Tax Analysts Blog

Hillary Clinton’s Immigration Policy Seeks to Erase Bill Clinton’s Welfare Reform Legacy

Posted on Apr 6, 2016

As Bill Maher summed it up recently, the Democrats’ position on immigration has morphed from comprehensive reform to “You get across that river, you're here to stay.” He might as well have added, “And you get to apply for federal public benefits right away.”

At a March 9 primary debate sponsored by Univision, the party’s presumptive presidential nominee, Hillary Clinton, sought to distance herself both from her own prior pronouncements criticizing illegal immigration as well as the Obama administration’s policy of deporting recent arrivals. Declaring that as president, she would “stop the raids, stop the roundups,” she signaled that she would limit deportations to “violent criminals, terrorists, and anyone who threatens our safety.”

Earlier, she had made clear that she would further expand President Obama’s expansion of his initial 2012 executive action granting amnesty to aliens who had entered the country illegally before age 16 and have not yet turned 31. Almost 800,000 so-called Dreamers have received work authorization and Social Security numbers under that program. But in 2014, Obama sought to add another 4 million to those rolls by dispensing with the current age cap for the Dreamers and extending amnesty to a second category—aliens who had entered illegally at any age but now happen to have U.S. citizen or lawful permanent resident children. Clinton would add yet another amnesty category—parents of the Dreamers.

While Obama’s original 2012 executive action remains in place, 23 Republican-governed states have challenged his 2014 expansion, which has been enjoined by the courts. The Supreme Court will hear arguments on that challenge this month and may decide as early as this summer. With the four liberal justices virtually certain to sustain the administration, the most the challengers can hope for is a deadlocked Court and a rehearing next term, by which time Justice Antonin Scalia’s replacement would have been seated. If Hillary Clinton gets to choose that replacement, she is assured of delivering on her campaign promise of outdoing Obama’s executive amnesty. In the process, she will help erase her husband’s legacy of withholding federal public benefits from aliens who entered illegally.

In 1996 Bill Clinton signed into law comprehensive welfare reform legislation, the Personal Responsibility and Work Opportunity Reconciliation Act. Title IV of that legislation limited the availability of federal public benefits to “qualified” aliens. Among other changes, the legislation amended the tax code’s provisions governing eligibility for the refundable earned income tax credit to require each claimant and qualifying child to have a valid SSN. That requirement effectively excluded illegal aliens from participating in the largest federal welfare program, which Treasury acknowledges is plagued by fraud. According to a Treasury Inspector General of Tax Administration report, of the total $68.1 billion EITC payments claimed by 28.8 million return filers in 2013, as much as 22 to 26 percent, or between $13.3 billion and $15.6 billion, were issued improperly.

Obama’s amnesty, which Clinton is committed to expand, would require that SSNs be issued to almost 5 million illegal aliens, allowing them full access to the EITC’s fraud-plagued largesse. The IRS commissioner has confirmed that all those individuals issued SSNs would be able to claim EITCs not just in the future but also going back all three “open” tax years, even though they lacked work authorization for the back years and regardless of whether they had filed returns for those years. The Joint Committee on Taxation estimates as many as 800,000 claims for EITCs from illegal aliens with newly issued SSNs, and resulting additional payments in 2018 alone of $1.1 billion.

Perplexingly, the IRS takes the position that unless an availability restriction appears in the tax code, refundable credits are available without regard to lawful immigration status. This despite the clear exhortation in the Personal Responsibility and Work Opportunity Reconciliation Act that “notwithstanding any other provision of law ... an alien who is not a qualified alien ... is not eligible for any federal public benefit.” Evidently, means-tested refundable credits are not federal public benefits in the IRS’s Alice-in-Wonderland worldview. Thus, the IRS continues to send out checks to illegal aliens claiming the refundable additional child tax credit, which was enacted after the Personal Responsibility and Work Opportunity Reconciliation Act, but for which the tax code’s governing provisions lack an SSN requirement.

A TIGTA report found that illegal aliens using IRS-issued individual taxpayer identification numbers (ITINs) obtained $4.2 billion in additional child tax credit payments in 2010. The IRS created the ITIN to facilitate compliance with U.S. tax laws by those ineligible for SSNs. But, as the TIGTA report notes, “these individuals generally cannot obtain a job in the United States without an SSN.” The same report finds that over 1 in 5 of them steals someone else’s identity, including an SSN, to obtain employment. An equal number fabricates SSNs, with only a little over half using ITINs. The total additional child tax credit payments to illegal aliens could therefore be much larger than the amount paid to claimants using ITINs. Amnesty and valid SSNs would enlarge those payments still further.

It is a sign of how far the Democratic Party has swung to the left that welfare reform, Bill Clinton’s crowning achievement, is destined for unceremonious decapitation under the policies his wife is touting on the campaign trail.

 

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