The Administration's Mixed Messages on Migration: Credit Cards?

By David North on April 16, 2018

The Trump administration clearly wants to reduce international migration to the United States.

It has lowered the number of refugees, sought to ban entry from some Muslim countries, tried to reduce chain migration, and to build a wall, or at least a better fence, on the southern border. It is raiding some places where illegals work, and it is putting more emphasis on enforcement.

So why has it taken the migration-expanding step of allowing petitioners, in many cases, to use credit cards to pay their U.S. Citizenship and Immigration Services (USCIS) fees?

A merchant deciding to accept credit cards does so, among other reasons, because he wants to increase business, right? Businesses know that people will spend more money if they can put it on credit than if they have to come up with actual dollars.

If an entity offers credit cards, it indicates it wants to get more customers, so why is DHS letting many of its migration-creating fees to be paid with plastic?

The short answer is probably that the administration has deprived itself of so many political appointees that it simply does not have the policy staff to oversee such matters as how the government's fees are paid. (As a one-time Democratic political appointee, I cannot see how anyone can govern effectively without a substantial sprinkling of such persons.)

But how USCIS fees are paid is a nuance, and this administration is not good at nuances.

Background. Unlike most government agencies, USCIS is more than 90 percent funded by fees paid by people and corporations who seek immigration benefits for themselves, their relatives, or their employees. In the past these fees were paid by check or money order. (The agency clearly would not want the risks of accepting large amounts of cash.)

Handling lots of checks is more burdensome than handling lots of credit card transactions, as I was told by a couple of experts on large-scale financial transactions; so there are presumably some fiscal savings in this conversion. The same two people were pretty sure that these staff savings would not equal the credit card fees, but they were not sure how big the loss would be.

However, in the totally unreal world of federal finances, USCIS officials do not have to worry about those costs, because such credit card costs are picked up by the U.S. Department of the Treasury on the apparent grounds that Treasury wants agencies to use credit cards when they can.

So this decision will save a little money in transaction costs for DHS itself while the Treasury will pay a probably larger sum out of taxpayer funds to cover the credit card fees. Only if you look at this very narrowly from the point of view of the DHS budget is this a savings. It is a largely hidden taxpayer subsidy to alien fee payers.

Although I have been dealing with immigration statistics most of my adult life, I cannot see any way of determining how many more petitions will be filed because of the credit card decision. Readers are invited to suggest a measuring technique in the comments.

I would think, however, that the use of credit cards will, in some borderline situations, tip the balance to filing, as opposed to not filing. I am absolutely certain that the new payment method will cause many a petition to be filed sooner than had the pay-by-check rule remained in place. And one of the elements of chain migration is time — if the process is slow, there will less of it, and if rapid, there will be more of it.

Some officials reading about the migration-adding element of this new policy may stroke their proverbial chins and say, "Gee, I had not thought about that."

Fee Waivers. One of the potential arguments for the use of credit cards in this connection might be that it would reduce the number of fee waivers sought for the petitions in question, and this would save the agency some money. (The hundreds of millions of dollars not collected every year by USCIS because of fee waivers is rarely discussed, though we covered it in a posting a few years ago).

I found it interesting that this potentially plausible defense of the introduction of credit cards was not mentioned in any of the material published by USCIS on this subject. Maybe one does not discuss such crass things in polite company, or maybe the agency is not very interested in saving money by reducing the use of the fee waiver.

Will those filing fee waiver applications be sent a notice that, instead of seeking such a waiver, they could use a credit card instead? I doubt it.

Rich Man, Poor Man. One of the other ironies of this decision is how it plays out, albeit in a small way, to re-emphasize the gap between the prosperous and the poor. If a well-to-do person pays by credit card, and if that person always pays his or her monthly bills fully and on time, that person will pay no interest on the transaction in the months to come; the poor person, who is always in debt to the credit card company, will pay interest, sometimes at steep rates.

To rub a bit of salt into this economic wound, the prosperous person may also get some money back from the credit card company. Were I to use my Mastercard to pay the feds a $1,000 fee, for example, the credit card company would give me a rebate later of $10. (The refund system, even based on payments to the federal government, would apply to my card, or so the lady in the Philippines told me at 2 a.m. her time; other cards may differ on such refunds.)

A well-to-do immigrant investor seeking to convert his EB-5 temporary card to a permanent green card, will not get a break on the size of his or her $500,000 investment, but thanks to this new policy (if the alien has a credit card with a 1 percent refund attached), there will be a $37.50 rebate on the USCIS fee. The charge of $3,750, for the form I-829, is the most expensive on the list of 41 fees handled in this program. A more typical fee is the $535 for the chain migration benefit (more formally called the I-130 Petition for Alien Relative).

So the new policy will tend to both expand migration and to increase (a tiny bit) the gap between the prosperous and the poor.

Is that really what the Trump administration wants to do?