to the hospital’s dedicated emergency 

department seeking treatment, and must provide stabilizing treatment or an appropriate transfer to any individual requiring emergency care. Section 1011 provides 

for direct payments to eligible providers for EMTALA-related care to undocumented 

immigrants that was not otherwise reimbursed. Eligible providers include hospitals, 

qualifying physicians, and ambulance providers, and may also include Medicare critical access hospitals (CAHs) and Indian Health Service facilities (whether operated 

by the Indian Health Service or by an Indian tribe or tribal organization). For purposes of the section 1011 program, physician and ambulance providers need not be 

enrolled in the Medicare Program. Providers may also qualify for payment under 

this program for emergency care furnished to immigrants who have been paroled 

into the United States for the purpose of receiving health care services and to Mexican citizens who have temporary permission to enter the United States. For purposes of section 1011, CMS does not require hospital staff to ask patients directly 

about their citizenship or immigration status. Instead, CMS developed a Provider 

Payment Determination information collection form that instructs providers to ask 

or research some basic questions (e.g., whether the patient is enrolled in Medicaid) 

and request some documentation (e.g., a border crossing card, foreign passport). It 

is the provider’s responsibility to make a reasonable determination of patient eligibility based on that information. Section 1011 provides funds for FY 2005 through FY 2008, with $250 million appropriated per fiscal year. Each year, two-thirds of this $250 million, or $167 million, is allocated to the States based on their relative percentages of undocumented 

immigrants. The remaining $83 million is allotted to the six States with the highest 

number of undocumented immigrant apprehensions for each fiscal year. In FY 2005 

and FY 2006, Arizona, Texas, California, New Mexico, Florida, and New York were 

the six states determined to have the highest number of undocumented immigrant 

apprehensions. 

Although funds under section 1011 are allocated on a State level, CMS makes 

payments directly to providers. These payments are made from each State’s allocation and these payments to providers are subject to a proportional reduction if the 

total amount allocated is insufficient to provide full reimbursement to each provider 

based on the law’s payment formula. This pro-rata reduction ensures that some 

amount is paid for every provider that makes a qualifying payment request (claim). 

30 

Payments under section 1011 may only be made to the extent that care was not otherwise paid for (through insurance or another source). Funds are State-specific, and 

any unused portion allocated in one year may be rolled over to the State’s allocation 

for the following year for use by that State. 

For FY 2005, CMS made payments in excess of $58 million to providers under 

section 1011. Since approximately $192 million allocated for FY 2005 was not paid 

to providers, those excess funds were rolled over to be used in FY 2006. 

To help hospitals and other providers utilize the funding available under section 

1011, CMS contracted with TrailBlazer Health Enterprises in July 2005 to administer the program. CMS and TrailBlazer have worked together to develop systems 

for provider enrollment, claims processing, and payment. TrailBlazer, which processes these claims on a quarterly basis, also conducts outreach and training sessions 

and maintains a Web site, listserv, and customer service telephone line to update 

providers on any developments regarding the section 1011 program. 

EMTALA 

As previously mentioned, under EMTALA hospitals have obligations to any individual, regardless of citizenship, who requests treatment for a medical condition. 

EMTALA was designed to ensure that people will receive appropriate screening and 

emergency treatment, regardless of their ability to pay. 

CMS’ regulations implementing EMTALA require that hospitals with dedicated 

emergency departments provide an appropriate medical screening examination to 

any person who comes to the hospital emergency department and requests treatment or examination of a medical condition. They also require that these hospitals 

provide an appropriate medical screening examination to any person who presents 

on hospital property requesting evaluation or treatment of an emergency medical 

condition. In both cases, a request may be made by another individual on behalf of 

the person for whom examination or treatment is sought or a request can be considered to have been made if a prudent layperson believes that based on the behavior 

of the individual an emergency medical condition exists. If the examination reveals 

an emergency medical condition, the hospital must also provide either necessary stabilizing treatment or arrange for an appropriate transfer to another medical facility. 

EMTALA applies to all Medicare-participating hospitals with dedicated emergency 

departments and applies to all individuals who present requesting examination or 

treatment of a medical condition, not just those who receive Medicare benefits. Hospitals with specialized capabilities have a responsibility under EMTALA to accept 

appropriate transfers regardless of whether the hospital has a dedicated emergency 

department. A hospital that violates EMTALA may have its ability to participate 

in Medicare terminated and may be subject to civil penalties of up to $50,000 per 

violation. An individual who has suffered personal harm and any hospital to which 

a patient has been improperly transferred and that has suffered a financial loss as 

a result of the transfer are also provided a private right of action against a hospital 

that violates EMTALA. 

Hospitals also are required to maintain lists of physicians who are on call for duty 

after the initial examination to provide necessary stabilizing treatment. Hospitals 

have discretion to develop their on-call lists in a way that best meets the needs of 

their patients requiring services required by EMTALA. 

Under CMS’ regulations, EMTALA does not apply after an individual has been 

admitted for inpatient hospital services, as long as the admission is made in good 

faith and not in an attempt to avoid the EMTALA requirements. 

Section 945 of the MMA required the Secretary of Health and Human Services 

to establish a technical advisory group (TAG) to review EMTALA policy, including 

the regulations and interpretive guidance outlining hospitals’ responsibilities under 

EMTALA. This TAG, which includes hospital, physician and patient representatives, 

has already met 4 times. The TAG will complete its deliberations and submit a report of its findings and recommendations to the Secretary by October 2008. 

Conclusion 

Thank you again for this opportunity to discuss CMS’ efforts to assist hospitals 

that provide health care to undocumented immigrants. I would be happy to answer 

any questions you might have. 

f 

Mr. MCCRERY. Thank you, Dr. Gustafson. 

Ms. Myers, I talk to employers occasionally about this issue of 

verification of eligibility to work, and they often express frustration 

31 

with the current law that governs their ability to determine whether a prospective employee is, in fact, eligible for employment in the 

United States. The DHS and SSA kind of jointly operate the Basic 

Pilot program, which, as I understand it, is designed to help employers verify eligibility to work. Can you describe for us the current law with respect to what tools are available to employers to 

verify eligibility for work, and how, if at all, the Basic Pilot program alters that for those employers who volunteer for the program? 

Ms. MYERS. Thank you, Chairman McCrery. The Basic Pilot 

program is a voluntary program that’s administered jointly by SSA 

and the United States Citizenship and Immigration Services at the 

DHS, not ICE. The Basic Pilot, we believe, helps provide employers 

with some tools for verifying that employees, when they bring in 

documents, can know whether or not the employee is legally entitled to work here. What it doesn’t do is, if someone is using my 

name and SSN and provides those documents, that can’t tell you 

that, so it’s not a perfect system, but it is one step. 

One of the reasons that we launched the IMAGE program today 

is that we believe there are other things that employers can do to 

try to protect themselves from being tricked by individuals who 

might want to come in and provide them with false documents. 

Those are some of the best practices, which we’ve placed on our 

website. Those include such things as making sure that the individuals who are reviewing I–9’s actually have training, that you conduct an internal audit twice a year to make sure that the individuals who are reviewing I–9s know what they’re doing. You also can 

work with ICE in other ways to make sure that you are complying 

with the law. 

We realize the Basic Pilot is not the entire solution, and that’s 

why we’re working with other law enforcement agencies in cracking 

down on the problem of document fraud. We’ve established these 

taskforces throughout the country to go after franchises like the 

Castorena franchise that had locations in many cities, really document mills, that were providing false documents to employers. So, 

those are some of the tools that we’re using to help guide employers who want to follow the law. 

Mr. MCCRERY. So, it’s my understanding that the Administration believes that a mandatory program like the Basic Pilot program ought to be in place eventually for employee verification; is 

that correct? 

Ms. MYERS. Yes. Yes, Chairman. 

Mr. MCCRERY. I suppose that means that you all have reached 

the conclusion that the Basic Pilot program works and that it actually facilitates identification of potential employees who are, indeed, eligible for employment in the United States, and also the 

converse, would help identify those people who are not eligible for 

employment in the United States, who are seeking employment. Is 

that right? 

Ms. MYERS. We do believe it had—the Basic Pilot program and 

a mandatory electronic employer-verification system has some 

value. Now it’s not a panacea. It can’t be looked at as the only 

thing, as the only tool for employers or as the only way that we’re 

going to weed out illegal immigration, but we have seen it has 

32 

value. For example, in some employers, we hear examples that if 

they advertise that they’re using Basic Pilot, illegal aliens don’t 

come in to apply because they know that the employer is using 

Basic Pilot, that their documents are going to be checked. So, there 

are some things like that that are helpful, but certainly, Basic Pilot 

is not a perfect tool. I would defer to Commissioner Barnhart as 

well, if she has anything to add on the Basic Pilot program. 

Mr. MCCRERY. Well, I think the key question here is, because 

I know Commissioner Barnhart, she and I have talked about this 

before, and there are added costs to the SSA for administering 

their end of the Basic Pilot program. So, I guess the question we 

need to broach here is, is the added advantage that we’re getting 

from the Basic Pilot program worth the added expense that we’re 

paying through administrative costs at the DHS and the SSA. 

Commissioner Barnhart, do you have any—— 

Ms. BARNHART. As you know, Mr. Chairman, what the Basic 

Pilot does is it verifies the name, SSN, and the date of birth. We 

also provide a death indicator, and then the citizenship status as 

we know it. If they’re not American citizens, it goes back to DHS 

to verify the current work authorization status of the individual. 

The bulk of the work that is done through Basic Pilot, in terms 

of verifications, I think 92.5 percent were handled by SSA last 

year, and only 7.5 percent, I believe, had to be deferred to DHS for 

their follow-up. So, I do think it’s a tool, if you look at the way that 

the number of employers using Basic Pilot has increased. We have 

over 10,000 employers who are using it now. That’s an increase 

over the past. We have approximately 36,000 employer sites 

around the country using it. So, I think employers are looking for 

any tool that could be available and helpful to them, and they do 

like it. 

They’re also using our SSN Verification System, which, as you 

know, matches name and SSN, and doesn’t go as far as citizenship, 

but does at least give a preliminary indicator of whether the individual is presenting appropriate and accurate information for purposes of the W–4 that they complete. 

Mr. MCCRERY. Thank you, Commissioner. Mr. Rangel. 

Mr. RANGEL. Thank you so much, Mr. Chairman. I don’t know 

what this has to do with pending immigration legislation, but I 

have to admit it is very informative, and I’ll take my questions 

wherever the testimony leads me. 

I want to thank IRS for the great job that you do over the years, 

for the thankless work that you do. There was some implication 

from Secretary Myers, and you, Commissioner, that this enforcement of existing law as it relates to undocumented workers—I 

don’t—you said something about—— 

Mr. EVERSON. Yes, sir. I think what you are probably responding to is the enforcement penalties in this area. What Secretary 

Myers was referring to, are the—— 

Mr. RANGEL. No, no, no. I don’t want to talk about what she’s 

talking about. I want to talk about you saying that illegal workers 

are liable for taxes. 

Mr. EVERSON. Yes. 

Mr. RANGEL. There was some vague implication that you’re 

going after the worker and the employer. Someone gave me this 

33 

saying that we got between 11,000,000 and 12,000,000 illegals, unauthorized population, that two-thirds of them have been in the 

country for 10 years or less, that 30 percent of them—where is it 

now? 

The industries that they work in: the hotel industry, the agricultural industry—oh, here it is, here. Seven million of the workers 

out of the labor force of one-hundred forty-eight legal, and onethird of the unauthorized workers are in service occupations. Nineteen of the illegals employed in construction and extractutive (sic); 

fifteen in production, installation, and repair; four percent in farming. That’s not very—then we have percentages in cleaning and all 

the service industries: butcher, food, landscaping. 

The President has implied that if we got rid of all the illegals, 

it would have an outstanding negative economic impact on these 

industries, and that’s why we have to do something to legalize 

them. That means that we know where they are, where they’re 

working, the industries, and what the political position is. We not 

only cannot want to deport them, but we can’t afford to deport 

them. We can’t do and we can’t afford to do it. 

Now how does the IRS fit into this? You know where they are. 

You know where they’re working. You know the industries. Are you 

suggesting that you’re enforcing the tax laws, as relates to illegal 

workers in the United States of America? 

Mr. EVERSON. Sire, what I have said, and perhaps I wasn’t as 

clear as I should have been, is that the tax laws do not distinguish 

between status as a citizen, a legal resident, or as an illegal undocumented worker. 

Mr. RANGEL. No, I know the law. I want to talk about—ask 

you, are you—— 

Mr. EVERSON. We try to get the taxes—— 

Mr. RANGEL. Are you attempting to enforce the law as it relates 

to illegal workers in the United States of America? 

Mr. EVERSON. No, we are trying to enforce law as it relates to 

the tax obligations of illegal workers in this country. 

Mr. RANGEL. Let’s try it again. Are you going after illegal workers who don’t pay taxes in the United States of America? 

Mr. EVERSON. Yes, we do, sir. We have, in this country, an absolute obligation to pay your taxes. 

Mr. RANGEL. I know the obligation, but—— 

Mr. EVERSON. That doesn’t matter whether you’re here legally 

or illegally. 

Mr. RANGEL. Are you going after employers who hire illegal 

workers, who don’t take taxes away from these illegals? 

Mr. EVERSON. They are subject to the same scrutiny that other 

employers are subject to. 

Mr. RANGEL. Commissioner, I know they’re subject to, but do 

you have any statistical data—can you give me any idea of the 

number of cases that you’ve gone after. All of this statistics and the 

President of the United States—no one challenges you can go to 

any restaurant, chain of restaurants, chain of hotels, agriculture, 

landscaping, we know where the illegals are. Could you tell me 

what percentage of the estimate of illegals that you’ve prosecuted 

for none-payment of tax? 

34 

Mr. EVERSON. I can give you one statistic that I think will answer your question and, perhaps, rebut the inference that we’re 

singling this population out. When you look at our—— 

Mr. RANGEL. I don’t want you to rebut it. If you know they’re 

illegal, why rebut it, if they have a legal—— 

Mr. EVERSON. Let me give you one statistic. 

Mr. RANGEL. Sure. 

Mr. EVERSON. The audit rate for all individuals is a little less 

than one percent. If you look at the audit rate for non Earned Income Tax Credit (EITC) claimants with an income under $25,000, 

that is point-one-two (.12) percent. In other words, we are doing 

very little in that area in contrast to a 5 percent audit rate for people who have a million dollars of income or more. These people are 

not being singled out. That’s because at the level that we’re talking 

about, and if you look at the mismatched W–2s, as I indicated, 

three-fourths of them are for amounts of $10,000 or less. The ramification of all that is, we tread very lightly in this area because it 

does not generate a lot of money. 

Mr. RANGEL. Okay, but I will you could send me something as 

soon as you can. If we know that—do you really believe that illegal 

aliens generally are paying tax, Federal taxes? 

Mr. EVERSON. Well, it’s a very difficult thing to estimate, but, 

as I indicated, this year, so far, we’ve received 2.6 million returns 

that have an ITIN on a return. Now that can be an ITIN for a dependent or for a spouse, but probably there are 2 to 3 million 

illegals who are paying taxes out of the general consensus, of about 

7 million you mentioned in the workforce. So, clearly, there is a 

very significant contribution of tax by that population, sir. 

Mr. RANGEL. Thank you for your leniency, Mr. Chairman. 

Mr. MCCRERY. You’re quite welcome, Mr. Rangel. Mr. Shaw. 

Mr. SHAW. Thank you, Mr. Chairman. I’d like to start with Dr. 

Horn. I have an interesting question, I think. In your testimony, 

you provide, correctly so, that the TANF payments are paid on behalf of the child, if the child is an American, regardless of whether 

the parents are illegal or not, they’d be entitled to some TANF payments. 

Also, under the Welfare Reform Law, certain work is required in 

time-limited welfare reform. How do you work this out where somebody is an illegal and is required—having work requirements with 

regard to a condition of receiving TANF payments? 

Mr. HORN. If the adult is an undocumented immigrant, then 

they are not eligible for an adult assistance payment under any circumstance, and they are not covered under the work requirement. 

So, in cases where an illegal immigrant has a U.S.-born, citizen 

child, that benefit is paid on behalf of the child, but the adult is 

not eligible for Federal payment. 

Mr. SHAW. Oh, the child is not eligible for Federal—— 

Mr. HORN. The Child is, but not the parent, if the child is a U.S. 

citizen. 

Mr. SHAW. Where do you pay the TANF funds? 

Mr. HORN. Payment goes to the family. 

Mr. SHAW. To the illegals? 

Mr. HORN. The check, since children generally don’t have bank 

accounts, goes to the parent. 

35 

Mr. SHAW. That’s interesting. Mr. Everson, I—listening to the 

exchange that you had with Mr. Rangel calls to mind a bill that, 

I think, Mr. English has filed, and that is a question—and which 

I think I’m a cosponsor, and that is a question of matching SSNs 

with employees with regard to the W–2 forms that are filed for 

these employees. The question is what effect would it be to tell the 

employer that unless they can come up with a legitimate SSN, that 

they would not be able to deduct from their income tax the cost of 

the labor payments made to illegals. 

Mr. EVERSON. I think that this could be enforced, Congressman, but we need to consider that carefully. I would suggest that 

the real trick here is to get comprehensive reform so that we dry 

up the demand and the flow of illegals into the country. 

If that’s not done, a provision like that could have a real impact 

where businesses decline to organize in the legal sector. Businesses 

would then go into the underground economy where they don’t pay 

taxes at all. They’re then not paying the employment taxes; they’re 

not paying the income taxes. So, I’d be very careful before we did 

something like that, sir. 

Mr. SHAW. That’s interesting, and the—I would assume, though, 

that most of the illegals don’t really reach the point where they 

have any income tax liability. 

Mr. EVERSON. I think that’s probably, by and large, true, I 

talked about the billions that do come in, but if you look at all 

those mismatches that I mentioned before, the preponderance of 

them is for amounts below $10,000. Right now it takes about 

$8,000 as a single filer before you have any tax obligation, and 

$16,000 if you’re filing jointly, so you’re right. A lot of folks are 

under that limit. 

Mr. SHAW. Commissioner Barnhart, I, for some time—and I 

think we’ve talked about this, maybe, over the years. It’s been a 

very great concern of mine that somebody can be amassing Social 

Security payments under, really, a false number that they have 

made up, and actually, in many cases, is part of identity theft, and 

then they can come back, if they were legalized and had a legal 

SSN, they could come back then and claim the moneys that they 

they’ve paid in under an assumed name or quite—due to fraud and 

identity theft of another. Do you think we ought to reevaluate that 

position, and, exactly what—it seems basically wrong to me to 

allow somebody to enjoy our Social Security system who has actually defrauded the system for so many years, and then going back 

and claim the benefits of the fraud that they have perpetrated on 

the system, as well as, in some cases, the employer. 

What would be the effect of changing this policy? How much 

money is out there that’s estimated that would be forfeited in the 

event we were to change this policy? 

I think the situation over at the Senate was pretty much tracking a lot of the law that’s already on the books in their immigration 

bill. 

Ms. BARNHART. Yes. Mr. Shaw, as you know, there have been 

several changes made relative to the issue of who can collect Social 

Security benefits. In the 1996 legislation, it was required that you 

had to be legally present in the United States to collect benefits. 

36 

The Social Security Protection Act (SSPA) (P.L. 108–203) that 

went through this Committee required that anyone who was issued 

a SSN after on or after January 1, 2004, had to have been work 

authorized at some point or the earnings that they had accrued 

would not count toward Social Security benefits. 

The difficulty that we run into in looking back and trying to discern whether the person was work authorized or not work authorized is that, to the best of my knowledge, there is no electronic 

database or file where it chronicles a person’s status for specific periods of time. For example, a person could come into the country 

legally and be working, and then become not authorized to work, 

and therefore be in an unauthorized status, and then come back 

into being in an authorized status again. 

It’s my understanding, and I would defer to Ms. Myers, but my 

understanding is that the DHS does not, in an automated fashion, 

track that data longitudinally, and so it’s not readily available for 

us to go back and make determinations at Social Security about 

which portion of earnings were earned during a work-authorized 

period and which portion of earnings were earned under an unauthorized period. 

In the case of just strict identity theft—and I described that instance that I did because I believe that’s what you were talking— 

I believe that was the—— 

Mr. SHAW. Yes, ma’am. 

Ms. BARNHART. —but I just want to point out that in the case 

of strict identity theft, misuse of a SSN is a felony, and we would 

refer that to our Inspector General for investigation and prosecution. 

Mr. SHAW. Would the Senate bill have changed that? 

Ms. BARNHART. The Senate bill—— 

Mr. SHAW. Senate Immigration bill. 

Ms. BARNHART. My understanding is that the Senate Immigration bill does not change the requirements currently on the books 

related to who is eligible to receive Social Security and not eligible 

to receive Social Security. Rather, what it does is, it gets into making more people potentially eligible. 

Mr. SHAW. Thank you. 

Mr. MCCRERY. Mr. Stark. 

Mr. STARK. Thank you, Mr. Chairman. Secretary Myers, in your 

enforcement of these immigration and customs laws, do you use informants? 

Ms. MYERS. Yes, we do. 

Mr. STARK. My opponent has suggested a program of offering 

bounty payments to citizens for turning in undocumented workers 

or illegal residents. Would you—would the Administration support 

that? Would you support that idea? 

Ms. MYERS. Well, Congressman, we certainly are looking at, 

kind of, all creative ideas at this point, in order to insure—— 

Mr. STARK. Have you considered bounty payments? 

Ms. MYERS. We have not specifically considered so-called bounty 

payments. There are certain occasions—— 

Mr. STARK. Mr. Everson, you use rewards in collecting—— 

Mr. EVERSON. We do, sir. We have a whistleblower program. 

You’re right. 

37 

Mr. STARK. I doubt if you get many people in the five and 10 

percent bracket getting turned in, but you may. With your experience, would offering bounties to the average citizen help you or be 

useful in this kind of enforcement? 

Mr. EVERSON. I don’t want to get into that if I can avoid it. 

Chairman Grassley is a very strong advocate of expanding the 

whistleblower program, and we’re working to do that. Perhaps 

where you apply that is toward the top end, sir. 

Mr. STARK. That’s what I thought, too. One other idea that my 

opponent has that I, as far as I know of any—I guess I could ask 

Dr. Horn. He suggested that we revoke the citizenship of all the 

children who were born here of illegally resident parents, and I’m 

not a lawyer, but I’m not sure that, short of a Constitutional 

amendment, that would be possible. Is anybody here a lawyer? 

Who’s a lawyer? 

Are you a lawyer, Mr. Everson? I don’t think that’s Constitutional, do you? 

Mr. HORN. I’m a psychologist, not a lawyer. 

Mr. EVERSON. I believe that would require a Constitutional 

amendment, sir. 

Mr. STARK. Thank you very much. Now, Secretary Myers, you’re 

familiar with both the Senate and the House bill? 

Ms. MYERS. Yes, sir. 

Mr. STARK. Which do you prefer, and which would be more 

helpful in your work? 

Ms. MYERS. We enforce the law, and whatever law is passed, 

that’s the law—— 

Mr. STARK. I’m asking, you’re a professional law-enforcement 

person. We have two bills we’re discussing, we may compromise between them. I’d like to know which of the bills would be more useful to you in fulfilling your duties. 

Ms. MYERS. Well, there’s certain core things that we need in 

order to be more effective in enforcing, particularly, the Worksite 

Enforcement Law. One, we believe, would be more regularized access to the Social Security no-match data. 

Mr. STARK. Which bill does that better? I’m—— 

Ms. MYERS. Well, sir—the Administration, I think, has worked 

very closely. We would be happy to continue to work on that, because—— 

Mr. STARK. Let me try—is anybody else, Commissioner 

Everson? Between the bills—Secretary Barnhart, in Social Security, which bill would make your job easier? I’m not—I don’t think 

we’ll get either one in as it stands, but I’m curious which one would 

help you more. 

Ms. BARNHART. From my perspective, Mr. Chairman, Social 

Security doesn’t get involved, as Mr. Everson said earlier in his 

opening remarks, Social Security doesn’t get involved in strict enforcement of immigration law. So, from my perspective, both bills 

address the issue of Basic Pilot in terms of expanding the current 

Basic Pilot to make it mandatory to all employers. In addition, the 

Senate bill would include more elements. 

What I’m mainly concerned about is making sure that wages 

that are reported to Social Security are credited accurately to the 

38 

appropriate SSN. This goes back to the question that I was 

asked—— 

Mr. STARK. Dr. Gustafson, one of the concerns in the bill, the 

House bill, that the Senate bill doesn’t have is that there’s a—that 

the emergency-room workers who help illegal residents or aliens 

might be arrested for providing care that, under EMTALA, they’re 

required to provide. Have you looked into that part of the House 

bill? Would you have any comment on that? 

Mr. GUSTAFSON. Not in any depth, sir. 

Mr. STARK. Pardon? 

Mr. GUSTAFSON. We have not looked at that provision in any 

depth. 

Mr. STARK. You’re familiar with it? 

Mr. GUSTAFSON. It has been called to our attention recently, 

sir. 

Mr. STARK. Do you think it would help? 

Mr. GUSTAFSON. I think we would have to voice concern about 

a provision which interfered with the public health role of America’s hospitals, sir. 

Mr. STARK. Thank you, Mr. Chairman. 

Mr. MCCRERY. Mr. Herger. 

Mr. HERGER. Thank you. Commissioner Barnhart, just following up on some questioning that Congressman Shaw asked earlier, do you have any estimates of the number of children receiving 

Supplemental Security Income (SSI) benefits whose parents are in 

the United States illegally? 

Ms. BARNHART. No, sir. I do not. I can tell you that approximately 1,000,000 children receive SSI disability benefits. Unfortunately, for purposes of answering your question, we don’t capture 

whether or not the children are American citizens because they 

were born here but their parents are here illegally. We don’t capture that kind of data. 

Mr. HERGER. Secretary Horn, your testimony notes that in 

2004, about 152,000 TANF child only included parents of unknown 

citizenships. That is an alarming figure. Is this group a rising 

share of the welfare caseload? If so, what, if anything, can we do 

through future TANF policy reforms to address this issue? 

Mr. HORN. If you look at the number and the percentage of 

cases in which a child is receiving a benefit and residing with a 

parent who is not receiving a benefit, and where the parent is either of unknown citizenship or alien status, back in 1996, there 

were about 160,000 such cases, and in 2004, there were 152,000. 

So, in terms of absolute number, compared to the last year of Aid 

to Families with Dependent Children (AFDC), the number has 

gone down, although, if you compare it to 2000, the number was 

about 91,000 in 2000, and currently it’s 152,000. So, it depends on 

what your comparison year is. 

If you look at the percentage of those cases, in 1996, under the 

last year of AFDC, it was 16 percent of all child-only cases, and in 

2004, it was 18 percent. If you compare to 2000 instead, it was 12 

percent in 2000 and 18 percent in 2004. So, if your comparison is 

to the last year of AFDC, the number has gone down, certainly, but 

if you compare to 2000, the number and the percentage has gone 

up. 

39 

Mr. HERGER. Is that considering the fact that our caseload has 

gone down by 60 percent since 1996? 

Mr. HORN. If you look at the overall number of child-only cases 

on the caseload, the number has stayed relatively constant since 

the enactment of TANF, but the percentage has grown pretty dramatically for the entire category of child-only cases. In 1997, there 

were about 900,000 child-only cases, and in 2004, there were 

864,000. As a percentage of the total caseload, however, the percentage of child-only cases has grown from 21 percent to 44 percent. Now not all of those child-only cases are in the category that 

we’re discussing. A lot of them are residing with a parent who is 

on SSI, and some of them are residing with parents who are in 

sanction status, so it depends on which category of child-only cases 

you’re thinking about. 

Mr. HERGER. Does welfare—again, Dr. Horn, does the welfare 

system now expect illegal alien parents to work for these benefits 

or otherwise place a time limit on them? 

Mr. HORN. Illegal aliens are not eligible to receive a cash assistance payment. 

Mr. HERGER. Again, referring to the children who are receiving 

them, who have been born in the United States, even though their 

parents are illegal, they are legal, and if those children are receiving, are the parents working? 

Mr. HORN. Child-only cases, regardless of the status of the 

adult, at least until recently, the adult was not subject to the work 

requirement. That has changed for some categories of child-only 

cases with the publication, in late June, of our interim final TANF 

regulation, but we still did not include, as being subject to the work 

requirement, parents of child-only cases who are either immigrants 

under their five-year bar for receipt of benefits, or illegal immigrant parents. 

Mr. HERGER. Thank you. 

Mr. MCCRERY. Mr. Johnson. 

Mr. JOHNSON OF TEXAS. Thank you, Mr. Chairman. Ms. 

Barnhart, following up on the Chairman’s earlier question, do you 

have the ability to have instantaneous confirmation of someone 

with a SSN. 

Ms. BARNHART. Mr. Johnson—— 

Mr. JOHNSON OF TEXAS. Turn on your mic, please. 

Ms. BARNHART. Thank you. Mr. Johnson, what we have is the 

ability for an employer, through our SSN Verification System, to 

get a pin and password to be able to sit down on a web-based system, plug in Jo Anne Barnhart and my SSN and instantaneously 

it comes back that either it’s a match or it’s a no-match. 

Now that does not say, going back to a point Ms. Myers made 

earlier, that I’m actually Jo Anne Barnhart. It can’t do that, but 

it can say that the name and the number match, but not necessarily that the individual who provided that name and number 

to the employer in this instance is actually—— 

Mr. JOHNSON OF TEXAS. Yes, it could be a false number, but 

it matches whatever the name is? 

Ms. BARNHART. Correct. It does. 

Mr. JOHNSON OF TEXAS. Okay. You coordinate with them on 

that, with ICE? 

40 

Ms. BARNHART. Yes, we do. That is part of what we do. In addition to the SSNVS program that is available to all employers on 

a voluntary basis, we also work through the Basic Pilot with the 

DHS. 

Mr. JOHNSON OF TEXAS. Okay. You got a non-work alien file, 

I think, that tracks earnings. Is that true? 

Ms. BARNHART. We do have a non-work alien file. 

Mr. JOHNSON OF TEXAS. With a non-work SSN. If the Congress were to pass a new law stating, ‘‘only earnings from citizens 

or those with a green card were to be credited to Social Security,’’ 

is there any way to go back to previous years and make sure that 

no wages paid to illegals would ever be credited with Social Security benefits? 

Ms. BARNHART. That would be extremely difficult, Mr. Johnson. As I was discussing with Mr. Shaw earlier, the issue for us 

is that there is no longitudinal database that tracks a person’s 

work authorization status at specific points in time. So, for example, let’s say that I was here illegally in this country working, and 

then I went through whatever channels are necessary to go 

through, got sponsored, and I became a work authorized individual. 

It is my understanding that the database at DHS actually overwrites and then says, ‘‘As of today, July 26, I am now work authorized and in this country legally.’’ So, the data that would be necessary to go back and say, ‘‘that work authorization just started 

that day, and anything prior to was unauthorized,’’ to the best of 

my knowledge does not exist. I would invite Ms. Myers to talk 

about it. 

Mr. JOHNSON OF TEXAS. Okay. You do know that they’re 

earning wages and you apply them to Social Security? 

Ms. BARNHART. We do know that they’re earning wages, and 

if the name and SSN match our files, we apply it to Social Security. 

Mr. JOHNSON OF TEXAS. Okay. Do you coordinate with IRS 

on those wages? 

Ms. BARNHART. The coordination that takes place with IRS is 

actually done through our no-match. Every year, when we receive 

wage reports, which are the W–2s that are submitted with a summary W–3, we record those. The IRS, and Mr. Everson can obviously describe what they do better than I can, but we actually provide IRS with the information on the W–2s, and if we end up with 

a name and SSN that doesn’t match our records, we let them know, 

and if they can determine the correct SSN from their tax return 

file, then they contact us. 

Mr. JOHNSON OF TEXAS. Well, what happens if you don’t get 

a match? 

Ms. BARNHART. If we don’t get a match it goes into the earnings suspense file, something that’s been in existence since 1937. 

Mr. JOHNSON OF TEXAS. Yes. 

Ms. BARNHART. There are approximately 255,000,000 items in 

the earnings suspense file. Not dollars, but wage items that could 

not be attributed to a correct earnings record. 

Mr. JOHNSON OF TEXAS. Do you now coordinate with ICE on 

those kind of items? 

Ms. BARNHART. We send to the DHS information on the nonwork SSNs where wages were earned in the non-work alien file. 

41 

Mr. JOHNSON OF TEXAS. Okay, let me ask—— 

Mr. EVERSON. If I could add something to that. This gets to the 

nub of the issue on section 6103. Those 8,000,000 mismatches or 

so, are taxpayer information. It’s generated off a W–2. A W–2 is 

taxpayer information, so this is what the Administration is proposing would be addressed through the mandatory verification system, a change to 6103 that would allow what you’re talking about 

to happen, sir. 

Mr. JOHNSON OF TEXAS. Thank you. One quick question for 

Dr. Gustafson, does CMS have an understanding as why there was 

money left over in 2005 for section 1011 funding; and was it a lack 

of education on the providers’ part or were hospitals reluctant to 

verify status of citizenship; and what were the main barriers? 

Mr. GUSTAFSON. Not all of the money was expended in 2005. 

As you indicated, that rolls over to be available in 2006. We believe 

that the principle thing to point to here is that this was a new program, so that we were getting up and running, providers were enrolling in it, everybody was getting used to the new business. We 

have no evidence I could provide you indicating any reluctance on 

the part of providers to participate. 

Mr. JOHNSON OF TEXAS. Thank you, sir. Thank you, all of 

you. Thank you, Mr. Chairman. 

Mr. MCCRERY. Thank you, Mr. Johnson. Mr. Levin. 

Mr. LEVIN. Thank you. Welcome. Welcome to all of you. Ms. 

Barnhart, I think there was a Social Security Actuary estimate on 

the Senate bill. Are you familiar with that? 

Ms. BARNHART. Yes, sir. I’ve read that estimate. It was done 

by our independent actuary. Yes, sir. 

Mr. LEVIN. So, why don’t you briefly tell us what it said about 

the impact in terms of the solvency of the fund. 

Ms. BARNHART. The actuary’s memo that was provided to 

Chairman Grassley explained that, due to significantly increased 

revenue, because of the temporary worker program provided for in 

the S. 2611, the exhaustion date would actually be moved out two 

years, from 2040 to 2042. 

Mr. LEVIN. Thank you. Also, we were talking about the childonly cases, and you mentioned the availability of SSI. I think the 

record should be clear. If the child is illegal, there’s no benefit, 

right? There has to be legality of somebody, is that correct? 

Mr. HORN. Yes. It’s complicated. There are different categories 

of child-only cases. One category is that the parent is a legal immigrant, a qualified immigrant, who is under the five-year bar from 

receiving assistance, and the child is a U.S. citizen and getting assistance. Another category would be a U.S. citizen-born child, 

whose parents are here illegally, and therefore ineligible for a cash 

benefit. There are other categories. One of them is that the parent 

is on SSI and the child is receiving a benefit. 

My assumption is to get SSI, you have to be a U.S. citizen yourself, as an adult. Is that correct? 

Ms. BARNHART. Actually, the limitations on SSI to non-citizens 

became extremely strict after the 1996 legislation. Absolutely, 

Wade. The fact of the matter is that unless you are a legal citizen, 

you really don’t get SSI, except in very, very limited circumstances, 

for example, in the cases of certain refugees or asylees. 

42 

Mr. LEVIN. I just though the record should be totally clear on 

that. Let me ask you another question about the Senate bill. Would 

guest workers be entitled to any benefits under the Senate bill. 

Does anybody know that? 

Ms. BARNHART. What I can tell you is that depending how the 

Congress decides to deal with that, workers who earn credits and 

who pay into Social Security would be entitled to benefits under 

Social Security, unless the legislation decided to change that. 

Right now, generally if you earn money working in this country, 

your employment is covered under Social Security, and you pay 

taxes into Social Security, then you are covered by Social Security. 

Mr. LEVIN. Have you looked, though, at the guest worker provision in the Senate bill? 

Ms. BARNHART. Not specifically to that degree, Mr. Levin, but 

I’d be happy to do that and provide a response for the record. 

[The response of Ms. Barnhart follows:] 

The effect on Social Security benefits of a temporary worker program would depend on the details of the ultimate provision. The SSPA provided that, in determining whether a noncitizen qualifies for benefits, the noncitizen must be authorized to work when his or her SSN was issued or anytime thereafter. The requirement applies to SSNs issued after December 2003. 

Thus, if Congress establishes a temporary worker program and provides for the 

issuance of work-authorized SSNs to temporary workers, any earnings that they 

have in covered employment would be used in determining their eligibility for, and 

the amount of, their Social Security benefits. Of course, to qualify for Social Security 

benefits, the worker would need enough in credited earnings to be insured. 

f 

Mr. LEVIN. Good. Dr. Horn, you’re the psychologist, so I won’t 

ask you a legal question. 

Just so we’re clear again, the child-only cases, so what percentage of the overall beneficiaries relates to child-only cases? Just give 

us a—because you talked about the increase, but in terms of the 

total workload, what proportion is involved with child-only cases? 

Mr. HORN. The total category of child-only cases, as a percentage of the total TANF caseload in 2004, is 44 percent. That is not 

the same thing as the percentage of child-only cases where the 

adult is an illegal or a qualified immigrant under the five-year bar. 

That’s a much smaller percent. 

Mr. LEVIN. So, it’s clear, what’s the number of cases, now, of 

people on TANF? 

Mr. HORN. The number of families on TANF, in 2004, was 1.98 

million. Of that, 864,000 are child-only cases. If you subtract out 

families with non-parent care givers and those who are in sanction 

status, that number drops from 864,000 to 426,000, and, within the 

426,000, 152,000 have either a parent who is a qualified alien who 

is ineligible—usually that means they’re under the five-year bar for 

assistance—or they could be an illegal alien. 

Mr. LEVIN. So, it’s out of a total of how many it’s how many? 

Mr. HORN. So, out of 1.98 million, the number of cases in which 

the child is receiving a benefit while residing with a parent who 

is either of unknown citizenship or alien status is 152,000. So, out 

of 1.98 million, that category is 152,000. 

Mr. LEVIN. Thank you. 

43 

Mr. MCCRERY. Just to clarify, Commissioner Barnhart, on Mr. 

Levin’s question about non-citizens receiving Social Security benefits. They have to be here legally in order to claim Social Security 

benefits and to collect Social Security benefits, isn’t that correct? 

Ms. BARNHART. Absolutely, sir, I interpreted Mr. Levin’s question as speaking specifically to people who would be authorized as 

temporary workers under the Senate bill. 

Mr. MCCRERY. Yes, I think he was. I just wanted to make it 

clear that people who are not here legally, even though they may 

have paid Social Security taxes, cannot collect Social Security benefits unless they subsequently become legal workers or citizens here. 

Ms. BARNHART. That is absolutely true as passed in the Social 

Security Protection Act a few years ago. 

Mr. MCCRERY. Thank you. Mr. Lewis. 

Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Ms. 

Barnhart, as we have been discussing, most illegal aliens work but 

many granted amnesty under the Senate bill may be disabled or 

otherwise unable to support themselves in this country, and many 

may seek benefits under programs under our jurisdiction, like the 

SSI and Social Security disability, welfare checks. How would the 

amnesty program affect the eligibility of formerly illegal aliens for 

SSI and Social Security programs? 

Ms. BARNHART. Thank you, Mr. Lewis. Obviously, it would depend ultimately on the specifics. Just to generally try to answer 

your question, even if you had an increase in the number of lawfully present aliens, it wouldn’t necessarily have a big effect on the 

SSI Program or Social Security because people still have to qualify 

under the existing rules of the program. For example, in Social Security, in order to receive retirement benefits you have to have 40 

quarters of work or the equivalent of 10 years. So, simply looking 

at automatically legitimizing the person’s presence in the United 

States does not guarantee that. Further, there is the additional 

provision that the Chairman just referenced from the Social Security Protection Act, which requires that person to have a legal SSN 

or a SSN issued prior to 2004in order to be able to collect benefits. 

Mr. LEWIS OF KENTUCKY. Okay, thank you. I yield back my 

time. Thanks. 

Mr. MCCRERY. Mr. Foley. 

Mr. FOLEY. Thank you very much. A couple of questions, either 

to Internal Revenue or Social Security, I have inquired to some employees, who appear to be obviously working in our area, however 

I don’t believe they are using an accurate number. When I asked 

the question because I was curious how they cashed paychecks, 

how they were paid by their employers, and one of them said, 

‘‘Well, we all use one number, five or seven of us use one number 

in order to facilitate to our payments. So, we use a SSN belonging 

to another individual.’’ How is it the Service cannot determine if 

there are many entries into a person’s payroll record, five different 

jobs, it would seem physically or humanly impossible to have five 

simultaneous jobs but that is apparently how they are working the 

system in order to receive a paycheck. 

Ms. BARNHART. Well, I would defer to Mr. Everson to give details about how W–2 information is reported but from my knowledge W–2’s do not express the time period in which the earnings 

44 

were accrued other than the year. So, it is possible. We do have individuals who have multiple W–2’s for perfectly legitimate reasons. 

They may work for a contractor. They may work all over the place. 

There are a number of circumstances under which it is perfectly 

plausible that the individual does have multiple W–2’s. Individuals 

change jobs more and more. The current generation changes jobs 

way more than say the Boomers did or our parents before us. 

Mr. FOLEY. Let me understand, so you are saying that the W– 

2 would reflect the aggregate payments over the course of the year, 

not individual payments? 

Ms. BARNHART. Well, what it doesn’t say is that Jo Anne 

Barnhart earned these from January to March of 2006. What it 

says is these were the earnings that were paid to her by this employer for tax year 2006. So, we cannot discern from the information reported to us that they were concurrent earnings to get to 

what I believe your initial question was. 

Mr. FOLEY. Well, and I am trying to figure out on a weekly 

basis as they report their Social Security payments, the payments 

on a quarterly basis, the employer, whoever that happens to be. 

There is no cross system that shows inputs from employers collected from employees that then verify where those two? 

Mr. EVERSON. If maybe I could get in here, sir. There are approximately 230-plus million W–2s that are issued each year for 

about 150 million employees. That indicates that the typical employee gets more than one W–2. That is the first point I would 

make. As I have indicated, there are about eight million 

mismatches a year, largely associated with this population of folks 

working illegally. Within that, it is very likely that there is a higher multiple people working in more than one job. Part of the problem you have here is that all that information flows into us after 

the work takes place because we don’t get the W–2s from SSA until 

several months after the end of the calendar year. In many instances this population is—if you look at these employers, their 

total employee turnover is more than 100 percent of employees during the course of the year. So, trying to get the currency on this, 

which is what the Administration is really suggesting, with the upfront verification is much more effective than trying to track it 

down afterward because of the nature of this population. 

Mr. FOLEY. I guess ultimately if five people are using the same 

number, then one person is going to have a more plentiful Social 

Security check at the end of their working? 

Mr. EVERSON. Let me make a comment as to the tax then defer 

to my colleague. This is a problem where there is identity theft. We 

estimate that approximately 30,000 returns a year come in from 

identity theft. That is where my name and SSN is being used by 

somebody else. So, to us it appears that there are multiple wages 

coming in on my account. If there is just a mismatch, our systems 

screen that out so that if someone is using my SSN but not my 

name, I am not going to be dinged by the Service. 

Ms. MYERS. If I could just add there, we have found on some 

case by case occasions that W–2’s are useful. In the IFCO case, 

which is the case I cited in my opening example, it actually came 

to our attention because the illegal aliens were ripping up their W– 

2’s. Another employee said, ‘‘Why are you doing that?’’ They said, 

45 

‘‘We don’t need those. We are not paying taxes.’’ So, five to seven 

individuals posting against one number may not be the big thing. 

In cases where we have hundreds, two hundred, those are the 

kinds of things that often come to our attention through other 

means and are very useful in building a case. 

Ms. BARNHART. I would just add from Social Security’s perspective, if there are seven people who somehow happen to come up 

with a name/number combination that is a legitimate number 

issued to a person who is authorized to work, when that person receives their statement from us, which we provide to all workers 

over age 25 every year, approximately 2 months before their birthday, it shows the earnings for each of the preceding years. We urge 

people obviously to read the statement, pay attention to it, and we 

find that people actually do from the surveys we do. So, I obviously 

know how much I earned in a particular year, and I could look and 

if I all of a sudden saw enormous amounts of earnings because 

these seven people had my name and number, then I would know 

that individuals were using my number, and I would be able to 

contact SSA and we would sort through that. 

Mr. EVERSON. It might help you get a loan though. 

Mr. FOLEY. That was the irony of it all is who is going to end 

up reporting the excess income if they don’t have a tax penalty, 

they will simply have a more aggregate of a Social Security check 

at the end of their working years. So, it just seems a system 

fraught with problems. 

Ms. BARNHART. What we do at the end of—say this situation 

would continue throughout a person’s work year, odds are when 

they come to apply for benefits, going back to the Chairman’s point, 

they would not be eligible because they are probably still residing 

illegally in this country, which would make them de facto ineligible 

for benefits. If, in fact, they did have a work authorized SSN, we 

would go through and actually do what we call unscramble the 

earnings, and we do this with some degree of regularity. Sometimes it is for purely legitimate reasons, a woman gets married and 

changes her name but forgets to tell Social Security and her employer reports earnings under her married name. There are all 

kinds of reasons why earnings end up being scrambled. We would 

actually make the individual provide information from the employer, wage stubs proving that they had earned those earnings. It 

is quite a process that some people must go through in order to 

show that past earnings that were recorded on a number used by 

many were actually theirs for purposes of determining the benefit. 

Mr. MCCRERY. Dr. McDermott. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. Article 14 of the 

Constitution says that, ‘‘All persons born in the United States are 

citizens and no law shall make or enforce any law which will 

abridge the privileges of immunities.’’ Now, you have heard questions asked here about how do the children of illegals get TANF 

benefits as though there is something wrong with that, as though 

there was something wrong. Well, I would like to expand this a little bit. Let me give you a specific example. Tommy Clark came over 

from Ireland for a visit to his brother in Boston, stayed on, got a 

job, laid bricks. The first year he paid his income tax on his ITIN. 

The next year he paid his ITIN, paid his ITIN for 10 years. Then, 

46 

well, he married Mary Quinn along the way and they had two little 

boys, Sean and Locklin. Then Tommy was killed on the job. Would 

his children be eligible for survivor benefits under Social Security? 

Ms. BARNHART. I would have to have a little more information 

about whether or not—— 

Mr. MCDERMOTT. Whatever you want to know I can make it 

up. 

Ms. BARNHART. Was he legally working in this country at the 

time that he was making payments? 

Mr. MCDERMOTT. No, he was an illegal. 

Ms. BARNHART. He never had a work authorized SSN? 

Mr. MCDERMOTT. He never had a SSN. He used an ITIN the 

whole time. 

Ms. BARNHART. He used an ITIN the whole time. For purposes 

of the children, were they born in this country? 

Mr. MCDERMOTT. The children were both born here, one in 

Boston, Mass General. 

Ms. BARNHART. I think the difficulty would be in the fact that 

the individual based on the Social Security Protection Act provisions, would not have had a legally authorized to work SSN. I 

would have to check on that, Mr. McDermott, just to be sure before 

giving you a definitive answer. 

Mr. MCDERMOTT. Are you saying, Mr. Everson, that you keep 

a record? He pays taxes on his wages, he pays the payroll taxes, 

doesn’t he? He pays Social Security and pays Medicare, right? 

Mr. EVERSON. What you are getting to is the divergence under 

the law between treatment for Social Security benefits and your income tax obligations, sir. 

Mr. MCDERMOTT. You just left me hanging out in the middle 

of a divergence, what does that mean? 

Mr. EVERSON. It means while the information is collected and 

shared between the two agencies, that just because you paid your 

income taxes, that doesn’t entitle you to Social Security benefits. 

Mr. MCDERMOTT. If you put money into an account, you have 

done your 40 quarters of work. I worked him for 10 years. 

Mr. EVERSON. Sure. 

Mr. MCDERMOTT. So, he has his 40 quarters done. It is all recorded by you and she has got the data, right? You sent it over to 

her. 

Ms. BARNHART. I would have the data based on the W–2s that 

are reported, the employer wage reports that were posted against 

that individual’s number. You indicated that in this case that the 

individual you are presenting here wouldn’t have a work authorized SSN. 

Mr. EVERSON. There would be a mismatch here, sir. This is 

what we are getting to—because Mr. Clark wouldn’t have used his 

ITIN at his employer. He would have used a false SSN in order to 

have been hired. 

Ms. BARNHART. So, his wages would go into our earnings suspense file, Mr. McDermott. 

Mr. MCDERMOTT. Why didn’t you give that information to the 

Homeland Security people and get him thrown out of the country? 

How could an Irish immigrant last 10 years in this country and 

47 

you not give his name to her and boot him? If he is using a false 

SSN, isn’t somebody going to pick that up? 

Mr. EVERSON. Well, again, the basic presumption is the protection, the absolute privacy of the tax return information. Right now 

it is not shared with DHS in order for them to go find this person 

and to use your word ‘‘boot’’ him. That is what is the nub of the 

issue. That needs to be considered because there will be a tax administration impact on changing section 6103, albeit with the goal 

of having better protection and better workforce enforcement. 

Ms. MYERS. If I could just add, sir, something I believe is interesting in this situation as well. This whole notion of reporting 

when someone is not work authorized and so forth, based on our 

reviews that we do, at any given point in time about 36 percent of 

the people who are not work authorized at the time that the no 

match is initially discovered, meaning when the wage report is 

filed, either in February or March of each year, about 36 percent 

eventually become work authorized and are work authorized within 

that year. So, the situation changes quite a bit, and I think that 

also elaborates on some of the complexities that you are speaking 

about, Mark. 

Mr. MCDERMOTT. Doesn’t the employer have to fill out an I– 

9 as well and you are supposed to go collect them. Do you go and 

collect all the I–9’s from all the employers? 

Ms. MYERS. No, the employer keeps those on file so we do not 

go—we audit them and do investigations. 

Mr. MCDERMOTT. How often do you audit? This guy is working 

for 10 years for a construction company and you haven’t audited 

his company in 10 years? 

Ms. MYERS. Well, certainly we have a number of challenges, we 

only have about 5,700 agents in the entire country who not only 

do work site but also do criminal aliens, who do custom violations, 

who do kind of a number of things. We are really increasing our 

work site efforts, and we are targeting the most egregious employers. 

Mr. MCDERMOTT. How do you increase them? You don’t have 

any more people. 

Ms. MYERS. We have increased them by trying to do it smarter 

because we used to just focus on the I–9 audits, and we found at 

the end of the day that sometimes people would have their paperwork clean but it wasn’t good paperwork. So, we focus on using 

confidential informants, using other sources, working with other 

leads to develop cases. 

Mr. MCDERMOTT. What does it mean to have your paperwork 

clean but it isn’t clean? That sounds political to me a little. 

Ms. MYERS. Certainly, Congressman, if you owned a construction company and you had six employees and you had all their documentation listed on the I–9’s, it was actually us and in fact you 

knew that. That would be the kind of problem that we would see 

where sometimes the I–9 paperwork is fine but in fact we have reason to know that the employer actually knows that they are not 

hiring me, they are hiring the individual that you named. 

Mr. MCDERMOTT. Does the I–9 have my SSN or something on 

it so I know that—I am the employer, how do I know that this person is illegal? 

48 

Ms. MYERS. Well, certainly there are challenges for the employers and so that is why we are providing them with best practices. 

So, for if I came into you and I said I was Wade Horn. I said I was 

Wade Horn, and I claimed to be a Caucasian man with a moustache but I looked just like me, and I gave you my documents, you 

filled it out. If you didn’t look askew at that, that is a problem. 

Now if I came in and said I was Julia Smith, you might not have 

any reason to know based on the documents, based on a fake document I presented to you and so that is why we use things in addition to just looking at I–9’s, which can be very helpful to bring 

cases. What we do is we work with employees who act as whistle 

blowers. We got a good case the other day from a congressman in 

Pennsylvania who had heard that down in one of the grocery stores 

in North Carolina there were a lot of illegal aliens employed there. 

We actually conducted an investigation and made some arrests 

there. So, we use kind of a wide variety of sources and then we are 

bringing criminal cases. We are just not focusing on small fines. It 

used to be we would fine people $150 and today that is not enough 

to keep employers from going out and hiring other illegal aliens. 

What is enough is if you bring a criminal charge against them 

where they could be subject to spending years in prison or forfeiting ill-gotten assets. 

Mr. MCDERMOTT. One second to say what is puzzling to me is 

I look at your work site enforcement data from 1999 to 2003 and 

you went from 192 cases—182 cases down to four this year. It 

sounds like you are doing less to me. I yield back the balance of 

my time. 

Mr. MCCRERY. I will give Ms. Myers a chance to respond to 

that. 

Ms. MYERS. I appreciate that. That is actually the notice of intent to fine, the civil fine structure, which we found to be not effective. We actually would like to have a more robust civil fine structure that is in the Senate bill, it is something we think would be 

helpful. This year we are actually up over 445 criminal arrests, and 

we have apprehended over 2,700 illegal aliens. So, we think we 

have made great progress in the area since ICE was formed. 

Mr. MCCRERY. Mr. Brady. 

Mr. BRADY. Well, first I hope Mr. McDermott will accept our 

condolences to the family, the widow and the son of the imaginary 

couple that you have. 

Mr. MCDERMOTT. They got good benefits. 

Mr. BRADY. There are a lot of emotional issues tied to the discussion about the temporary worker program. If I could ask Commissioner Barnhart first, trying to get a little handle on the Social 

Security impact. If I understand it right, under current law those 

who work here illegally, once they are legalized can claim benefits 

for work done illegally as long as they can prove through documents that they worked, is that correct? 

Ms. BARNHART. They actually have to have an authorization to 

work, a Social Security card that indicates authorization to work. 

We provide Social Security cards with no legend, just your name. 

We provide a legend that says, ‘‘Valid for Work with DHS Authorization,’’ or ‘‘Not Valid for Employment.’’ The not valid for employment category, we only provide less than 15,000 of those a year 

49 

and they are largely so people can take advantage of programs like 

those that Dr. Horn operates because they are State or Federal 

programs that require a SSN and card in order to be eligible for 

the programs. 

Mr. BRADY. So, under current law they cannot go back and 

claim benefits if they are here illegally working, have filed under 

multiple cards, for example, and then later are legalized? I am just 

trying to understand it. 

Ms. BARNHART. Well, if they are later legalized, and they have 

a SSN that was issued with authorization to work, then, yes, they 

can. They absolutely can because the fact of the matter is that we 

credit the wages to their SSN and use those wages in the calculation of their Social Security benefit since the law does not distinguish in that sense. What SSPA says is you have a work authorized SSN issued on or after January 1, 2004 in order to receive 

benefits. 

Mr. BRADY. Under the Senate bill, and they have sort of a 

three-tiered path to citizenship, but for those who end up working 

here legally, do they then have a claim for past Social Security benefits earned under—if they have a Social Security card, whether it 

is a legal document or a multiple fraudulent document? I am just 

trying to understand if they have the claim—— 

Ms. BARNHART. Again, that would fall into that unscrambling 

of earnings. If in fact they had earnings while they were working 

illegally, odds are they were posted to a false SSN or an incorrect 

SSN. Those would fall into the mismatch category that Mr. 

Everson and I have been describing, and if that were the case, it 

would require unscrambling those earnings. We would not simply 

accept their personal attestation that, gee, I was working there and 

these are my earnings. I dare say that happens in very few cases 

because most individuals don’t keep wage stubs and W–2’s, particularly if they are working illegally. As you pointed out, oftentimes 

people try to destroy W–2’s now who are here illegally because it 

is not to their advantage to have them. 

Mr. BRADY. If the Senate bill were eventually to become law, 

there are different estimates in how many would end up being legalized. I don’t know if it is five million or eight million or 12 million. Does SSA have any range of estimated costs to Social Security 

of what those past benefits may add up to? I know there are a 

whole bunch—it depends on what the final product would be obviously, but have you looked at or do you have experience and in past 

cases, what do those past claims tend to be? 

Ms. BARNHART. I don’t believe we have but I would be happy 

to check for you, Mr. Brady. What we have looked at in terms of 

that legislation is the workload that would be required assuming 

the majority of those individuals do not have legitimate SSNs. So, 

for example, if they were legalized and they all of a sudden needed 

to get a SSN, would we likely be having to issue 6,000,000 new 

numbers, 9,000,000 new numbers, 12,000,000 numbers. We have 

looked at that in the context of the fact that we now issue approximately 17,000,000 a year—usually 12,000,000 replacement numbers and 5,000,000 original numbers. So, obviously it would add 

fairly dramatically on a short-term basis to our, what we call, enuVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00053 Fmt 6633 Sfmt 6602 E:\HR\OC\31575.XXX 31575
50 

meration workload if in fact all those individuals needed Social Security cards. 

[Ms. Barnhart’s response follows:] 

Attached is a memorandum from the Social Security Administration’s Chief Actuary that provides information on the cost effects of the Senate-passed immigration 

reform bill (S. 2611). The estimates reflect the total cost of both the additional benefits that would be paid and the additional revenue to the trust funds (due to an increase in net immigration). As indicated in the memorandum, the net effect would 

be to reduce the long range deficit from the estimated level of 2.02 percent of taxable payroll under current law to roughly 1.88 percent of payroll. 

I would like to point out that this memorandum also includes information on the 

cost effect of a possible amendment to the Senate bill (amendment Number 3985 

by Senator Ensign) that would stipulate that a worker assigned a valid SSN after 

enactment would not be credited with earnings for Social Security benefit purposes 

for years prior to being assigned the SSN. The Chief Actuary indicates that the effect of this amendment is estimated to be a relatively small reduction in total benefits, possibly negligible. 

51 


31575A.001
52 


31575A.002
53 


31575A.003
54 


31575A.004
55 


31575A.005
56 

Mr. BRADY. Okay. May I ask how big is the suspension file for 

the no match dollar wise? 

Ms. BARNHART. The suspense file is 255,000,000 separate 

items, in other words wage reported items, and it totals $519.6 billion. What is important is to make the point that is wages and that 

taxes have been paid. So, in other words for those 255,000,000 instances of individuals where the wages did not match—their name 

and SSN did not match, those wages when you add them up total 

$519.6 billion. 

Mr. BRADY. Is that cumulative? 

Ms. BARNHART. Absolutely, from 1937—I believe that is 

through tax year 2003. 


31575A.006
57 

Mr. BRADY. Any idea how much each year that is running? 

Ms. BARNHART. I didn’t bring that information with me, but I 

could certainly—in terms of the dollar value, I could certainly get 

you that. I think it is around 1.3 percent of all earnings each yearend up in the earnings suspend file. 

[The information follows:] 

Wage item entries added to the Earnings Suspense File for TY 2003 

totaled $57.8 billion. 

f 

Mr. BRADY. All right, thanks, Commissioner. Sorry, I ran over 

time, Mr. Chairman. 

Mr. MCCRERY. Mr. Lewis. 

Mr. LEWIS OF GEORGIA. Thank you very much, Mr. Chairman. Mr. Chairman, I apologize that I had to be out of the room 

for a moment, a little more than a moment. I heard each member 

of the panel’s testimony. Commissioner Everson, it is good to see 

you here, and I know that my colleague, I believe Mr. Johnson 

touched on this issue while I was out of the room, but I want to 

be sure I follow-up on some discussion that we had when you testified earlier this year. 

Mr. EVERSON. Yes. 

Mr. LEWIS OF GEORGIA. I think back in February. 

Mr. EVERSON. Yes, sir. 

Mr. LEWIS OF GEORGIA. You testified before the Subcommittee on Oversight. I think that was a joint Committee, Social 

Security and Oversight. During that hearing, the DHS was seeking 

broader access to taxpayers’ return information, which would require an amendment to Tax Code section 6103. You testified then, 

and I think you made it plain and somewhat clear, that giving this 

information, turning this information over to the DHS in your 

words would have a chilling effect on participation in the tax system and that everyone should have their eyes wide open before 

agreeing to such a proposal. Do you care today to discuss your concern about giving DHS access to tax return information? 

Mr. EVERSON. Certainly, sir, and thank you for your welcoming 

words. I believe you have correctly quoted me but you have left out 

a part. 

Mr. LEWIS OF GEORGIA. Oh, what did I leave out? 

Mr. EVERSON. I advocated this sharing, but I said that there 

are times when concerns over tax administration can give way to 

a national imperative. My point then, and my point now is that we, 

and particularly this Committee, which has jurisdiction over the 

tax laws, needs to have its eyes wide open that we are changing 

this very important element of privacy as to return information. 

Let me just read you what the President said just 2 days ago. 

He said, ‘‘Congress is now considering legislation on immigration 

reform. That legislation must be comprehensive. All elements of 

the problem must be addressed together or none of them will be 

solved at all.’’ I believe what I said in February, and what I believe 

today, is that we need to solve all the elements of this problem. My 

concern would be if we have a cherry picking of solutions, some legalization efforts and not enough enforcement, or we don’t ultiVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00061 Fmt 6633 Sfmt 6602 E:\HR\OC\31575.XXX 31575
58 

mately get to the right balance here, then you will be left with immigrant groups and others counseling aliens not to participate in 

the tax system. That remains a concern of mine. That is why I 

think it is so important to do what the President says and get all 

the elements that need to be included in this legislation handled. 

I support what the President is doing very vigorously, but I do 

think it needs to be done in a balanced way and understanding 

that there will, sir, be this ramification on tax administration. 

Mr. LEWIS OF GEORGIA. I appreciate that very much, Mr. 

Commissioner. With your history and your background and your 

previous role in the Government, do you believe that the DHS has 

done all it can to enforce immigration laws and use the laws already under its authority? 

Mr. EVERSON. Well, I am reluctant to criticize sister agencies, 

especially when someone is sitting right next to me. So, if you will 

bear with me, I won’t go down that road. What I will say is that 

the flaw in the 86 Act is one that we have been dancing around 

all afternoon. That is the fact that employers were able to just review the documents and the documents of the employee could be 

false. That is what has gutted the effect of the IRCA, the 86 Act, 

the fact that you as an employer could look at me and say, gee, 

those documents look good and then you were off the hook. That 

is what gave rise to the decline in this interior enforcement I would 

suggest, and that is what the Administration is trying to address 

here, sir. 

Mr. LEWIS OF GEORGIA. Thank you very much. 

Ms. MYERS. If I could just add? 

Mr. LEWIS OF GEORGIA. Yes. 

Ms. MYERS. I think as a Department we are and have been 

striving to do better. The Secretary’s Secure Border Initiative developed the kind of a comprehensive strategy for looking anew at 

interior enforcement and using the tools that we have. I believe 

that we had not adequately used all the tools that were existing 

and that is why we are trying to enforce the law in new and better 

ways but there is much more work to be done. 

Mr. LEWIS OF GEORGIA. Thank you very much. Thank you, 

Mr. Chairman. I yield back. 

Mr. MCCRERY. Thank you, Mr. Lewis. Mr. Beauprez. 

Mr. BEAUPREZ. Thank you, Mr. Chairman. Mr. Horn, are you 

aware of any cases where someone who thought probably did qualify for benefits, welfare benefits of one type or another, when they 

applied, they found out, were told, ‘‘Wait a minute, you have got 

a whole bunch more income than you are reporting here’’ or that 

they were on benefits and later were bumped off because of at least 

an assumed reporting of too much income? 

Mr. HORN. Are you saying am I aware, sir—— 

Mr. BEAUPREZ. Somebody applies for a benefit. They meet the 

poverty guidelines. Somebody does the check and says, ‘‘Wait a 

minute, we checked your SSN and your reporting $200,000 of income,’’ what is up? 

Mr. HORN. Sure, I know that happens. In fact, we encourage the 

TANF agencies to match against the National Directory of New 

Hires. 

59 

Mr. BEAUPREZ. Good, I am glad you do that check. I am also 

familiar with, and I am going to share with all of you, some background information that I got recently from my State Department 

of Labor in Colorado. In the first quarter of 2006 alone, just inside 

one quarter, 304 different SSNs were reported by 2,819 different 

employers. This was a check for only numbers that were reported 

at least six or more times. It is certainly possible that somebody 

had six employers within a 90 day period, I grant that, but that 

seems like quite a few, especially for that many. They further 

found out that one number was reported by 57 different employers, 

one by 36, one by 24, 23, 22, 19, you get the picture. Some employers actually reported SSNs, interestingly enough, with all nine digits the same digit, 111–11–1111, same for two and three and four 

and nine, and I am sure you are familiar with this. Some of those 

employers were extremely familiar employers to me and I am sure 

to you. The point being something must be wrong. Some of that is 

probably legitimate, people change jobs several times, but it staggers the imagination. I don’t know how much of this really goes to 

our illegal question or not because we don’t know. There is a problem here. I think it was Ms. Barnhart, if I remember right, who 

pointed out what I already knew, misuse of a SSN is a felony. Are 

we pursuing this kind of a problem or are we not? 

Ms. BARNHART. I can say that generally these kinds of issues 

do not rise to the level of demanding aggressive pursuit by U.S. attorneys. 

Mr. BEAUPREZ. Okay, let me tell you what I think is part of 

the problem, and this is the complexity I think of illegal immigration and identity theft and law enforcement that we are dealing 

with, there is at least some degree of identity theft going on here. 

I saw one case of a lady who had 529, I believe I have got the number right, I am working from memory, over a half a million dollars 

of income reported to her SSN in a year. She was a widow lady and 

was legitimately trying to get benefits. Now she has got to go hire 

an attorney and you know the rest of the story and wait a protracted period of time and literally live hand to mouth and be begging from relatives instead of getting her justifiable benefits. That 

is part of the problem we have got here. I guess what I would ask, 

I have got a photo ID that is encrypted to get into my YMCA. 

Would it make sense, Ms. Barnhart, if our Social Security identification, which is the backbone of our ID in this whole country for 

citizenship and everything else, would it make sense that it got 

into something close to the 21st century technologically as opposed 

to more line the 19th century? 

Ms. BARNHART. There has been a lot of interest expressed in 

what you are talking about, a tamper proof or allegedly tamper 

proof hard card, whether it has biometrics in it or a photograph. 

We have looked at that and explored what that would mean for us 

in terms of workload particularly. I know that was one of the subjects for this hearing and one of the questions posed us specifically 

by the Chairman. 

Mr. BEAUPREZ. Yes, that is why I am asking it. 

Ms. BARNHART. Yes, the cost of the card itself is not the issue. 

The cost of the card is very inexpensive. The questions that have 

been asked to me by Congressman and Senators ‘‘Jo Anne, explain 

60 

to me why can’t you just issue a card like American Express does? 

It costs them nine cents a card.’’ My response to that is the reason 

is because we spend about 30 minutes—31 minutes to be precise— 

per person checking the evidentiary documents that are provided 

to us. When someone loses a Social Security card and comes in for 

a replacement, we don’t just accept the fact that the person ways 

he is Mark Everson, although in your case we might, Mark, but we 

actually say show us a U.S. passport, show us a U.S. driver’s license. 

Mr. BEAUPREZ. Sure. 

Ms. BARNHART. You have to have two forms of documentation. 

So, it is that time—the times spent verifying the evidence documents that drives the cost. Also, the estimate, whether you use a 

photograph or biometrics, if we were to look at re-issuing cards, for 

just the working people, that would be 300,000,000 minus 

60,000,000 of the under 14, so a total of 240,000,000 people. Trying 

to do that would cost about $9.5 billion and require 67,000 work 

years. To put that in perspective, I currently have a budget of $9.4 

billion and less than 65,000 employees at the agency. So, it is really a matter of checking the evidence that stands behind those 

cards. 

Mr. BEAUPREZ. I accept that. I see I am out of time but only 

a follow-up comment. I would suggest for at least this Committee 

and this Congress that the system we have is broken and 

unsustainable. At some point when you have got this kind of problem out there, when the SSN clearly doesn’t mean anything anymore, we have got a problem and somehow have to address it. I 

think technology somehow has to be your friend and ours and that 

of the legitimate legal citizen out there and the person who is perhaps a victim of identity theft, which I know is an enormously 

growing problem in this country. With that, I will just yield back, 

Mr. Chairman. 

Mr. MCCRERY. Thank you, Mr. Beauprez. Mr. Neal, you just returned, but it is your turn to inquire if you like, or I can go to Mr. 

Becerra. 

Mr. NEAL. Go ahead. 

Mr. MCCRERY. Be happy to. Mr. Becerra. 

Mr. BECERRA. Mr. Chairman, thank you very much. To all the 

witnesses, thank you very much for your patience and for your testimony. Let me make sure in all this conversation that I have this 

correct in terms of where we are so far on these immigration matters. First, if I hear correctly, any worker—any immigrant who 

does not have the authority to be in this country is barred under 

law, Federal law, from receiving any kind of Federal benefit. The 

only exception that I heard was emergency medical care. Any disagreement with that. Okay, secondly, legal immigrants, individuals 

who have the right to be in this country and are on their way to 

becoming U.S. citizens and have gone through all the process to 

have their documents certified, those with what we call the green 

card, they too are restricted from a lot of these Federal benefit programs. In many cases, even if they are entitled or eligible for some, 

they are means tested so they may not qualify based on their income. Any disagreement with that? Okay. Social Security and 

Medicare are programs that are earnings based. If you work and 

61 

pay into these programs, then you have earned the right to receive 

those benefits. If you don’t work, you don’t get to receive Social Security or Medicare payments, is that correct? 

Ms. BARNHART. Yes, it is. 

Mr. BECERRA. So, for any immigrant here in this country to 

qualify, first that immigrant would have to be here legally, correct? 

Ms. BARNHART. Correct. 

Mr. BECERRA. Secondly, the person would have to have worked 

and paid into the system for Social Security and Medicare to have 

any access to those programs, correct? 

Ms. BARNHART. For Social Security purposes, absolutely. 

Mr. BECERRA. My understanding, Commissioner Barnhart, is 

that the actuaries for the SSA have estimated that the Senate bill 

on immigration reform, the comprehensive immigration reform, 

would actually if it passed extend the solvency of the Social Security Trust Fund, as you pointed out earlier, and that it would reduce, because it would increase revenues, it would reduce the long 

range deficit of the Social Security system by about 6 percent? 

Ms. BARNHART. That is correct, it would reduce it to 1.88 percent of taxable payroll. 

Mr. BECERRA. So, I am assuming that what the actuaries are 

saying in these estimates is that if the Senate comprehensive immigration reform bill would pass, that you would incorporate more 

of these immigrants, who are probably right now in our underground economy or our shadow economy and maybe some paying 

taxes, maybe others not, but it would incorporate them more so 

that we would all get them within the legal system for paying their 

contributions into Social Security and Medicare and therefore the 

trust fund for Social Security would have an increase in revenues? 

Ms. BARNHART. I have read the actuaries’ memo and that is 

what it says to me, Mr. Becerra. 

Mr. BECERRA. Okay, now we have all these folks that are the 

subject of this discussion about immigration reform because many 

are in this country without documents, and I think everyone in this 

panel, on this Committee would agree that no one has the right to 

be in this country without first having received the permission of 

this sovereign Nation to be here. The fact remains that we have 

some, estimates are some 10,000,000 to 12,000,000 people who are 

in this country working without those documents. The nut here 

that we haven’t been able to crack is what do you do with so many 

folks? I know that some folks are saying we just deport them all 

and others are saying let’s be more rational and try to figure out 

how we figure out who has earned a chance to stay here, who will 

pay some fines, and so forth so they have an opportunity to stay 

here long term and continue to contribute to this country. 

The Social Security system, as you just mentioned, I think the 

questions asked by the gentleman from Texas, my friend from 

Texas, Mr. Brady, has an earnings suspense file. That is a file or 

an account of money where you cannot connect the contribution 

that you found from the W–2 form that was submitted to you with 

a name for someone who has a SSN. So, that contribution that 

came in from that work, documented through that W–2 form, is 

now money in the Social Security system but you cannot trace to 

62 

whom it really belongs because it did not match the names you 

have on file? 

Ms. BARNHART. That is correct. 

Mr. BECERRA. That totals $520 billion or so to date? 

Ms. BARNHART. Yes. 

Mr. BECERRA. We do not know the source of all these discrepancies. We know in some cases it could be just a simple clerical 

error or a mistyped name but in many cases it is probably due to 

the fact that there are many workers in this country who do not 

have documented status, are paying into the Social Security system, but you cannot trace it to them because they do not have a 

legal or a legitimate SSN? 

Ms. BARNHART. That is right and if they do not get that and 

come back and unscramble the earnings, they will never be able to 

collect. 

Mr. BECERRA. So, I guess my point here is not really a question. As we try to move forward in this debate, and I found this 

hearing to be somewhat constructive and helpful in this discussion, 

is that what we find is that for the most part we are talking about 

a population of folks who do not have the right to be in this country but continue to work, in many cases I think, as Commissioner 

Everson also mentioned, they are also paying taxes even though 

most of them will not get to file for a tax refund for any taxes they 

may have paid, they are paying into Social Security in many cases, 

yet they cannot collect it because they cannot legally apply for the 

system. So, we are trying to figure out what to do with folks who 

for the most part are working very hard, don’t deserve to be here 

if they do not have the documents, but we have to figure out a way 

to resolve this for some 10,000,000 to 12,000,000 people, the size 

of the State of Ohio, to get this immigration nut cracked. I hope 

that with your testimony you will help us come to a rational way, 

a comprehensive way of dealing with immigration reform [continuing]. So, I thank you for having taken so much time here to be 

with us. I yield back. 

Mr. MCCRERY. Just a quick correction to an exchange that Mr. 

Becerra had with Commissioner Barnhart. In fact, in the case of 

spousal benefits and survivor benefits, there are often people who 

do not have a work history who do receive Social Security benefits. 

Ms. BARNHART. I apologize. Yes, that is correct. I was looking 

at it specifically within the universe he was discussing. Absolutely, 

Mr. Chairman, you are right. 

Mr. BECERRA. Mr. Chairman, can I clarify? You are saying a 

spouse or a child who may not have worked but it is due to the 

fact that there was a person who did work and paid into the system? 

No one is receiving a benefit that he or she or a working relative 

did not pay into the system for? 

Mr. MCCRERY. That is correct. 

Mr. BECERRA. Thank you. 

Mr. MCCRERY. Mr. Hayworth? 

Mr. HAYWORTH. Thank you, Mr. Chairman. Thank you to the 

witnesses. 

63 

It is almost like an exam question. Compare and contrast the observations of my friend from Colorado with the observations of my 

friend from California. It goes to the crux of the matter. 

What my friend from California failed to describe when he talked 

about hard working people using false SSNs, my friend from Colorado did address. 

It is committing a felony. Now, we go back to the crux of the 

matter. Are we a nation of laws or not? I guess that is the essence 

of the public policy debate. 

I marvel at my friend from Washington State, a psychiatrist by 

training, who had a generous amount of time applied to a complete 

hypothetical about an illegal Irish immigrant and the game of what 

if. It is called counter factual now in the study of history. 

In other words, it was fictitious. Yet, we had almost 15 minutes 

of serious sober policy analysis of a tragic fable. It makes for great 

political theater, but it sheds very little light. 

Dr. Gustafson, thank you for coming in. You talked about 

EMTALA. You also talked about Section 1011. This is Section 

1011. It says here, I have highlighted, ‘‘A provider should not ask 

a patient if he or she is an undocumented alien.’’ 

According to a 2004 GAO study, over 95 percent of hospitals use 

lack of a SSN as a method of identifying unauthorized aliens. 

You go on down Application 1011, it says the SSA cannot validate SSNs for Section 1011 purposes, but rather providers should 

determine if the SSN is valid or not. 

Dr. Gustafson, why can’t hospitals ask outright a person’s immigration status? 

Mr. GUSTAFSON. The 1011 program is intended to be a program providing support for hospitals serving illegal aliens and 

other folks for which they have an obligation as I described under 

EMTALA. 

The intent of Congress as we implemented it was to ensure that 

payments went to hospitals, to try to prevent inhibiting effects on 

potential applicants for medical care, for patients coming through 

emergency rooms, because they would be concerned about enforcement information being turned over to the DHS or other authorities, so we set up the system in such a way that although we can 

audit whether the individuals are in fact appropriately identified, 

but we concluded that it would be counter productive for the purposes of this statute to require information about whether the person was in fact illegally here. 

I guess, Mr. Chairman, I could claim the right that my friend 

from Washington State utilized, to offer a hypothetical. Since Arizona is ground zero for illegal immigration, since we have had confirmation from both the DHS of at least hundreds of people, persons of a national security interest, crossing our border illegally, 

submitted for your disapproval, the story of one Osama Hussein, 

where in reconciling testimony to an appropriations Subcommittee, 

the Director of the FBI, tells us that we now have people from Nation States exporting Islamic fascism, adopting Hispanic surnames, 

in this case, Osama Hussein has changed his name to Juan Valdez. 

He is involved in transporting across our southern border components of a nuclear device when he is thrown from a pick up truck, 

64 

his neck is broken, and he is taken to the Copper Queen Emergency Room in Bisbee, Arizona. 

What we understand now is that it would be counter productive 

to inquire as to Mr. Hussein, now with the alias, Valdez, status, 

and really, it is not the role of the hospital to first ascertain who 

this person is, to offer that compassionate care, but basically not 

to go any further. 

That is basically the conundrum we find now. As I said in the 

oversight hearing to my friend from the IRS, and as we have heard 

in a variety of different answers today, and again, I’m not like my 

friend from Washington State, licensed to practice psychiatry, but 

I would tell you, ladies and gentlemen, we are engaged in public 

policy schizophrenia. 

Unless and until we understand the first and most basic responsibility of Government is protection of the citizenry, and offer true 

compassion to the American people and to those really in need of 

compassionate care, and deal with the security and legal questions 

as they stand, and unless and until we do, we will remain a Nation 

at risk, and we are whistling past the grave yard. 

I yield back. 

Mr. MCCRERY. Thank you, Mr. Hayworth. Mr. Neal? 

Mr. NEAL. Thank you very much, Mr. Chairman. 

I was at a meeting with the National Transportation Safety 

Board discussing the Big Dig. I apologize for coming back late. 

I was hoping the gentleman from Arizona might have stated, as 

the grandson of immigrants, which probably qualifies half of Massachusetts, we remind people that all those immigrants, they 

raised two sons who gladly and proudly fought for America during 

World War II, and raised families quite successfully, and nobody 

loved America more than those grandparents did. 

Nobody ever thought there was going to be a chance that would 

come close in any other Nation, the chance that was presented to 

them by coming to America. 

Mr. Everson, just a couple of questions, and a note of congratulations to you on many of the reforms you have embraced. I think 

not only is it healthy, but I think the public interpretation of them 

is being balanced and fair, and it is really an achievement that you 

ought to take some satisfaction from. 

Mr. EVERSON. Thank you, sir. 

Mr. NEAL. You spoke a couple of days ago before the House Government Reform Committee about the negative impact on tax administration if procedures are imposed on employers and employees that have the effect of driving economic activities underground. 

What you are referring to there is the underground economy, I 

assume. 

Mr. EVERSON. Yes, sir. What we were just discussing with your 

colleague, Mr. Lewis, is that I am a strong advocate for what the 

President is trying to achieve, which is a comprehensive program 

of immigration reform. 

If you get this right and you have an eligible legal workforce and 

you do not have the reason to go underground, then the system will 

be helped. 

The problem that we potentially have, if we do not have a balanced solution, is that if we open up 6103 and make another excepVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00068 Fmt 6633 Sfmt 6602 E:\HR\OC\31575.XXX 31575
65 

tion, and I would emphasize there are already 50 exceptions, so it 

is not as if this has never been done before, but if we agree to 

share this information but then there is not the benefit of solving 

our illegal immigration problem, I do worry there will be a price 

on tax administration that we all should understand as we go 

through this process. 

Mr. NEAL. What would be a couple of examples that might encourage non-compliance? 

Mr. EVERSON. You have a lot of businesses that may have competition that is not legal. They are not organized formally as a corporation. They are hiring illegal employees, and they are not paying their taxes. 

The problem is if they know there is a check by DHS, then they 

may just say it is not worth organizing legally. If you really have 

not stopped that flow of illegals into the country, and that ready 

illegal workforce continues to be there, there will be some who will 

say ‘‘I will just go underground and not participate in the system 

at all.’’ 

That situation would not be in the interest of tax administration. 

You really have to solve this and stop that flow with enforcement 

at the border and strong interior enforcement as well as an appropriate legal workforce, which I think the President is trying to 

work toward. 

Mr. NEAL. The Senate bill disallows workers attempting to obtain legal status, the ability to file for a refund on over withheld 

taxes. Who would receive that excess tax revenue? 

Mr. EVERSON. I think that would stay in the Treasury. I have 

not commented on this, but there are two points here. One is the 

denial of the participation with certain credits, like EITC. That is, 

as your colleague, Mr. Becerra, was saying, that is consistent with 

the denial of other benefits to illegals. 

I am somewhat troubled with the specific provision you mention, 

if our goal is to have people get current with their taxes, if they 

do that, I’m not quite sure I understand the basis for saying you 

are current, you happen to be over withheld, and you cannot have 

that back. Once you have evened out, you have fulfilled the tax obligation. 

I think the intent of what the Senate is trying to do is to say 

everybody should have fulfilled that tax obligation. I think we 

ought to think about that one provision. 

Mr. NEAL. Are there any other groups of workers who are 

barred from filing for refunds of over withheld income taxes? 

Mr. EVERSON. I would have to consider that more carefully. I 

think the Joint Committee staff paper makes it clear that this is 

an aberration. 

Mr. NEAL. Thank you, Mr. Chairman. 

Mr. MCCRERY. Ms. Hart? 

Ms. HART. Thank you, Mr. Chairman. I want to thank the panel 

for coming before the Committee. Your testimony actually demonstrates for us part of what the problem is, and obviously, each 

of you are not in complete sync with the other in ways that we can 

all get together and help enforce our immigration laws. 

That is not criticism of you. It is obviously something that we 

need to focus on to help you do better. We fully intend to do that. 

66 

This sharing of information, I want to address right up front. 

Taxpayer information sharing, obviously between the DHS and the 

IRS. I am interested in your comments about the Senate proposal, 

because it permits the sharing of taxpayer information with the 

DHS. 

I want to know first of all, does the IRS have any concerns with 

that sharing on a limited basis with DHS? 

Mr. EVERSON. As I have indicated in several of the conversations, we do have concerns, but there are 50 exceptions to section 

6103. 

The Congress very clearly takes a look at that broad prohibition, 

and then acts from time to time to allow that information sharing. 

It will have to be done properly, and again, I believe it should only 

be done if we can achieve a real reform, a comprehensive reform 

of our immigration laws. 

If that is not the case and we have not fixed our immigration 

system, but we have tinkered with the tax administration system, 

you could have problems. 

I am not saying do not do this. I support what we are trying to 

do here. 

Ms. HART. In a comprehensive way. 

Mr. EVERSON. In a comprehensive way, and with all the safeguards. There are standing protections now that are very important when the IRS shares taxpayer information, we regularly audit 

the other agencies that have the information, be that a State tax 

system or another Federal agency, that needs to be done. 

Ms. HART. That is fair. I have very little time and I want to 

jump to Ms. Myers. Does the DHS have ideas or a mechanism now 

that they are using that kind of information that is accessible on 

a limited basis? 

Ms. MYERS. Right now, Congresswoman, we have access to the 

information on a case by case basis. Sometimes we will be working 

on an investigation for over a year, and then Social Security Office 

of Inspector General joins in and then they are able to share that 

information with us. 

It is very frustrating to us. We waste a lot of time where we 

could really target things up front, if we had this information in 

a more regularized fashion. 

Ms. HART. Does the Senate proposal actually satisfy what you 

believe would be a good model for that sharing? 

Ms. MYERS. The Senate proposal, we think goes a long way and 

takes us much further than where we are now. 

Ms. HART. There is something good in the Senate proposal. 

Ms. MYERS. We would be perfectly happy to work with that and 

continue to work with the SSA. 

Ms. HART. I will yield 30 seconds to my colleague, Bob 

Beauprez, and then I am coming right back. 

Mr. BEAUPREZ. I thank the gentle lady and my good friend and 

colleague for yielding. 

I assume Ms. Barnhart is the right one to answer this question. 

I am confused about Basic Pilot and the Social Security Administration’s number verification program. 

As I read them, for employers who want to verify especially new 

employees, Basic Pilot is the appropriate program. The NV proVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00070 Fmt 6633 Sfmt 6602 E:\HR\OC\31575.XXX 31575
67 

gram looks to me like it has all kinds of signals on it that you 

should not use it because of privacy violation concerns. 

Can you clarify for me? My State is one of the States who is looking at trying to give employers very clear direction as to how to live 

better within the law. 

Ms. BARNHART. Actually, thank you for that question. We are 

constantly promoting Social Security’s online number verification 

system as a matter of fact. We are trying to urge as many employers as possible to use it, and the usage has grown fairly dramatically in the last couple of years. It has only been around for about 

two and a half years and open to all employers since June 2005. 

The caution is that we are not allowed under the law to verify 

name and SSN for an employer until the person is hired. I believe 

that is the privacy violation concern you are talking about. That is 

the issue. 

Mr. BEAUPREZ. That is exactly right. I yield back to the gentle 

lady from Pennsylvania. 

Ms. HART. Thanks. I have a quick question actually, and it is 

more or less to the panel in general. 

There have been a lot of discussions about what we need to do 

to help fix the immigration system among my colleagues informally, formally, proposals, you name it. 

One of the things that has been talked about there, and I do not 

necessarily endorse it, is that we end birth right citizenship in the 

United States. 

I am interested in any feedback, especially from the two gentlemen on the end, if you believe your agencies are burdened because 

we have birth right citizenship, as a result of—I see my time is 

limited. Can I have another second for them to answer? 

Mr. MCCRERY. Yes. 

Ms. HART. Thank you. I appreciate that. Gentlemen, if you 

could, quickly. 

Mr. HORN. First of all, whether caseloads go up or down, States 

get the same amount of money in a block grant environment. Of 

the 1.9 million families on TANF, a relatively small percentage of 

them are child only cases, where a U.S. citizen born child resides 

with a parent who is an illegal immigrant. 

We do not know the precise percentage, because if the adult is 

not applying for assistance the adult is not required to provide 

proof of immigrant status. Therefore, they are not part of the assistance unit because they are legal permanent residents but under 

the 5-year bar, or they are illegal immigrants. 

Ms. HART. Thank you. Dr. Gustafson, are you familiar with any 

cases? 

Mr. GUSTAFSON. No. I do not really have anything to add. 

Ms. HART. You do have under your agency and under your jurisdiction benefits that actually are applied for by parents for children 

directly? 

Mr. GUSTAFSON. It comes as part of the Medicaid program, 

and basically the benefits flow as a by-product of the welfare programs. 

Ms. HART. It is pretty hard to measure. 

Mr. GUSTAFSON. I would believe so; yes. 

68 

Ms. HART. On the State programs, the parents can apply for all 

kinds of assistance where they do not get any but it is for the child. 

Mr. MCCRERY. Mr. Everson, if you would like to submit a response in writing. 

Ms. HART. If any of you have further responses, we would love 

it in writing. I thank the Chairman for his indulgence. 

Mr. MCCRERY. We have two more members who would like to 

inquire. I would like to get that in before we leave. Mr. Doggett? 

Mr. DOGGETT. Thank you, Mr. Chairman. I would offer my sincere thanks for your comments. I know the Committee asked you 

to appear. You have been kind enough to appear. We will benefit 

from your insight. 

My comments do not go to your role as individuals but to other 

failings of this Administration and this Congress. Of the many bizarre hearings I have been at in this room, I think this one ranks 

fairly near the top. 

This Committee played absolutely no role in the passage of the 

immigration bill that passed through the House. It was not referred to this Committee. I think there have been some occasional 

hearings about the impact on Social Security, not directly related 

to this bill. 

The bill that passed the House was a narrow, impractical bill 

that will not address this problem, and it would not have passed 

the House without the vote of almost every Republican on this 

Committee. 

The Senate passed a bill that dealt with this problem, and while 

it is an imperfect bill, it appears to be a more comprehensive way 

of approaching the problem. I am pleased that the President has 

belatedly endorsed, it though his Administration also seemed to 

have kind words to say about the initial House bill. 

I think any high school civics class member in Austin, Texas 

would know that when the House passes a bill and the Senate 

passes a bill, there is a way to resolve the differences if the Administration and the Congress has the slightest interest in addressing 

this problem, and if it has any degree of the urgency that your testimony suggests that it does. 

That is to convene a conference Committee to address the differences between the House and the Senate, one of the first things 

you learn in understanding the legislative branch in high school 

civics. 

The House has chosen not to do that. The Bush Administration 

is in year six of dealing with this problem or in fact, not dealing 

with this problem. 

Today’s hearing, while insightful and interesting and of some 

academic importance, has very little relevance to whether or not we 

will see an immigration bill passed in this Congress, and apparently, it is not the intent of the House leadership, which took such 

a narrow backward and impractical approach to immigration, to do 

anything except use this for political purposes. 

That would be consistent with the way the House has handled 

this issue in the last couple of years. As we have heard in earlier 

questions, instead of having more border patrol officers, we are 

going to turn our emergency room nurses into border patrol offiVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00072 Fmt 6633 Sfmt 6602 E:\HR\OC\31575.XXX 31575
69 

cers. Instead of having more border patrol officers, we will turn our 

bank tellers into border patrol officers. 

Instead of having more border patrol officers, we will turn our 

local police who need the confidence of everyone in their community to be able to prosecute garden variety murders, rapes and robberies, we will turn them into border patrol officers. 

The problem is that this Congress back in 2004 approved 2,000 

additional border patrol officers, and this Administration said no, 

we do not need 2,000, 210 will be enough. 

The problem became so serious in Texas that my Republican colleagues in the Texas delegation, including two in this Committee, 

wrote to the Administration last September and said there was an 

emergency, a crisis in Texas, because the administration had taken 

our border patrol officers and transferred them out to Arizona. 

This Administration has come on board about this problem too 

little with none of the so-called political capital that the President 

claimed he had applied in a consistent manner to try to work out 

a solution. 

I appreciate your comments, given the phony solutions and the 

whole phony situation that has been set up about immigration reform. I am not sure they are going to advance us much closer to 

an answer that will make any difference in the lives of the people 

throughout America. 

I represent the largest border section, along the Rio Grande 

River, in Texas, of any Member of Congress save one. I can tell you 

there is a broad consensus along that border, whether you are talking about a Republican banker, a Democratic farm worker, or an 

independent small businessperson, that there is a total lack of understanding of the realities of the border. 

Many phony solutions that are being advanced, like the ones I 

mentioned, as well as more formal policies, like the western hemispheric travel initiative, WHTI, they are counter productive to our 

local economy, that they will undermine our local economy and prevent legitimate business transactions and customers coming from 

Mexico to share, invest and contribute as they have in a very significant way. 

As to the real comprehensive solutions, I will ask you if all of you 

agree that if the Senate bill with imperfections that it has were 

passed in its current form, if you agree it is actually a revenue 

raiser, not a revenue cost, according to the analysis that the Congressional Budget Office and others have done of the Senate bill? 

Mr. MCCRERY. I thank the gentleman for his testimony. 

Mr. DOGGETT. It was a question. 

Mr. MCCRERY. The witnesses may present their answers in 

writing. Mrs. Tubbs Jones, if you would like to inquire. We have 

one more panel of two witnesses. I would like to get them in so 

they do not have to wait through the entire series of votes that we 

have. 

[Ms. Barnhart’s response follows:] 

With respect to Mr. Doggett’s question, concerning S. 2611’s impact on revenue, 

on July 24, 2006, the SSA’s Chief Actuary, Mr. Stephen C. Goss, sent a memo to 

Senator Charles E. Grassley concerning the effect of S. 2611 as passed by the Senate would result in increases in net immigration that would improve the long-range 

Old Age, Survivors, and Disability Insurance (OASDI) actuarial deficit by roughly 

70 

0.13 percent of payroll. This would reduce the long-range deficit from the estimated 

level of 2.02 percent of payroll under current law to roughly 1.88 percent of payroll. 

f 

Mrs. TUBBS JONES. Mr. Chairman, thank you very much. Let 

me begin, please, with you, Mr. Horn. Ms. Hart’s questions, there 

was the implication that children born of illegal aliens in the 

United States—illegal immigrants in the United States of America 

cause a burden financially on the United States of America. 

Can you tell me how much money there is that is paid to children born in the United States of America who are illegal immigrants, whose parents are illegal immigrants? 

Mr. HORN. We would not know that because States are allowed 

the flexibility to provide different levels of benefits. All that we 

know is the number of children who fall into that category. 

Mrs. TUBBS JONES. Can you tell me how many children? 

Mr. HORN. Approximately 152,000 families are in child only 

cases in which they reside with a parent of either unknown citizenship or alien status, where the child is receiving a benefit and the 

parent is not. 

Not all of those cases will be in the category that you are suggesting. Someone may just simply refuse if they are not applying 

for a benefit to say whether they are illegal, a U.S. citizen or an 

immigrant. 

Mrs. TUBBS JONES. If they are not applying for a benefit, we 

are not paying any money? 

Mr. HORN. We are paying a benefit on behalf of the U.S. born 

citizen child, but not the adult. 

Mrs. TUBBS JONES. It is a small number in comparison with 

what we pay for—excuse me. Have you estimated how many illegal 

immigrants there are in the United States? 

I am sure that at some juncture, the U.S. Government has contacted every State in the United States of America and asked them 

to assess how many people are receiving some type of benefit, that 

may be children of illegal immigrants. 

Mr. HORN. Under the TANF program? 

Mrs. TUBBS JONES. Any program. 

Mr. HORN. The only thing I can speak to would be the TANF 

program. 

Mrs. TUBBS JONES. Under the TANF program then, sir. If you 

have not done it, I would suggest that you do it. It only makes 

sense to me if you are going to figure out numbers of people in the 

United States, receiving that information. 

Would it not make sense? 

Mr. HORN. The States would not be able to tell us. The reason 

they would not be able to tell us is because you cannot deny a U.S. 

born child a benefit. 

Mrs. TUBBS JONES. They can tell you how many people say 

they are not legal immigrants, right, or assess that? 

Where do you come up with this number of 152,000 if they do 

not tell you? 

Mr. HORN. Some of them are legal immigrants who are under 

the 5 year bar. Some of them are—— 

71 

Mrs. TUBBS JONES. Tell me this, how many legal immigrants 

under the 5 year bar are families that are receiving money? 

Mr. HORN. Approximately 37,000. 

Mrs. TUBBS JONES. Approximately 37,000. Of those 37,000, 

have you ever contacted the State to find out how much money is 

being paid for those 37,000 families? 

Mr. HORN. No. 

Mrs. TUBBS JONES. Would you do that for me, please, and get 

back with me? I think it would help us determine how much money 

we are spending nationally. You can shake your head, but I want 

to know. Okay? Could you do that? 

Mr. HORN. There are limitations under the statute concerning 

what data we can ask States to collect under this program. 

Mrs. TUBBS JONES. Mr. Horn, do what you can. 

Mr. HORN. I will do what we can. 

Mrs. TUBBS JONES. Thank you. Let me go to Ms. Myers. Ms. 

Myers, I recall your making a statement with regard to prosecution, with regard to criminal prosecution, of companies. 

How many criminal prosecutions have you done? 

Ms. MYERS. This year, we have had 445 criminal arrests 

through June 30th. 

Mrs. TUBBS JONES. Who was arrested? Are these owners of 

companies? 

Ms. MYERS. It varies. In some cases, it was owners, managers. 

In some cases, we had illegal aliens who were also crew leaders 

who brought people in. In some cases, there were also criminal arrests of illegal alien work sites. 

Mrs. TUBBS JONES. Of those 445, how many of them emanate 

from this year, the original charge was brought this year? 

Ms. MYERS. Those are all this year. 

Mrs. TUBBS JONES. Previously, we have had testimony that 

only three companies in the United States of America in the past 

few years have been charged with failing to provide the Government SSNs for people, accurate SSNs. 

Ms. MYERS. Congresswoman, I think the number three that you 

are referring to reflects numbers of companies who were given a 

notice of intent to fine. That is a civil penalty system. We have 

shifted from that civil penalty system because we think that is not 

effective to bring criminal charges. 

Mrs. TUBBS JONES. I understand what you are saying. Previously, of the three civilly, how many criminally do we do? Companies. I do not want to know all the other illegal residents. 

Ms. MYERS. What I can tell you is that was 445 criminal arrests. 

Mrs. TUBBS JONES. How many are companies, ma’am? 

Ms. MYERS. It is a mix of employers, crew leaders, a range—— 

Mrs. TUBBS JONES. Could you do me a favor? Could you send 

me a notice of how many are companies? I do not want to know 

about the workers. I want to know about the heads of companies 

that you have charged for failing to appropriately provide information with regard to their workers, particularly with regard to their 

SSNs. 

Could you do that? 

72 

Ms. MYERS. Absolutely, yes. Just yesterday, by the way, there 

were two—— 

Mr. MCCRERY. Ms. Myers, if you could get that to Mrs. Tubbs 

Jones in writing, that would be appreciated. 

Mrs. TUBBS JONES. I would think all of the Committee would 

like to hear it. Thank you, Mr. Chairman. 

Mr. MCCRERY. Thank you very much for your testimony and for 

your patience today in answering all our questions. 

We have one more panel. Michael Fix and Dr. Camarota, if you 

would come forward. Members, we have about 2 or 3 minutes left 

on the clock to vote. 

We are going to recess the Committee while members vote. We 

will return, I hope, in about 15 minutes. 

The Committee is in recess. 

[Recess.] 

Mr. MCCRERY. Our second panel is composed of Mr. Michael 

Fix, Vice President and Director of Studies, Migration Policy Institute, and Dr. Steven A. Camarota, Director of Research, Center for 

Immigration Studies. 

Gentlemen, welcome. Mr. Fix, we will start with you. 

STATEMENT OF MICHAEL FIX, VICE PRESIDENT AND 

DIRECTOR OF STUDIES, MIGRATION POLICY INSTITUTE 

Mr. FIX. Thank you so much, Mr. McCrery. 

It is a great and somewhat daunting privilege to appear before 

you today. My name is Michael Fix. I am the Vice President and 

Director of Studies at the Migration Policy Institute, a non-profit, 

non-partisan research organization here in Washington. 

You have a copy of my rather tardily prepared testimony. I will 

simply summarize my main points, if you will. 

First, I would say that it is an often overlooked fact that the fiscal costs of providing many means tested benefits to new or legalizing immigrants are going to be circumscribed by restrictions imposed by the 1996 welfare reform law, which as we have heard, 

barred new legal immigrants from receiving SSI, from Medicaid, 

from TANF, and food stamps. 

The second point I would make is that the exacting demands 

that are written into proposed reform legislation and in combination with welfare reform policies are likely to forestall legalizing 

immigrants’ eligibility for means tested programs for some time. 

CBO estimates until 2020. 

However, tax payments, including substantial potential payments for back taxes by the undocumented, if they legalize, would 

flow far sooner under the plan. 

My third point is that while the public and the media often believe that immigrants are swamping benefit programs, as Figure 1 

on page four in my testimony indicates, research at Migration Policy Institute (MPI), along with the Urban Institute, where I was 

formerly, indicates that low income legal non-citizen immigrant 

families with children actually used TANF, actually used food 

stamps and SSI at lower rates than their citizen counterparts, and 

that their use rates have fallen substantially over the course of the 

past decade. 

73 

Medicaid expenditures, if you look at that chart, follow a different path, in part because of what could be considered policy successes. There was strong outreach under the State Children’s 

Health Insurance program in the late 1990s to provide care to low 

income children, and partly, I think, as a function of pull backs in 

private insurance among many employers of low wage immigrant 

workers in particular, and all low wage workers in general. 

My fourth point, as Figure 2 on page five of my testimony indicates, is that I would suggest that if you look at the settlement patterns of immigrants observed during the nineties, which is essentially away from States with generous eligibility programs for immigrants, on the map, they are the blue States, and most notably, 

California, their settlement pattern has moved to high growth 

States, such as Georgia, Tennessee, and Colorado, which are shown 

in the map in red colors, which indicates basically that these flows 

are labor driven and not welfare driven. 

My fifth point that I make in my testimony is that many commentators suggest that the new wave of immigrants are not going 

to experience the same kind of mobility as their predecessors, but 

as Figure 3 on page seven of my testimony shows, cohorts of immigrants who are in the United States for 10 years or more, which 

are the blue bars, had substantially higher incomes than those who 

had been in the United States for less than 10 years, the yellow 

bars. 

We see that phenomenon reproducing itself when we decompose 

the immigrant population into refugees. They show great growth. 

Into legal immigrants, you see substantial growth, and naturalized 

citizens, you see substantial growth. 

The incomes and the gains among undocumented immigrants 

were far lower. 

Taking a longer view of this question of mobility, at MPI, we recently commissioned a study by Roger Waldinger of the University 

of California Los Angeles, who found substantial—I think this is 

important—intergenerational gains along almost all measures of 

economic progress that he examined, including, as Figure 4 indicates, incomes. 

You see this for all broad immigrant groups studied, including 

Mexicans. 

Sixth, and I guess my final empirical set of points, go to the fact 

that income gains are of course linked to the payment of taxes. We 

have had a lot of discussion on that today, and a variety of researchers who have documented the tax contributions that immigrants make, including Steve Camarota, but here I just want to 

highlight a recent study of taxes paid by immigrant households in 

the Washington metropolitan area that we conducted with the 

Urban Institute and Jeffrey Passel of the Pew Hispanic Center. 

What we found is that all households, including households led 

by the undocumented, paid substantial taxes. 

Tax payments of the region’s immigrant populations were proportional to their share of the population. That is to say they make 

up about 18 percent of the regional population, and they pay about 

18 percent of the taxes. 

74 

Like income, the taxes again varied by legal status with the lowest paid by the undocumented, in part, we estimate, as a function 

of compliance rates. 

The results suggest to us that some form of legalization that 

mandates full tax compliance would lead to higher tax yields. 

Yields would be felt immediately and not down the road like most 

benefit costs. 

Reform legislation like the one passed by the Senate also would 

raise the caps on skilled legal immigrants and would also likely 

contribute and to boost tax revenue as well. 

Mr. McCrery, I am aware that these are only pieces of a much 

larger fiscal and still larger economic puzzle that surrounds this 

complex debate that we have heard today. 

For example, we found that immigrants are more likely than 

U.S. natives to be self employed. That immigrant entrepreneurship 

creates jobs and boosts tax payments in ways that many accounts 

do not capture. 

The foreign born population’s willingness to follow jobs to other 

States and localities make the U.S. economy run more efficiently, 

and high skilled immigrants innovate in key sectors of the economy 

that are very difficult to measure. 

I would submit that even if we limit our discussion to tax payments and benefits use, the trends that I have discussed here offer, 

I think, a realistic anecdote to some of the most gloom and doom 

scenarios that we have heard in this discussion. 

Thank you very much for your attention. 

[The prepared statement of Mr. Fix follows:] 

Statement of Michael Fix, Vice President and Director of Studies, 

Migration Policy Institute 

Debate over immigration and proposals to reform it raise a number of issues that 

have been at the center of research conducted over the past decade on selected costs 

and benefits. In my testimony today I would like to raise several issues regarding 

immigrants’ costs and contributions. 

In sum, my points are as follows: 

• The 1996 welfare reform law substantially restricted new legal immigrants’ access to public benefits, limiting fiscal exposure in the short-run. 

• The exacting character of proposed legislation would bar the current undocumented population from social welfare programs through 2020. 

• Since welfare reform’s enactment, use of TANF, SSI, and Food Stamps has fallen substantially among legal immigrant families with children. Medicaid for immigrants, like citizens, does not follow this trend, and corresponds to a general 

decline in extension of private health insurance benefits to low-wage workers. 

• During the 1990s many immigrants moved from states with comparatively generous public welfare programs for immigrants to states with strong economies 

but less generous programs, raising doubts about the strength of welfare 

magnets. 

• Cohorts of immigrants in the U.S. 10 years or more had significantly higher incomes than those in the U.S. less than 10 years—suggesting substantial income 

gains. Naturalized citizens in the U.S. 10 or more years had higher average incomes than natives. Lower incomes were found among both recent and established undocumented immigrants, again suggesting that regularization would 

boost wages and taxes. 

• A study of taxes paid by immigrants in the Washington, DC region revealed 

that immigrant households pay substantial taxes. Immigrants’ tax payments 

were proportional to their share of the total regional population. 

• Tax payments in the Washington region varied by legal status, with payments 

and compliance ascribed to undocumented immigrants being lowest. This finding suggests that a legalization program that effectively mandates full tax comVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00078 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
75 

1 Under current law, undocumented are eligible for emergency Medicaid. Their U.S. born children are citizens and hence eligible for benefits. 

pliance as a condition for earning LPR status would lead to higher tax yields, 

which would be felt immediately (unlike increased usage of social benefits— 

which to the degree it actually occurs—would be delayed for many years). 

• Higher tax yields might be supplemented by higher incomes. The wage benefit 

of legalization under IRCA was approximately 6 percent. 

I will address several points in turn: 

First, I will briefly explore the degree to which current comprehensive reform proposals are likely to affect social welfare systems by focusing on (1) the existing bars 

that restrict legal immigrants’ access to benefits; (2) patterns of declining benefit 

use among legal immigrants; and (3) the labor-driven, rather than welfare-driven, 

movement of immigrants that we see in today’s settlement patterns. 

Second, I will note patterns of wage growth and mobility among immigrants over 

time, differentiating, among other things, between legal statuses. 

Third, in a related vein, I will say a word about the taxes paid by immigrants 

by highlighting the Washington Metropolitan area, a major new gateway region. 

AVAILABILITY OF BENEFITS 

The 1996 welfare reform law imposed restrictions on new legal immigrants’ access 

to means-tested federal public benefits. Recent discussion of immigration reform has 

often overlooked this fact and the likelihood that the law will limit benefit outlays 

associated with such immigration reforms as a legalization program or expanded 

legal immigration. The Senate bill’s emphasis on skilled and educated immigrants 

and the proposed temporary worker program would mean that a large component 

of new permanent immigrants would not likely need social services, while temporary workers would by definition not qualify for most forms of assistance. 

Prior to 1996 welfare reform, legal immigrants were eligible for benefits on the 

same terms as citizens. Following the law’s enactment, states were authorized to 

discriminate against legal immigrants in their public benefit programs. The most severe restrictions were imposed on immigrants arriving after August 22, 1996, the 

law’s date of enactment. These restrictions essentially bar nearly all legal immigrants arriving after that date from receiving selected means-tested public benefits—SSI, TANF, Medicaid, SCHIP, and Food Stamps—for at least five years. 

These restrictions are not the only barriers to access to public benefits for post96 immigrants. In addition, immigrants entering under the family unification provisions of immigration law must sign an enforceable affidavit of support that makes 

their sponsors liable for benefits they use. Further, the sponsor’s income is deemed 

to the immigrant—commonly making the immigrant’s income too high to qualify for 

means-tested public benefits. The sponsor deeming provision extends until an immigrant naturalizes or establishes a work history of 40 quarters (i.e., at least 10 

years)—in many cases a date substantially beyond the five-year bar. 

These multiple barriers serve to push back the date of new immigrants’ eligibility 

for benefits. Fully 40 percent of legal immigrants in the U.S. today arrived after 

1996, and so have been subject to the welfare restrictions; new or legalizing immigrants as a result of comprehensive immigration reform would be no different. 

Beyond the barriers to access embedded in welfare reform, the proposed comprehensive reform legislation (as reflected by S. 2611) further lengthens the time 

before a formerly undocumented immigrant will be eligible for means-tested public 

benefits.1 According to the Congressional Budget Office, the earliest most undocumented immigrants would be eligible for benefits would be 2020, almost 20 years 

after their entry into the United States. This delayed access owes to the fact that 

most of them might not become legal permanent residents until eight years after 

the initiation of the legalization process, at which time they would have to wait another five years as a result of welfare reform bars in order to access benefits. Further, the qualification process described in S. 2611—which includes extensive employment and acquisition of some English—is quite exacting. Those who attain permanent legal status and wait an additional five years are likely to have benefited 

financially from the wage gains that U.S. work experience and English skills bring 

and thus be less likely to need public assistance in the future than they do at time 

of arrival. 

DECLINE IN BENEFIT USE BY LEGAL IMMIGRANTS 

Our research suggests two other trends in the use of public assistance among immigrants that have been downplayed in the current debate over the impact of immigration reform on the social welfare system. One is the decline in the use of most 

76 

public benefits on the part of legal immigrants in the wake of welfare reform’s 1996 

enactment. 

As Figure 1 indicates, following reform, we see sharp drops in TANF use among 

immigrant families. Immigrant use of TANF was lower than that of citizens both 

before and after welfare reform, falling from 19 percent in 1994 to 4.5 percent in 

2004. (Our analysis focuses on low-income, legal noncitizen-headed families with 

children. We contrast them with low-income, citizen-headed families with children.) 

Similar patterns emerge through 2002 when we examine Food Stamps. There is a 

slight up-tick in use from 2002 through 2004, perhaps reflecting policy changes in 

the program introduced by the 2002 Farm Bill, which restored eligibility to working 

age adults who had been in ‘‘qualified status’’ in the United States for five or more 

years and to legal, noncitizen children regardless of date of entry. Finally, we see 

declines in SSI use among legal, noncitizen-headed families for the period 1996— 

2004; in fact, noncitizens’ usage levels are just over half those of citizens. 

Figure 1: Low-Income Families’ Benefit Usage, 1994–2004 

For each program, then, benefit use among immigrant families has fallen since 

welfare reform and is substantially lower than that of citizens. This is not the image 

of immigrants and social welfare reliance that is commonly conveyed. 

We do, however, see different patterns when it comes to Medicaid—with use 

among noncitizen families exceeding that of natives and rising since 1999. Generally 

higher levels of Medicaid use among legal, noncitizen families may reflect the introduction of the 1997 SCHIP program, broad outreach in the late 1990s to boost enrollment, and a reduction in private insurance coverage among low-wage immigrant 

workers and low-wage workers more generally. 

DISPERSAL FROM HIGH TO LOWER BENEFIT STATES 

A third general point that has not received much attention in the current debate 

over immigration benefits is the dispersal of immigrants during between 1990 and 

2000 away from states that have comparatively generous public benefit programs 

(California, most notably) toward many states with less generous state eligibility 

rules for legal immigrants such as Georgia, Tennessee, and Colorado (See Figure 2). 

This trend suggests that welfare remains a far less powerful magnet for newcomers 

than jobs. 


31575A.007
77 

2 Bureau of Labor Statistics, ‘‘Foreign-Born Workers: Labor Force Characteristics in 2005,’’ 

(Washington, DC: U.S. Department of Labor, 2006). Available: http://www.bls.gov/news.release/ 

pdf/forbrn.pdf. 3 Neeraj Kaushal and Michael Fix, ‘‘The Contributions of High Skilled Immigrants,’’ (Washington, DC: Migration Policy Institute, forthcoming 2006). 4Darren Lubotsky, ‘‘Chutes or Ladders?: A Longitudinal Analysis of Immigrant Earnings,’’ 

Princeton University Industrial Relations Section Working Paper No. 445, 2000. This paper is 

particularly rigorous in that it relies on longitudinal—as opposed to cross-sectional—data. 

Figure 2: New Immigration Growth Centers 

Declining benefit use, the continuation of stringent restrictions on legal immigrants’ access to public benefits, and changing spatial migration patterns suggest 

that fears that welfare systems will be swamped by increased legal immigration and 

by a legalization program are overstated. 

LABOR FORCE PARTICIPATION, WAGE GROWTH AND MOBILITY, AND 

TAXES 

We turn now to the other side of that fiscal equation that is so often discussed 

in debates over immigration reform: the contributions of immigrants to the federal 

purse. But first I’d like to highlight some of the most relevant facts about immigrants in the labor force and their wages that position them to make these contributions. 

Immigrants contribute significantly to the U.S. workforce and economy. Since 

2000, immigrants have made up 46 percent of the growth in the U.S. labor force, 

and today there are more than 22 million foreign-born workers.2 While immigrants 

are one in eight U.S. residents, they are one in seven workers, and one in five lowwage workers. At the same time, the foreign-born now account for one in every five 

doctors; one in five computer specialists, and one in six professionals in engineering 

or science occupations in the United States.3

Clearly the skill levels of immigrants affect their income levels and tax contributions. Also of note, though, is evidence that the wages of immigrants rise over time 

and that the rates of growth outpace those of natives, perhaps by 10 to 13 percent 

in the first twenty years an immigrant is in the United States.4 While these gains 

do not fully compensate for the large average earning differential between natives 

and immigrants at arrival, the fact that immigrants are earning more over time 


31575A.008
78 

5With regard to wage differentials between natives and new immigrants: David Card, ‘‘Is the 

New Immigration Really So Bad?’’ IZA Discussion Paper Series, No. 1119, 2004. 6Sherrie A. Koussoudji and Deborah Cobb-Clark, ‘‘Coming Out of the Shadows: Learning 

about Legal Status and Wages from the Legalized Population,’’ Journal of Labor Economics 20 

(3), 2002. 

means that they have more to contribute to the federal purse the longer they are 

in the United States.5

Legal status is also related to wages. Research that followed illegal immigrants 

regularizing under IRCA in 1986 found that the wage benefit of the legislation for 

previously unauthorized immigrants was 6 percent.6

Incomes and Legal Status. Figure 3 compares incomes of cohorts of immigrants 

in the United States for less than 10 years in 2002 with those who had been in the 

country for 10 years or more. We see that for all groups other than unauthorized 

immigrants the data reveal substantially higher family incomes for immigrants who 

had been in the United States for 10 years or more than their more recently-arrived 

counterparts. The data also reveal that the incomes of naturalized citizens in the 

United States for more than 10 years exceed those of natives’ and that those of refugees and legal immigrants approach those of natives. We see much lower incomes 

and smaller differences in incomes among unauthorized immigrants, suggesting the 

potential value of legal status for economic integration and for tax contributions. 

Figure 3: Immigrants’ Income by Time in United States and Immigration 

Status 

Generational Mobility. Any analysis of the contributions of immigrants should arguably take a somewhat longer view than most fiscal analyses do, as well. By that, 

I mean, looking at the second generation and its outcomes—in some ways the crucible for economic progress. In his analysis of this topic, Professor Roger Waldinger, 

the former Chairman of the Department of Sociology at the University of California, 

Los Angeles, broke the first and second generation into broad categories: 

• Mexicans; 

• Asians; 

• Europeans, Canadians, and Australians; and 

• Other Americans (from Central and South America and the Caribbean) 


31575A.009
79 

7 Roger Waldinger and Renee Reichl, ‘‘Today’s Second Generation: Getting Ahead or Falling 

Behind?’’ Securing the Future: The U.S. Immigrant Integration Policy Agenda, Ed. Michael E. 

Fix (Washington, DC: Migration Policy Institute, forthcoming 2006). 8While the Washington region is a new gateway community, it may not be representative of 

the nation as a whole. Its immigrant population is unusually diverse and is composed of a comparatively large share of Asian immigrants. See, R. Capps, et. al. Civic Contributions: Taxes 

Paid by Immigrants in the Washington DC Metropolitan Area, (Washington, DC: The Community Foundation and the Urban Institute, 2006). 

Results were compared with white and black 3rd generations.7

Figure 4: Median Yearly Wage and Salary Income ($) of Adults* by 

Generation, Origin, and Gender, 2000 

He found that all of these broadly defined immigrant groups are making 

generational progress along almost all indicators: rates of high school graduation; 

college completion, incomes, and job quality as measured by health insurance and 

pensions (Figure 4). With regard to incomes, he found that while Mexicans lag all 

groups in the first generation, dramatic growth occurs in the wages and salaries of 

the second, with incomes approaching those of African American natives. 

Tax Contributions. In today’s economy, then, the foreign-born are no strangers to 

the workforce, and as a consequence, they make sizable tax contributions. In the 

future, new tax contributions stemming from comprehensive immigration reform 

like that set forth in S. 2611 would be felt immediately, in contrast to the delayed 

impact of potential welfare benefit usage among legalizing or newly arriving immigrants. 

We highlight a localized example of these tax contributions through a recent study 

my colleagues Jeffrey S. Passel and Randy Capps and I conducted, which examined 

the federal, state and local taxes paid by immigrant households in the Washington 

Metropolitan Region.8 Despite polls that find most people believe that immigrants 

do not pay their fair share in taxes, our study found that immigrant households 

paid taxes at the nearly the same rates as native households. Further, as earlier 

studies in New York and Illinois have revealed, immigrants’ tax payments are proportional to their share of the regional population. That is, immigrants paid the 


31575A.010
80 

same share of the region’s overall taxes (18 percent) as their share of the total population (17.4 percent). 

The study also found that immigrant households in Northern Virginia paid eight 

percent of all state taxes paid by households in Virginia ($810 million out of $9 billion). Immigrant households in suburban Maryland paid an equivalent share of 

Maryland state taxes ($560 million out of $6 billion). These findings highlight the 

fact that immigrants’ tax payments support both local and state services on which 

residents draw, in addition to the federal coffers. 

While all immigrants pay a substantial share of their incomes in taxes, we found, 

as with incomes, that tax payments are correlated with legal status. Naturalized 

citizens paid higher taxes than households headed by native-born citizens. Households headed by legal permanent residents and refugees had slightly lower incomes 

and paid somewhat lower taxes. Those headed by undocumented immigrants had 

the lowest average incomes and therefore paid the lowest average taxes. Based on 

other analyses we assumed that a little over half of unauthorized immigrants paid 

payroll taxes. Here again it appears that legislation that would change this population’s legal work authorization would effectively mandate full tax compliance and 

likely lead to higher incomes, thereby raising immigrants’ fiscal contributions to the 

federal, state, and local coffers. 

In sum—these trends in welfare use and tax contributions are often ignored in 

debates over immigration’s impacts and the merits of reform. While I make no attempt to sum them up, they suggest that reform’s fiscal impacts may be much more 

positive than the current debate would lead one to believe and far more complex 

than the caricature portrayed by some of the literature. 

OTHER ECONOMIC IMPACTS 

To close let me indicate a few additional ways that impacts affect the federal 

purse. Decade after decade we’ve found that immigrants are more likely than U.S. 

natives to be self-employed, and immigrant entrepreneurship may create jobs and 

as a result boost tax payments. Immigrants are increasingly associated with further 

openings to trade and other forms of exchange that promote business. The foreignborn population’s willingness to follow jobs to other states and localities makes the 

U.S. economy run more efficiently. High-skilled immigrants innovate in key sectors 

of the economy. And immigrant workers both produce and, in turn, consume goods 

and services—thus creating jobs that might not otherwise have existed and making 

much wider ripple economic effects. The effects are felt up and downstream from 

the specific places and sectors of immigrant employment. 

f 

Mr. MCCRERY. Thank you, Mr. Fix. Dr. Camarota. 

STATEMENT OF STEVEN A. CAMAROTA, DIRECTOR OF 

RESEARCH, CENTER FOR IMMIGRATION STUDIES 

Mr. CAMAROTA. I would like to thank the Committee for inviting me to testify. My name is Steven Camarota. I am Director of 

Research at the Center for Immigration Studies in Washington. 

All of my comments can be found in detail at our website, cis.org. 

When it comes to immigrants and public coffers, there is a lot of 

agreement, in fact, overwhelming agreement, that their fiscal impact depends largely on the education level of the immigrants in 

question, while other factors also matter, immigrants with a lot of 

education tend to pay a lot in taxes, and use relatively little in 

services, while those with little education tend to have low incomes, 

pay relatively little in taxes, and often use a good deal in public 

services. 

In the case of illegal aliens, the public services are typically received on behalf of their U.S. born children. 

It should be pointed out that the fiscal drain that comes from 

less educated immigrants is not because they come to get welfare. 

In fact, use of cash assistance welfare programs is irrelevant to this 

debate. 

81 

It is Medicaid. It is the food assistance program, particularly 

WIC and free school lunch, where use rates tend to be quite high. 

Nor does the fiscal drain from unskilled immigrants come from 

an unwillingness to work. Legal or illegal, they mostly hold jobs. 

It is simply due to the fact that there is no single better predictor 

of one’s income, tax payments, or use of public services in the modern American economy than one’s education level. 

All research shows that the vast majority of illegal aliens have 

very little education. It is estimated that some 60 percent of illegal 

aliens have not even completed high school. Another 20 percent 

have only a high school degree, that is no additional schooling. 

Thus, the people who will be legalized under the Senate bill have 

significant negative fiscal implications. 

One of the most detailed studies of the fiscal effects of immigration ever done was done by the National Research Council. It is 

called ‘‘The New Americans.’’ It found that the life time drain on 

public coffers from an immigrant who comes to America without a 

high school degree is negative $89,000. That is he will use $89,000 

more in services than he pays in taxes in his life time. 

The drain for an immigrant who has only a high school degree 

in his life time is $31,000. 

However, an immigrant with education beyond high school is a 

net fiscal benefit of $105,000. Again, educational attainment is the 

key to understanding fiscal effects. 

The fundamental problem with the Senate bill is that it ignores 

this basic insight. My research shows that in 2002, illegal alien 

families used $26 billion or imposed, I should say, $26 billion in 

costs on the Federal Government, but it is important to know that 

they also paid about $16 billion in taxes, for a net drain of $10 billion at the Federal level. 

However, I also find that if illegal aliens were legalized and they 

began to pay taxes and use services like households headed by 

legal immigrants with the same level of education, the fiscal costs 

would explode to $29 billion, net drain. 

That is the difference between what they pay in taxes and use 

in services. 

To understand why this happens, it might be helpful to look at 

a particular program, like the earned income tax credit, which goes 

to low income workers. 

Right now, I estimate that illegal aliens account for just 1.5 percent of that program’s total cost, a very small share. If they were 

legalized and had the income of legal immigrants with the same 

level of education, the costs of that program would increase ten 

fold. 

Again, this dramatic rise in costs is not due to laziness or net 

lack of work. In fact, only those that work get the credit. It simply 

reflects their education level. 

Let me shift my comments very briefly to Social Security and 

Medicare. I have estimated that illegal aliens pay into those two 

systems and create a net benefit for those two programs of $7 billion a year, but it makes little sense to focus just on those two programs because illegals create a net deficit of $17 billion in the rest 

of the Federal budget, for a total net drain of $10 billion. 

82 

Again, the benefits to those programs, it should also be pointed 

out, would largely disappear upon legalization. The benefit comes 

from the fact that they pay and do not use. Again, that is probably 

not the way to think about the program, since they create such 

large problems for the rest of the Federal budget. 

Speaking more generally on Social Security, it is very important 

to note immigration has only a very small impact on the aging of 

American society, mainly because immigrants age like everyone 

else, and they do not have that many more children than everyone 

else, so they do have somewhat higher fertility. 

The Social Security Administration’s projections show that the 

dollar value of the Social Security deficit would increase by just 6.6 

percent if net immigration was $350,000 a year versus $800,000 a 

year, over 75 years. 

Put simply, an extra 34 million immigrants over 75 years has 

only a very tiny effect, and it is not even clear that this small net 

gain for Social Security even exists, because the SSA assumes that 

immigrants will have exactly the same incomes as natives immediately upon arrival, which is contrary to a very large body of literature. 

It also ignores the fact that we have something called the earned 

income tax credit, which is explicitly designed to refund people 

some or all of their Social Security payments. 

My own research suggests that legal immigrants are almost 

twice as likely to get this program as natives. 

As a general proposition, immigration is largely irrelevant to the 

Social Security system because it has such a tiny impact on the 

aging of American society. 

The bottom line is this. The Senate bill has large increases in 

legal immigration and is supposed to legalize some 10 million 

illegals. For the most part, the bill does not attempt to select new 

immigrants based on their skills and skills are also irrelevant to 

the legalization of the illegals. 

There is the fundamental problem. If you take nothing else away 

from my testimony, it is simply this. It is not possible to fund social 

programs, including those for retirees, with large numbers of immigrants with relatively little education. Unfortunately, the Senate 

bill ignores this basic common sense. 

Thank you. 

[The prepared statement of Mr. Camarota follows:] 

Statement of Steven A. Camarota, Ph.D., Director of Research, Center for 

Immigration Studies 

Summary 

There is general agreement that the fiscal impact of immigration depends largely 

on the education level of the immigrants in question. Immigrants with a lot of education pay more in taxes than they use in services, while those with little education 

tend to have low incomes, pay relatively little in taxes and often use a good deal 

in public services. In the case of illegal alien, the vast majority have little education, 

and this is the key reason they create fiscal costs. Illegal families often receive benefits on behalf of their U.S.-born children. As a general proposition, the large scale 

immigration of less-educated immigrants (legal or illegal) creates significant funding 

problems for social programs, including those for retirees, even though the immigrants work. 

83 

1The National Research Council’s 1997 is report entitled, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration. A summary of the report’s findings can be found 

at www.cis.org/articles/1999/combinednrc.pdf. 2These estimates and those that follow dealing with illegal immigration come a Center for 

Immigration Studies report entitled, The High Cost of Cheap Labor: Illegal Immigration and 

the Federal Budget. The Report can be found online at www.cis.org/articles/2004/fiscal.pdf. 3These figures and those that follow dealing with the Social Security system can be found 

in a Center for Immigration Studies report, entitled, Immigration in an Aging Society: Workers, 

Birth Rates, and Social Security, which is available online at: www.cis.org/articles/2005/ 

back505.pdf. The data for the Center’s Social Security study comes from the 2004 trustee’s report which can be found online at: www.socialsecurity.gov/OACT/TR/TR04/index.html and from 

additional data provide by the SSA to Senators Chuck Hagel, which can be found online at: 

www.nfap.net/researchactivities/studies/Appendix1toSocialSecurityStudy.pdf. 

Key Findings of Research: 

The Fiscal Impact of Immigration Generally 

• The National Research Council (NRC) 1 estimated that immigrant households 

create a net fiscal burden (taxes paid minus services used) on all levels of government of $20.2 billion annually. • The NRC estimated that an immigrant without a high school diploma will create a net lifetime burden of $89,000, an immigrant with only a high school education it is negative $31,000. However, an immigrant with education beyond 

high school is a fiscal benefit of $105,000. • Estimating the impact of immigrants and their descendants, the NRC found 

that if today’s newcomers do as well as past generations, the average immigrant 

will be a fiscal drain for his first 22 years after arrival. It takes his children 

another 18 years to pay back this burden. • The NRC also estimated that the average immigrant plus all his descendants 

over 300 years would create a fiscal benefit, expressed in today’s dollars of 

$80,000. Some immigration advocates have pointed to this 300-year figure, but 

the NRC states it would be ‘‘absurd’’ to do so. 

Illegal Immigration 

• The Center for Immigration Studies (CIS) estimates that in 2002 illegal alien 

households imposed costs of $26 billion on the federal government and paid $16 

billion in federal taxes, creating an annual net fiscal deficit of $10.4 billion at 

the federal level, or $2,700 per household.2

• Among the largest costs, were Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and 

free school lunches ($1.9 billion); the federal prison/court systems ($1.6 billion); 

and federal aid to schools ($1.4 billion). • If illegal aliens were legalized and began to pay taxes and use services like 

households headed by legal immigrants with the same education levels, CIS estimates the annual net fiscal deficit would increase to $29 billion, or $7,700, per 

household. • The primary reason illegal aliens create a fiscal deficit is that an estimated 60 

percent lack a high school degree and another 20 percent have no education beyond high school. The fiscal drain is not due to their legal status or unwillingness to work. • Illegal alines with little education are a significant fiscal drain, but less-educated immigrants who are legal residents are a much larger fiscal problem because they are eligible for many more programs. • Many of the costs associated with illegals aliens are due to their U.S.-born children who have American citizenship. Thus, barring illegal aliens themselves 

from federal programs will have little impact on costs. • Focusing just on Social Security and Medicare, CIS estimates that illegal households create a combined net benefit for these two programs in excess of $7 billion a year. However, they create a net deficit of $17 billion in the rest of the 

budget, for a total net federal cost of $10 billion. 

Funding for Retirement Programs 

• Immigration has only a very small impact on the aging of society because although immigrants arrive relatively young, and have higher fertility than natives, they age like everyone else, and the differences with natives are not large 

enough to fundamentally alter the nation’s age structure. • In 2000 the average age of an immigrant was 39, which is actually about four 

years older than the average age of a native-born American.3

• If all post-1980 immigrants and all the children they have had are excluded 

from the 2000 Census, the working-age (15 to 64 years old) share of the popuVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00087 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
84 

4The Census Bureau’s population estimates from 2000 can be found at www.census.gov/population/www/documentation/twps0038.pdf. Table E on page 28 reports the different net immigration assumptions and Table F on page 29 reports the impact of these assumptions on the dependency ratio. 

5See footnote 2. 

6See footnote 2 for the source of this information and all information dealing with the fiscal 

costs of illegal immigration on the Federal budget. 

lation would be 65.9, almost exactly the same as the 66.2 percent when they 

are all included. • Looking to the future, Census Bureau projections indicate that if net immigration averaged 100,000 to 200,000 annually, the working-age share would be 58.7 

percent in 2060, if net immigration average roughly 900,000 to one million, it 

would be still be 59.5 percent.4

• The Social Security Administration (SAA) projections show that, net annual 

legal immigration of 800,000 a year over the next 75 years versus 350,000 a 

year would create a benefit equal to less than 1 percent of the program’s projected total expenditures. • As for the program’s deficit, net annual legal immigration of 350,000 a year 

versus 800,000 would increase the dollar value of the actuarial deficit by just 

6.6 percent over the next 75 years. • It is not clear that even this small benefit exists, because SSA does not take 

into account the lower average earnings and resulting lower average tax payments of legal immigrants. • SSA also does not consider the Earned Income Tax Credit (EITC), which is explicitly designed to give back Social Security tax payments to low-wage earners. 

Legal immigrants use the EITC at significantly higher rates than natives. • If illegal alines are legalized and began to receive the EITC at the same rate 

as legal immigrants with the same education, CIS estimates that costs for the 

Credit would increase 10-fold.5

Immigration’s impact on public coffers has long been at the center of the immigration debate. Until recently, however, we actually had very little reliable data on the 

subject. While there is still much that is not known, we now have some reasonably 

good information about this important topic. As I tried to make clear in the summary above, there is a pretty clear consensus that the fiscal impact of immigration 

depends on the education level of the immigrants. Certainly other factors also matter, but the human capital of immigrants, as economists like to refer to it, is clearly 

very important. There is no signal better predictor of one’s income, tax payments 

or use of public services in modern America than one’s education level. The vast majority of immigrants come as adults, and it should come as no surprise that the education they bring with them is a key determinate of their fiscal impact. It is simply 

not possible to fund social programs, including those for retirees, by bringing in 

large numbers of immigrants with relatively little education and resulting low incomes. 

In my own research I have concentrated in two areas: the effect of illegal aliens 

on the federal government and the impact of immigration more generally on the Social Security system. I can only briefly touch on these two topics in my testimony. 

For those wanting a more detailed look at these questions, my most recent publications are available online at the Center for Immigration Studies web site, 

www.cis.org. My most recent studies of these issues are, ‘‘The High Cost of Cheap 

Labor: Illegal Immigration and the Federal Budget’’ and ‘‘Immigration in an Aging 

Society: Workers, Birth Rates and Social Security.’’ 

Illegal Immigrants and the Federal Budget 

A good deal of research has focused on the effect illegal have on taxpayers at the 

state and local level. Much of this work has examined only costs, or only tax payments, but not both. In my work I have tried to estimated both, and I have focused 

on the federal government. In Based on a detailed analysis of Census Bureau data, 

my analysis indicates that households headed by illegal aliens imposed more than 

$26.3 billion in costs on the federal government in 2002 and paid $16 billion in 

taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household. The largest costs are Medicaid ($2.5 billion); treatment for the uninsured ($2.2 

billion); food assistance programs such as food stamps, WIC, and free school lunches 

($1.9 billion); the federal prison and court systems ($1.6 billion); and federal aid to 

schools ($1.4 billion).6

A Complex Fiscal Picture. While the net fiscal drain they create for the federal 

government is significant, I also found that the costs illegal households impose on 

federal coffers are less than half that of other households, but their tax payments 

85 

are only one-fourth that of other households. Many of the costs associated with 

illegals are due to their American-born children, who are awarded U.S. citizenship 

at birth. Thus, greater efforts to bar illegals from federal programs will not reduce 

costs because their citizen children can continue to access them. It must also be remember that the vast majority of illegals hold jobs. Thus the fiscal deficit they create for the federal government is not the result of an unwillingness to work. In 

2002, I found that 89 percent of illegal households had at least one person working 

compared to 78 percent of households headed by legal immigrants and natives. 

Legalization Would Dramatically Grow Costs. One of my most important 

findings with regard to illegal aliens is that if they were given legal status and 

began to pay taxes and use services like households headed by legal immigrants 

with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion. 

Costs increase dramatically because less-educated immigrants with legal status— 

what most illegal aliens would become—can access government programs, but still 

tend to make very modest tax payments. Of course, I also found that their income 

would rise, as would their tax payment if legalized. I estimate that tax payments 

would increase 77 percent, but costs would rise by 118 percent. 

These costs are considerable and should give anyone who advocates legalizing illegal immigrants serious pause. However, my findings show that many of the preconceived notions about the fiscal impact of illegal households turn out to be inaccurate. In terms of welfare use, receipt of cash assistance programs tends to be very 

low, while Medicaid use, though significant, is still less than for other households. 

Only use of food assistance programs is significantly higher than that of the rest 

of the population. Also, contrary to the perceptions that illegal aliens don’t pay payroll taxes, we estimate that more than half of illegals work ‘‘on the books.’’ On average, illegal households pay more than $4,200 a year in all forms of federal taxes. 

Unfortunately, they impose costs of $6,950 per household. 

What’s Different About Today’s Immigration. It is worth noting that many 

native-born Americans observe that their ancestors came to America and did not 

place great demands on government services. Perhaps this is true, but the size and 

scope of government was dramatically smaller during the last great wave of immigration. Not just means-tested programs, but expenditures on everything from public schools to roads were only a fraction of what they are today. Thus, the arrival 

of immigrants with little education in the past did not have the negative fiscal implications that it does today. Moreover, the American economy has changed profoundly since the last great wave of immigration, with education now the key determinant of economic success. The costs that unskilled immigrants impose simply reflect the nature of the modern American economy and welfare state. It is doubtful 

that the fiscal costs can be avoided if our immigration policies remain unchanged. 

Illegals and Federal Retirement Programs. As for Social Security and Medicare, our findings show that illegals have an unambiguously positive effect for these 

two programs. We estimate that illegal households create a combined net benefit for 

these two programs in excess of $7 billion a year, accounting for about 4 percent 

of the total annual surplus in these two programs. Unfortunately, they create a net 

drain of $17 billion in the rest of the federal budget, for a total net loss of more 

than $10 billion. Nonetheless, their impact on Social Security and Medicare is unquestionably positive. Of course, the benefit to these two programs stems from the 

fact that they are illegal. In the long run, legalization would be a significant problem for these two programs because it would add millions of low-wage earns to the 

system. Also, if the Social Security totalization agreement with Mexico goes into effect, which allows illegals to collect Social Security, the impact could be very negative for both programs as well. 

Policy Options for Dealing With Illegal Immigration. The negative impact 

on the federal budget from illegal immigration need not be the only or even the primary consideration when deciding what to do about illegal immigration. But assuming that the fiscal status quo is unacceptable, there are three main changes in policy 

that might reduce or eliminate the fiscal costs of illegal immigration. One set of options is to allow illegal aliens to remain in the country, but attempt to reduce the 

costs they impose. A second set of options would be to grant them legal status as 

a way of increasing the taxes they pay. A third option would be to enforce the law 

and reduce the size of the illegal population and with it the costs of illegal immigration. 

Let Illegal Stay Illegal, But Cut Costs. Reducing the costs illegals impose 

would probably be the most difficult because illegal households already impose only 

about 46 percent as much in costs on the federal government as other households. 

Moreover, the fact that benefits are often received on behalf of their U.S.-citizen 

children means that it is very difficult to prevent illegal households from accessing 

86 

the programs they do. It seems almost certain that if illegals are allowed to remain 

in the country, the fiscal deficit will persist. 

The High Cost of Legalization. As discussed above, our research shows that 

granting illegal aliens amnesty would dramatically increase tax revenue. Unfortunately, we also find that costs would increase even more. Costs would rise dramatically because illegals would be able to access many programs that are currently off 

limits to them. Moreover, even if legalized illegal aliens continued to be barred from 

using some means-tested programs, they would still be much more likely to sign 

their U.S.-citizen children up for them because they would lose whatever fear they 

had of the government. We know this because immigrants with legal status, who 

have the same education levels and resulting low incomes as illegal aliens, sign 

their U.S.-citizen children up for programs like Medicaid at higher rates than illegal 

aliens with U.S.-citizen children. In addition, direct costs for programs like the 

Earned Income Tax Credit would also grow dramatically with legalization. Right 

now, illegals need a Social Security number and have to file a tax return to get the 

credit. As a result, relatively few actually get it. We estimate that once legalized, 

payments to illegals under this program would grow more than ten-fold. 

Enforcing the Law. If we are serious about avoiding the fiscal costs of illegal 

immigration, the only real option is to enforce the law and reduce the number of 

illegal aliens in the country. First, this would entail much greater efforts to police 

the nation’s land and sea borders. At present, less than 2,000 agents are on duty 

at any one time on the Mexican and Canadian borders. Second, much greater effort 

must be made to ensure that those allowed into the country on a temporary basis, 

such as tourists and guest workers, are not likely to stay in the country permanently. Third, the centerpiece of any enforcement effort would be to enforce the ban 

on hiring illegal aliens. At present, the law is completely unenforced. Enforcement 

would require using existing databases to ensure that all new hires are authorized 

to work in the United States and levying heavy fines on businesses that knowingly 

employ illegal aliens. 

Policing the border, enforcing the ban on hiring illegal aliens, denying temporary 

visas to those likely to remain permanently, and all the other things necessary to 

reduce illegal immigration will take time and cost money. However, since the cost 

of illegal immigration to the federal government alone is estimated at over $10 billion a year, significant resources could be devoted to enforcement efforts and still 

leave taxpayers with significant net savings. Enforcement not only has the advantage of reducing the costs of illegal immigration, it also is very popular with the 

general public. Nonetheless, policymakers can expect strong opposition from special 

interest groups, especially ethnic advocacy groups and those elements of the business community that do not want to invest in labor-saving devices and techniques 

or pay better salaries, but instead want access to large numbers of cheap, unskilled 

workers. If we choose to continue to not enforce the law or to grant illegals legal 

status, both the public and policymakers have to understand that there will be significant long-term costs for taxpayers. 

Immigration and Federal Retirement Programs 

Many advocates argue for high levels of immigration on the grounds that it can 

solve the problem of our aging population. Those that make this argument worry 

that there will not be enough working-age people to support the economy or pay for 

government, particularly retirement programs. Immigration, it is argued, will make 

the country more youthful. Almost all of those making this argument, however, are 

not demographers. Actual demographic analysis shows immigration can have only 

a very tiny effect on the nation’s age structure. 

Basic Demographics. We can measure the impact of current immigration on the 

aging of the United States very precisely. The Census asks immigrants when they 

arrived. (Some 90 percent of illegal immigrants are thought to have responded to 

the 2000 Census.) If we excluded all immigrants, including illegals, who arrived 

after 1980 from the 2000 Census, the average age in the United States would have 

only been four months older. Another way to look at the aging of society is to examine the working-age (15 to 64) share of the population. Looking at the full impact 

of post-1980 immigrants reveals that if they and all their U.S.-born children are not 

counted, the working-age share would have been 65.9 percent in 2000, almost exactly the same as the 66.2 percent when they are all included. We can also look 

at fertility rates. In 2000 the average woman living in America had 2.1 children in 

her life time, compared to 1.4 for Europe. But if all immigrants are excluded the 

rate would still have been 2.0. The key to understanding why America has higher 

fertility than other industrialized democracies is not immigration. The relatively 

87 

7See footnote 3 for the source of information dealing with the impact of immigration on demographics in the United States and the Social Security system. 8See footnote 3. 

9See footnote 3. 

high U.S. fertility is one of the key reasons immigration has such a small impact 

on the aging of American society.7

Immigration’s Projected Impact on Aging. Looking to the future, Census Bureau projections indicate that if net immigration averaged 100,000 to 200,000 annually, the working-age share would be 58.7 percent in 2060, while if net immigration 

averaged 900,000 to one million, it would be 59.5 percent A 2000 report by Census 

Bureau states that immigration is a ‘‘highly inefficient’’ means for addressing the 

ratio of working-age people to the rest of the population in the long run. The argument that immigration can have a significant impact on the aging of our society 

may seem plausible. Immigrants tend to arrive in America relatively young and 

they also tend to have more children than natives. But an evaluation of the actual 

data shows that the difference between immigrants and natives is not sufficiently 

large, nor are immigrants sufficiently numerous to be of any real help in changing 

the nation’s age structure. Moreover immigrants age just like everyone else. Americans will simply have to look elsewhere to deal with this problem.8

Impact on Retirement Programs. Because, as pointed out above, immigration 

has little impact on the working-age share of the population, it follows that it will 

have only a very small impact on federally funded retirement programs. One can 

see this by looking at Social Security Administration (SSA) projections. The 2004 

trustee’s report, along with other information provided to Senator Hagel, indicate 

that net annual legal immigration of 800,000 a year versus 350,000 a year would 

create a benefit equal to only 0.77 percent of the program’s projected total expenditures. As for the program’s deficit, annual legal immigration of 350,000 versus 

800,000, would increase the dollar value of the actuarial deficit by just 6.6 percent 

of the projected deficit over the next 75 years. The bottom line is that even very 

large shifts in the number of people allowed into the country have only a minor impact on the program.9

Low-wage Workers Are a Problem for Social Security. It not even clear that 

the modest benefits estimated by the SSA from immigration actually exist. The SSA 

immigration projections do not account for the lower average income and resulting 

tax payments of legal immigrants. SSA basically assumes that legal immigrants will 

have average earnings from the moment they arrive, which is contrary to a large 

body of research. A 1998 study by the Urban Institute, which is generally regarded 

as a supporter of high immigration, found that legal immigrants in New York State 

paid only 85 percent as much in Social Security taxes as natives on average. This 

also matters because Social Security is redistributive in nature, making somewhat 

more generous payments to lower-wage earners relative to their tax contributions, 

than to more affluent earners. 

The lower income of immigrants also has implications for Earned Income Tax 

Credit (EITC), which as the IRS states on its web site, was partly created by Congress to ‘‘offset the burden of Social Security taxes’’ on low-wage workers. For example, a family of four (with two children) and earned income of $25,000 a year would 

received about $2,100 from the EITC in 2004, compared to Social Security tax payments of roughly $1,600, not including the employer contributions. The Center for 

Immigration Studies has estimated that households headed by legal immigrants received an average of $392 from the EITC in 2002 compared to $209 for native headed households. The SSA makes no attempt to adjust for the existence of the EITC 

in its projection, which are focused solely on Social Security. Even putting aside the 

EITC and the lower average earnings of immigrants, Census Bureau and SSA projection show that immigration of any kind can have only a modest impact on the 

aging of society and thus the Social Security system. 

Conclusion 

If you take nothing else away from my testimony, it should be remembered that 

it simply is not possible to fund social programs, including those for retirees, by 

bringing in large numbers of immigrants with relatively little education. This is central to the debate over illegal immigration debate because 60 percent of illegals are 

estimated to have not completed high school and another 20 have only a high school 

degree. The fiscal problem created by less-educated immigrants exists even though 

the vast majority of immigrants, including illegals, work and did not come to America to get welfare. The realities of the modern American economy coupled with the 

modern American administrative state make large fiscal costs an unavoidable problem of large scale less-educated immigration. 

88 

This fact does not reflect a moral defect on the part of immigrants. What it does 

mean is that we need an immigration policy that reflects the reality of modern 

America. We may decide to let illegals stay and we may even significantly increase 

the number of less-educated legal immigrants allowed into the country, which is 

what the immigration bill recently passed by the Senate would do. But we have to 

at least understand that such a policy will create large unavoidable costs for taxpayers. 

f 

Mr. MCCRERY. Thank you both, gentlemen, for your testimony. 

You both spoke primarily about identifiable fiscal effects on the 

Federal Government. What about a bigger economic effect? 

I hear quite often and read that these illegal immigrants are filling jobs that nobody else in this country will do, and that the agriculture industry really needs these workers to go in the fields and 

gather the crops, that the service industry really needs these workers to fill the jobs in the service industry, whether it is hotels or 

restaurants, that services for landscaping needs this, and on and 

on. 

Is that true? Do either of you have any research on that or an 

opinion on that? 

Mr. FIX. I think it is definitely true there is a demand for the 

labor in these comparatively low wage occupations, low skilled occupations. There has been an explosion in the numbers of people 

working in the low wage service sector. Agricultural workers have 

not declined significantly, as was expected. We did not think we 

would have two million field workers 20 years ago when we were 

thinking about the future. 

There is obviously a big demand here. It is not met at any level 

with the number of legal visas or legal opportunities to enter, that 

are in any way commensurate with the number of jobs in the sector. 

You have suggested another point, which is very important, 

which is you have to step back to think about the merits of the 

Senate bill. The fiscal impacts are very important, and I would not 

discount them. 

As Eugene Steurle, a tax economist at the Urban Institute points 

out to me all the time, the public sector represents about 10 percent of the total economy and a lot of the contributions of these 

populations, even though they may produce a fiscal deficit, their 

larger economic impacts may really look rather different. 

Mr. CAMAROTA. Let me answer it in a couple of ways. One is 

that the most definitive study done on the economic benefits of immigration was done by the National Research Council, part of the 

National Academy of Sciences. 

The report is called ‘‘The New Americans.’’ What they found is 

look, you add more workers, the economy is bigger, but is it richer? 

The impact on natives was mainly to drive down the wages of the 

poorest 10 percent, but the benefit to natives was so small, they 

could barely measure it, one tenth of one percent. You cannot add 

lots of unskilled workers to an economy like ours, which is mostly 

made up of skilled workers and capital, and get a big economic 

boost. 

What the lead author in that report, George Borjas at Harvard, 

who did the economic analysis for the National Research Council, 

89 

pointed out is that the benefits that come from immigration would 

appear to be minuscule for natives, but huge for the immigrants 

themselves. That is something to think about. 

What is happening generally in the U.S. economy is native born 

Americans who would compete at the bottom end of the labor market, these are the 16 or 17 million native born Americans who do 

not have a high school education, and then there is about 10 million young natives who have only a high school education but they 

are in their twenties, they have been dropping out of the labor 

market in droves, in just the last 5 years, three million fewer of 

those people hold a job. 

The actual number of these people in the working age groups has 

gone up, but natives with little education have been leaving the 

labor market in droves, and these are precisely the kind of people 

who, until very recently, worked in construction, worked in food 

service, and worked in hotel and restaurant maintenance. 

In fact, the vast majority of workers in all those occupations are 

still native born. 

When more educated and effluent people say illegal aliens only 

take jobs Americans do not want, what they really mean is they 

take jobs that I do not want, as a more educated and effluent 

American, since the vast majority of people who do those jobs are 

native born, and their wages are down, their unemployment is up, 

and their workforce participation has also fallen. Things look very 

bad for less educated natives. 

All the objective economic evidence suggests there simply is no 

shortage of high school drop outs in America or young people with 

only a high school degree. 

Mr. MCCRERY. If all of the illegal immigrants who are here 

were found and deported, you have no concerns that we could find 

the workforce to fill all these jobs? 

Mr. FIX. In fact, the number of U.S. born drop outs has been 

dropping quite rapidly over the years. If I could add to that, there 

is very little literature—we have just done a review of this—I have 

to say there is very little literature that supports a strong competitive wage effect. In the main literature, these strong competitive effects are not found. 

Mr. CAMAROTA. What Mr. Fix is referring to is literature that 

tries to look at wages. If you have lots of immigrants, does it seem 

to reduce wages. 

I think the evidence on that—we disagree on the literature. I 

think it is pretty significant, but it is confined to the poorest and 

most vulnerable American workers. 

The bottom line is this. If there is no wage effect, then there is 

no economic benefit. You cannot argue that immigration creates 

large economic benefits for the United States but wages in hotels 

and construction and so forth are exactly the same with or without 

immigrants. 

You cannot have it both ways. You cannot be a single married 

man. Either immigration saves consumers a lot of money by holding down labor costs or it has very little or no effect on wages. 

If you say it has no effect on wages, then you are saying it has 

no significant economic benefits for everyone else. Businesses could 

90 

do the same with or without them, is what you are saying. Their 

presence is not having an effect. 

In terms of could we get rid of them and be okay, yes, I think 

we could. It would not happen overnight. As I understand the approach in the House bill, it is attrition through enforcement. Go 

after the employers. Police the border. Get the cooperation of local 

law enforcement, and over time make many more illegal aliens go 

home on their home then come in. 

Even if there is any temporary disruption, it happens gradually. 

There are millions—let me give you a statistic. There are seven 

million native born Americans of working age who do not have a 

high school degree who are not even in the labor market. 

There are something like 13 million natives of working age who 

have only a high school degree who are not in the labor market. 

These figures do not even include the unemployed. 

Mr. MCCRERY. Why would they enter the labor market? 

Mr. CAMAROTA. My contention would be in the absence of immigration, wages, benefits and working conditions would improve. 

We would expect that a larger share would go into the labor market. 

There is no such thing as a job Americans do not do, depending 

on the wage. When I worked in farm work in New Jersey 20 some 

years ago, that job paid over $7 an hour, adjusted for inflation, it 

would have to be over $16 an hour today. Farm jobs pay generally 

speaking $8 to $12 an hour. 

There has been a significant decline in wages in the farm sector 

in the last 25 years. That is strong prima facie evidence there is 

no labor shortage. 

Mr. MCCRERY. There is a reason I did not study economics. You 

two are illustrating that quite well. I think you have just used both 

hands. 

I do not think there is anyone who disagrees with one of Dr. 

Camarota’s principal themes, which is given a choice, we would 

rather have immigrate to this country people with higher educations. Clearly, there is a bigger bang for the buck, so to speak, 

if we get a highly educated immigrant, a scientist, an engineer, 

than an immigrant with very little formal education. 

I am hopeful that when we do get a comprehensive immigration 

policy reform in this country, and I think we will, we have to, we 

are certainly going to invite more highly skilled, highly educated 

immigrants to join us in this country. 

I think it is a real question, and demonstrated by your conflicting 

testimonies and opinions, as to whether we should close the door 

on lower skilled, lower educated immigrants. 

If you would, just kind of sum up. Mr. Fix, you talked about the 

ripple effects through the economy of immigration, positive impacts. Can you just kind of talk about that a minute? 

Dr. Camarota, if you want to respond about any negative ripple 

effects. 

Mr. FIX. I would simply reiterate a number of the statements 

that I made earlier. When you look at these cost accounts of the 

impacts of immigration on the economy, one of the problems is they 

simply cannot take into account a couple of things. 

91 

First of all, entrepreneurship and the spill over effects of job creation that immigrant entrepreneurship generates. We know immigrants are more likely to be self employed than natives, as well as 

the tax effects of entrepreneurship. 

I think another piece of the puzzle which is often left out is the 

consumption of immigrants. We forget that immigrants spend a lot 

of money and their money ripples through the economy and creates 

jobs for natives as well. 

Immigrants are more mobile than are natives, and they move to 

jobs, and by moving to jobs, they make the economy more fluid and 

they make it more productive. 

Finally, the point that you just made, I just want to underscore 

the point that you have made, that high skilled immigrants are incredibly important to the economy and to the productivity of the 

economy, and in particular, to innovation within the U.S. economy. 

In terms of low skilled immigrants, I think we have to be realistic. Our economy is structured in many ways so that it needs lots 

of low wage, comparably low skilled workers. 

It would be good if we could manage that supply, manage that 

flow. This is a global flow. We should regulate that flow. If we do 

regulate that flow, perhaps we could move to higher wages, as 

Steve has suggested. 

To just ignore that these people are going to come and these jobs 

are going to be created and we can exclude them through attrition, 

I do not think it is realistic at this stage in the game. 

Thank you. 

Mr. CAMAROTA. Let me answer it this way. If the argument is 

look, we just cannot enforce our law. People want to come to America, and quite frankly, it does not matter what this Congress—if we 

want to let a million legal immigrants a year but another million 

foreigners want to break our laws and come, tough. We have to accept that. 

I would urge Congress to reject that fundamentally anti-democratic position. It is we who decide how many come in and then we 

enforce the law. We do not say, well, look, the willingness of foreigners to break our laws really should be the key determinant. 

Another million want to come on top of the legal million that we 

let in, we just have to let them in. 

I think that is fundamentally un-democratic and a very dangerous argument to go down in a democratic republic. 

We decide how many come in and then we enforce. If we want 

two million, then we should have two million a year, instead of the 

one million. 

On the question of entrepreneurship, let me say I believe Michael 

and I just have a fundamentally different view of this. I think all 

the literature shows that now natives have slightly higher self employment rates. 

The current population surveys show this. The census shows 

this. For example, the 2005 current population survey showed that 

11 percent of immigrants were self employed and 13 percent of natives were self employed. 

It is true that historically, immigrants once had a higher entrepreneurship rate. That is no longer the case. 

92 

On this point, I guess we disagree, and it has not been true for 

a number of years now. Immigrant entrepreneurship has fallen a 

lot, partly because the education level of immigrants relative to natives has deteriorated. 

On a larger question, let me sum it up this way, when the National Research Council looked at this question, again, they found 

the economy is bigger, the immigrants benefit, but the benefit to 

natives appears to be so small, that they could barely find it, onetenth of 1 percent increase in the income or per capita Gross Domestic Product of natives. 

You cannot get a big boost to the U.S. economy by increasing the 

supply of unskilled workers. That is the big effect that immigration 

has on the United States, because fully, one-third of all the foreignborn in the United States have not completed high school. 

Thank you. 

Mr. MCCRERY. Thank you both for your testimony and your patience today. I would just say, Dr. Camarota, I do not think anybody is suggesting that we not enforce our laws. 

What some are suggesting is that we change our laws, and we 

change our underlying policy. I think that is a legitimate area for 

Congress to explore. That is what we do. 

We are certainly not suggesting that we not enforce our laws, but 

maybe we need to change our laws to accommodate more immigrants or a different mix of immigrants or whatever. 

Clearly, we need to be able to enforce our laws. That is certainly 

part of the equation of protecting our border, being able to enforce 

our border is certainly part of the overall equation. 

I think we also have to look, as the President has suggested, at 

the other parts of the equation, which would include the mix of immigrants, and the overall number of immigrants that we would like 

to join us here. 

Those are the questions we are trying to explore. Yes, we do need 

to know the impact of those various proposals for change on the Social Security system, on other benefit programs, and that is why we 

appreciate your coming today and sharing with us your expertise 

on those issues. 

Thanks very much. The hearing is adjourned. 

[Whereupon, at 5:55 p.m., the hearing was adjourned.] 

[Questions submitted from Chairman Thomas to Ms. Barnhart, 

Mr. Everson, and Ms. Myers, and their responses follow:] 

Questions from Chairman William Thomas to Ms. Jo Anne Barnhart 

Question: What effect did the last major immigration reform—The Immigration Reform and Control Act 1986 (P.L. 99–603) have on the Social Security Administration’s (SSA’s) workloads? 

[The response from Ms. Barnhart not received at time of printing.] 

Question: What new workloads would the Senate-passed Comprehensive 

Immigration Reform Act (S. 2611) create for the SSA, and how would these 

additional workloads affect current workloads? In other words, if the Senate bill were enacted, would you expect retirees and individuals with disabilities to have to wait even longer for their claims to be processed? 

Would Americans who need to conduct business at their local Social Security office have to wait in even longer lines? 

[The response from Ms. Barnhart not received at time of printing.] 

93 

Question: What percent of the work authorizations performed by the 

Basic Pilot are processed by the SSA versus the Department of Homeland 

Security (DHS)? What work is involved, other than a data match between 

SSA computers and DHS computers? How many employees and how many 

dollars does it take for the SSA to conduct its share of the Basic Pilot— 

name, SSN, & U.S. citizenship verification? What would be the effect on the 

SSA’s workloads of a mandatory Basic Pilot program? Will the SSA have 

the capacity to handle the increased number of verifications that would be 

required under either the Border Protection, Antiterrorism, and Illegal Immigration Control Act of 2005 (H.R. 4437) or the Comprehensive Immigration Reform Act (S. 2611)? 

[The response from Ms. Barnhart not received at time of printing.] 

Question: The current ‘‘no-match’’ letter the SSA sends to employers 

when they submit W–2s with names and SSNs that do not match the SSA’s 

records contains language saying the employer should not take adverse action against the employee due to the letter. The DHS rule could eventually 

result in the employee being fired if the discrepancy identified in the nomatch letter is not resolved. Did the DHS consult with the SSA in developing the rule? Does the SSA plan to change any of the language in the letter if the DHS rule becomes final? 

[The response from Ms. Barnhart not received at time of printing.] 

f 

Questions from Chairman William Thomas to Mr. Mark Everson 

Question: The Social Security Administration (SSA) provides SSN (SSN) 

information to the Internal Revenue Service (IRS) along with an indicator 

showing whether the SSN was issued to the individual for a non-work purpose (i.e., the SSN recipient was not authorized to work in the United 

States at the time the SSN was issued). The IRS has explained that it cannot estimate the amount of Earned Income Tax Credit (EITC) dollars paid 

in error because the SSA’s indicator does not specify whether the non-work 

SSN was issued solely for the purpose of receiving Federal benefits versus 

another non-work purpose. Would you please clarify the rules regarding 

eligibility for the EITC for non-citizens who are not authorized to work in 

the United States, and explain whether the IRS is able to detect EITC fraud 

and enforce the law based on the information it receives from the SSA? 

Answer: In 1996, Congress enacted a provision (IRC sec. 32(m)) that was intended to deny the EITC to noncitizens who were not authorized to work in the 

United States. However, this provision requires noncitizens EITC claimants to provide a SSN issued for work purposes for themselves and their qualifying children. 

It explicitly denies the EITC to noncitizens who are not authorized to work in the 

United States but who, under clause (II) of sec. 205(c)(2)(B)(i) of the Social Security 

Act, obtain an SSN solely for the purpose of claiming Federally funded government 

benefits (such as public assistance). 

The 1996 Act also gave the IRS the authority to automatically deny such claims 

during processing using ‘‘mathematical error’’ procedures. (Without mathematical 

error authority, the IRS can still deny ineligible claims through the examination 

process. However, more ineligible claims can be denied through the less labor-intensive mathematical error procedures.) 

At the time of enactment, it was thought that this provision would effectively restrict EITC eligibility to U.S. citizens, permanent residents (‘‘green card’’ holders), 

and other noncitizens who obtain an SSN because their visas authorize them to 

work in the United States. These individuals are entitled to obtain an SSN under 

clause (I) of sec. 205(c)(2)(B)(i) of the Social Security Act. 

However, Sec. 32(m) inadvertently allows some undocumented workers to receive 

the EITC. Prior to October 2003, it was possible for some undocumented workers 

to receive SSNs for certain reasons other than to obtain federal benefits—e.g., to obtain a driver’s license in some states or, before the adoption of ITINs, to file a tax 

return. In addition, it is still possible for some noncitizens who are legally in the 

United States without authorization to work to receive SSNs for state general assistance benefits. Further, while SSA records contain an indicator showing that an 

SSN holder is not authorized to work in the United States, the records do not distinguish between those who receive an SSN in order to obtain federal government benVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00097 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
94 

efits and those who obtain an SSN for other nonwork purposes. As a result, the IRS 

has never used its mathematical error authority to deny EITC claims of certain noncitizens, for fear of denying the credit to individuals who are technically eligible (albeit undocumented workers). 

In the FY 2007 budget, the Administration proposed that sec. 32(m) be rewritten 

to state that for purposes of the EITC, IRS will recognize only an SSN assigned either to a citizen of the United States or pursuant to clause I of section 205(c)(2)(B)(i) 

of the Social Security Act. This modification would effectively deny EITC eligibility 

to individuals who were assigned SSNs for any non-work reason—as was the intent 

of Congress in 1996. Further, this modification would allow the IRS to implement 

the existing math error authority to deny the EITC to undocumented workers, because the IRS would be able to use SSA and DHS provided data to detect claimants 

who were neither U.S. citizens nor work-authorized aliens and thus ineligible for 

the EITC. 

Question: The Senate proposal requires the Treasury Secretary to establish rules and procedures for the IRS to determine an illegal alien’s payment of taxes in exchange for legal status. It seems that this requirement 

would place an undue burden on the IRS. How would the IRS know if a 

taxpayer reported all of his or her income and how would the IRS ensure 

that those ineligible to receive tax credits and refunds did not receive them 

for previous years? 

Answer: Upon request, we are able to provide taxpayers, including t onewho has 

filed using Individual Tax Identification Numbers (ITINs), a transcript of his or her 

tax records. However, this process would not provide a verification of the accuracy 

of the tax return or information the taxpayer has submitted. Due to disclosure concerns, we would also not provide information to a taxpayer on multiple identification 

numbers, which might be necessary if the taxpayer had been filing Federal income 

tax returns using various ITINs or SSNs belonging to other taxpayers. To take the 

necessary steps to verify that all income has been reported and prior year credits 

and refunds were appropriate, the IRS would have to divert significant resources 

from current functions. In particular, the IRS could have to conduct labor-intensive 

examinations of millions of undocumented workers, going back a number of years 

and sorting out complex return reporting that may involve improper use of ITINs 

or SSNs belonging to other taxpayers. This high cost of enforcement will result in 

little revenue. 

f 

Questions from Chairman William Thomas to Ms. Julie Myers 

Question: A Government Accountability Office (GAO) study found some 

weaknesses with the existing Basic Pilot program. For example, it does not 

detect identity theft, the databases are not always up-to-date, employers 

may misuse the system to discriminate against workers, and the system 

may not be able to handle a significant increase in users. How would the 

Department of Homeland Security (DHS) address these problems if the 

Basic Pilot were made mandatory for all employers? 

Answer: The Basic Pilot relies in part on the employer’s I–9 document inspection 

to detect identity fraud. Since the Basic Pilot currently does not have a biometrics 

component, it is not possible for it to detect all identity theft. However, as the Department makes technological advances in capturing, storing and using biometrics 

over time, the Basic Pilot program will consider modifications to its current business 

processes to leverage those advances. Detecting identity theft generally and fraud 

related to false claims to U.S. citizenship would require a biometrics check on all 

new hires, including those claiming to be U.S. citizens. The Basic Pilot verifies the 

name, Social Security Number, and date of birth for all new hires, including U.S. 

citizens, by comparing the employee’s information with the records in the SSA 

Numident database, which does not include biometrics. USCIS is currently evaluating ways of displaying the photograph of non-citizen new hires who have been 

issued a secure DHS document (i.e., a Lawful Permanent Resident card or a secure 

Employment Authorization Document (EAD)), as part of the Basic Pilot. In addition, 

USCIS will explore the technical feasibility of adding visa photographs, including 

photographs of nonimmigrants who do not have to obtain an EAD, and passport 

photographs of U.S. citizens, to the Basic Pilot database. 

USCIS recently briefed the GAO about its initiatives to reduce the percentage of 

noncitizen queries that cannot be verified electronically through the Basic Pilot 

95 

database. These initiatives include: (1) adding real-time CBP arrival information 

and change and extension of status information about nonimmigrants to that database and (2) developing a query method that verifies noncitizen work authorization 

status against the USCIS repository of secure card information. 

With respect to potential discrimination, USCIS has worked closely with the Department of Justice’s Office of Special Counsel for Unfair Immigration-Related Employment Practices (OSC) from the earliest development of the Basic Pilot program 

to minimize any such potential. While any verification system, including the I–9 

form itself, can potentially be misused, we believe the requirements and capabilities 

of the Basic Pilot, such as verifying all new hires at participating employment sites, 

reduce rather than enhance the potential for any discrimination, when used properly by employers. In FY2007, USCIS plans to add a data monitoring and compliance function to the Basic Pilot program. We have reached out to the DHS Office 

of Civil Rights and Civil Liberties and to OSC to solicit their further input into how 

to best detect possible misuse of the system for discriminatory purposes and work 

with employers to prevent such misuse. 

Finally, the greatest challenges in scaling the system to handle a significant number of additional users lie, not in adding hardware to handle more queries, but in 

streamlining current employer registration procedures, and in improving the electronic sharing of data to more effectively resolve queries that require secondary 

processing and reduce the percentage of those queries. USCIS already has initiatives in place to address each of the challenges. 

Question: The law requires Federal agencies to take steps to ensure the 

security of their computer systems. The DHS does not have a good track 

record in this area, and received a failing grade from the House Committee 

on Government Reform based on the agency’s 2005 report, which is required under the Financial Information Security Management Act (FISMA) 

of 2002. How secure are the Basic Pilot program and the databases that 

support it, including components of the Basic Pilot operated by a contractor? Do they meet the law’s requirements? Have there been any data 

breach or security incidents related to the Basic Pilot, the databases it 

uses, or the contractor? 

Answer: The Verification Information System (VIS) database, which supports the 

Basic Pilot program, is certified and accredited as required by FISMA and in accordance with security guidelines from the National Institute of Standards and Technology. The VIS database is housed in a secure and accredited contractor-owned facility. There have been no data breach or security incidents of any kind relating to 

the Basic Pilot program, the VIS database, or its contractor. 

Question: In a June 2004 report to the Congress, the DHS found that too 

frequently, work-authorized employees receive an initial response that 

they are not authorized to work when in fact they are authorized to work 

(a ‘‘false negative’’ response), especially in the case of foreign-born employees. How accurate is the Basic Pilot? What happens to employees who receive a response that they are not authorized to work? Has an employee 

ever been wrongly fired from a job due to an incorrect response from the 

Basic Pilot? Has an employee who was authorized to work ever sought 

compensation from the DHS or the Federal Government because he or she 

wrongly lost a job due to the Basic Pilot? What recourse, if any, does an 

employee have if he or she wrongly loses a job because of data provided 

to the employer by the Basic Pilot? 

Answer: Employees who are not instantaneously confirmed by the Basic Pilot are 

issued tentative non-confirmations. These tentative non-confirmation findings mean 

that additional information and/or review of SSA or DHS records is required before 

work authorization can be confirmed; they do not mean that the employee is not 

work authorized. Sometimes the need for further verification results from actions 

or corrections that employees have not made, and in other cases it results from employer input errors or missing or inaccurate government records. USCIS is currently 

taking aggressive steps to improve the quality and timeliness of its data to reduce 

the number of tentative non-confirmations issued by the Basic Pilot for work authorized non-citizens. Basic Pilot procedures require that employers cannot terminate 

the employment of workers for verification-related purposes while the verification 

is pending. If action is not taken to resolve the discrepancy or if SSA’s records do 

not indicate U.S. citizenship and USCIS finds that the person is not work authorized, a final non-confirmation is issued and the employer may terminate employment of the individual. 

96 

We are not aware of any cases where employees have been wrongfully fired from 

jobs due to tentative non-confirmation findings where employers and employees 

have followed all of the requirements of the Basic Pilot program or where an employee sought compensation for such a termination. 

Question: The Comprehensive Immigration Reform Act, S. 2611, includes 

an appeal process for workers who believe they were wrongly fired from 

their job due to an error attributable to the mandatory electronic employment verification system in the bill, which is modeled on the Basic Pilot. 

What are your thoughts on the Senate bill’s provisions? Is an appeal process necessary? 

Answer: Because the incidence of tentative nonconfirmations of work authorized 

noncitizens is quite low and getting lower, we have serious concerns about subjecting the system to the prospect of extensive administrative and judicial review 

procedures that could prevent it from getting off the ground, particularly since those 

provisions appear to make DHS potentially liable in situations where it was not the 

cause of the error. We believe that making back wages an available remedy could 

result in an incentive for litigation. We would oppose any provision that would allow 

attorney fees. We would further note that since the verification system is specifically 

a two-step process involving review of any initial tentative nonconfirmation, the 

benefit of any further administrative steps is substantially reduced compared to the 

disadvantages of lengthy delays before work authorization is finally resolved to the 

employer and the employee themselves, as well as to the Government. 

Question: Are there requests for verification from the Basic Pilot that are 

never resolved because the DHS cannot determine whether or not the individual is authorized to work? What is the longest period of time it takes 

to resolve a request for verification? 

Answer: No. USCIS is always able to issue either a confirmation or final nonconfirmation of a noncitizen new hire’s work authorization status. In FY 2006, we resolved 99.56% of DHS tentative nonconfirmations within 10 days of the employer 

notifying the employee of the DHS tentative nonconfirmation response (Note: the 

new hire may take up to eight days to contact USCIS and provide additional information, and we have an additional 2 days to resolve.) In that same time period, 

there was one instance where we took 57 days to resolve a DHS tentative nonconfirmation, but appropriate steps were taken to ensure it will not happen again. Of 

course, a number of final nonconfirmations are the result of employees who are the 

subject of a tentative nonconfirmation because there is no matching DHS record 

that verifies their claim on the Form I–9 that they are work authorized. This is the 

normal, expected, and indeed desirable result of a system that catches false claims 

to lawful status and/or work authorization. 

Question: The Basic Pilot is intended to help employers comply with immigration law that prohibits the hiring of an unauthorized immigrant. To 

what extent has the Basic Pilot achieved that goal? 

Answer: Basic Pilot has proven to be a critical tool in helping employers comply 

with hiring requirements of non-U.S. citizens. Through participation in the Basic 

Pilot program employers are able to go beyond the law’s minimum requirements related to the Form I–9 and actually verify work authorization against Federal databases. It is the best procedure available to ensure that an employer’s workforce is 

work authorized, and as a web-based program it is easy to use with more than 80 

percent of responses provided electronically within 3 seconds. 

Additionally, while voluntary participation in the program has grown steadily 

since 2001, there was a significant increase from FY 2005 to FY 2006, with the 

number of employers nearly doubling to over 11,000. 

Question: Are there alternatives, short of a mandatory Basic Pilot program, that would help prevent the hiring of unauthorized immigrants, such 

as changes in the list of acceptable documents proving identity and employment eligibility, or increased data-sharing among agencies? 

Answer: While there are other initiatives that could help prevent the hiring of 

unauthorized aliens, such as changes in the list of acceptable documents, these initiatives are missing the critical component found in Basic Pilot—verification of work 

authorization. A mandatory employment eligibility verification program is essential 

to more effectively enforce our immigration laws. 

DHS is examining the list of acceptable documents with an eye toward further 

streamlining while balancing the need for simplicity against the need to ensure that 

those who are authorized to work, including U.S. citizens, have access to the approVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00100 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
97 

priate documentation. DHS also supports increased data sharing among agencies. 

These, however, are complements to Basic Pilot that should also be pursued, rather 

than ‘‘alternatives’’ to it. Because the opportunity for employment is a major factor 

behind most illegal entry and visa overstays, mandating the use of the Basic Pilot 

by all U.S. employers would have the biggest effect on reducing the ability of unauthorized persons to work in the United States. 

Question: Prior to FY 2006, the DHS reimbursed the Social Security Administration (SSA) for its work related to the Basic Pilot. However, it 

stopped effective with FY 2006, even though the SSA is still providing services. Why? How much will the DHS owe the SSA by the end of Fiscal Year 

2006 (approximately $1 million)? 

Answer: USCIS did not receive appropriated funds for Basic Pilot in FY 2006 and 

thus was unable to reimburse SSA, as it had done in prior years. The 2007 budget 

includes approximately $6 million to reimburse SSA for its cost of resolving SSA 

tentative nonconfirmations when the new hire contests SSA’s inability to verify the 

worker’s claimed name, SSN and date of birth or U.S. citizenship. We note that we 

view this program as one that Congress has directed SSA and USCIS to work together on to implement in the public interest, and both have done so in what we 

believe has been a model example of interagency cooperation. 

Question: In June 2006, the DHS proposed a rule that would require employers to take certain steps to verify a worker’s name, SSN, and work authorization status if the SSA sends the employer a letter notifying them of 

name/SSN mismatches in the W–2s the employer files. When responding to 

evidence of potential unauthorized work, employers may be placed between a rock and a hard place—if they don’t reverify employment authorization, they may be subject to DHS penalties; if they do reverify, they may 

be sued for discrimination. Are you concerned that the proposed rule 

would exacerbate that situation? 

Answer: No, rather than exacerbate the situation, DHS believes that the Notice 

of Proposed Rule Making will go a long way toward resolving it. The proposed rule 

describes an employer’s current obligations under the immigration laws, and provides employers with an optional ‘‘safe-harbor’’ procedure to avoid violations of the 

employer sanctions provisions in the INA. The proposed addition of SSA no-match 

letters to 8 C.F.R. 247a.1(I) would clarify, not change, employers’ duties under existing law. Previous guidance from INS and DHS noted that employers who ignore 

SSA no-match letters may, depending on the circumstances, be found to have constructive knowledge. This led to confusion among employers, who did not know how 

to respond to SSA no-match letters in a manner that satisfies DHS and is consistent 

with the anti-discrimination provisions in the INA. The proposed rule still allows 

employers to address SSA no-match letters in any reasonable way they choose, but 

it also provides a DHS-approved method for doing so. Further, we do not see any 

conflict between the INA’s anti-discrimination and employer sanctions provisions. 

Conduct that is justified under the INA’s employer sanctions provisions does not violate the INA’s anti-discrimination provisions, which were designed to ensure that 

employers did not overreach to the threat of employer sanctions. The anti-discrimination provision does not prohibit an employer from taking reasonable action in response to the receipt of reliable information that leads the employer to question an 

employee’s eligibility to work in the United States. 

f 

[Questions submitted from Mrs. Tubbs Jones to Mr. Everson and 

his responses follow:] 

Questions from Mrs. Tubbs Jones to Mr. Everson 

Question: To your knowledge, how many of the patents that have been 

issued are being ‘‘marketed’’ by the patent holder? That is, how many of the 

tax strategies that have received patents do you know are being ‘‘shopped 

around’’ to taxpayers? 

Answer: Based on our focused review of 14 patents and published applications 

we observed little conspicuous marketing of the related patents. In one case a website restriction (we needed to be a client) hampered our ability to drill into the site 

without a client password. Nevertheless, it is important to note that there is no requirement in U.S. patent law to work (or market) the patented invention. 

98 

Question: If taxpayers are believing that a particular tax strategy has 

some sort of ‘‘seal of approval’’ because it has been patented, then should 

the IRS not be intimately involved in the process of issuing tax patents? 

Answer: No. The process of examining and granting patents is outside the IRS’ 

jurisdiction and expertise. Importantly, the granting of a patent on a tax strategy 

provides protection to the patent holder against infringement by other parties, but 

has no bearing on its legitimacy or illegitimacy under the tax laws, which remain 

under the jurisdiction of the IRS. The IRS is, however, considering taking steps to 

clarify for taxpayers that the tax treatment of a strategy is unrelated to any patent 

protection and that a patent is not an IRS ‘‘seal of approval.’’ 

Question: To what extent is the IRS currently involved? 

Answer: The IRS has no involvement with the USPTO in the patent review process and does not review patents to determine whether they are valid or meet the 

criteria for patentability. We monitor the USPTO database to gauge the level and 

type of potential Tax Strategy Patents. When warranted, we review public applications and previously granted patents to learn more about the strategy in order to 

assess the extent of potential aggressiveness of the strategy/technique and to gain 

insight into areas where activity is occurring. Furthermore, in the summer of 2005 

we conducted a cross-Agency workshop that encompassed topics requested by the 

USPTO. This was an awareness workshop and was similar to what industries have 

historically done with the USPTO to keep them abreast of the latest sources of information, trends in practice, and the like. Our goal was to assist the USPTO in 

developing the resources to determine ‘‘prior art’’ in the area of tax strategies and 

structures. 

Question: Of those tax patents that you have reviewed, how many do you 

think are abusive tax shelters? 

Answer: In 2004 and 2005, we performed two searches of the USPTO data base. 

The first search, conducted in November 2004, was designed to identify patents and 

public applications of known tax shelter strategies. Specifically, we were looking for 

transactions the IRS has identified as ‘‘listed’’ transactions in Notices 2004–67 and 

2005–13. These Notices describe over thirty transactions the IRS considers tax 

avoidance transactions. That search, which was updated in November 2005, and 

again in June 2006, found no evidence of patents or public patent applications embodying any abusive tax shelters or listed transactions. 

Question: How many do you think are aggressive—there is a good likelihood that if audited the legality of the tax strategy will be challenged by 

the IRS? 

Answer: It is impossible to definitively determine that a patented structure will 

constitute an aggressive tax strategy as used by taxpayers. This determination is 

inherently factual and depends on how the transaction is implemented in the real 

world. However, we have reviewed patents and applications to determine whether, 

as described in the application itself, the patented structure represents a high risk 

of aggressive tax planning. 

We conducted this type of search in July 2005, and update it periodically. 

The initial search just asked for patents that included the word ‘‘tax’’ in applications and granted patents in all classifications. We had fewer than 300 ‘‘hits’’. A further analysis showed that approximately 100 of these dealt with ‘‘business methods’’ 

and the majority of those appeared to be software models for computing tax impact 

or effect, and not tax strategies. 

We pared the potential population to 14 patents and public applications primarily 

in the areas of employee compensation, wealth transfer, and financial products. 

Upon initial examination, none of the 14 patents were found to clearly involve abusive tax avoidance transactions. We have subsequently completed our review of 12 

of the 14, one of which was allowed by the applicant to expire for non-payment of 

fees. While we do not consider them to be abusive tax avoidance transactions, we 

are continuing to review two of the transactions to fully satisfy ourselves that they 

do not present an apparent compliance risk requiring follow-up action on our part. 

Question: Of those tax patents that you have reviewed, how many would 

you say are common tax strategies and how many are truly unique? 

Answer: Considering our lack of expertise in the patent review process and the 

difficulty in determining ‘‘uniqueness,’’ most (11 of the 14) of the tax strategy patents and public applications reviewed involved strategies familiar to us and thus appear to be commonly used ‘‘tried and true’’ techniques. Of course, it is USPTO’s role 

99 

to decide whether these patents meet the criteria of patentability, such as novelty 

and nonobviousness. 

f 

[Submissions for the record follow.] 

Statement of The Honorable John R. Carter, a Representative in Congress 

from the State of Texas 

Chairman Thomas: 

The purpose of this hearing is to review the impact of current and proposed border security and immigration policies on programs in the Committee’s jurisdiction. 

As you are aware, Section 2029 (y) of the Social Security Act requires aliens in 

the United States to be ‘‘lawfully present’’ in order to receive Social Security benefits. Even though most illegal workers pay taxes, they do not place a burden on the 

Social Security Administration (SSA) as they are not eligible for said benefits unless 

they become legal residents of the United States. 

Currently, there are over 10 million illegal immigrants living and working in our 

borders. Several surveys indicate that households headed by illegal workers pay, on 

average, less than $5,000 annually in federal taxes. This is less than two-thirds of 

the average paid by all legal households. While providing much less to the treasury, 

each illegal household results in a net loss of over $2,700 annually due to healthcare 

costs and other social programs. However, the Social Security Administration actually sees a net profit from illegal workers because while they pay in, they are not 

eligible to receive benefits. 

Under current law, the path to citizenship for an illegal alien is difficult. However, language in S 2611 would allow some 10 million illegal aliens a path to citizenship. This newfound amnesty will place a severe strain on Social Security to meet 

the needs of the 10 million new workers suddenly eligible to receive benefits—benefits they have accrued by openly ignoring our laws. 

I am concerned about the obvious incentives of S 2611 to additional illegal workers. Our first priority should be to employ U.S. citizens, whether native born or legal 

immigrant. As we learned in the years following the 1986 amnesty, a path to citizenship for illegal workers only serves to invite more illegal aliens across our borders, not shut the door. This open invitation will serve only to place additional 

strain on welfare programs and drive down wages for American workers. 

I am also concerned about the cost associated with the Senate Bill as projected 

to all social security wage earners. Through Tax Year 2003, over 255 million wage 

files have been placed in the Earnings Suspense File (ESF) by SSA. In the 1990’s 

alone, nearly $190 billion in unmatched wages were placed in the ESF. Some have 

argued that this serves as a ‘‘savings account’’ for illegal workers to later draw benefits once they reach a legal status. Make no mistake that this is not the case. The 

ESF, by its very definition, is comprised of money we cannot attribute to any worker, legal or not. Each wage report placed in the ESF merely shows that SSA cannot 

match the file with a worker in its system. Because of this, any wages attributable 

to an illegal worker that are placed in this file are wages earned through either 

identity theft or Social Security fraud. I find it reprehensible that we would consider 

granting benefits to those who work in our country illegally while the solvency of 

Social Security for America’s seniors remains a very real problem. 

Furthermore, the Earnings Suspense File does not include contributions made by 

illegal workers under fraudulently obtained, valid Social Security numbers or Individual Taxpayer Identification Numbers legally obtained from the IRS. While these 

records result in deposits to Social Security, they are not drawn on due to the illegal 

status of the record holder. Should these monies, deposited over several decades, be 

drawn we should expect nothing less than bankruptcy of the Social Security system. 

As we attempt to forecast the effects of the amnesty included in S 2611, it is important to note that in 2010, the first of the ‘‘baby-boomers’’ generation will be eligible for Social Security benefits. It is an unfortunate coincidence that just as an entire generation of Americans begins to draw Social Security benefits, the first wave 

of the10 million illegal aliens granted amnesty would also become eligible for these 

very same benefits, thereby placing an even greater strain on the system. 

Because of these concerns, I urge the Ways and Means Committee to look into 

methods by which we can utilize the Social Security Administration and the Internal Revenue Service to assist with not only controlling, but decreasing the levels of 

illegal work in the country. The primary tools to fight this battle are through more 

accurate verification of a person’s eligibility to work legally in the United States, 

and enforcement of current law against employers who so willingly violate it. I also 

100 

urge the Committee to undertake a serious study of the potential costs to federal, 

state, and community welfare programs and educational systems associated with 

the legalization of millions of illegal immigrants. 

f 

Statement of U.S. Citizenship and Immigration Services, U.S. Department 

of Homeland Security 

Mr. Chairman, Ranking Member Rangel, and Members of the Committee: 

I. Introduction 

We appreciate the opportunity to submit testimony for the record to the Committee about the U.S. Citizenship and Immigration Services’ (USCIS) Basic Pilot 

Employment Verification Program (Basic Pilot), which provides information to participating employers about the work eligibility of their newly hired workers. We will 

also describe the agency’s plans to improve and expand the Basic Pilot in preparation for a nationwide mandatory Employment Verification Program. 

An Employment Verification Program is a critical step to improving worksite enforcement and directly supports the President’s goal of achieving comprehensive immigration reform. In his speech to the U.S. Chamber of Commerce on June 1, President Bush endorsed the Basic Pilot as ‘‘a quick and practical way to verify Social 

Security numbers’’ that ‘‘gives employers confidence that their workers are legal, improves the accuracy of wage and tax reporting, and helps ensure that those who 

obey our laws are not undercut by illegal workers.’’ 

Clearly, if we are to control illegal immigration, we can’t just focus on the border. 

Illegal immigrants are living and working in every state of the nation, and our solution must be just as comprehensive. We must make sure that our immigration laws 

are enforced in New York and Colorado and Georgia, not just along the southwest 

border. Today, an illegal immigrant with a fake ID and Social Security card can find 

work almost anywhere in the country without difficulty. It’s the prospect of jobs that 

leads people to risk their lives crossing a hundred miles of desert or to spend years 

in the shadows, afraid to call the authorities when victimized by criminals or exploited by their boss. 

That is why the Administration has proposed a comprehensive overhaul of the 

employment verification and employer sanctions program as part of the President’s 

call for comprehensive immigration reform. 

There is much we can do in advance of the enactment of comprehensive immigration reform. Here’s what we are working on at USCIS to improve and expand the 

Basic Pilot: 

• Ensuring that more aliens authorized to work have secure biometric cards. • Accessing our card databases for verification of work authorization—which will 

decrease the number of Basic Pilot queries that require a manual check. • Streamlining the enrollment process for employers by making it completely electronic. • Creating monitoring and compliance units that will search Basic Pilot and Employment Verification Program data for patterns to detect identification fraud 

and employer abuse. 

The President’s FY07 budget requests $110 million for expansion of the Basic 

Pilot to make it easier for employers to verify electronically the employment eligibility of workers. Based on our planning to date, we believe a feasible timetable allowing for phased-in expansion of mandatory verification along with flexible, userfriendly program requirements are essential to expand and operate the program as 

efficiently and effectively as possible. 

We will also reach out to employers, including small businesses, for feedback and 

real-world input, such as ideas on the best ways to submit data on new hires with 

the least collective burden and how to make electronic employment verification as 

user-friendly as possible. 

II. The Current Basic Pilot Program and Employment Verification Program 

With that backdrop, we would like to take this opportunity to outline how the current Basic Pilot works and the plans USCIS is putting in place to expand and improve it in preparation for a national mandatory program. 

Congress established the Basic Pilot as part of the Illegal Immigration Reform 

and Immigrant Responsibility Act (IIRIRA) in 1996, creating a program for verifying 

employment eligibility, at no charge to the employer, of both U.S. citizens and noncitizens. The Basic Pilot program began in 1997 as a voluntary program for employVerDate Aug 31 2005 04:51 Jan 26, 2007 Jkt 031575 PO 00000 Frm 00104 Fmt 6633 Sfmt 6621 E:\HR\OC\31575.XXX 31575
101 

1Statistics gathered from the Basic Pilot database, Oct. 1, 2005 to March 31, 2006. 

2 Ibid. 

ers in the five states with the largest immigrant populations—California, Florida, 

Illinois, New York and Texas. In 1999, based on the needs of the meat-packing industry as identified through a cooperative program called Operation Vanguard, Nebraska was added to the list. The program was originally set to sunset in 2001, but 

Congress has twice extended it, most recently in 2003 extending its duration to 2008 

and also ordering that it be made available in all 50 States. However, the program 

remains only voluntary, with very limited exceptions. A small percentage of U.S. 

employers participate, although the program is growing by about 200 employers a 

month to a current 10,000 agreements between USCIS and employers. These employers are verifying over a million new hires per year at more than 35,000 work 

sites. 

We seek in operating the Basic Pilot program to encourage the voluntary participation of small businesses, and to be responsive to their needs and concerns. Most 

(87%) of our participating employers have 500 or fewer employees. We would welcome your support in reaching out to enroll even more employers in the program. 

Interested employers can register by going to our Basic Pilot Employer Registration 

Site at: https://www.vis-dhs.com/employerregistration 

How the Basic Pilot Works 

After hiring a new employee, an employer submits a query including the employee’s name, date of birth, Social Security account number (SSN) and whether the person claims to be a U.S. citizen or work-authorized noncitizen (for noncitizens, DHS 

issued identifying # is also submitted) and receives an initial verification response 

within seconds. For an employee claiming to be a U.S. citizen, the system transmits 

the new hire’s SSN, name and date of birth to the Social Security Administration 

(SSA) to match that data, and SSA will confirm citizenship status on the basis of 

its Numident database. For the 88% of employees whose status can be immediately 

verified electronically, the process terminates here; in the remaining cases, the system issues a tentative nonconfirmation to the employer. The employer must notify 

the employee of the tentative nonconfirmation and give him or her an opportunity 

to contest that finding. If the employee contests the tentative nonconfirmation, he 

or she has eight days to visit an SSA office with the required documents to correct 

the SSA record. 

Noncitizen employees face a more elaborate process. Once SSA verifies the name, 

date of birth, and SSN, the system will attempt to verify the person’s work authorization status against the Basic Pilot database. (If a noncitizen’s SSN information 

does not match, the individual is first referred to SSA) If the system cannot electronically verify the information, an Immigration Status Verifier will research the 

case, usually providing a response within one business day,1 either verifying work 

authorization or, in 19 percent of cases, issuing a DHS tentative nonconfirmation. 

If the employer receives a tentative nonconfirmation, the employer must notify the 

employee and provide an opportunity to contest that finding. An employee has eight 

days to call a toll-free number to contest the finding and cannot be fired during that 

time because of the tentative nonconfirmation. Once the necessary information from 

the employee has been received, USCIS generally resolves the case within three 

business days,2 by issuing either a verification of the employee’s work authorization 

status or a DHS Final Nonconfirmation. 

As you know, the House and Senate have both passed significant immigration legislation this Congress, including provisions that require a mandatory electronic employment eligibility verification program for all 7 million U.S. employers. Although 

the House and Senate provisions differ in some significant ways, both bills would 

require the eventual expansion to all U.S. employers of an Employment Verification 

Program generally modeled on the Basic Pilot. 

USCIS is already planning for the expansion of the program. The President’s 

FY07 budget request includes $110 million to begin expanding and improving the 

Basic Pilot, including conducting outreach, instituting systems monitoring, and compliance functions. USCIS is exploring ways to improve the completeness of the immigration data in the Basic Pilot database, including adding information about nonimmigrants who have extended or changed status and incorporating arrival information in real time from U.S. Customs and Border Protection. In addition, USCIS 

is enhancing the Basic Pilot system to allow an employer to query by the new hire’s 

card number, when that worker has a secure I–551 (‘‘green card’’) or secure Employment Authorization Document. This enhancement will improve USCIS’ ability to 

verify promptly the employment eligibility of noncitizens because the system will 

102 

validate the card number against the repository of information that was used to 

produce the card, thereby instantly verifying all legitimate card numbers. 

Planned Monitoring and Compliance Functions 

No electronic verification system is foolproof or can fully eliminatedocument fraud, 

identity theft, or intentional violation of the required procedures by employers for 

the purpose of hiring unauthorized persons or keeping them on the payroll. But an 

Employment Verification Program that includes all U.S. employers, along with monitoring and compliance functions and a fraud referral process for potential ICE 

Worksite Enforcement cases, can substantially deter and detect the use of fraud by 

both employers and employees as the Administration works to strengthen its overall 

interior enforcement strategy. 

The current Basic Pilot is not fraud-proof and was not designed to detect identity 

fraud. In fact, a recent analysis of Basic Pilot systems data found multiple uses of 

certain I–94 numbers, A-numbers, and SSNs in patterns that could suggest fraud. 

As currently envisioned, the Employment Verification Program will include robust 

processes for monitoring and compliance that will help detect and deter the use of 

fraudulent documents, imposter fraud, and incorrect usage of the system by employers (intentionally and unintentionally). USCIS will forward enforcement leads to 

ICE Worksite Enforcement in accordance with referral procedures developed with 

ICE. The monitoring unit will scrutinize individual employers’ use of the system and 

conduct trend analysis to detect potential fraud. Findings that are not likely to lead 

to enforcement action (e.g., a user has not completed training) will be referred to 

USCIS compliance officers for follow-up. Findings concerning potential fraud (e.g., 

SSNs being run multiple times in improbable patterns; employers not indicating 

what action they took after receiving a final nonconfirmation) will be referred to 

ICE Worksite Enforcement investigators. 

It is essential that DHS have the authority to use information arising from the 

Employment Verification Program to enforce our Nation’s laws, including prosecuting fraud and identifying and removing criminal aliens and other threats to 

public safety or national security. It is also important that the system contain security and other protections to guard personal information from inappropriate disclosure or use, and to discourage use of the system to discriminate unlawfully or otherwise violate the civil rights of U.S. citizens or work-authorized noncitizens. 

Planning for the Employment Verification Program 

We are confident in our ability to get a substantially expanded Employment 

Verification Program operational with the President’s budget request. 

The Administration supports a phased-in Employment Verification Program implementation schedule on a carefully drawn timeframe to allow employers to begin 

using the system in an orderly and efficient way. We favor having the discretion 

to phase in certain industry employers ahead of others. As noted elsewhere in my 

testimony, USCIS already is working to improve and expand the Basic Pilot program to support the proposed expansion. 

USCIS is also committed to constructing a system that responds quickly and accurately. In order for this system to work, it must be carefully implemented and cannot be burdened with extensive administrative and judicial review provisions that 

could effectively tie the system, and DHS, up in litigation for years. 

III. Improved Documentation 

In the President’s May 15, 2006 address to the nation on comprehensive immigration reform, he indicated that businesses often cannot verify the legal status of their 

employees because of widespread document fraud. We need, he said, ‘‘a better system for verifying documents and work eligibility. A key part of that system should 

be a new identification card for every legal foreign worker. This card should use biometric technology . . . to make it tamper-proof. A tamper-proof card would help us 

enforce the law, and leave employers with no excuse for violating it.’’ 

Many foreign workers already possess a secure, biometric card evidencing their 

immigration status as either an immigrant (an I–551 card, commonly known as a 

‘‘green card’’) or a work-authorized nonimmigrant (an Employment Authorization 

Document or EAD). Some nonimmigrants currently have non-secure EADs, but 

USCIS is planning to eliminate the issuance of these cards in favor of secure cards. 

In addition, USCIS is considering requiringmore classes of work-authorized nonimmigrants to obtain a secure EAD. Requiring all work-authorized nonimmigrants 

to obtain secure documentation would help ensure that their work eligibility can be 

instantly verified in the Basic Pilot or Employment Verification Program. As discussed previously, USCIS already is developing the system capability to verify a 

new hire’s immigration card number against the card information repository. Under 

this new system, a legitimate card number matched with a name and date of birth 

103 

will electronically verify in a matter of seconds—and only a fraudulent card would 

fail to verify. 

IV. Conclusion 

We in USCIS are in a unique position to understand the importance of having 

legal means for individuals to enter and work in the United States. That is why 

we, and the President, support comprehensive immigration reform that includes interior and border enforcement in addition to a temporary worker program. 

We thank both the House and the Senate for recognizing the need for change in 

this area. With a strong cooperative effort now, the prospect of a truly effective national mandatory Employment Verification Program, combined with improved documentation, will reduce pressure on border and interior enforcement, simplify today’s 

processes, put employers on an equal footing, and support a temporary worker program that is vital to our economy. 

Æ