oversight

Comments on S. 214--A Bill to Enhance the Integrity of the Social Security Card

Published by the Government Accountability Office on 1990-04-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                      United Ststes General Accounting OUke   / Y I 1L 7
                      Testimony
GAO



                                                                 141167

For Release           Comments on S. 214--A Bill  to Enhance
on Delivery           the Integrity of the Social Security
Expected at           Card
10:00   a.m.    EDT
Wednesday
April 18,      1990




                      Statement of Joseph F. Delfico
                      Director,  Income Security  Issues
                      Human Resources Division

                      Before the
                      Subcommittee   on Social    Security
                        and Family Policy
                      Committee   on Finance
                      United States Senate




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GAO/T-HRD-90-23

                                                                    .:   :
                                      SUMMARY

S. 214 requires        the Secretary     of HHS to develop a prototype           of a
counterfeit-resistant          social   security     card.    It is intended     that
the new card would provide            a more reliable       means for verifying
employment under the Immigration             Reform and Control        Act of 1986
 (IRCA).      The bill    would also require       the Secretary     to prepare a
report    that examines different         methods for improving         the social
security     card application       process.     The Attorney     General is to
assist    the Secretary      as the latter       deems necessary and both the
card and the report         would be required        to be submitted      to the
Congress within        one year of the bill's          enactment.
IRCA requires      the Nation's   employers to verify     employee identity
and work eligibility.       To prove identity,    an individual     may use
any of 21 documents.        To prove employment eligibility,        any of 17
documents may be used, including         a social  security     card and a
birth certificate.
IRCA also provides      sanctions    against      employers who do not comply
with the law, and it prohibits          discrimination      on the basis of
national  origin     and citizenship      status.    However, as GAO reported
last month, IRCA has actually          caused discrimination        because
employers   lack confidence       in the verification       system.   They do
not understand     the law and they are confused as to how to carry
out the verification      process.
The social      security     card is only one component in the IRCA
validation      system     and reliability      of the system as a whole needs
study.      Though there are a number of ways to improve the social
security     card they may have limited             impact on providing      for a
more secure verification            system or increasing         employer
confidence.       One approach which we believe            is worth additional
study is the use of state drivers'                licenses    with a validated
social     security      number imprinted     thereon.       Such an approach was
suggested by the Secretary              of HHS in a 1988 report        to the
Congress.
The Attorney    General and the Secretary           of HHS should be required
to review and report         on the IRCA verification        system as a whole,
including    the possibility       of incorporating     validated   social
security   numbers on all drivers'         licenses.     Such report    should
be submitted     to the Congress within         one year of enactment.




                                                                                        . .
Mr. Chairman             and Members of the                    Subcommittee:

We are pleased               to be here              today     to testify             on S. 214.                The bill
would       require         the      Secretary            of Health         and Human Services                     (HHS) to
develop       a prototype                  of a counterfeit-resistant                         social        security
card.        This     card         would          provide      a more reliable                 means for
verifying        employment                 eligibility            under     the      Immigration               Reform and
Control       Act of         1986 (IRCA).                  The bill         also      would      require          the
Secretary           to issue          a report            to the Congress              that      examines
different        methods             for     improving         the       social       security           card
application           process.


To achieve           the bill's              objective,            the     Attorney       General          is to
provide       assistance              and information                 to the        Secretary            as he deems
necessary.            Finally,              the    Secretary          is    to submit          the mandated
report,       along         with      the prototype                card,     to the Congress                 within
1 year       of the bill's                  enactment.


THE IRCA VERIFICATION                        PROCESS


The principal               thrust          of our testimony                today      is to discuss               an
improved        social        security             card      in the context             of     IRCA.         Each year,
millions       of people              change        jobs      or seek employment                   for     the     first
time.        IRCA requires                  the nation's            7 million          employers           to examine
specified        documents                 to be provided            by all        prospective             employees--
including           those     born          in the        United     States--to           verify          their
identity       and eligibility                     to work         in this        country.          To prove
                                                               1
identity              to an employer,               an individual                    may use any of                    21
documents,                  including          a driver's             license             or a voter           registration
card.           To prove              employment          eligibility,                    any of      17 documents                 may
be used,              including          a social          security                card      and a birth
certificate.                    To comply          with         the       law,      employers          must certify                   that
they          have reviewed              the documents                    and that           the documents                  appear
genuine             and relate           to the applicant.


IRCA provides                   for     sanctions          against               employers           who do not              comply
with          the     law's      requirements,               and it              prohibits           employment
discrimination                   on the basis              of national                 origin         and citizenship
status.               However,          the employers'                    lack      of understanding                   of the
law's          verification              process          has actually                    led    to discrimination                     in
hiring          practices.               Concerns          over           discrimination               have led              to
renewed             calls      for      a system          that        employers             can rely           on to verify
worker          eligibility.               One component                     of that            system       is the          social
security             card      and many have called                          for     improving           its     resistance
to counterfeiting.


There          are a number of ways to improve                                      the     social       security             card,
ranging             from relatively                inexpensive                   improvements            to the current
paper          card     to      integrating          advanced               electronics               into      the card
itself.              However,           changing          the     social            security         card       does not,             by
itself,             address           the need for           a secure              verification                system.             To do
so effectively,                      we will      need to address                     how verification                       is
          *

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                                                                                                                  .’          .’             .,
                                                                                                                                                  .
accomplished              and how eligibility                       documents         are obtained             in
addition             to how they            are made.


THE VERIFICATION                    PROCESS AND DISCRIMINATION


Last     month we reported                    that      there        are    three      possible        reasons         why
employer         discrimination                 resulted            from the        sanctions      provision:
(1)    lack      of understanding                    of major         sections         of the      IRCA
legislation;               (2) confusion              and uncertainty                 of how to determine
eligibility;              and (3) alien               workers         using      counterfeit           or
fraudulent             documents,           which       contributed            to employer         uncertainty
over     how to verify                eligibility.                  The widespread           pattern           of
discrimination                we found          could      be reduced            by (1)      increasing
employer         understanding                through        effective           education        efforts;            (2)
reducing         the      number of work eligibility                           documents;          (3) making           the
documents            harder         to counterfeit;                 and (4)      requiring        that         upgraded
documents            be issued          to all        affected         members of the population.


IMPROVING THE SOCIAL SECURITY CAR0


Making         the     social        security         card      more counterfeit-proof                      can play         a
role     in increasing                employer          confidence            in work eligibility
documentation                and could          make it         more difficult            for     illegal           aliens
to obtain            work.          Using     technologies              such as magnetic               strips,
integrated             circuitry,           and lasers              could     make it     easier         for
empLoyers             to identify           counterfeit              cards,     but     these     technologies

                                                                3
may      be very       costly.            Less costly                approaches          could             include
altering        the      type      of material               the      card       is made of and the                        type
set,       colors      or design           of     the       card,       all      of which            can aid            in making
it     more difficult                 to duplicate.                  These efforts              may           not    have       their
intended        effects          in the         short        run,      however,          unless               the     improved
social       security           cards      are        reissued          to all         those         required            to have
a social        security           number.


Notwithstanding                 the     cost      of producing                 the     card         itself,          reissuing
210 million            new counterfeit-resistant                               cards     would             require         an
enormous        effort          on the         part     of    the      Social          Security
Administration                (SSA) and the public.                            The cost         and disruption
caused       by this          process          needs        to be carefully                   evaluated.


In the       past      we have been reluctant                          to recommend wholesale
conversion            to a new high-tech                     social           security         card           because          of
our     concern        over      costs         associated             with      producing              and
disseminating             a new card.                  These costs              could         run      into         billions        of
dollars.            Moreover,           we see a need for                      assessing             the       social
security        card      within          the broader                context         of the          whole          IRCA
verification             system.           Along        these         lines       we feel            the       scope of
S. 214 should             be broadened                 to    include           an assessment                   of the
vulnerabilities                 of each component                     in the         whole      system              and to
increase        the      role      of the         Attorney            General.




                                                                 4
VULNERABILITY OF THE APPLICATION PROCESS


Counterfeit-resistant                       cards        may make it               more difficult               to produce
a bogus         card,       but        obtaining          a real         card        fraudulently             is still
problematic.                Our work and other                         studies        have shown that              a weak
link        in the       system         is the       fact         that      over      7,000        state      and local
offices         issue       birth        certificates                  which     are relatively                easy to
obtain         fraudulently             --sometimes               simply       by request             through      the
mail.          Once this            "breeder"           document            is obtained,              it    can be used
to obtain             a valid        counterfeit-resistant                         social          security       card,         a
driver's             license,        and a host             of other           documents.


Steps        have already               been taken           to        improve        the     internal         controls
over        social       security          card      issuance.               SSA has started                  a program
for     enumeration              at birth,           and federal               tax     law requires             that      all
children             2 years      old      or older          who are claimed                   as a tax         exemption
must have a social                      security         number.             These steps             should
substantially               reduce         the number of fraudulently                               obtained       social
security         cards          over     time,      but      will        probably           have limited           impact
on current             employer          problems           of verification                  for     aliens      and those
who have not              secured          legitimate              social        security           cards.


Because         of this          current           vulnerability,                  we support              the provision
of     s.    214 that           would      require          the        Secretary        of HHS to examine                  the
current         social          security         card       application              process         to determine               if

                                                                   5
improvements                   can be made.                  The process             is vulnerable              to fraud
because       thousands                  of different               documents             can be used in support
of an application,                           many of them can be obtained                            fraudulently,
they       are easily                 counterfeited              or altered,               and there       is no
practical               way to verify                 that     the applicant                is the person            named on
the document.                        State      and local           governments             need to improve              their
processes               for         issuing      birth        certificates                to make them less
vulnerable               to fraud.


IMPROVING THE IRCA VERIFICATION                                      PROCESS


A less       expensive                  alternative            to    issuing            new social        security          cards
could       be issuing                  tamper-resistant                  driver's          licenses       with
validated               social          security         numbers.               In a December 1988 report                     to
the Congress                   the      Secretary            of HHS suggested                a role       for     drivers'
licenses           if         the     law were changed                   to require          employers           to contact
SSA for       social                 security         number validation.                     He suggested            that     if
all     drivers'               licenses         had social               security         numbers,        state
licensing               authorities              could        validate           social      security           numbers with
SSA on an automated                           basis      putting          less      of a strain           on their
operations               than         having       employers             call     for     verification.


The driver's                   license          is now the most widely                       used form of
identification                       in the      United        States,           and most states            already
include       social                 security         numbers        on them.             Each state            issues
drivers'           licenses              that      contain          the driver's             photograph,           and also

                                                                     6
furnishes            photo-identification                         cards     for     nondrivers           who need an
official            form of           identification.                   Using      the driver's            license
could       enhance            both     work eligibility                   and identification
documentation,                  however,          it     should         be noted       that     drivers'         licenses
suffer        the      same vulnerability                       to fraud          as the      social       security
card.         If,      however,           these         vulnerabilities              can be controlled,                 the
improved            driver's           license          could      negate         the need for           major
improvements              to the social                  security          card.


CONCLUSION


We believe             that      focusing              on strengthening              the      social      security
card       alone,       without           assessing             the     IRCA system           as a whole,           could
have marginal                 effects          on the reliability                   of the      verification
system       because            the card's              reliability          may not be critical                    to the
whole       process.


In our view             the      Attorney          General             in conjunction           with      the
Secretary            of HHS should               review          and report          on the verification
system       as a whole                while     changes           to the social              security       card      are
being       studied           as required               by S. 214.           This     report        should,       among
other       things,            include         an assessment              of options           involving         the
incorporation                 of validated               social         security      numbers          on state
driver's            licenses.             Because          of the urgency             to affect           reductions
in discrimination                      under      IRCA, reports              on both          the   IRCA system             and



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the      social      security       card     should         be issued      within      one year          of
S. 214's          effective        date.


Regarding           the   report     on the social             security       card,      it     should
address       for     each option --the              cost     to SSA, employers,                and workers;
the      impact      on employers,           potential         employees,           and the public;
privacy       considerations               and the expected             benefits.             A discussion
of benefits           should       include         to what extent          an improved           card     would
simplify          the employer         verification            process      and reduce           fraud        and
discrimination.                 We believe          such a report          would      be extremely
useful       to the Congress               as it     addresses      the various           problems            with
IRCA.